G7 Countries Announce Infrastructure Partnership to Rival BRI as China Dominates Agenda

Background

The 47th G7 summit took place in Cornwall, United Kingdom from June 11-13, 2021, marking the first large-scale, in-person meeting between western countries since the COVID-19 pandemic began in early 2020. Maskless leaders were seen mingling in the English seaside town, in stark contrast to the sometimes awkward virtual meetings that punctuated the last year and a half. This, notes the New York Times, largely signifies the “much-welcomed death of Zoom diplomacy” on the world stage. 

A significant amount of attention over the weekend was directed at China, which features prominently in the post-summit leaders communiqué. The document notes that the G7 will push for a “timely, transparent, expert-led, and science based WHO-convened Phase 2 COVID-19 Origins study… in China,” and calls for China to “respect human rights and fundamental freedoms, especially in relation to Xinjiang and those rights, freedoms and high degree of autonomy for Hong Kong enshrined in the Sino-British Joint Declaration and the Basic Law.” It further expresses concern regarding the “situation in the East and South China Seas,” a nod to the ongoing cross-strait tensions with Taiwan. While not all G7 countries share the same approach in their diplomatic relationship with China, the communiqué illustrates a number of shared areas of concern. 

One particularly notable announcement was the creation of a G7-led infrastructure initiative - titled Build Back Better World (B3W) - aimed at “help[ing] narrow the $40+ trillion infrastructure need in the developing world, which has been exacerbated by the COVID-19 pandemic.” The announcement was clearly made with China in mind, signifying an attempt to utilize the West’s collective development finance apparatus to create a so-called “democratic” alternative to the China-led Belt and Road Initiative (BRI). 

What Does the Plan Entail? 

The term “Building Back Better” is, according to World Bank’s Global Facility for Disaster Reduction and Recovery (GFDRR), generally used to describe “an approach to post-disaster recovery that reduces vulnerability to future disasters and builds community resilience to address physical, social, environmental, and economic vulnerabilities and shocks.” It was also adopted by President Joe Biden to describe his jobs/economic recovery plan during the 2020 U.S. Presidential Election. The term was used as a buzzword within the G7’s broader agenda after the 2021 meeting, showing up in the communiqué’s title (“Our Shared Agenda for Global Action to Build Back Better”) and ten separate times throughout the document’s text. 

The plan is underpinned by a set of key principles, including a values-driven vision, intensive collaboration among the various G7 development finance institutions, high standards (including the environment, social factors, labor, governance, and transparency), and emphasis on strategic partnerships. The plan will also augment the existing development finance system with private capital, and ensure that the internal system of multilateral finance is “enhanced” by working with global institutions to “enhance their catalytic impact and increase the mobilisation of capital needed for impactful and sustainable infrastructure investment” 

The specific Build Back Better World (B3W) title, interestingly, is not used in the communiqué’s text; the plan is instead described as “a partnership to build back better for the world.” But a fact sheet released by the White House on June 12 (one day before the joint communiqué) offers some additional details (including a direct mention of China) and attaches the B3W name. It notes that the initiative will comprise four areas of focus - climate, health and health security, digital technology, and gender equity and equality. The initiative will also be guided by the Blue Dot Network, US, Japan, and Australia-led initiative that seeks to regulate and/or certify global infrastructure projects. 

Beyond the limited details outlined by the communiqué and American factsheet, there is relatively little information concerning the logistics of the plan. German Chancellor Angela Merkel, speaking to reporters, noted that she hoped the plan could be developed by the 2022 G7 summit, which will be held in Germany. 

How has China reacted?

China offered a sharp reaction to the G7 communiqué. Chinese Ministry of Foreign Affairs spokesperson Zhao Lijian stated that the document was “deliberately slandering” his country on a number of issues. He noted oft-cited line that issues related to Xinjiang, Hong Kong, and Taiwan “are purely China's internal affairs that brook no foreign interference.” 

Appearing to at least implicitly reference B3W, Zhao also stated that “[c]ountries should not seek bloc politics on the basis of the interests of small cliques, suppress different development models by holding ideology as the yardstick.” This sentiment was further repeated in Chinese media, with Chinese experts predicting that B3W would fall flat in any sort of competition against the BRI. 

Zhao Gancheng, a research fellow at the Shanghai Institute for International Studies (SIIS), was quoted in the Global Times as stating that the “[t]he political meaning of the B3W initiative far outweighs the material results it may yield.” The article further notes the lack of detail surrounding the initiative, which stands in stark contrast to the well-established and global BRI. And John Gong, a professor at the University of International Business and Economics in Beijing, argued in an CGTN opinion piece that the B3W would instead do well to address the crumbling infrastructure problem in the domestic United States instead of making unspecific global pledges. Gong acknowledges the need for all wealthy nations to address the worldwide infrastructure gap, but argues that “some real commitments should also be made.”  

Where does Canada fit in? 

Most of the China-related points included in the joint communiqué are simply an addition to the array of multilateral actions and rhetoric levied at China from the West in recent memory. Canada has previously been involved in international efforts to sanction Chinese officials related to Xinjiang, issued statements regarding the ongoing situation in Hong Kong. And, while the demand for a new investigation into the origin of COVID-19 may ruffle some feathers, Canada had previously expressed support for the U.S.-led probe in late May with little blowback. 

The Canadian has not commented directly on the B3W plan besides the post-summit document - perhaps signifying that it needs further ironing-out before an official announcement is made at the government level. But we know, by way of the communiqué, that this concept has at least been supported and endorsed by the Canadian side. 

The aforementioned American fact sheet notes that the B3W will allow G7 members to make “catalytic investments from our respective development finance institutions.” This will likely fall to Development Finance Institute Canada (DFIC, or FinDev Canada), a relatively young institution. It was founded in 2017 and made operational in January 2018. The group, a wholly owned subsidiary of Export Development Canada, was initially “capitalized with $300 million over five years to support its work.” 

More broadly, the initiative - while notabale - is still a relatively imprecise concept. With so few details available to the public, it is difficult to predict how big a role any one country - including Canada - will play. It is also difficult to imagine how seven nations - each with their own set of domestic pressures and policies towards China - will be able to achieve the ambitious project goals of raising “hundreds of billions of dollars of infrastructure investment for low- and middle-income countries in the coming years.” Dnyanesh Kamat, writing in the Asia Times, states that the plan, which “rests on the rather facile assumption that the world today is divided between democracies and autocracies...will make America’s European allies deeply uncomfortable, as it carries echoes of the Cold War.” This could make it difficult for the G7 - or any other multilateral group - to present a collective challenge to China. 

Even China’s BRI - a more established, unilateral initiative - is at times opaque, difficult to understand, and hard to track. Only time will tell if the B3W will truly act as a full-throttled “democratic” alternative to the BRI, or simply fizzle out in the coming years.