To tackle the growing influence of China and its belt and road initiative, Western leaders launched a Western counter-initiative worth $600 billion to lessen the Chinese economic grip on low- and middle-income countries.
The Partnership for Global Infrastructure and Investment was formally launched on Sunday (26 June) at the G7 summit hosted by Germany’s chancellor Olaf Scholz in Bavaria, which will take place until Tuesday.
“The G7 wants to make the world a better place with better infrastructure. Today, we launch our joint work on this with the Partnership for Global Infrastructure and Investment,” Scholz said in a press statement.
The partnership, already announced last year, aims at mobilising $600 billion in private and public capital by 2027 – one-third of which should come from the US.
The infrastructure partnership mainly encompasses various priorities, from tackling deficits in health infrastructure, expanding connectivity, promoting gender equality and tackling the climate crisis.
“We need worldwide effort to invest in transformative clean energy projects to ensure that critical infrastructure is resilient to changing climate,” Biden said at a press conference.
While China wasn’t mentioned directly during the partnership presentation, the initiative’s bottom line is clear, as many Western leaders have increasingly voiced concern over Beijing’s belt and road initiative – which is estimated to total a massive $1 trillion investment in infrastructure by 2027.
The new partnership ties into broader attempts by the West to present an alternative to Chinese lending practices and aims at narrowing the €38 trillion infrastructure investment that developing countries will need by 2035.
In December, the EU launched the Global Gateway – an initiative aiming at mobilising €300 billion in investment by 2027.
“With our joint G7 Infrastructure Initiative, we are building on strong regional initiatives such as the EU Global Gateway Initiative and the work of all G7 members. This is another example of our unity and close cooperation as G7 countries,” Scholz said.
In early February, the EU announced an investment package for Africa of €150 billion under the Global Gateway framework, which will be financed in equal parts by public investments, loan guarantees and private investments.
“I am convinced that the G7, and the EU, are taking the right direction for a more stable and forward-looking partnership,” President of the European Council Charles Michel said.
China will be one of the main issues discussed at the G7 summit. While Michel stressed that cooperation with China on global topics is still crucial, he stated that “we need to rebalance the economic relationship” with Beijing.
While the EU remains open in terms of trade, there is “a lack of reciprocity,” Michel said, adding that Western leaders will discuss how to “encourage Chinese authorities to play a more positive role to address the global challenges together with us.”