G7 aims to raise $600 bil. to counter China's Belt and Road

The Korea Times

The Korea Times

World

Wed, November 29, 2023 | 23:53

SCMP

G7 aims to raise $600 bil. to counter China's Belt and Road

Posted : 2022-06-27 11:32

Updated : 2022-06-28 08:26

U.S. President Joe Biden listens to other G7 leaders speaking at the 'Global Infrastructure' side event during the G7 Summit at Schloss Elmau, near Garmisch-Partenkirchen, Germany, June 26. Biden announced plans to raise $600 billion for the G7's global infrastructure program to counter China's Belt and Road Initiative. EPA-Yonhap

U.S. President Joe Biden announced plans to raise $600 billion for the G7's global infrastructure program to counter China's Belt and Road Initiative.

Biden revealed the plan in a speech Sunday as he attended the first of a three-day Group of Seven meeting in Elmau, Germany, alongside his six counterparts from the world's most developed economies.

"Together with G7 partners, we aim to mobilize $600 billion by 2027 in global infrastructure investments," the White House said Sunday following Biden's announcement.

The official launch of the G7 initiative ― the Partnership for Global Infrastructure and Investment (PGII) ― amounts to a revamping of the Build Back Better World initiative introduced at last year's annual meeting. The PGII seeks to offer an alternative to infrastructure models that sell "debt traps," a U.S. official said.

The U.S. would mobilize $200 billion for the initiative over the next five years "through grants, federal financing, and leveraging private sector investments," the White House said, noting these projects would focus on clean energy, secure communications technology, health systems and other areas.

"This will only be the beginning," it added, with the U.S. and its G7 partners intent on ushering in "hundreds of billions in additional capital from other like-minded partners, multilateral development banks, development finance institutions, sovereign wealth funds, and more."

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Biden broached the idea of a global infrastructure building project during his presidential campaign, against the backdrop of growing accusations from the U.S. and European countries that Beijing was burdening Belt and Road participants with loans that could not be repaid. The Belt and Road Initiative is a trade and investment scheme that links China to other economies.

Chinese President Xi Jinping and his wife Peng Liyuan arrive at Rome's Leonardo Da Vinci airport in Fiumicino, Italy, March 21, 2019. Xi is in Italy to sign a memorandum of understanding to make Italy the first Group of Seven leading democracies to join China's ambitious Belt and Road infrastructure project. AP-Yonhap

Personally launched by Chinese President Xi Jinping in 2013, the initiative has expanded Beijing's influence globally through the building of ports, bridges and infrastructure in developing countries. While there is no official data on the total amount of investments made to date, in Latin America alone, for instance, Beijing has sharply increased spending and infrastructure projects such that China-Latin America trade exceeded $400 billion in 2021, compared to $295 billion for the U.S.

A senior U.S. official who briefed reporters on the PGII, Sunday, acknowledged the Belt and Road Initiative had been influential, but believed the G7 project would hold an edge.

"There's no doubt that the Belt and Road Initiative has been around for several years and it's made a lot of cash disbursements and investments," the official said.

"But I would argue that it is definitely not too late. And I'm not even sure that it is late."

Speaking on condition of anonymity, the official said "many countries" that partnered with China were experiencing buyer's remorse, concluding that Beijing was more interested in establishing economic and geostrategic footholds than benefiting locals.

"We're coming to you with an offer to make investments to actually improve your country, to improve the economy and to have lasting effects on GDP and your populations," the official added. "I think that is the deal that is being offered."

Among G7 countries, only France and Italy have signed up to the Belt and Road Initiative. In February, Beijing and Paris announced they were jointly building seven infrastructure projects in Africa, Southeast Asia and Eastern Europe worth more than $1.7 billion. (SCMP)