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DAILY NEWS ANALYSIS

  • 29 June, 2022

  • 8 Min Read

PGII to counter China's Belt and Road Initiative

PGII to counter China's Belt and Road Initiative

In the recent G7 summit in Germany, the ambitious Partnership for Global Infrastructure and Investment (PGII) was unveiled, with the aim of collective mobilization of $600 billion by 2027 for transparent investment in infrastructure projects in developing and middle-income countries.

It’s a G7 initiative to counter China’s multi-trillion-dollar Belt and Road Initiative which the West considers China’s strategy to increase its geopolitical influence in Asia and other developing and low-income countries in the disguised identity of connectivity, infrastructure, and trade projects.

What is PGII?

  • In 2021 the G7 partners along with European Union launched the Build Back Better World (B3W) intending to fill the $40 trillion infrastructure gap in the developing world. PGII is the relaunch and better version of B3W.
  • It is a value-driven, high-impact and transparent infrastructure partnership to narrow down the infrastructural needs of low and middle-income countries including India.
  • Under this, the US has pledged to mobilize $200 billion over five years, through grants, public finances, and private capital for PGII, while the European Union has pledged 300 billion euros for the partnership for the same period.

Kinds of Projects undertaken by PGII

PGII projects for investment will be driven by four priority pillars:

  • To tackle climate crises and ensure global energy security through clean energy supply chains.
  • To boost digital information and communication technology (ITC) and adoption of technologies such as 5G and 6G internet connectivity, and cybersecurity.
  • Projects that aim to work for gender equality and equity.
  • To build and upgrade Global health and infrastructure.

Projects that are set to begin under PGII

  • The US along with G7 countries and European Union are disbursing a $3.3 million technical assistance grant to build a vaccine facility with a yearly capacity to manufacture millions of doses of COVID19 and other vaccines in Senegal.
  • European Union supporting mRNA vaccine plant in Latin America and a fiber optic cable linking project, linking Europe to Latin America.
  • In India, the US is will invest in a venture capital fund (Omnivore Agritech and Climate Sustainability Fund 3), which invests in startups and entrepreneurs working in the field of agriculture, food security, climate, and rural economy in India.

PGII in comparison to China’s BRI

About China’s Belt and Road Initiative

  • It was launched in 2013 to revive the ancient Silk Road through connectivity, infrastructure, and trade.
  • It is a two-pronged approach that aims to build Silk Road Economic Belt on Land and a Maritime Silk Road.
  • The project was initially aimed to build connectivity to South East Asia but was later expanded to South and Central Asia, Latin America, Europe, and Africa.
  • BRI invests in infrastructure projects like ports, airports, bridges, dams, coal-fired power stations, and railways along with digital infrastructure.
  • China builds BRI projects by extending low-interest, large loans to countries to be usually paid over 10 years and often leading to countries falling into a debt trap. For example, Sri Lanka had to cede its key Hambantota Port to China on a lease for 99years.

  • PGII on the other hand unlike China is a value-based plan to help countries meet their infrastructural needs and aims to build projects through grants and investments.
  • It focuses on climate action and clean energy, unlike China’s BRI which also built large coal-fired plants.
  • While PGII pledges a $600 billion investment by 2027 on the other hand as per Morgan and Stanly estimates, China’s overall funding by that time would reach $1.2 to $1.3 trillion.
  • Under PGII large private capital will be mobilized while China’s BRI is mostly state-funded.
  • PGII projects will be based on transparency while China’s BRI has been criticized for signing confidentiality agreements with countries leading to countries indebted to China, often referred to as neocolonialization. For Instance, Pakistan owes a large proportion of its foreign debt to China due to the CPEC project.

India’s Stand

India opted out of China’s BRI initiative due to China’s increasing influence in the Indian Ocean Region and its neighbourhood, but a PGII project has been announced in India which shows India to be the beneficiary of this partnership.

Source: The Hindu


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