The massive Partnership for Global Infrastructure and Investment (PGII) was launched by the United States and its G7 allies during the 48th G-7 Summit. The PGII aims to compete with China’s Belt and Road Initiative (BRI) and seeks to develop trade and infrastructure investments worldwide. By 2027, the G7 has announced that it would raise $600 billion to fund infrastructure projects in low- and middle-income nations as part of the PGII.
The G-7 countries have called the initiative ‘game changing’ that would deliver ‘transparent’ infrastructural undertakings to countries in Asia, Europe, Africa and Latin America. The initiative is said to increase global cooperation and commerce. Sounding positive about PGII, US President Joe Biden said in a speech announcing the plan, “When we demonstrate all that democracies have to offer, do not doubt that we will win the competition every time.”
What the BRI is and isn’t
BRI was launched in 2013 to export China’s foreign exchange surplus and infrastructure production overcapacity. The project encouraged and subsidised Chinese companies and personnel to work beyond China’s borders. So far, 146 countries and 32 international organisations have signed up for the BRI, with over $860 billion invested.
BRI is a lot more than about infrastructure building. It is an effort to create interdependent and interlinked markets for China to grow into and expand its political and economic clout globally. The image of BRI creating debt traps for least developed countries refuses to go away. The opaque nature of the contracts contractually mandated involvement of Chinese firms, and the relative ‘no strings attached’ nature of the funds have created an image of the BRI as a Chinese predatory scheme. Unwind lending and investment have also created several white elephant projects. There has been a backlash in many countries regarding over-inflated costs and the involvement of Chinese firms and labour.
Issues with the PGII
The initiative against China might not be as easy as it looks, and this is not the first attempt by Western countries to challenge the BRI. At last year’s G7 summit, a programme dubbed “Build Back Better World” (B3W) was introduced. The project was also seen as a counter to the BRI. However, the scheme fizzled out and is now rechristened as the PGII. To promote the funding of digital initiatives, infrastructural projects, and transportation in other nations, the European Union and Japan formed a “Partnership on Sustainable Connectivity and Quality Infrastructure” in 2019.
The Global Gateway initiative from the EU and the Clean Green Initiative from the UK, launched in 2021, sought to mobilise investment for global infrastructure. However, all of these initiatives failed to materialise and were abandoned. The G-7 addressed this matter in a White House memo, claiming that the absence of a thorough strategy for coordinated infrastructure expenditures with like-minded partners frequently resulted in inefficiencies and missed possibilities.
Another burning issue with the PGII is the question of funding. The US has promised to raise $200 million over the next five years through grants, federal financing and private sector investments. Together with the G7 countries, the PGII aims to raise $600 million by 2027. Private sector financing seems crucial to the whole endeavour, and it remains unclear how well the G7 can mobilise those investments. The private sector is likely to be wary of investing in unstable countries.
The BRI, meanwhile, has seen low private sector involvement, primarily due to its heavy reliance on infrastructure projects overseen by state-owned Chinese construction companies financed by state-led banks. G7 officials say that the PGII would not be directly taking on the BRI, instead focusing on its strengths in digital connectivity, health, women’s equality and climate and energy security. This seems sensible considering that G7 cannot match China’s infrastructure building.
The G7 countries are ahead of China when it comes to Artificial intelligence (AI), green energy technology and Big Pharma. Extending these benefits through the PGII to low-developed and developing countries can reap dividends for the G7 and help one up on the BRI. The Chinese media mocking PGII for its poor infrastructural creation ability seems to be missing the fact that PGII is not concentrating on creating complex infrastructure.
There are also indications that BRI is evolving. Investment in financially dubious ventures coupled with a Covid-19-induced economic slowdown has seen China gradually shifting its focus to infrastructural projects involving communication, healthcare and IT services. This shift is epitomised by China’s new Global Development Initiative (GDI). The GDI appears to be the non-infrastructural alternative to the BRI, aiming to encourage sustainable development through grants and funds for capacity building and seems to have much in common with the G7’s PGII.
Conclusion
The PGII has been met with a heavy dose of scepticism. This is understandable, considering that PGII is only the latest in a series of initiatives taken by the US and its allies to counter the BRI. All previous ones have floundered. The Chinese media have been very vocal and dismissive about the PGII. However, they seem to forget that when the BRI was announced, it was equally vague about finances, timings and deliverables. At this point, little is known about PGII and what it will do. We will have to wait and see what the future of PGII will look like.
With a fair dosage of optimism, it may well be argued that the PGII and the BRI need not be rivals. In fact, healthy competition would not be the worst thing from the perspective of a developing country. In an ideal world, both initiatives could complement each other in terms of infrastructural developments and emerging technologies.
Ajay Karuvally is an independent researcher and holds a Master’s in International Relations. His interest lies in studying international organisations and their response to global conflicts. Swayamsiddha Samal is a research assistant at United Service Institution (USI). Her interests lie in Chinese politics and foreign policy. Views expressed are personal.
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