After he launched the Belt and Road initiative (BRI), the multitrillion-dollar infrastructure development program that is reshaping global economies, you’d think the world would hang on Chinese President Xi Jinping’s every word when he addressed that subject.
You’d be wrong. Xi’s announcement of the Global Development Initiative (GDI) at the United Nations General Assembly last September has been pretty much ignored.
Western governments have recognized the challenge and created their own programs to fill the yawning infrastructure gap in the developing world. They are going to have to go beyond speeches and slogans, however, and put real money on the table if they are going to be taken seriously. A close reading of their efforts isn’t reassuring.
The GDI aims to promote more robust, greener and more balanced global development. This means putting development higher on the global policy agenda and promoting policy coordination among major economies to ensure continuity, consistency and sustainability. In his U.N. remarks, Xi highlighted the special needs of developing countries — explicitly aligning Beijing with those nations — and urged the world to speed up implementation of the U.N. 2030 Agenda for Sustainable Development.
Xinhua, the official Chinese news agency, crowed that “this major initiative constitutes a fresh Chinese solution to advancing sustained global growth, economic recovery and narrowing the disparities among countries amid the ravaging COVID-19 pandemic” China’s Foreign Ministry added that it would be based on a “true multilateralism” that is “open to the whole world.”
Chinese diplomats have touted the GDI at every opportunity and lined up support. U.N. Secretary-General Antonio Guterres said that the U.N. backs the initiative and U.N. agencies have been signing agreements with Chinese counterparts that highlight and institutionalize cooperation. The 53 nations that attended last month’s ministerial conference for the Forum on China-Africa Cooperation offered their support for the GDI in the Dakar Action Plan (2022-2024).
The GDI builds on the successes of the BRI, which Western governments fear will give China influence, intelligence and important real estate. Such BRI projects are often implemented in strategically important locations and Western analysts point to Chinese military bases that are being constructed in some of those countries. The Chinese development initiative has also been endorsed by more than 150 states and international organizations and has been complemented by other initiatives, such as the Digital Silk Road, the Polar Silk Road and the Green Silk Road.
If Western governments were alarmed, you couldn’t tell from their response. Europe launched a connectivity plan in 2018 and signed the Partnership on Sustainable Connectivity and Quality Infrastructure with Japan a year later. Japan, the United States and Australia created the Blue Dot Network to certify quality infrastructure projects in 2019 as well, but that initiative has foundered. Two years on, report Jennifer Hillman and Alex Tippett of the Council on Foreign Relations, those countries were still “working to define metrics” for the program.
Japan has been more aggressive. Prime Minister Abe launched the Partnership for Quality Infrastructure in May 2015. That provided $110 billion (a 30% increase) for quality infrastructure in Asia over five years. The following year, the sum was increased to $200 billion in the “Expanding Partnership for Quality Infrastructure.”
Last summer, the Group of Seven announced its Build Back Better World (B3W) initiative that sought to bring substance to Western efforts to match China. It will be formally launched next year. Last week, G7 leaders issued a statement that laid out guiding principles and “next steps” to modernize their approach to infrastructure finance and narrow the investment gap in developing countries. U.S. National Security Adviser Jake Sullivan touted the announcement, adding that the Biden administration was “conducting a whole of government effort to assess how to better use the U.S. government’s development infrastructure toolkit.”
It’s tempting to view those statements as either misdirection or the triumph of bureaucratic logic over strategy; there are few signs of real urgency. But last week, the European Union stepped up its game with the announcement of its “Global Gateway” investment plan that will “mobilize” up to €300 billion ($339 billion) between 2021 and 2027 for infrastructure and other projects. Using resources from the EU, member states, European financial institutions and national development banks, it seeks “to mobilize private sector finance and expertise and support access to sustainable finance.”
European Commission President Ursula von der Leyen said the plan will “support smart investments in quality infrastructure, respecting the highest social and environmental standards, in line with the EU’s values and standards. The Global Gateway strategy is a template for how Europe can build more resilient connections with the world.” Based on six principles — democratic values and high standards, good governance and transparency, equal partnerships, green and clean, security focused and catalyzing private sector investment — it will prioritize investment in digitalization, health, climate, energy, transport, education and research.
While the word China never appears in official Global Gateway documents, von der Leyen pulled no punches when asked. “Countries (had) their experience with the Chinese investments — they need better and different offers,” she said. The U.S. is onboard, calling the plan a complement to B3W.
China initially greeted the Global Gateway with caution. China’s ambassador to the EU, Zhang Ming, said it would be “welcome if it is truly open.” That sentiment quickly soured, with the nationalist tabloid Global Times filling its usual role as attack dog. It argued that “The EU’s feeble governing credentials and economic slowdown (undercut) the credibility of its new infrastructure strategy.” It warned that “Attaching political conditions is the old problem of European aid to developing countries, and it is also the reason for its failure.”
The Global Times might be onto something. It isn’t clear that developing countries want that conditionality or that without it, infrastructure will be inferior. Jonathan Holslag, a longtime observer of European politics in Brussels, cautions against Western governments who assume that they are considered “a more honest-and-responsible partner, while China shortsightedly fumbles with credits and megaprojects that benefit no one.” China has learned lessons from the first stage of BRI and upped its game. Moreover, writes Holslag, it isn’t clear that recipients are that keen on our conditions. “They will take our money, but not automatically our values and rules.”
The big issue is money. The EU plan “mobilizes” up to €300 billion. That is €60 billion a year, an impressive sum — until compared to the €100 billion that China was spending each year before the pandemic. But the EU, along with the G7, also aims to “catalyze” investment with a mix of loans, grants and guarantees, distributed through public, private and development finance; just over 50% will be in the form of direct funding. Ultimately, only money on the table counts. Reinhard Bütikofer, chair of the European Parliament’s delegation for relations with China, got it right when he pointed out the obvious: “The Chinese made inroads because they had something to offer that we did not.”
But even money won’t make a difference if it isn’t deployed to support a genuine strategy. The West can’t match China project for project, RMB for RMB. Nor should it. The fact that their resources are limited demands that Western governments be smarter and more efficient. Merely denying Beijing the chance to spend its money isn’t strategy; it’s a form of charity. Throwing money at a problem is no better than ignoring it. Fortunately, it’s not a binary choice, although you can be excused for thinking that it is.
Brad Glosserman is deputy director of and visiting professor at the Center for Rule-Making Strategies at Tama University as well as senior adviser (nonresident) at Pacific Forum. He is the author of “Peak Japan: The End of Great Ambitions” (Georgetown University Press, 2019).
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