The latest initiative by G7 member states could face trouble getting off the ground if climate financing commitments are anything to go by.
US President Joe Biden and G7 leaders have rebooted the Partnership for Global Infrastructure and Investment (PGII), initially proposed during the last G7 meeting.
The G7 pledged to raise $600 billion in private and public funds over a period of five years to finance infrastructure in developing countries. The move comes as a counter to China’s multi-trillion Belt and Road Initiative.
European Commission President Ursula von der Leyen also declared $317.28 billion in support for the initiative while speaking at the G7 summit held in Schloss Elmau, Germany this year.
While the G7 share a common stance towards China, the PGII is more likely to resemble an umbrella of aligned national and regional development infrastructure.
Within the G7, Germany and France hold development interests in Africa, while the US is focused on Asia and Latin America. Japan, on the other hand, cites the importance of the Indo-Pacific region.
"I want to be clear. This isn't aid or charity. It's an investment that will deliver returns for everyone," Biden said, arguing that it would help countries "see the concrete benefits of partnering with democracies."
China’s Belt and Road Initiative is active in over 100 countries, with over a ten-year head start and has been likened to the ancient Silk Road spanning Europe and Asia. Biden’s administration has previously levelled criticism against China’s BRI, which faces claims that it has done little to benefit its partner developing countries.
“When democracies demonstrate what we can do -- all that we have to offer -- I have no doubt that we’ll win that competition every time,” said President Biden on the sidelines of the G7 summit. The measure will target middle and low-income nations, with a focus on private sector investments.
While the US is set to contribute $200 billion to the PGII, it remains to be seen whether G7 support will not falter amid global economic instability and rising inflation.
A Chatham House research paper cites a possible fragmentation of shared G7 development policy amid changing priorities impacted by events in Ukraine.
Despite its presentation as an alternative to China’s BRI, the G7’s development bid still includes little in the way of detail.
A senior US official acknowledged that the West is currently in second place when it comes to the global infrastructure game, yet denied that China has a real advantage.
"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 - and that we're coming to this after years of their investments," the official related.
Biden’s appeal to the G7 for a global development project seeks to engage with nations that would prefer the benefits of economic partnerships with major Western economic powers in lieu of China.
The announcement however, comes amid high levels of economic risk and instability in emerging markets and developing nations, offering a lifeline that many states can not ignore.
Chinese Foreign Ministry spokesperson Zhao Lijian addressed the G7 developments on Monday, stressing the country’s belief that the initiatives did not counter or replace one another.
“What we oppose are moves to advance geopolitical calculations and smear the BRI in the name of promoting infrastructure development,” he added.
The BRI is seeing a resurgence as China retools its multi-trillion dollar development initiative in the face of restricted trade flows and taxed global supply chains, towards a ‘Digital Silk Road’.
Announcements of BRI projects show diminishing values, down to $13.6 billion in 2021, following $80 billion in 2020, and around $200 billion in announced projects in 2019.
Developing technological capacity is not overlooked from the G7’s PGII, with several announced projects including a $2 billion solar energy investment into Angola, a $600 million project to lay an underwater telecommunications cable between Singapore and France through Egypt and the Horn of Africa, as well as $14 million into a Romanian design study for small nuclear reactors.
With a strong focus on information and communication technology, the PGII would also offer alternatives to Chinese 5G network infrastructure, which would directly impact major state-backed companies such as Huawei.
Developed nations however, have consistently fallen short of meeting major commitments to climate finance over the last decade, raising scepticism over whether the latest PGII is as development-motivated as it initially seems.
While Biden’s most recent infrastructure development project could impact Chinese interests in the mid to long term, discourse at the G7 has given little attention to the not insignificant role of emerging markets and developing economies in aiding global recovery.