China’s colossal infrastructure investments project, the Belt and Road Initiative, which has sceptics worried since its launch in 2013, may have a challenger.
The US-led G7 announced the Partnership for Global Infrastructure and Investment (PGII) at the 48th Summit held last month in Germany, underscoring its commitment to close the infrastructure gap in developing countries. So far, China’s BRI has created a network of infrastructure and trade and utilised economic leverage to gain political advantage. After struggling to offer a competing vision, the PGII may be the West’s attempt to enhance competitiveness.
However, competing with the BRI would mean matching the key characteristics of the mammoth infrastructure project vis-a-vis stability, coherence and continuity, something that’s been missing in the Western block for nearly a decade now, and visible in their fragmented stand on key geopolitical issues.
The G7 partners must synchronise their respective approaches, investment criteria, expertise, and resources. Besides greater internal coordination, the PGII should also emphasise coordination of infrastructure needs and interests of low- and middle-income countries. This would not only accelerate progress but also avoid bureaucratic inefficiencies that multi-partner schemes are typically susceptible to.
More importantly, projects under the PGII need to resonate with leaders in developing countries — a code that Beijing has managed to solve. That BRI is a State project gives it an advantage, so even if it hits roadblocks or is accused of placing the host nations under severe debt, the transcontinental infrastructure programme does not have to juggle multiple internal stakeholders.
For PGII, an opportunity to course correct
The BRI, reminiscent of the Silk Road, has been designed to cover regions from East Asia to Europe and make partners beholden to Chinese interests. “We’re offering better options for countries and for people around the world to invest in critical infrastructure that improves lives,” US President Joe Biden said while announcing the collective mobilisation of $600 billion by 2027 to deliver “game-changing” and “transparent” infrastructure projects to developing and middle-income countries.
A largely similar scheme was launched at last year’s G7 conference under the label ‘Build Back Better World’ (B3W), which the Biden administration had framed as a response to China’s BRI. While the 2022 White House factsheet makes no such suggestion, the PGII too has been viewed as a counter to it. Little was heard about B3W since. Even if it is simply repacked as the PGII, the initiative is an opportunity to correct its course as it tries to rival the BRI.
While still in its nascent stage, the B3W was clogged, as the European Union and the UK announced separate funds and projects with the same goal. The EU’s Global Gateway and UK’s Clean Green Initiative also aimed to mobilise investment for global infrastructure, making space for duplicate efforts and weakening the offering to developing countries. Theoretical vagueness, which may turn into practical confusion, is a high risk to the PGII.
The G7 took a step in the right direction by addressing this shortcoming in a White House memo which stated, “The lack of a comprehensive approach for coordinating infrastructure investments with like-minded partners often leads to inefficiencies and missed opportunities for coordinated investments to deliver at scale.” However, the group’s development bid remains aspirational and provides little detail.
Compete but also learn from the BRI
The Chinese foreign ministry spokesperson, Wang Wenbin, said at a regular press briefing in Beijing that while China welcomed efforts to promote global infrastructure development, Biden’s initiative was based on a “zero-sum game approach.” “The relevant initiative from the US side ignores the desire of all countries for common development and win-win cooperation,” Wang said, adding that it “will win no support”. Execution of projects will be critical to the survival and success of the PGII.
Nonetheless, the PGII has some things going for it. The announcement comes amid high levels of economic risk and instability in emerging markets and developing nations, offering a lifeline that many States cannot ignore. BRI projects have shown diminishing values down to $13.6 billion in 2021, following $80 billion in 2020, and around $200 billion in announced projects in 2019. Hazily defined, the BRI seems predatory to partners who are unsure about what they are signing up for. Sustainable and quality infrastructure projects implemented in an ethical and safe manner can make the PGII everything that the BRI has failed to deliver.
The BRI has been the centrepiece of Chinese President Xi Jinping’s foreign policy for nearly a decade. But some projects are stalling as countries struggle to repay related debts. China’s economy is faltering, too. Silk roads are getting bumpier. However, in the infrastructure game, China continues to have a real advantage, and Beijing will maximise its pursuit of global leadership as long as it perceives that Washington seeks to deny it any. It is, therefore, imperative to get the premises of US-China relations right. Both place infrastructure-led economic development at the heart of foreign policy initiatives. To compete, they must use leverages unique to them instead of imitating the other. The PGII can begin by avoiding theoretical vagueness and deliver on its promise of transparency.
Shibani Mehta is a Research Analyst with the Security Studies Program at Carnegie India. Views are personal.
(Edited by Humra Laeeq)