Biden Admin china Mǎ Hànzhì

Can Biden’s New US $600B PGII Initiative “Replace” China’s Role in Africa?

The launch of the Partnership for Global Infrastructure and Investment at the recent G7 summit is another example of the Biden Administration's relentless push to try to undermine the Chinese-led Belt and Road Initiative.
Biden announces infrastructure plans at the G7 summit on June 26, local time. Photo credit: NBC

By Mǎ Hànzhì / Dongsheng

At the G7 summit on June 26, U.S. President Joe Biden drew an ambitious infrastructure “pie” – the Global Partnership for Infrastructure (PGII). “(PGII), the goal is to provide $600 billion in infrastructure funding for developing countries by 2027, of which the U.S. itself will bear $200 billion, and the EU’s “Global Gateway” program will raise 300 billion euros.

Although Biden did not explicitly mention it, but the media widely believed that this is the West’s move is a reference to China’s “One Belt, One Road” initiative.

This is not the first time that Biden played this kind of as intended. A year ago at the G7 summit, Biden announced a much larger “Build Back Better World” (B3W) partnership, which planned to mobilize more than $40 trillion. However, only a pitiful $6 million has been delivered so far, and its domestic legislative proposal of the same name has been thwarted in Congress.

Now, Biden is making a comeback with old wine in new bottles. The U.S. targets four industrial projects in clean energy, health systems, gender equality and information and communication technology, and most of the “model projects” announced so far are concentrated in the African region, followed by South America and Asia.

W. Gyude Moore, former public works minister of the West African nation of Liberia, noted that Africa’s infrastructure needs are the greatest of any region in the world and that “any additional infrastructure financing would be welcome.” But he has doubts in his mind in the face of a West that has already gone back on its word, and “until the details of implementation emerge, there will be questions of credibility.”

China and Africa have been working together for decades to create win-win cooperation. Around Biden’s ambitious infrastructure plan, the Observer invited Ma Hanzhi, an assistant researcher at the Institute of Developing Countries of the China Institute of International Studies, to give an in-depth explanation on the 28th.

Observer: What is the relationship between PGII and last year’s B3W program? What are the differences?

Ma Hanzhi: PGII is a more mature reference and initiative within the global infrastructure field after more than a year of Biden’s administration, and has more credibility compared to the old plan.

Last year’s B3W initiative was a plan to invest more than $40 trillion to meet the infrastructure needs of developing countries. This year’s Global Infrastructure and Investment Partnership (GIIP) aims to raise $600 billion over five years, a significantly reduced amount.

The B3W program a year ago was probably much just a general concept and more of a political necessity. At that time, there were divisions within the Democratic Party, plus the main U.S. strategic resources were still distributed in the Asia-Pacific, so the U.S. had neither the resources nor the ability to pursue the massively funded B3W program, nor the time and will to do so.

The current PGII program is very specific and relatively pragmatic in terms of funding. Taking into account the actual needs and capacities, the PGII integrates the 150 billion euro commitment of the EU’s Global Gateway infrastructure program for the African region, which can be seen as a relatively rational investment. The projects are divided into four main areas: clean energy, health systems, gender equality and ICT.

Observer: How is PGII strategically positioned compared to China’s “Belt and Road” initiative? What are the characteristics of PGII?

Ma Hanzhi: I think its goal is still to replace “One Belt, One Road”.

In recent years, the West has been concerned that China has made significant infrastructure investments and financing in developing countries in Africa and elsewhere, something that was previously grossly neglected by the West. Since the Trump era, the U.S. has become aware of this issue, arguing that infrastructure is still the biggest dependency for the development of developing countries, especially those in the African world.

From domestic “construction” to international initiatives, it is the U.S. that hopes to use infrastructure as an entry point to reshape the U.S. discourse in the global development arena. The U.S. has injected values such as gender equality and climate change into its infrastructure programs, and by emphasizing so- called “high standards” and “transparency”, it has “set the rules” for global infrastructure. The core of this narrative is to crowd out China’s position and influence in the infrastructure market.

