Tug of war between Biden’s B3W and China’s BRI
In June 2021, the Biden Administration announced that the US along with the G7 nations will be launching the B3W (Build Back Better World) initiative. Though similar in the concept of infrastructure advancements in the developing world, key differences include the G7’s focus on climate health, digital technology, and gender equality. Since the announcement of the B3W, there has been much speculation and skepticism from experts and the international community alike, mainly at whether the B3W is in direct conflict with China’s Belt Road Initiative (BRI).
It is already a fact that the B3W was initiated to counter the BRI amid trade tensions between the US and China. Aside from legitimate concerns on whether the B3W is too late to challenge the BRI, it is still a strong kickstart from the Biden Administration, especially given how the Trump Administration spent its years in office rather ignorant of international relations. Those hopeful of the success of the B3W also worry that the G7 initiative may make the same mistakes as the Belt Road Initiative. Nonetheless, it is even possible that the two global initiatives may not even end up at odds with one another as China’s BRI is mainly focused on hard, traditional infrastructure while the B3W is more focused on the sustainable development aspect as opposed to its Chinese counterpart.
All Roads Lead to China
In 2013, a popular book by the title of All Roads Lead to China: An Investor Road Map to the World’s Fastest-Growing Economy was published by Jeffery Friedland. Chinese President Xi Jinping first announced news of the (former) One Belt One Road initiative, which is now more commonly known as the Belt Road Initiative. Contrary to its name, the ‘Road’ of the Belt Road Initiative refers to a maritime network starting from China- Southeast Asia- Africa- and Europe. The ‘Belt’ on the other hand refers to overland railroad routes that extend from China- Central Asia- Europe. The BRI is expected to be complete by the year 2050, and by then its cargo trains will be able to take products from China to London in just 2 weeks.
The BRI also has several economic corridors that mapped out its routes through Asia, Europe, and Africa including the
- China- Mongolia- Russia
- China- Indo-China Peninsula
- China- Central Asia- West Africa
- China- Pakistan
Currently, there are nearly 70 countries involved with the BRI already, and the countries that are estimated to be involved had ranged between 60- 115 initially.
As of now, there are 140 countries engaged. The participating countries also account for more than 30 percent of global GDP, 62 percent of the world’s population, and 75 percent of the known energy reserves on the planet. In 2020 alone, China had already spent more than 47 billion USD on the BRI.
The BRI Investment Report shows that the initiative has invested 770 billion USD in 138 countries so far. China has invested heavily in countries in the respective regions of the BRI economic corridors.
Some of these include building a 3.2 billion USD railway in Kenya connecting the port city of Mombasa to its capital Nairobi. The commune that used to take almost 15 hours now only takes up to 4.5 hours. Though all the transport infrastructure is great, there is a great lack of transparency in the deals made through the BRI. Activists in Kenya are taking legal action against their government to make them provide the details of the deal that financed the rail from Mombasa to Nairobi.
In Sri Lanka, the BRI spent 209 million USD building its second international airport. It is also fair to note that Forbes declared the new Mattala Rajapaksa International Airport as the world's emptiest international airport given its large size despite having a low number of flights. As such, infrastructure investments had been made all across the three continents within the framework of the BRI. Funding for the BRI has been continuously made by China’s largest state-owned banks and despite the coronavirus pandemic, China shows no signs of slowing down.
Biden’s initiative at the eleventh hour
On June 12, the White House announced Biden’s B3W initiative to be launched by the G7. Middle and low-income countries in Latin America, the Caribbean, Africa, and the Indo-Pacific are to be included in the initiative. Some reports of the B3W have been extremely critical of the initiative calling it “The copycat project of the Belt and Road Initiative”. It would take a vast amount of resources for the G7 to fund the initiative. According to the White House, it is to be funded by organizations such as the Development Finance Corporation, the US Trade and Development Agency, Transaction Advisory Fund, etc.
