The G7’s Challenge to China’s Belt and Road Initiative
The G7’s Global Investment and Infrastructure Partnership directly competes with China’s Belt and Road Initiative. Here are all the details…
On 26th June, the G7 relaunched their Global Investment and Infrastructure Partnership as part of their summit in Kruen, Germany.
This partnership was originally launched a year before but failed to gain much traction due to multiple current challenges. Both times, it has been presented as a direct competition between China and the G7, the group of the seven richest democracies: Canada, France, Germany, Italy, Japan, the United Kingdom and the United States. This group was previously the G8 before Russia was removed.
What is the Global Investment and Infrastructure Partnership?
The Global Investment and Infrastructure Partnership is an international infrastructure project aimed at building ties between the G7 and developing economies.
It aims to gather $600 billion (€575 billion) by 2027 from public and private sources. At the G7 summit, US President Biden claimed $200 billion would come from the US alone.
How does this relate to China?
Since 2013, China has build ties with strategically advantageous developing countries through investing in infrastructure projects. As a large country with a large population, China has to look beyond its borders to find enough resources to maintain growth.
Chatham House explains that the ‘Belt’ part of the Belt and Road Initiative refers to revitalising and expanding trade routes over land between China and Europe. This makes Central Asia a key region. Furthermore, the ‘Road’ refers to reestablishing the ‘Marco Polo route’ which is actually not a road. This route connects China, Southeast Asia, Africa, and Europe by sea. China has also invested further afield in Africa and Latin America.
China’s Belt and Road Initiative is far more mature than the G7’s but it it is still possible to compete with. This is because some have accused China of creating ‘debt traps’ through the Belt and Road Initiative. Furthermore, various projects have been criticised for their hidden environmental and human costs.
China’s lack of transparency and unethical dealings open up the chance for the G7 to secure projects.
How could the G7 do things differently?
Countries that are already wary of China’s influence may prefer to receive investment from other sources. To oversimplify the issue, it is potentially a direct choice for some countries between the democratic and authoritarian worlds.
Biden’s administration has directly presented the G7’s plans as an ‘alternative’ to China’s B&RI, potentially further stoking the competitive fire between the two countries. However, China argued this was based on a zero-sum approach, meaning that one parties’ wins directly equate to another parties’ losses. Instead, they argued the G7’s (and US’) current approach neglects the potential for win-win scenarios.
Wait, aren’t there also other infrastructure initiatives?
If you have been keenly reading the newspapers, you might be wondering whether countries have gone plan-crazy.
In January, the EU launched the Global Gateway, its own infrastructure fund worth investing €300 billion by 2027. The European Union is considered a close partner of the G7 with France, Germany, and Italy being key member states. The fact that both the G7 and EU have global infrastructure plans being launched around the same time has the potential to be confusing.
To add to things, the UK also has its own infrastructure project, the Clean Green Initiative, and other G7 members have been setting aside their own funds for forming stronger international connections through infrastructure.
At COP26, in November, Biden, Johnson, and von der Leyen even discussed whether multiple initiatives meant a mixed, weaker offer for developing countries. At the G7 summit, Olaf Scholz, the new German chancellor, argued that it was advantageous for the G7 to advertise their initiatives together. This does not make them the same package but the EU also states they would be highly coordinated.
So, what next?
With COVID-19 still disrupting many countries around the world, including China, and Russia’s invasion of Ukraine seriously altering Europe’s focus, and the looming potential for devastating global food and fuel insecurity this winter, infrastructure is far from the public’s minds.
However, infrastructure is literally building the future. The international relationships between the public and private sectors of different countries are a key indicator of global trends and the distribution of soft power.
By drawing their various initiatives tentatively together, the G7 and EU begin to strengthen the growing fight for democracy. Although China’s B&RI vastly outspends its competitors, some developing countries may choose the partner which will provide them with transparent terms which are fairer for them.
China’s sphere of influence is not wholly at risk but its access to resources will continue to be a major problem and therefore a potential weakness.
