China launches the challenge of development aid

After launching the Belt and Road Initiative (BRI), the multibillion-dollar infrastructure development program that is reshaping global economies, one would think the world would cling to every word from Chinese President Xi Jinping when he broached this subject.

You would be wrong. Xi’s announcement of the Global Development Initiative (GDI) to the United Nations General Assembly last September has been largely ignored.

Western governments have recognized the challenge and have created their own programs to bridge the yawning infrastructure gap in the developing world. However, they are going to have to go beyond speeches and slogans and put real money on the table if they are to be taken seriously. A careful reading of their efforts is not reassuring.

The GDI aims to promote more robust, greener and more balanced global development. This means putting development higher on the global political agenda and promoting policy coordination among major economies to ensure continuity, coherence and sustainability. In his remarks to the UN, Xi underscored the special needs of developing countries – explicitly aligning Beijing with those nations – and urged the world to accelerate the implementation of the Sustainable Development Agenda on the horizon. 2030 of the United Nations.

Xinhua, the official Chinese news agency, stressed that “this major initiative is a new Chinese solution to advance sustained global growth, economic recovery and reduce disparities between countries amid the devastating COVID-19 pandemic. “, added the Chinese Foreign Ministry. on a “true multilateralism” “open to the whole world”.

Chinese diplomats have praised the GDI at every opportunity and aligned their support. UN Secretary-General Antonio Guterres said the UN supports the initiative and UN agencies have signed agreements with their 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 to 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 important influence, intelligence and real estate. Such BRI projects are often implemented in strategically important locations, and Western analysts report Chinese military bases being built in some of these countries. The China 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 for Sustainable Connectivity and Quality Infrastructure with Japan a year later. Japan, the United States and Australia also created the Blue Dot Network to certify quality infrastructure projects in 2019, but this initiative failed. Two years later, report Jennifer Hillman and Alex Tippett of the Council on Foreign Relations, those countries “were still working to define parameters” for the program.

Japan has been more aggressive. Prime Minister Abe launched the Quality Infrastructure Partnership in May 2015. This provided $ 110 billion (a 30% increase) for quality infrastructure in Asia over five years. The following year, the amount was increased to $ 200 billion as part of the “Expanding Partnership for Quality Infrastructure”.

Last summer, the Group of Seven announced their Build Back Better World (B3W) initiative which aimed to flesh out Western efforts to compete with China. It will be officially launched next year. Last week, G7 leaders released a statement setting out guiding principles and “next steps” to modernize their approach to infrastructure finance and close the investment gap in developing countries. US National Security Advisor Jake Sullivan praised the announcement, adding that the Biden administration was “leading a comprehensive government effort to assess how best to use the US government’s development infrastructure toolkit.”

It is tempting to view these statements as misdirection or the triumph of bureaucratic logic over strategy; there are few signs of a real emergency. 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 euros ($ 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, meeting the highest social and environmental standards, in line with EU values ​​and standards. The Global Gateway strategy is a model 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, green and clean partnerships, focused on security and catalyzing private sector investments – it will prioritize investments in digitization, health, climate , energy, transport, education and research.

While the word China never appears in official Global Gateway documents, von der Leyen did nothing when asked. “Countries (had) their experience with Chinese investments – they need better and different deals,” she said. The United States is on board, calling the plan to complement B3W.

China initially greeted the Global Gateway cautiously. Chinese Ambassador to the EU Zhang Ming said it would be “welcome if it is really open.” That sentiment quickly deteriorated, with the nationalist tabloid Global Times fulfilling its usual role of attack dog. He argued that “the EU’s weak governance credentials and the economic slowdown (know) the credibility of its new infrastructure strategy”. He warned that “the attachment of 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 on to something. It is not clear whether developing countries want this conditionality or that without it infrastructure will be poor. Jonathan Holslag, a longtime observer of European politics in Brussels, warns of Western governments assuming they are seen as “a more honest and responsible partner, while China is short-sighted groping with credits and megaprojects that benefit no one ”. China has learned the lessons of the first stage of the BRI and improved its game. Moreover, writes Holslag, it is not clear that the recipients are so enthusiastic about our terms. “They will take our money, but not automatically our values ​​and our rules. “

The big problem is the money. The EU plan “mobilizes” up to 300 billion euros. That’s 60 billion euros a year, a staggering sum – until compared to the 100 billion euros 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 the money on the table matters. Reinhard Bütikofer, chairman of the European Parliament’s delegation for relations with China, understood when he pointed out the obvious: “The Chinese made inroads because they had something to offer that we did not have. not.

But even the money won’t make a difference if it isn’t deployed to support a real strategy. The West cannot compete with China project for project, RMB for RMB. He shouldn’t either. Their limited resources demand that Western governments be smarter and more efficient. Simply denying Beijing the possibility of spending its money is not a strategy; it is a form of charity. Throwing money at a problem is no better than ignoring it. Fortunately, this is not a binary choice, although you can be excused for thinking it is.

Brad Glosserman is Associate Director and Visiting Professor at the Center for Rule-Making Strategies at Tama University as well as Senior Advisor (non-resident) at the Pacific Forum. He is the author of “Peak Japan: The End of Great Ambitions” (Georgetown University Press, 2019).

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