By Hayden Siratt
Over the last decade, China has continued to rise in power and prestige on the world stage. One of the main ways China is expanding its power is through its Belt and Road Initiative (BRI). This initiative links more than a hundred countries in an effort to boost investment and infrastructure to facilitate trade and to ‘break the bottleneck in Asian connectivity.’ China’s motivation around such an ambitious project is to assert China’s economic might and to reduce reliance on the US.
China’s projection of power through the BRI has inspired fear in the US and many other western countries. This anxiety in the West has developed as countries in Asia and the Pacific participating in the BRI have become entrapped in debt, allowing China to seize strategic assets. This was seen in Sri Lanka when the Chinese government seized a major port due to unpaid debt owed to China. The US has so far failed to offer a compelling alternative to the BRI for developing nations in need of investment. However, in March of 2021, President Biden and UK Prime Minister Boris Johnson discussed a western alternative to the BRI. The question that remains is whether the US would be able to turn this idea into something more viable.
What would a western alternative to the BRI look like? Close to no details on such a project have been released by President Biden or other Western leaders. The only aspect that is certain is that it would be enterprise-based, with private firms working together with Western and developing nations’ governments on infrastructure improvement. Despite this lack of clarity, ongoing infrastructure development already taking place in Eastern Europe offers a glimpse into what form this western alternative would take.
The Three Seas Initiative in Eastern Europe, provides a model for a global western BRI alternative. Connecting 12 European countries between the Adriatic, Baltic, and Black Seas, the initiative is aimed to “inspire global thinking so that private money can contribute to countries’ development” to promote cooperation in the development of energy, transport and digital infrastructure. In addition, the Three Seas Initiative seeks to improve the wellbeing of the region’s population and boost European competitiveness, as well as to ensure “energy security and an energy market based on open competition to achieve climate goals via smart investment.” There are currently 77 priority projects underway dealing with the three pillars of transport, energy, and digital. Examples of these projects include the “Via Carpathia” which would be a highway linking the Greek port of Thessaloniki to Klaipeda in Lithuania, a Baltic Pipe project with the aim of diversifying the gas supply sources and integration of gas infrastructure in the Three Seas Region, as well as 5G Cross-Border transport corridors.
Although what this would look like on a global level is up for debate, the Three Seas Initiative invites us to speculate on what the western alternative to the BRI would look like. The western alternative will likely be built on the same three pillars: transport, energy, and digital. The aim of each of these projects would be to diversify reliance on foreign economies and to support domestic economic growth. The transport projects would likely involve physical infrastructure projects such as highways, railways, and ports. The two more interesting pillars are energy and digital. As seen with the Three Seas Initiative, there is significant new attention on sustainability and green energy. On a global scale, this could mean the improvement of nuclear energy in developing countries, and the construction of new wind and solar farms. The digital sector would involve increasing internet access in developing countries as well as the construction of new 5G towers.
How will the West do this? The answer is perhaps through enterprise and private investment. On the sustainability side, the African thinktank, the Africa Sustainability Centre, ASCENT, has been working with Western companies to invest in 17 sustainable projects in an effort to transform climate finance and reverse climate change in Africa. One of such projects is the hybridization of diesel engines with solar systems. The aim of this project, among others, is to bring sustainable energy to rural communities in Africa whilst also boosting capacity development for these regions.
In terms of technology, western data companies such as Facebook and Google are already deepening their presence in Africa. Facebook is building an underwater cable around Africa which will interconnect 23 countries in Africa, the Middle East, and Europe with Facebook saying it will “provide nearly three times the total network capacity of all the subsea cables serving Africa today.” Microsoft has begun constructing data centers in Africa, and London-based equity firm, Actis, is injecting $250 million into data centers in Africa. These centers will ramp up internet speeds, allowing Africa to become more interconnected with the world, and allow businesses to both expand their market and reach otherwise unattainable investment opportunities. Although such ventures will greatly increase the availability of information technology on the African continent, there are still concerns whether or not this program should be spearheaded by these technology giants, especially after scandals like that of Cambridge Analytica and Facebook.
At the global level, these digital and sustainability projects should ultimately expand into the Middle East, India, and South America, giving the West a competitive edge over China. The Chinese BRI focuses on primarily transport-based projects with a few energy projects – mainly in natural gas and hydropower. However, if the West offered digital projects as well as sustainability projects, Western projects may appear more attractive, as well as being essential in tackling today’s greatest threats.
Despite these opportunities, the economic feasibility of such a project is a concern that cannot be ignored. The Chinese BRI already costs around $6 trillion a year, 50 times more than the Three Seas Initiative, and now with many of the projects failing and new contracts stalling, it is likely many more trillions are needed. The vast majority of the financing for the BRI comes from China’s two state-owned commercial banks, as well as the Silk Road Fund set up by the Chinese government. Considering the sheer costs of the BRI, it is not much of a surprise that China is running out of money, and is leaving developing nations with mountains of debt alongside unfinished projects.
With China already buckling under the strain of the cost of their BRI and with Western projects likely to cost more by covering the arguably more expensive sectors of sustainable and digital infrastructure, can the West even afford a Western BRI? Although President Biden has announced a $2 trillion investment to rebuild US physical infrastructure, increase digital infrastructure while addressing climate change, it is highly unlikely that the US would be able to finance both its own domestic infrastructure projects and new global projects. However, one advantage the west has is the number of nations which could help finance these projects.
Potential partner nations for a western alternative to the BRI have a combined GDP of around $44.07 trillion, 5 times more than China. The governments of these nations coupled with the private enterprises looking to expand into new markets may just be enough to finance this. After Brexit, the United Kingdom is chomping at the bit to take on a global leadership role and would jump on any opportunity to exert its capabilities. The EU in the past few months is becoming ever more hesitant to work with China, as the EU is now in the process of suspending a major Chinese investment deal. India has been clashing with China over border disputes, and Japan is becoming more anxious over China’s rising power and aggression in the South China Sea. Looking further south, Australia and China have seen an escalation in tensions with China launching a trade war against Australia. China’s aggression has led India, the US, Australia, and Japan to form “the Quad”, with aims of discussing measures to counteract the growing threat.
However, even with China’s increased aggression, these nations all have very different agendas, and it would likely prove difficult to get these countries on the same page to finance this initiative. China has already gone into a substantial amount of debt from their own projects which may make Western nations more hesitant.
Alongside this, this western alternative to the BRI would undoubtedly raise China’s hackles. Already, tensions are running higher than ever, and China has become more aggressive, participating in trade wars, encroaching on the South China Sea, building up its military, and making plans to invade Taiwan. A Western alternative to the BRI may be perceived as a threat to China, and incite further aggression against the West, potentially heralding in a Cold War style world.
A Western alternative to the BRI would likely focus on private investment into transport, energy, and digital sectors. However, such a project would raise tensions with China. Should the West even pursue a western alternative to the BRI?
“The views expressed in this article are the author’s own, and may not reflect the opinions of The St Andrews Economist.”