In terms of specific implementation methods, I feel that there are several features.

The first point is to use tripartite or multi-party cooperation as the main channel. Especially in the last two years, it is often seen that U.S. companies such as the U.S. International Development Finance Corporation, pulling in the European Investment Bank, the European Bank for Reconstruction, etc., to cooperate with indigenous African institutions such as the African Development Bank.

The second point is the reliance on public-private partnerships. Since the Obama administration, the United States has placed great emphasis on public- private partnerships, with a particular focus on leveraging private capital into the infrastructure market sector.

The last and most central point is to promote the privatization of public infrastructure in Africa by leveraging private assets, i.e., to create conditions for U.S. capital to enter the African market. For example, the U.S. government has been promoting the “Power Africa” initiative for some years, although the infrastructure is built in Africa, many of the technologies and hardware such as power lines and generators are provided by the U.S. According to the 2018 Power Africa Annual Report, half of the 145 private sector partners in “Power Africa Half of the 145 private sector partners in “Power Africa” are U.S. companies, according to the 2018 Power Africa Annual Report.

Observer: The White House document highlights four areas, namely clean energy, health systems, gender equality and information and communications technology, as “defining the second half of the 21st century”.

Ma Hanzhi: It should be said that the U.S. and the West have comparative advantages in the above-mentioned areas, and the White House has distilled them with a strong political meaning – that is, it wants to reinvent U.S. rule dominance and guidance in the field of “soft infrastructure” and conduct “values diplomacy”.

Among the four areas, I think one of the newer ones is the information and communication technology, which the U.S. has emphasized less in the past, and which is actually mainly considered to counter China’s so-called “digital authoritarianism”.

The Western narrative suggests that China’s investments in Africa’s digital economy infrastructure, such as 5G, are ultimately leading African authorities to intensify their crackdown on so-called opposition and tighten their grip on elections. But this is actually entirely in the service of its “values diplomacy”.

Huawei and other Chinese companies have been gaining momentum in the African market in recent years, and their digital communications cooperation with African governments involves smart cities, smart government and other security areas. Therefore, the West believes that the Chinese side is in fact gaining control over the security sector of other countries in the process of assisting in the construction.

For example, the French newspaper Le Monde has “alleged” that China has been bugging the AU since 2012 with the aid of its conference center.

But in fact, Western countries are trying to exclude Chinese companies from the African market and free Africa from the so-called “Chinese digital authoritarianism” under the guise of “fair and transparent communication technologies that avoid political abuse”. — because they were able to get hold of this private information when they provided services or gained some control in the relevant areas in the past.

Observer: PGII has announced its “model projects”, why are the key investment areas in Africa?

Ma Hanzhi: Africa has a relatively large infrastructure funding gap of more than $100 billion. Since the launch of the African Continental Free Trade Area (AfCFTA) in January last year, Africa’s cross-border infrastructure investment needs are very large, especially in transportation facilities and power projects, which means that the U.S. “profitable”. The AU and African countries have also made infrastructure a key investment area in recent years, which has in fact led to international investment.

In addition, it is based on a fundamental judgment of the United States about Africa, which has a particularly large youth population, so the United States is still optimistic about the future development potential of Africa.

However, these model projects are generally in the so-called “bright spot” countries (bright spot) that the U.S. has identified as being able to ignite a “spark”, such as Kenya, Senegal, South Africa, like some West African countries, central African countries, the United States is certainly not interested. The United States is certainly not interested.

Therefore, although the U.S. infrastructure program has done some practical things for some countries, its regional nature is still prominent, and its universality for African countries is very limited, which is likely to aggravate the development gap between countries.

Observer: PGII’s projects are more dependent on private investment, how can we ensure the stability of the funds?

