Opinion | Can G7’s infrastructure plan really challenge China’s Belt and Road Initiative?

While the plan tries to avoid direct competition in China’s areas of strength, such as transport infrastructure, there is still overlap in focus areas like clean energy

Not only does the US$600 billion pledged pale in comparison to the trillions involved in China’s initiative, but the US seems to be aiming to raise a large portion from the private sector, which may prove difficult

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A Fuxing bullet train crosses the Nanxihe grand bridge on the China-Laos Railway in southwest China’s Yunnan province on June 2. China’s strength in high-speed rail construction would make it difficult for the US to compete in infrastructure funding in this area internationally. Photo: Xinhua

Published: 3:30am, 13 Jul 2022

Rebranding his faltering Build Back Better World partnership launched a year ago, US President Joe Biden announced a US$600 billion Partnership for Global Infrastructure and Investment (PGII) at the G7 summit last month, to counter China’s Belt and Road Initiative. The US aims to contribute one third, or US$200 billion, of the five-year target. However, it appears that much of this will be through leveraging private capital.

While the rebranded G7 initiative could be a welcome addition to supporting infrastructure building in developing countries, it is questionable how far it can compete with or complement the belt and road. Unlike China’s broad investments in infrastructure internationally, PGII will focus on four areas: clean energy, information and communications technology, health systems, and gender equality.

It wisely avoids direct competition in China’s areas of strength, such as transport infrastructure. In the 2021 “Report Card for America’s Infrastructure”, put out by the American Society for Civil Engineers, the country scored a “D-” on public transit, “D” for roads and “C” for bridges.

In contrast, China has world-class transport infrastructure at all levels: urban (subways), regional (intercity rail, highways and bridges) and national (high-speed trains and airports). China is the world leader in high-speed rail while the US lacks this infrastructure entirely.

Even among the PGII’s focus areas, China leads in some. It is, for example, a global leader in clean energy, cornering about 75 per cent of the world market share in all the manufacturing stages of solar panels and 50 per cent of the world’s wind turbine production capacity. For both installed solar power and wind power capacity, China exceeds the European Union and US combined.

China also has broader and more relevant capabilities in installing communications equipment. The US has some leading information technology companies, such as Intel, Texas Instruments, Broadcom and Qualcomm, whose upstream technologies or critical components are embedded in a wide range of products and systems.

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