Wealthy nations in the Group of Seven have agreed to set up 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 governance said Monday.
Leaders from the G-7 nations met at a three-day summit in southwest England that ended 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 practices that undermine fair competition.
“This isn’t really intended to stop Belt and Road. But I think the G-7 is signaling that they want to offer an alternative which really revolves around two big things that these countries offer,” said Matthew Goodman, senior vice president for economics at Washington D.C.-based think tank Center for Strategic and International Studies.
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 Chinese President Xi Jinping’s signature foreign policy to expand his country’s global influence.
Goodman, who’s also the Simon Chair in political economy at CSIS, told CNBC’s “Squawk Box Asia” that the G-7 could make a “significant contribution” in closing the world’s infrastructure gap by channeling investments into developing countries.
In addition, the seven rich democracies would bring better safeguards to infrastructure projects — including transparency, accountability as well as environmental and social standards, said Goodman.
“I think that’s what they’re trying to signal here. Whether they can pull it off or not is another story, it’s a very difficult business,” he added.
The U.S. and many countries have been critical of the Belt and Road plan, accusing Beijing of leaving participating countries laden with untenable debt, while benefiting Chinese companies — many of them state-owned. In addition to the program’s environmental harm, critics also questioned the transparency of the deals.
China featured prominently in a communique released by the G-7 on Sunday. The G-7 countries are Canada, France, Germany, Italy, Japan, the U.K. and the U.S.
In addition to calling out China’s alleged human rights abuses and non-market policies, the G-7 also asked for more transparency on the origins of the Covid-19 pandemic. They stressed the importance of peace and stability across the Taiwan Strait, and expressed concerns about tensions in the East and South China Sea where China has overlapping territorial claims with its regional neighbors.
Beijing responded angrily to the communique on Monday.
The Chinese embassy in the U.K. said it firmly opposed the G-7 statement and was strongly dissatisfied. In a Mandarin-language statement translated by CNBC, the embassy urged the U.S. and other G-7 members to stop slandering China and interfering in Chinese internal affairs.
Before the release of the Chinese embassy’s statement, Goodman said Beijing shouldn’t be surprised of the G-7 pushback. He said the group had wanted to show that democratic nations are working together to address global challenges, in contrast to authoritarian rivals such as China and Russia.
“I think the tone was pretty clear about the concern that these seven large, advanced market economies have about China, its economic coercion, it’s non-market policies, its human rights abuses,” said Goodman.
“And I think that was well telegraphed in the run-up to the summit, so Beijing shouldn’t be surprised.”