Complementary global initiatives can benefit everyone – Global
In the fall of 2013, President Xi Jinping announced his vision for developing a strategic framework in support of the 21st Century Maritime Silk Road and the now-defunct Silk Road Economic Belt. collectively known as the Belt and Road Initiative. This was clearly a very ambitious and truly global plan.
So far, China has signed Belt and Road cooperation agreements with 140 countries and 32 international organizations, proving its worth and confounding doubters. The BRI undeniably fills a real need as emerging markets continue to grow.
Existing projects are also reviewed regularly and adjusted if necessary. This is particularly the case when financing structures become obsolete due to changes in the financial situation of the borrower, in particular due to the economic impact of the COVID-19 pandemic.
Sometimes new lenders will step in and provide refinancing, as happened recently in Montenegro. A consortium of European and American banks refinanced a $1 billion loan from the Export-Import Bank of China for a road infrastructure project. These developments are positive, as Montenegro will benefit from the new infrastructure when it is completed.
Recently, Argentina and China, celebrating 50 years of bilateral relations, signed a memorandum of understanding regarding BRI cooperation. Argentina is a huge exporter of wheat, soybeans and other commodities to China, so the focus on improving Argentina’s maritime infrastructure is both logical and mutually beneficial. When everything is finished, Argentina will be able to export raw materials much easier and faster.
As the great playwright and political activist George Bernard Shaw once observed, “imitation is not only the sincerest form of flattery, it is the sincerest form of learning”, and it is why several major economies are pursuing the BRI model. For example, the European Union recently announced its own international infrastructure engine known as Global Gateway.
The EU plan envisions raising up to 300 billion euros ($340.6 billion), which sounds like a lot of money but represents a small drop in the cost of emerging markets’ infrastructure needs. To put things into perspective, some analysts estimate that the total sum of BIS investments to date has already exceeded $4 trillion. The 300 billion euros will be raised from various public funds that have given the green light, combined with financing from the private sector. This total amount would also be a mixture of loans, grants and guarantees.
According to Ursula von der Leyen, President of the European Commission, the new EU plan offers “a real alternative” to the BRI. The EU Global Portal will focus on Africa, Central Asia and Latin America, all geographical areas where, to date, European infrastructure aid has been minimal to say the least. If the EU Gateway really focuses on helping regions where the infrastructure needs are greatest, this is extremely positive and would complement the commitments of the BRI. If, however, the real agenda is to focus on countries that have expressed an interest in BRI funding, in order to divert them away from China, then everyone loses. The entire planet benefits from global connectivity, increased trade, travel, and face-to-face human interaction, which in turn leads to a higher level of understanding and mutual benefit.
The United States has also launched an initiative, along with other G7 countries including Japan and the United Kingdom, called the Build Back Better World, or B3W, plan. This plan was unveiled by US President Joe Biden in Glasgow during the 26th United Nations Conference of the Parties on Climate Change, or COP 26, in November. Its goal is to fund a green and collaborative global infrastructure initiative that Biden said would create a “sustainable path to net-zero emissions by 2050.”
The more global funding made available for serious and sustainable climate change projects around the world, the better. Everyone benefits, including China, which cannot be expected to bear the global burden alone.
If the various global initiatives manage to work in a coordinated and complementary manner, enabling more countries to realize their infrastructure dreams and improve global connectivity, then the BRI may well be hailed as one of the greatest government initiatives. of the 21st century, not only in its own right, but as a catalyst for others to follow in its footsteps, thereby jointly benefiting humanity and the planet.
The late British Prime Minister Margaret Thatcher hit the nail on the head while underscoring the role of infrastructure in triggering economic development when she said: “You and I come by road or rail, but economists travel on infrastructure.
The author is a former lawyer and investment banker, and is the founding partner of a Hong Kong-based strategic consulting firm.