Ma Hanzhi: In infrastructure construction, the stability and sustainability of funding sources has always been a problem. The U.S. has always had a theory that $1 of public capital can leverage $9 of private capital, and PGII actually relies on a variety of U.S. financial institutions to leverage private capital to invest.

In reality, despite the fact that U.S. embassies in African countries have dedicated deal teams to help companies match and do business with locals, there has never been much interest from private U.S. capital to invest in Africa.

This is partly because local legal systems in Africa are not robust, and regimes in African countries are sometimes less stable. Once elections are held and regimes change, many policies will change. On the other hand, Africa does not occupy an important place in the overall political strategy of the United States, which has led to contradictory U.S. policies toward Africa.

In practice, some of the projects in Africa have had problems recovering their profits. The U.S., for example, found in its Power Africa initiative that electricity was created, but no one was willing to pay for it – they connected 3 million customers to electricity in Kenya at high cost, but about 1 million were in arrears.

The U.S. Power Africa Act, passed in 2016, promised to generate 20,000 megawatts of electricity for Africa by 2020, providing power to 50 million customers. But with only 4,194 megawatts actually delivered by the end of 2020, the outlook is not good. If this project was particularly profitable, it certainly wouldn’t be moving forward so slowly. Benefitability is also not a problem that can be solved quickly if the U.S. wants to; it will be a long process.

Moreover, the so-called value-neutral reforms pursued by the United States often have the clear intention of interfering in the internal affairs of Africa.

For example, in promoting the Power Africa Initiative, USAID Administrator Mark Green said that it is important to level the playing field for U.S. companies by identifying and eliminating regulatory and logistical barriers to trade in Africa, starting with improving transparency and reducing the cost of doing business in Africa.

To this end, USAID has launched a Senior Advisory Group program to assist African governments in advancing power sector reform and, if necessary, to participate directly in the reform effort, covering how to promote power regulator reform, how to finance new grid construction, and how to attract off-grid investors.

Therefore, when the project is finally landed, the United States will often be opposed by many countries in Africa. The so-called “openness and transparency” of the United States is entirely in their own way and standard requirements, power infrastructure is backward, power knowledge base is limited, power governance capacity is limited, power system is not complete, the vast majority of African governments do not have such capacity, but also to the U.S.-led system: you want these projects in the end What do you want?

The United States has proposed many initiatives and programs, but in the end the concrete and substantive results have been mediocre.

Observer: What challenges does PGII pose to China’s “One Belt, One Road” strategy? How should China respond?

Ma Hanzhi: The most direct strategic aspect of the U.S. PGII at this time is to hedge against China’s Global Development Initiative (GDI), which is the most critical point. PGII was proposed against the backdrop of the new epidemic and the setback in economic recovery, in order to arouse the international community’s attention to development issues and allow countries to recover as soon as possible.

I understand that in May 2022, on the eve of a high-level videoconference of the Group of Friends of the Global Development Initiative, the United States pressured several UN development agencies to block the participation of African stakeholders and threatened to “scale back funding.”

Second, PGII will also force some countries to choose sides. The U.S. still occupies an important position in foreign aid to Africa, and the U.S. West and Europe are a large part of the source of African funding and will knock you with this from time to time. For example, the U.S. African Growth and Opportunity Act provides that some African countries can enjoy unilateral tariff preferences for U.S. product imports, but if you do not listen, I will interrupt you, and last year Ethiopia was sanctioned by the United States.

Third, the market will certainly become more competitive. Infrastructure itself is an area in which everyone is competing for investment, but the situation is complicated by the U.S. and the West forcing to choose sides. For example, the new government of the Democratic Republic of Congo (DRC) was encouraged by the U.S. last year to review the TFM copper and cobalt mining contract with Chinese enterprises, and similar things have happened many times under the guise of so-called “anti-corruption” to reshuffle the market.

The core of U.S. global strategy is still competition. Looking at the four important areas the U.S. has proposed: information and communication, women’s empowerment, health systems, and clean energy, it is not considering cooperation with China; it prefers cooperation with allies such as the European Union.

