AN ALTERNATIVE TO THE BRI; WILL IT BE DIFFERENT THIS TIME?

Various cases and studies suggest the loans often do not serve the interests of the recipient countries (for instance because the loan terms are not very attractive and/or the planned infrastructure remains underutilised).

This (Western) criticism of BRI may be useful, but the logical geo-political counter policy would be to create a credible alternative, as developing countries have huge infrastructure investment needs.

So far, this is where ‘the West’ has failed. India, the US and Japan failed to provide an alternative to the BRI in the Indo-Pacific (announced in 2018 under the heading of the ‘Trilateral Infrastructure Working Group’), the EU and Japan’s ‘Partnership on Sustainable Connectivity and Quality Infrastructure’ also did not fly, nor did the EU-India Connectivity partnership or the G7 Build Back Better World (B3W). The frequent announcement of ‘alternatives’ that really do not live up to expectations begs the question: will it be different with the latest announced alternative: the G7 Partnershipfor Global Infrastructure and Investment (PGII)?

The core difficulty may be that the G7 approach, like previous approaches, is centered around (public) financing of infrastructure, whereas the Chinese BRI ‘offering’ consists not just of financing, but also of constructing, operating and filling (i.e., creating demand for) the newly developed infrastructure, through involvement of Chinese state-owned enterprises like Cosco, Sinotrans and China Telecom.

Especially for port development and infrastructure for freight transport, such a broad package is potentially much more attractive than ‘just’ loans for infrastructure, as the key challenge in port development is to attract new userssuch as shipping lines, logistics and manufacturing companies.

Thus, the PGII may only work if it manages to commit companies to the PGII values such as sustainability, transparency, free markets and democracy and provide a broad ‘western’ offering to developing economies, which matches China’s broad offering. However, that is highly unlikely, as the private western companies will choose to ‘stay out of politics’ – contrary to the Chinese SOEs, that ultimately are subjected to China’s policy initatives. Is there an alternative G7 answer to the PGII as this seems poised to fail? The most consequential approach (with far reaching consequences) may be to stop treating the Chinese SOEs as ‘normal’ companies