£28 trillion ($40 trillion). That is the cost of the gap in infrastructure between the developed and developing world, according to the Biden White House.
After over a year of mostly virtual diplomacy, the G7 Carbis Bay Summit in Cornwall saw the world’s wealthiest democracies (G7) spell out a plan primarily aimed at rivalling China in Global South development. The plan is built around US President Joe Biden’s Build Back Better World (B3W), which will directly rival Chinese President Xi Jinping’s signature Belt and Road Initiative (BRI). While both plans position themselves as the better alternative for the development of the Global South, they both have vested geopolitical interests.
The BRI and the China threat
The BRI, now a 140 member-state program initiated in 2013, has seen at least $200 billion (out of over a trillion expected) poured into physical and digital infrastructure stretching across the world from Asia to Latin America, creating a multi-nodal land and maritime network that will redirect international trade towards a China that is desperately in need of resources to feed an ever-growing middle class. These projects range from railways, ports, and airports, as well as acquisitions, like that of Mount Tormocho in Peru. Yes, China bought a mountain – and the mineral rights to the two billion tons of copper within.
While the BRI has helped to narrow the infrastructural gap, critics argue that it has resulted in high levels of unsustainable debt. The so-called ‘Chinese debt-trap diplomacy’ is where sovereign states accept loans from China and subsequently default on them, allowing Chinese state-linked companies to take over strategic state infrastructure. This greatly undermines state sovereignty while benefitting China. Sri Lanka’s Hambantota port is an example of this idea in practice. It also works in tandem with China’s push to internationalise its Renminbi currency as an alternative to the US dollar in international trade transactions.
On the environmental impact front, as of 2017 Chinese companies have been involved in over 240 coal projects in twenty-five of the sixty BRI signatory-states.
The BRI has also helped China reap substantial diplomatic benefits at the expense of the West. Case in point is the human rights concerns over Uighur Muslims in Xinjiang and Hong Kong at the UN Human Rights Council (UNHRC). On the subject of Xinjiang, twenty-one non-BRI states led by the G7 condemned China while 36 BRI states defended them. Regarding Hong Kong, twenty-two non-BRI signatories led by the G7 condemned China, in contrast to the 53 BRI signatories who came to China’s defence. In the Middle East, while the US remains lukewarm on resurrecting the Iran nuclear deal aimed at stopping Iran from developing nuclear weapons, China agreed a $400 billon development package with Iran in March.
From Washington D.C.’s perspective, politicians like Hillary Clinton and former Trump advisor John Bolton have claimed a Chinese strategy of neo-colonialism is taking root.
What is B3W?
Build Back Better World (B3W) is a plan of “strategic competition with China” aimed at meeting the infrastructural needs of developing countries, according to the White House. This plan harmonises various other international development initiatives from G7 members that have tried to be an alternative to the BRI. Some of these include the EU/Japan-led Asia Connectivity Strategy (now extended to Africa) and the Blue Dot Network (BDN) between Japan, Australia, and the US, aimed at the Indo-pacific region.
The lengthy G7 Carbis Bay Summit Communique is also explicit in its ambition to rival China, stating that “with regards to competition” with China, its “non-market” driven practices “undermine the fair and transparent operation of the global economy.”
So, what’s different?
- First is the emphasis on fundraising for the B3W to be private sector led.
- There is a focus on its status as a greener alternative, with terms like the “Clean Green Initiative” or the “Green Marshall Plan” being tossed around.
- Thirdly, in response to criticism of China’s debt-trap diplomacy, it pledges to be transparent, economically viable, and based on values of “good governance.”
The diplomatic strategy
On the diplomatic front, the G7 Communique’s aggressive stance against China (on topics ranging from the South China Sea to what Biden has described as “forced labour” in Xinjiang) can be interpreted as Biden’s concerted effort to sell a confrontation with China to the G7 and the developing world. This contrasts with the EU’s willingness to cooperate with China on climate change issues as the BRI shifts away from funding coal projects, exemplified in its refusal to fund a coal power plant in Bangladesh in March.
Also, intertwined with Biden’s approach to China is his Russia strategy, which became clear when he met Vladimir Putin in Geneva following the G7 summit. While addressing the press, Biden suggested that Putin, with a “struggling” Russian economy, must be uncomfortable with “sharing a multi-thousand-mile border” with a China “seeking to [possess] the most powerful military” and the largest economy in the world, as this is not in the mutual interests of both the US and Russia. This strategy builds on the G7 Summit Communique which voiced “interest in stable and predictable relations with Russia” rather than China. Therefore, Biden is hoping to play on Russia’s economic weakness (the country has a smaller GDP than Italy) against China’s economic clout, as well as Russia’s military strength against China’s military ambitions, to bring Russia to the US table of cooperation.
What does this mean?
While the B3W is the first attempt at harmonising the US’s approach to China vis-a-vis the developing world, it still lacks in specificity. No exact blueprint has been laid out to explain how the private sector will overcome the investment risks associated with developing countries that Chinese-backed SOE’s seem to have an appetite for. This ‘development offensive’ will have to work if the US and the G7 is to compete with China on the diplomatic front. This is especially because the G7 is attempting to expand its speciality in medical and educational international development to include infrastructure, a field dominated by China. The B3W’s viability lies first in whether private capital sees an incentive, and secondly, whether developing countries rationally consider it to be in their interests. Otherwise, they shouldn’t be expected to pick between super-powers over values alone.