It is now too early to evaluate the scale and impacts of the project. However, since the US allocates billions of USD annually for infrastructures overseas, the US may be able to fund the project alongside the G7 who is also expected to invest hundreds of millions of USD for the initiative. The guiding principles of the B3W are;
- Good governance and strong standards
- Strong strategic partnership
- Mobilize private capital through development finance
- Enhancing the impact of multilateral finance
At this early on, the plans for the initiative are not laid out yet. Regardless, it would take the G7 many years to get the project up and running to the current development of the BRI. By that time, the BRI would be in its final phases. One of the advantages of the B3W would be its coverage of Latin America. Due to geopolitical reasons, the BRI covers mainland Asia, Europe, and Africa leaving North and South America out of the loop. Contrarily in the countries, the BRI is operating, there are criticisms regarding the US’s choice to launch the B3W. Many believe that the US is more in favor of waging wars than building infrastructure, claiming that if the US did want to “build back a better world”, then they would have launched such a project a long time ago.
Similarly, there is no telling how the BRI will receive and react to the B3W. For instance, if the B3W wants to operate in Turkey, China may not be in favor of this, and given how Turkey is also heavily dependent on China’s trade, they likely will not engage in fear of severing its relations with China. The majority of the globe is heavily dependent on China for investment and trade regardless of whether they are a part of the BRI or not. In theory, it may appear as though it is more the merrier with these massive infrastructure projects, but the sustainability and the longevity of the B3W are concerns internationally.
Even though the B3W may not be able to fully cover a large portion of the globe the same way China’s BRI has, it also has significant developmental projects to the US itself in mind. The domestic infrastructure projects are to create job opportunities by employing Americans. It would be interesting to see how the G7 nations would carry out this project seeing as they also have trade and economic ties with China. India being a US ally against China will likely be one of the first nations to jump on board. In the past, the White House has been critical of the BRI, calling it a debt trap and China a neo-colonialist when they take over airports and seaports.
Debt Trap Diplomacy
The Washington Center for Global Developments expressed their concern for eight countries in particular that are receiving investments from China. These countries include Mongolia, Pakistan, Kyrgyzstan, Tajikistan, Maldives, Laos, Montenegro, and Djibouti where China has its only overseas military base. To this, the Think Tank commented that nations with debts to China have their economies at risk of potential widespread defaults.
In the past, there have been some extreme cases with China seizing control over areas in countries that we're unable to pay their debts to the BRI. This has caused negative public sentiment towards the BRI internationally. Similarly, Malaysia’s new government tried to cancel a 20 billion USD railroad project, perhaps fearing the worst. The Maldives also has attempted to renegotiate its debts after opening a new bridge with Chinese Funding.
Some of the more drastic cases include China taking over Sri Lanka’s Hambantota Port when the country was unable to pay its debts. As a result, there have been mass protests by the locals who claimed that it was a colonial invasion. When skepticism grew in the global community of the BRI’s intentions, China made a statement saying that the initiative is a peaceful economic project without political or military intent. To further this statement, China which is already one of the biggest funding states of the UN further paid all expenses of luxurious international UNESCO projects as well.
Pakistan: The buckle in the belt
Perhaps the most important aspect in ensuring the good fruition of the BRI is energy resources. China is the largest consumer of energy in the world and though the global trends of shifting toward renewables are very much supported by the country, they still have a high growing demand for energy. Thus, the CPEC (China- Pakistan Economic Corridor) is one of the most peculiar economic corridors.
Bilateral relations between the two had a spark of chemistry from the beginning due to their mutual threat to India. Pakistan is believed to be the ‘buckle’ in the Belt Road Initiative. Compared to all the other economic corridors, the CPEC is the only one that has only one other country involved. Pakistan is a very strategic location for China to significantly reduce the oil and gas routes from the Middle East. Without the full cooperation of Pakistan, China would have gone all the way around South-East Asia to access these resources.
In a way, the CPEC was almost showcased in such a way that it shows the rest of the world the power of the BRI. As of 2021, Pakistan owes nearly 25 billion USD to China and the debt has been made worse through their relations with the BRI. Gwadar is a port city in Pakistan, close to Iran. One-third of all the CPEC projects have been completed, but despite being the most important zone in the BRI, the port city has been neglected since 2015.
