Can The G7 Stand up to China?

Published June 15th, 2021 - 06:14 GMT
Joe Biden
Joe Biden arrives for a NATO summit in Brussels. Photo: AFP

US President Joe Biden’s ill-defined program to counter China’s Belt and Road Initiative (BRI) is unlikely to pose a serious threat to the latter. Hubristically named after one of his domestic campaign slogans, “Build Back Better for the World” (B3W) aims to be an alternative multilateral funding program to the BRI for developing countries.

Ideologically, the B3W rests on the rather facile assumption that the world today is divided between democracies and autocracies, and B3W will somehow “rescue” countries from their drift toward authoritarian China. This bifurcation of the world into two opposing camps will make America’s European allies deeply uncomfortable, as it carries echoes of the Cold War. This notion ignores the fact that, due to democratic backsliding in the world today, there are various countries nominally allied to America but which straddle the divide between democracy and autocracy. Furthermore, B3W is riddled with far too many internal consistencies and rests on America, Europe and Japan moving in tandem with regard to their China policies.

There is no uniform China policy within the EU. Germany, for example, continues to view China as a critical market for its high-tech manufacturing products and automobiles. It will not want to be seen to be too enthusiastic in its support of B3W lest it antagonizes Beijing. The EU, despite American pressure, recently signed an investment deal with China. On the issue of freeing global supply chains from the use of forced labor (a reference to China’s treatment of the Uighurs), there has even been pushback from American corporations. How does B3W plan to ensure global supply chains are free of products manufactured in Israel’s illegal settler colonies in the occupied West Bank?

It also remains to be seen how B3W will be funded, beyond vague assertions by American diplomats that the program will incorporate existing multinational funding programs. Moreover, B3W funding will be attached to conditionalities regarding human rights, climate change, corruption and the rule of law. This raises the question of why developing countries would choose to work with a patchwork of funding initiatives wedded to intrusive conditionalities rather than continue to seek China’s simplified and no-strings-attached BRI funding. How does America plan to marshal its private-sector firms and banks to support B3W? Currently, the political atmosphere in the country remains hostile to large firms and banks, with Biden himself planning to finance his domestic Build Back Better program by raising taxes on big business.

The recent America-led initiative to institute a global minimum tax on multinationals reduces their competitiveness against China’s state-backed companies. Exactly how do American private-sector companies expect to maintain their competitiveness as part of a B3W package deal to developing countries? Moreover, how does America plan to offer attractive technologies to developing countries that choose B3W over BRI? Republicans in America remain allergic to industrial policy that seeks to divert public-sector funding toward research and development in strategic sectors. This has allowed China to steal a march over America on 5G technology, for example.

That B3W is named after one of Biden’s domestic initiatives is a well-worn sign of America’s imperial pretensions. It assumes that what is good for America ought to be a model for the rest of the world. Yet even in this endeavor, America falls short. The US Congress, which holds the purse strings for any government initiative, is yet to approve Biden’s domestic spending initiatives under the Build Back Better program. Large parts of it may eventually have to be sacrificed to achieve bipartisan consensus in America’s dysfunctional polity.

Even as America seeks to use B3W to promote free trade and more robust global supply chains, Washington is silent about rejoining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. This multilateral free-trade agreement includes America’s allies but faces strong opposition from both Republicans and Democrats. The B3W’s planned incorporation of climate change and green goals will likely run into opposition even from America’s allies. For example, there were howls of protest from across the Canadian political spectrum when the Biden administration recently canceled the Keystone XL pipeline project meant to transport oil from Canada to the US.

Biden wants to recast America as a model state in the hope that this can increase the attractiveness of B3W. However, the White House has remained silent on B3W incorporating the movement of labor in addition to the movement of capital, goods and services. The Biden administration has yet to announce any plans for immigration reform. And the world recently witnessed Vice President Kamala Harris, herself the daughter of immigrants, telling Central Americans: “Do not come to the US.” The world would rather sign up to BRI projects, based on hard-nosed realpolitik, rather than America’s B3W, based on woolly feel-good values that America is very obviously only paying lip service to.
B3W found a vague single-line mention in the communique issued at the end of the G7 summit. This is perhaps a sign that the rest of the G7 members recognized it for what it was: Verbal gimmickry aimed at a domestic audience by a newly elected president desperate for a foreign policy victory.

  • Dnyanesh Kamat is a political analyst who focuses on the Middle East and South Asia. He also consults on socioeconomic development for government and private-sector entities. Copyright: Syndication Bureau


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