G7 Infrastructure Scheme a Futile Attempt to Counter the Belt and Road Initiative

Jul 01-2022   

Commenting on infrastructure plan announced by US President Joe Biden during the recent G7 summit, Prof. Yu Miaojie, Associate Dean of the NSD, told a Hong Kong-based media that the scheme is bound to fail due to its over-reliance on private investment.

The plan, involving USD600 billion within five years, is a rehash of the one which was put forward in last year’s G7 summit and had achieved precious little, said Prof. Yu. Under the new name still lies the proposition to counter China’s Belt and Road Initiative.

The US and European countries will respectively fork out USD200 billion and 300 billion euros within the next five years on infrastructure projects in underdeveloped countries. Unlike the Belt and Road Initiative, the scheme aims to raise funds primarily from private investors.

Prof. Yu said that infrastructure investment at its best takes a long period to pay back and at its worst offers no return at all, hence the usual need of governments to take on financing. Private investors will have a hard time mustering enough motivation for such projects, he said.

Another headwind that weighs down private investors is the expected stagflation in major economies, except for China, over the next five years as the pandemic-battered world economy lurches amid uncertainties, said Prof. Yu.

He added that President Biden’s emphasis on democratic values for meting out funds will achieve little. Democracy offers various forms and pathways, he said, so the American way doesn’t necessarily fit the other countries; in addition, the Western countries are hidebound in attaching strings as is evidenced by their extensive demands for helping South-east Asian countries out of the 1997 financial crisis.