A local journalist stated “These projects are creating jobs, but not creating jobs for the local people of Gwadar. They (the local population) are not against economic prosperity, but against development that leaves them behind.”One of the things that angered the locals the most was when China proposed that they bring in Chinese workers to build lavish residential housing for the people of Gwadar that cost 500 million USD.
Aqib Hassan, the Chief Commercial Officer at the China Pakistan Investment Company said “We are very sensitive to the local market. CPIC projects have upwards of 10 million USD in the construction sector of Gwadar and created over 500 employment opportunities for locals.” When the CPEC projects begun, Former-Prime Minister of Pakistan Nawaz Sharif told the press “We will leave no stone unturned in ensuring that CPEC and all the projects under its umbrella are materialized in time and in full,”
Current Prime Minister of Pakistan Imran Khan stated that Pakistan’s economic future is linked with China. The growing debt of Pakistan is all the more concerning due to Pakistan’s overall external debt which now stands at over 90 billion USD. In 2019, Pakistan had its 13th bailout by the IMF since 1980. The US has been giving Pakistan the cold shoulder for a while now since Pakistan refused involvement in the Afghanistan war. In Pakistan’s case, ensuring its economic development though its relationship with China seems to be the only option.
US-China Proxy War in Africa
The whole world is afraid of a new cold war brewing between China and the US. During the Cold War with the Soviets, the US and Russia did not engage in physical combat warfare, but there were a series of proxy wars fought in Africa due to it. The primary concern for the 54 nations in Africa should be the negative consequences of a potential frontier of rivalry between the US and China on their continent as a whole. In the case of such an event unfolding between the two global powers, the best-case scenario for the continent would be to get the African Union to make a unanimous decision and protect itself through the African Governmental Free Trade Agreement. This would let Africa negotiate as equals with the US and China, enabling the 54 different economies to act as one.
China has done much positive PR in regards to Africa-China relations throughout the years and has heavily invested in the continent as a whole. When Canada sent a letter to the UN calling out China for various human rights violations, none of the African countries agreed to be signatories. The US has had relations with Africa for a long time and has never done a development project on the same scale as this one. Africa and China have never had a project of such scale until the BRI. China has stated many times that it does not have any political intent in Africa and being the largest producer of the world, they are solely in need of resources from Africa. With the case of the US, it is different as they are launching the project to directly rival China.
When it comes to China and Africa relations, aside from the financial and transactional nature of the relationship, there is an aspirational way Africa sees China. This year is the 100th anniversary of the People’s Republic of China, and throughout the last 30 years, China has lifted 800 million people out of poverty and risen as one of the most powerful countries in the world, even posing a threat to the US, the most powerful nation in the world.
The US has made it clear that the B3W will not be giving grants to African Governments. This means that the governments that do take on these large-scale infrastructure projects with the US need to eventually pay it back, the same way they have to pay China back at a later date. The thing that the Biden Administration and Washington have been critical of the most about the BRI is its lack of transparency. The B3W is presented in such a way where the G7 wants to implement democratic values into the initiative rather than autocratic ones.
If this can be the case, the biggest advantage in nations jumping on board with the B3W could be the transparency of the initiative.
For reasons related to the coronavirus pandemic, the infrastructure development projects taking place all over Africa have met their complete stop. Primarily, this was due to a lack of financing, but secondly, there were logistical restraints in the allocation of materials and resources. Nearly half of financing for infrastructure projects in Africa comes from their government budget. The liquidity crunch in government budgets in addition to a decrease in financing from China, multilateral institutions, and the private sector means that Africa could use the extra boost from the B3W more than ever.
Though it is too early to tell how the B3W initiative will stretch out, there is also the alternative that the two will not collide and not clash with each other. Ultimately, the main goal for China’s BRI is the actual ‘belt’ and ‘road’ aspects, not the infrastructure projects it finances. So far, the B3W did not state anything to indicate that they will be implementing transportation infrastructure as well. It is still very much a reality that the BRI and B3W can complement each other when there is a global demand for infrastructure projects. If the US can finance Africa and the other regions involved in their areas of expertise including health and education, and China can do the same with logistical infrastructure, then co-existing amongst the two is possible and we can all let go of the rope.