Rhetoric and Reality – The Hindu BusinessLine
The recently concluded G-7 meeting (comprising the United States, Canada, Britain, Germany, Italy, France and Japan – with Australia, South Korea, Africa South and India as observers) sends significant signals. The Biden administration, like its predecessor, is determined to contain China’s influence. It wants to go beyond erecting trade and investment barriers to expand its infrastructural footprint around the world to compete with China’s Belt and Road Initiative (BRI). As might be expected, the US-led push has been framed in ideological terms – as a group of nations defending democracy and human rights vis-a-vis an authoritarian force. Called Build Back a Better World (B3W), the plan talks about spending $ 40 trillion, but there is no clarity on exactly where this infra will occur and how it could be funded. A White House fact sheet says “B3W will have global reach, from Latin America and the Caribbean to Africa to the Indo-Pacific” … technology, and equity and ‘gender equality’. This is seen as an overflow of the US jobs plan “to demonstrate US competitiveness abroad.” But as the BIS experience shows, countries and businesses can fall into the debt trap. B3W can fuel soaring inflation – already high in the United States – in the rest of the world.
Above all, it appears that the United States woke up quite late in the day to the BRI threat. According to the think tank, American Enterprise Institute, BRI, in effect since 2013, has created investments of around $ 450 billion in more than 140 member countries. The BIS has enabled China to diversify its investments beyond the US and the EU into West Asia and Africa; this is in addition to its presence in the ASEAN region. While the United States, Australia, Great Britain, Brazil, Switzerland, Canada and Germany (many of them in the G-7) have been the main recipients of Chinese investment since 2005 , the BIS channeled funds to Pakistan, Iran, Saudi Arabia, Ethiopia, Nigeria, Algeria, Bangladesh and the United Arab Emirates, among others. Thanks to the BRI, China became the EU’s largest trading partner in 2020, replacing the United States. The EU and China signed a âcomprehensive investment agreementâ in December. Obviously, rhetoric and realpolitik are at odds. Yet it cannot be denied that a hegemonic and non-transparent China must be controlled.
With the Covid, the need to reduce dependence on Chinese supply chains has gained ground. In this context, the B3W takes on all its importance. India can take advantage of this initiative by seeking to channel investment in the construction of a road and rail link connecting South Asia to ASEAN. He needs to think beyond the Quad Group, while recognizing that his trade ties with China cannot be abandoned. The G-7 has always been a selfish group. His hollow rhetoric on Covid vaccines as well as climate finance confirms this. Yet India can make a deal on its terms.