Biden’s Elusive Better World

At the recently concluded G7 summit, the Biden administration’s Build Back Better World (B3W) initiative was proposed. The initiative emphasizes that developed democracies will provide partnerships to help narrow a $40 trillion infrastructure gap in the developing world. The initiative was seen as a major strategic counterweight to China’s Belt and Road Initiative.

Over the past few years, the U.S. administration under Donald Trump waged a global war of resistance against the BRI. Senior U.S. government officials, including military leaders, have labeled the BRI with a series of negative concepts, such as “predatory economics” and “debt trap,” demanding that the countries concerned refuse to participate or withdraw from it. U.S. members of Congress have also touted the BRI  as a tool for Chinese global hegemony, which the United States must counteract. This rhetoric is more hyperbolic and imaginative and is intended to strategically mobilize competition with China. U.S. experts such as Johns Hopkins professor Deborah Brautigam have shown through empirical research that the BRI is not a debt trap.

Obviously, while the U.S. is mounting its verbal attacks on China, it is difficult to meet the urgent infrastructure needs of developing countries and provide more jobs. This need has been further reinforced by the COVID-19 epidemic, and the economic woes of a large number of developing countries are becoming more acute.

According to the Global Infrastructure Outlook released by Oxford Economics, global infrastructure investment needs will amount to $94 trillion from 2016 to 2040. According to Refinitive, a global financial market data provider, the total investment in projects related to the BRI was about $3.7 trillion as of July last year. Obviously, in the face of the huge need for global infrastructure funding, the BRI is simply not a panacea.

The Biden administration’s B3W actually demonstrates the value of the Belt and Road Initiative and the progress it has made. If the U.S. is willing to provide more support for infrastructure in developing countries, this is welcome. However, if the U.S. uses B3W as a tool for strategic competition with China, it could backfire and undermine its own credibility and leadership.

B3W is in fact an extension of the Biden administration’s Build a Better America program, and it reflects Biden’s policy priorities, which focus on four major issues:  climate, health and health security, digital technology and gender equity and equality. The initiative is global in scope, with the U.S. side highlighting Latin America, the Caribbean, Africa and the Indo-Pacific in a statement released by the White House.

To reinforce the distinction between B3W and the Belt and Road Initiative, the U.S. proposed six guiding principles, including being values-driven, mobilizing private capital through development finance and   enhancing the impact of multilateral public finance and international financial institutions.

Significantly, the Biden administration has made no secret of the link between B3W and the American Jobs Plan. The White House previously proposed a $2 trillion jobs plan, but it was strongly opposed by the Republican Party. The White House claimed that B3W would create business opportunities for U.S. companies, provide more jobs for Americans and demonstrate U.S. competitiveness internationally.

As for how to promote the active participation of U.S. companies in infrastructure development overseas, the Biden administration stressed the need to make full use of the power of the U.S. International Development Finance Corporation (DFC), the U.S. Agency for International Development, the U.S. Export-Import Bank, the U.S. Trade and Development Agency and other institutions, and to further expand the Transaction Advisory Fund (TAF) and other mechanisms.

B3W has raised a number of questions. First, how much financial support will the United States and other G7 countries actually provide for this plan, and how will funds be secured? This is a fundamental question. Second, the six guiding principles of the U.S. are actually conditions attached to the participation of developing countries in the initiative, and the high standards of environmental protection, labor rights and financial sustainability may discourage many. Third, the reluctance of U.S. companies to participate in infrastructure construction in developing countries has been a chronic disease, and the Biden administration’s prescription doesn’t provide many effective incentives to the private sector. Fourth, the G7 is divided over which regions are the key implementation areas for B3W, with European countries hoping they would be African countries, Japan focusing on the Asia-Pacific and the U.S. focusing on Latin America and the Caribbean.

Obviously, B3W needs a lot of testing. Previously, the Trump administration proposed the Blue Dot Network Project with other initiatives that have not made much real progress, and many international analysts fear that B3W will suffer the same fate. Of course, another major risk of B3W is that it places too much emphasis on competition and confrontation with China, thus undermining its legitimacy. Neither Japan nor European countries want to be caught in a zero-sum game with China.

As British Prime Minister Boris Johnson has said, the G7 initiative should “show who we are for, not who we are against.” The U.S. and other countries should genuinely help developing countries solve their problems, rather than using them as a playing field to compete with China. Excessive competition will not lead to a better world.