Wednesday, September 28, 2022

Explained: G7’s infrastructure investment plan to counter China’s Belt and Road Initiative

G7 countries that are meeting during Leaders’ Summit in Germanyhas officially launched the Partnership for Global Infrastructure and Investment (PGII), a joint initiative to fund infrastructure projects in developing countries. The project, launched on June 27, is being viewed as a block China’s ‘Belt and Road Initiative’ competition,

US President Joe Biden said on Twitter: “Collectively, we aim to raise approximately $600 billion from the G7 by 2027 to invest in critical infrastructure that improves the lives of all our people and delivers real benefits.” Is.”

What is the G7’s PGII?

The infrastructure plan was first announced in June 2021 during last year’s G7 summit in the UK. At the time, US President Joe Biden called it the Build Back Better World (B3W) framework. However, it did not register much progress and details regarding the timeline or funding source of the scheme were not clear.

This time around, the initiative was officially launched as PGII.

Essentially, the G7 countries – the US, Canada, Italy, the UK, France, Germany and Japan – and the European Union have noted infrastructure projects being undertaken and funded by China globally and have their own alternative mechanisms. Decided to present

The stated objective of both PGII and BRI is to help secure funding for countries to build critical infrastructure such as roads, ports, bridges, communication systems, etc. to enhance global trade and cooperation.

However, the G7 says their initiative is meant to be transparent, focused on building climate change-resilient infrastructure, and help achieve gender equality and health infrastructure development objectives.

“While we demonstrate all that democracies have to offer – I have no doubt that we will win the contest every time,” Biden said in a speech announcing the plan on Monday. He said about a dozen projects are already underway with funding from both the government and private sectors.

The US President also mentioned that the fund does not mean “charity or aid”, but a loan, and would be beneficial to both countries lending and receiving.

Where are the funds being directed under the scheme?

In India, the US International Development Finance Corporation, the country’s development bank, will invest up to $30 million in Omnivore Agritech and Climate Sustainability Fund 3, described as “an impact venture capital fund” that will shape the future of agriculture. Invests in manufacturing entrepreneurs. , the food system, the climate and the rural economy,” according to a White House statement.

The fund will invest in companies that “increase food security and promote both climate resilience and climate adaptation in India, as well as improve the profitability and agricultural productivity of small farms.”

Apart from India, projects have been announced in countries in West Africa, Southeast Asia and South America.

What has been China’s reaction to the announcement of PGII?

Asked about the PGII, Chinese Foreign Ministry spokesman Zhao Lijian, according to Reuters, said: “China welcomes all initiatives to promote global infrastructure development.”

“We believe that there is no doubt that various related initiatives will replace each other. We are opposed to advancing geopolitical calculations on the pretext of building infrastructure or tarnishing the Belt and Road Initiative, “They said.

What is China’s BRI?

China launched the Belt and Road Initiative in 2013 under its President Xi Jinping. Its purpose is to revive ancient trade routes from China in Europe to Rome to East Asia.

Under this, the Chinese government helped various countries provide loans for infrastructure projects, and in many cases, contracts were awarded to Chinese companies. This helped China to make its mark on the global stage.

However, China was criticized by the West and some other countries for providing unstable loans to countries that would be unable to repay them. According to a 2019 World Bank report, 12 of the 43 corridor economies for which detailed data were available may face a situation where loans were not sustainable, allowing public assets to be handed over to foreign contractors or to China. Was.

The report said that if the issues of environmental degradation, high debt and corruption are successfully tackled and the BRI is fully implemented, it could increase trade for the world by between 1.7 and 6.2 percent, Global real income could increase by 0.7 to 2.9 percent.

In 2019, Chinese Foreign Minister Wang Yi said in a press conference that since the launch of the BRI, “the trade volume between China and the countries that have joined the BRI has exceeded US$6 trillion, including US$80 billion”. There is a Chinese investment of more than dollars in those countries, “creating about 300,000 jobs for local people.

India opposed the BRI because it included the China-Pakistan Economic Corridor, which linked Kashgar in China to the Gwadar port in Pakistan via Pakistan-occupied Kashmir. India’s External Affairs Minister S Jaishankar said in 2021: “Any serious connectivity initiative must be transparent and in line with the most basic principle of respect for sovereignty and territorial integrity.”

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Is there any overlap between the two schemes?

While the US has been critical of the BRI, other G-7 countries have reacted differently. Italy became the first G7 member to be part of the BRI in 2019, and British Finance Minister Philip Hammond in the same year described the policy as an “approach”, although it is not officially part of the BRI.

“Britain is committed to helping BRI realize its potential and doing so in a way that works for all whose lives are affected by the project,” he said, as reported by Reuters .

Germany and France, while not directly participating in the BRI, have partnered with China in building rail networks and other projects for connectivity.

Nation World News Desk
Nation World News Desk
Nation World News is the fastest emerging news website covering all the latest news, world’s top stories, science news entertainment sports cricket’s latest discoveries, new technology gadgets, politics news, and more.
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