The Belt and Road Challenge or its continuation? | Winston Mock

Winston Mock *

US President Joe Biden revived his faltering partnership a year ago and launched a new partnership to invest in global infrastructure; Worth $ 600 billion, to counter the Chinese Belt and Road Initiative; And that was during the opening of the G7 summit last month. The United States aims to contribute a third, or $ 200 billion, of the five-year target. However, it appears that much of this will be through the raising of private capital.

While the renamed G7 initiative may be a welcome addition to infrastructure support in developing countries, doubts remain about its ability to compete with or even complement the Chinese initiative. In contrast to China’s extensive investment in infrastructure internationally, the renewed G7 partnership will focus on four areas; These are: clean energy, information and communication technology, health systems and gender equality. It also avoids “modifying” direct competition with China’s striking strengths in the “Belt and Road” initiative; The transport infrastructure. In the U.S. Infrastructure Report 2021, compiled by the American Society of Civil Engineers, the United States scored average points in public transportation, roads, and bridges. In contrast, China has a world-class transportation infrastructure, at all local and regional levels, such as subway trains, high-speed railways between cities, roads, bridges and airports. While the United States completely lacks this infrastructure.

Even under the focus areas of the G7 Partnership for Investment in Global Infrastructure, China is leading in some areas. It is, for example, a world leader in clean energy; As it accounts for about 75% of the global market share in all stages of solar panel manufacturing, and 50% of the production capacity of wind turbines in the world. For both installed solar and wind power, China together outperforms the European Union and the United States.

In the field of information technology and communication systems, it is true that the United States owns some of the world’s leading companies, such as “Cisco”, “Intel” and “Qualcomm”, whose primary technologies or basic components in a wide range of products and systems, but China has broader capabilities. More relevant, to provide and install telecommunications equipment to developing countries in a cost-effective manner, including 5G.

At the same time, the high-cost healthcare system in the United States is deteriorating; The country was last among 11 high-income countries, according to a study done by the US-based Commonwealth Fund last year.

The US government’s financial contribution to the $ 200 billion target for a Global Infrastructure Investment Partnership may not be accurate. Based on the White House’s public lists of major partnership projects, the U.S. government may not put more than a few billion dollars on the table. How can the US federal government get the money to invest in overseas infrastructure when it relies on state and local governments that are cash to fund its domestic infrastructure? By spending billions of dollars to compete with Beijing’s trillions, Washington must be extraordinarily efficient.

Also, how can private capital, Western investors and companies that have been looking for attractive deals for a long time suddenly be spurred on by the G7 partnership? How can they compete with Chinese companies that can accept lower returns and higher risks? In fact, Chinese investors can provide some project financing from US contractors or suppliers. Here, of course, Chinese companies should not be excluded from competing in US-funded projects in equitable and transparent operations, as the latest Washington-led partnership truly respects the high morals it claims.

From here, it is clear that delivering the greatest benefits to low- and middle-income countries, given the multiple roles of stakeholders in project development, sponsorship, financing, delivery and industry, the Belt-and-Road Initiative and the G7 Partnership for global infrastructure Investment must work together exactly as they compete.

The world does not need more expensive, or even non-competitive, Western products imposed on poor countries with Western funding. If the best and most cost-effective Chinese solutions are excluded for geopolitical reasons, the credibility of the renewed partnership will be undermined. The development of international infrastructure is one area; Where the United States and China can compete functionally for the benefit of the world. China welcomes the improvement of infrastructure in low- and middle-income countries, which can develop into larger markets and better economic partners. In this competition, China seems to have an overwhelming technological and financial advantage.

Can the United States really help developing countries, rather than focusing on containing and controlling China? And can America show its power by just winning sometimes? These will be more important measures for the success of the renewed G7 partnership than geopolitical outcomes, and the world watching.

* Private equity investor and former McKinsey adviser in China – for the South China Morning Post

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