Wealthy nations in the Group of Seven have agreed to put in place an infrastructure plan to compete with China’s Belt and Road Initiative – but that won’t stop Beijing’s massive program, an expert on global economic government said Monday.
The heads of state and government of the G-7 countries met for a three-day summit in south-west England that ended on Sunday – their first face-to-face meeting in two years. The group’s infrastructure plan is part of a broad collective pushback against China on issues ranging from human rights abuses to non-market-oriented practices that undermine fair competition.
“This is not really supposed to stop Belt and Road. But I think the G-7 is signaling that they want to offer an alternative that is really about two big things these countries offer,” said Matthew Goodman, senior vice president for Economics at the Think Tank Center for Strategic and International Studies in Washington DC.
The Belt and Road Initiative is China’s ambitious program to build physical and digital infrastructure to connect hundreds of countries from Asia to the Middle East, Africa and Europe. Critics consider it the characteristic foreign policy of Chinese President Xi Jinping to expand his country’s global influence.
Goodman, who is also Simon Chair in Political Economy at CSIS, told CNBC’s Squawk Box Asia that the G-7 could make a “significant contribution” to filling the global infrastructure gap by channeling investment into developing countries.
In addition, the seven rich democracies would better secure infrastructure projects – including transparency, accountability, and environmental and social standards, Goodman said.
“I think that’s what they’re trying to signal here. Whether they make it or not is another story, it’s a very difficult business,” he added.
The US and many countries are critical of the Belt and Road Plan, accusing Beijing of leaving participating countries burdened with unsustainable debts while benefiting Chinese companies – many of them state-owned. In addition to the environmental damage caused by the program, critics also questioned the transparency of the deals.
China played a prominent role in a G-7 communique on Sunday. The G-7 countries are Canada, France, Germany, Italy, Japan, Great Britain and the USA.
The G-7 not only called for China’s alleged human rights violations and non-market-oriented policies, but also for more transparency about the origins of the Covid-19 pandemic. They stressed the importance of cross-strait peace and stability and expressed concern about tensions in the East and South China Seas, where China’s territorial claims overlap with its regional neighbors.
Beijing reacted angrily to the communique on Monday.
The Chinese embassy in Great Britain firmly rejected the G-7 declaration and was very dissatisfied. in the a statement in Mandarin language Translated by CNBC, the embassy called on the US and other G-7 members to stop defaming China and meddling in Chinese internal affairs.
Before releasing the Chinese Embassy statement, Goodman said Beijing shouldn’t be surprised at the G-7’s backlash. He said the group wanted to show that unlike authoritarian rivals like China and Russia, democratic nations work together to address global challenges.
“I think the tone was pretty clear on the concerns of these seven major advanced market economies about China, its economic coercion, its non-market policies and its human rights abuses,” Goodman said.
“And I think that was well telegraphed in the run-up to the summit. So Beijing shouldn’t be surprised.”