The G7 countries plan to oppose China’s Belt and Road Initiative. As part of the announced Partnership for Global Infrastructure and Investment (PGII), they aim to raise $600 billion to fund infrastructure in developing countries. China understandably does not like the initiative; worse, the potential beneficiaries are skeptical.
- At the three-day G7 summit, US President Joe Biden announced a new project: $600 billion to invest in infrastructure, security, public services and human rights in developing countries.
- The European Union has joined this global initiative and is expanding its existing sustainable development efforts with the Gateway to the World initiative.
- The Partnership for Global Infrastructure and Investment (PGII) should be an alternative to the Chinese Belt and Road Initiative (BRI).
Speaking at the Bavarian castle of Elmau, Joe Biden presented the PGII project, which aims to raise $600 billion from the G7 countries and their partners by 2027. These funds are intended to address the climate crisis, strengthen global energy security, develop and implement secure information and communication technology networks, promote gender equality and equity, and modernize healthcare systems in developing countries.
Tune in as I comment with other G7 leaders to formally launch our partnership for global infrastructure and investment — an effort critical to our economic and national security. https://t.co/I5YzaCRJbU
— President Biden (@POTUS) June 26, 2022
The five-year deal is an update of last year’s Build Back Better World initiative, which aimed to provide countries in need of development capital with an alternative to Chinese loans, which were seen as threatening to become politically dependent on Beijing, but failed. due to financial problems. Given the growing economic problems and social inequalities in the world due to the coronavirus epidemic and the war in Ukraine, efforts to implement the project have resumed.
Also read: The EU gives developing countries an alternative to Chinese funds
The European Union, built around similar values and standards of cooperation, supported the project of the G7 countries and decided to participate in its financing. Ursula von der Leyen, President of the European Commission, has announced that the Community will provide €300 billion from public and private sources for this project.
So far, European countries have developed their own Gateway to the World initiative, implementing pharmaceutical collaboration projects in Africa and transport, energy and technology projects in the Indo-Pacific region, among others. Currently, these activities will be carried out under the PGII.
The aim is to balance the Chinese influence
The project is also in response to growing accusations from the US and European countries that Beijing is charging BRI participants for unpaid loans.
The Chinese venture was launched in 2013 by Xi Jinping to boost trade and improve the living standards of local communities, but it proved to be a way to build China’s economic and geostrategic edge. Some allegations also relate to non-market economic practices and human rights issues.
According to US National Security Adviser Jake Sullivan, the G7 project is a response to China’s challenge. It also notes that there is a need for G7 and NATO cooperation in this direction, but makes the caveat that this is not a step towards the Cold War and an attempt to divide the world into rival blocs.
China’s response was predictable
Beijing was deeply dissatisfied with Washington’s new initiative, describing it as “approaching a zero-sum game.” Chinese Foreign Ministry spokesman Zhao Lijian admitted that “China always welcomes all initiatives that promote the construction of global infrastructure.” At the same time, he criticized an approach he described as “promoting geopolitical calculations” intended to “denigrate the Belt and Road Initiative”.
But Shi Yinhong, an international expert at Renmin University in Beijing, argues that Beijing should not only see the project in terms of rivalry with the US, nor underestimate it. He warns that the pandemic and crisis in Ukraine, which have caused the economic slowdown in China and put a brake on the BRI project, could hamper rivalry with the US.
Also Read: Elmau Castle, site of the G7 summit, was a recovery center for Wehrmacht soldiers
American vs. Chinese Initiative
Despite many similarities, the Chinese project and the G7 countries differ significantly. While the idea behind the BRI initiative was to strengthen ties with Southeast Asia, followed by South and Central Asia, Africa, Europe and Latin America, PGII revolves around the idea of shared values of democratic states. By investing in infrastructure, it aims to create new jobs and increase the development potential of low- and middle-income economies to make them independent of US aid in the future.
PGII places great emphasis on environmental protection and clean energy, while China has built large coal-fired power plants in addition to renewable energy projects. The G7 countries plan to obtain funding from both public and private sources, while RDI is largely funded by the state.
When Beijing was criticized for corruption and its lending policy, PGII made transparency of cooperation one of the project’s flagship principles and decided to finance its projects through grants and investments.
However, the G7’s $600 billion budget by 2027 is much smaller than the Chinese budget that Morgan and Stanly estimate at about $1.2 trillion. According to Chinese experts, achieving such results could be difficult for Biden and Western partners, especially in times of economic difficulties.
Global South is skeptical
PGII undertakes many activities in the countries of Africa, Asia and Latin America. Planned investments include a $600 million contract to lay a submarine telecommunications cable from Southeast Asia through the Middle East to Western Europe.
Despite promises of specific actions, potential project beneficiaries remain rather skeptical. According to the former Liberian minister of public works, any source of funding in Africa is welcome. However, “since this is not the first proposed Western-based infrastructure program, there will be a credibility issue until the implementation details become known.”
Indian Foreign Minister Vinay Kwatra has also declined to take a position on the matter until he knows the details. As a result, the G7 initiative has not received the expected enthusiasm from the target countries, which casts doubt on its future success.
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