During the Group of Seven (G7) summit in Cornwall, President Joe BidenJoe BidenHouse clears bill to provide veterans with cost-of-living adjustment On The Money — Dems dare GOP to vote for shutdown, default To reduce poverty, stop burdening the poor: What Joe Manchin gets wrong about the child tax credit MORE and the other G7 leaders announced a global infrastructure plan to counter China’s “Belt and Road” initiative. The Biden administration should be applauded for prioritizing a response to Belt and Road and partnering with the G7 nations to offer a transparent, sustainable, responsible alternative. But it is unlikely that this new initiative, termed “Build Back Better World,” will be enough to compete with Belt and Road.
Belt and Road is Chinese President Xi Jinping’s signature foreign policy endeavor and the largest-ever global infrastructure undertaking — funding and building roads, power plants, ports, railways, 5G networks and fiber-optic cables around the world. In many ways, Belt and Road filled a void left by the United States, its allies and the multilateral development banks.
In too many instances, China is the only country offering to fund critical infrastructure projects in low- and middle-income countries, while in other cases China is more competitive than the United States because it can move quickly from planning to construction and offers the ability to work with a single group of builders, financiers and government officials.
In our recent Independent Task Force Report on Belt and Road, we argue that China has been implementing the initiative in worrying ways that leave its risks outweighing its benefits. In particular, we find that Belt and Road undermines global macroeconomic stability by lending funds to unsustainable projects, thereby adding to countries’ debt burdens. It locks some countries into carbon-intensive futures by promoting coal-fired power plants, tilts the playing field in major markets toward Chinese companies, promotes exclusive reliance on Chinese technology and draws countries into tighter economic and political relationships with Beijing.
The scattershot U.S. response to date has failed to protect American interests in encouraging sustainable and inclusive development, maintaining access to overseas markets for U.S. goods and services, setting international standards that will promote quality infrastructure, ensuring macroeconomic stability and preventing Beijing from gaining political leverage over countries.
Belt and Road has fed a growing conviction in low- and middle-income countries that China is on the ascendance and the United States and its partners are in decline. For these countries, the policy implication is that their future economic prosperity relies on strong political relations with China.
For too long, the U.S. response to Belt and Road has been to highlight its pitfalls and warn countries not to accept Chinese financing or technology, without offering an alternative. For the first time, the United States is now putting forward a comprehensive, affirmative agenda. Build Back Better World also emphasizes the right things — transparency, economic, environmental, and social sustainability, good governance and high standards.
Still, it is unclear whether Build Back Better World will have the tools it needs to compete. The Biden administration recognized that “status quo funding and financing approaches are inadequate” and alluded to unveiling a new financing mechanism, but did not provide any additional details in its announcement. It remains to be seen whether Build Back Better World will enable development finance institutions to spur sufficient additional private investments in infrastructure and whether Congress will approve sought-after additional resources.
Even with enhanced financing, Build Back Better World still might not be ambitious enough. While the World Bank estimates that an $18 trillion infrastructure gap exists, unless additional resources are devoted to the initiative, it will be unable to meaningfully make progress in filling this gap.
While Build Back Better World as a concept links back to Biden’s Build Back Better domestic agenda, as a slogan for the G7’s initiative it is unlikely to catch on or do enough to counter the perception that China’s Belt and Road is the most consequential economic project in the world. Belt and Road can in many ways be seen as a branding exercise, and a successful one at that. Already, the Belt and Road moniker has been attached to hundreds of projects around the world. Xi attracts dozens of heads of state to attend Belt and Road forums in Beijing, and the Chinese government has inserted language endorsing Belt and Road into the World Health Organization and other UN bodies, all of which furthers its narrative power.
In order to compete with Belt and Road, the United States needs a catchy brand of its own that signals its transparent, high-quality, sustainable offering. Alternatives such as Globally Responsible Infrastructure Development (GRID) or Open Road Partnership (ORP), for instance, would have been more appealing.
Finally, the United States still lacks an affirmative trade agenda for the Asia-Pacific. To compete with Belt and Road, it will need to negotiate additional trade and investment agreements while shoring up basic U.S. competitiveness in critical technologies like 5G. Additionally, it will need to focus more of its attention on leading in the international standards-setting process and on training, attracting and retaining top talent.
While offering a viable U.S.-led alternative to Belt and Road is commendable, the United States must put sufficient financial and leadership resources behind the effort. This is a good first step, but much work remains.
Jennifer Hillman is a senior fellow and David Sacks is a research fellow at the Council on Foreign Relations. They codirected the Council on Foreign Relations Independent Task Force Report on China’s Belt and Road Initiative.