From a Chinese perspective, I would like to make the following suggestions.

One, is to focus on “small but beautiful” livelihood projects, and constantly improve the “Belt and Road” to bring the local sense of access.

In previous years, our main focus has been in the production sector. Our “stadium diplomacy” (editor’s note: through direct assistance to African countries to build soccer stadiums, etc., or by providing low-interest loans to build stadiums in exchange for preferential access to natural resources) has indeed helped the cohesion of the country as a whole, but the development of the epidemic has raised the bar for the universality and peoplehood of the project itself.

Our “Walk of Light” campaign is a good example, the Chinese medical team into Africa for cataract patients to carry out surgery, the local people feel that “my disease is good, that on the Chinese doctors to cure”.

For example, the cold chain transportation in some areas, the weather in Africa is hot, and it is difficult to store agricultural products in the process of further processing, so China can invest in these projects. Issues such as clean water, disease prevention and relief in the health system are also important, and the U.S. has done relatively more, which is also a more active project in the West, including the U.S. President’s Emergency Plan for AIDS Relief and so on.

Two, is to explore the sustainability of the financing of facilities. Now the obvious feeling is that the overall pace of our investment in Africa is still affected by financing, that is, African countries have financial difficulties, you then invest in how to do the problem.

A project from investment, construction to operation, can not say that the end of the construction, proper operation is also to spend some effort. Perhaps consider taking a debt-to-equity equity stake to operate as a shareholder in the local long-term.

Third, it is to explore the strengthening of tripartite cooperation. For Africa’s infrastructure aid, the deeper and more realistic it is to go, the more troublesome the docking of national rules brought about by tripartite cooperation may be, but this can indeed provide some security for the riskiness of major investments. If you can’t work with the U.S., then you can try with France, try with Japan, and take advantage of other countries by working with more people to bring the project to life.

Observer: A U.S. official claims that some countries that have cooperated with China “regret it” because China is more interested in geopolitical benefits than in benefiting local people. He also believes that it is “not too late” for the West to enter into African infrastructure. What do you think of this statement?

Ma Hanzhi: Americans have always had a saying: for a person struggling in the water, as long as someone extends a helping hand, he will not hesitate to grab it. They believe that China is to provide help when Africa is struggling in the water, and when Africa comes ashore, other countries hand out more hands, they do not necessarily go to choose China.

The implication is that we did not pay attention to Africa before and let China steal the show, now we are all here and you should know who is the real partner. What is the subtext behind this? “Africans, you can’t make your own decisions.” It’s very arrogant and cocky.

The African people themselves have the ability and will to choose who to work with, and they would certainly refuse to work with China if they really regretted it, so why only speak privately with the West?

Many African leaders have also refuted such Western arguments. At a U.S.- Africa forum last year, the president of Senegal made it clear that our cooperation with China is the result of our own volition, and there is no question of who forced whom, let alone whether we regret it later.

The fact is that Africans have long since ceased to be what they understood them to be. It’s really not a brilliant statement for the West to see Africa developing now before it wants to come and get a piece of the pie, and Africans often scoff at it.

The United States and the West are actually still full of cold war thinking, confrontational thinking, treating Africa as a great power arena, treating African countries as pawns, as a plate of meat.

Africa is not anyone’s bureau, nor is it anyone’s turf. Africa can choose who to cooperate with on its own. It is not a question of whether it is late or not, Africa still has a trend of large-scale investment, it is a question of whether the content of cooperation is “real or not, real or not, and whether it can bring tangible benefits and practical gains”.

This article is an exclusive article of the observer network, the content of the article is purely the personal views of the author, does not represent the views of the platform, without authorization, may not be reproduced, or will be held legally responsible. Follow the Observer’s WeChat guanchacn and read interesting articles daily.

Ma Hanzhi

Ma Hanzhi is an assistant researcher in the Department for Developing Countries at the China Institute for International Studies. His main research fields are African development issues and Chinese-African relations.

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