US and Britain finally stand up to China’s quest for global domination
G7 leaders pose in Cornwall - Leon Neal / PA
The port of Hambantota on Sri Lanka's south coast has long been a cautionary example of what can go wrong when countries join China's Belt and Road Initiative.
Built for $ 1.3 billion (£ 920 million) and funded by Chinese loans, Ministers in Colombo have a deal to sell an 80 percent stake in the port to a state-controlled Chinese corporation just six years after opening completed.
A little over a year later, Sri Lanka handed the port over to China under a 99-year lease.
China's game book is familiar at this stage: find a developing country to partner with, finance its infrastructure ambitions with loans, and then send a number of Chinese workers overseas to help make the plans a reality.
Then, when the project's owners get into financial trouble - and when the built is of strategic interest to Beijing - buy it.
Through such an approach, Beijing was able to use its strong manufacturing sector and vast wealth to buy influence and make strategic advances in much of Asia, Africa, South America and parts of Eastern Europe.
Now, almost eight years after the formal adoption of the Belt and Road, the West is preparing its response.
Prime Minister Boris Johnson, center, with from left, Australian Prime Minister Scott Morrison, German Chancellor Angela Merkel, South African President Cyril Ramaphosa, South Korean President Moon Jae-in, US President Joe Biden, French President Emmanuel Macron and Canadian Prime Minister Justin Trudeau during the G7 Summit in Cornwall - Leon Neal / Getty Pool
At the G7 summit in Cornwall this weekend, the heads of state and government agreed on plans to design an alternative. Dubbed the "Build Back Better World" partnership - and labeled the "green belt and road" - the White House said the project will aim to "help meet the tremendous infrastructure needs in low and middle income countries."
It will aim to "limit" the $ 40 trillion demand for infrastructure spending in developing countries through the mobilization of private sector funds sparked by "catalytic investments" by government development agencies.
The G7 push removes all catchword checkboxes: "Value-oriented", climate-friendly and with good governance, the USA also emphasize that they will use taxpayers' money "appropriately and effectively".
"That shouldn't come as a surprise to Beijing," says Yu Jie, Senior Research Fellow for China at the Chatham House think tank.
A hard sell for western leaders
So can it work? From the beginning, the belated reaction to China's system of influence through infrastructure has faced challenges.
A split G7 could come first among these. While the US has maintained a strong anti-China stance, other countries - including the UK and the EU - have a much softer stance and are in fact already working with China on elements of the Belt and Road program.
"The central challenges for both China and the West are the distribution of financial resources, the sustainability of the projects and the workforce, even if both have a strong willingness to pursue their individual versions of infrastructure plans," says Yu.
She points out that China's efforts have been mainly driven by state capital, with private sector funds rarely going into the projects. Taxpayer funding for such projects would be a hard sell for Western politicians after last year's unprecedented fiscal moves, but private companies are likely to be cautious about pumping money into overseas projects as well.
Egyptian workers are working on a construction site in the central business district of the new administrative capital, 45 kilometers east of Cairo - KHALED ELFIQI / EPA-EFE / Shutterstock
Trust is another potential pitfall. Linda Calabrese of the Overseas Development Institute think tank notes that African countries will not accept being treated - or blaming projects - as mere subjects of Western charity.
“We can't go there and say, 'You think you need the railroad, but I think you need a road,'” she says.
"The confidence problem that I believe the G7 countries need to restore is different from what China is facing," she added. "If you want to compete with the Chinese, you have to offer something better than what China is now offering."
Chinese money was always just a "drop in the bucket"
For China, Belt and Road offered the opportunity to export part of its production capacities, as the country was confronted with an oversupply at home. This dynamic has shifted significantly recently as Beijing has returned to a domestic focus as part of its “dual circulation policy”. As a result, overseas lending has virtually plummeted from its peak in 2016.
"We have to ask ourselves which Belt and Road are we talking about - the one that took place in 2016 or the one that took place in 2019 because it has declined really badly," says Jonathan Hillman, Senior Fellow at the Center for Strategic and International Studies and author of "The Emperor's New Road: China and the Project of the Century".
Hillman says there is massive unmet need for infrastructure investment in developing countries. Chinese money was always just a "drop in the bucket".
In the U.S., domestic infrastructure - which was demoted to some sort of political punch line under the haphazard Trump administration - has become a major priority as Joe Biden seeks to use the Covid-19 recovery as a springboard for long overdue investments.
With that in mind, it's hard to understand why America's big private equity financiers would choose to go on trips abroad beyond those near home, which are likely safer and more lucrative.
Money can speak louder than geopolitics
The West, of course, is not new to this type of investment. Development institutions, above all the World Bank, have long provided developing countries with funding, although this has often been hampered by the need for multilateral agreements.
"[The Chinese] model allows for a faster project start and that is very appealing," says Hillman. “If you're a leader, you might be re-elected and want to make an announcement. The lack of transparency can also be appealing for other reasons. But it's also risky. "
But stories of white elephants and Chinese takeovers have raised the skepticism of many potential Beijing partners, with Pakistan and Myanmar being among the countries that recently marginalized or discarded China-backed projects.
The G7 efforts offer a narrower focus, promise a profit motive and have infrastructure in their sights. All of this could theoretically add to efficiency - but adding stakeholders adds complexity.
Ultimately, much of the power rests in the hands of smaller countries, some of which can benefit from a selection of international donors. For countries struggling with the most basic infrastructure problems, money can speak more than geopolitics.
“Ultimately, it comes down to affordability, in many of these cases probably more than safety,” says Hillman.
Calabrese says the Build Back Better World program provides a way to learn from the mistakes of the belt and the road, but warns that more lessons are likely to come.
“No partner has found a good formula for it,” she says.
Jeremy Warner: A western alternative to China's Belt and Road is a great idea - but there is a catch
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