IRIA News

G7 announces infrastructure initiative to Counter China’s multi-billion-dollar Belt and Road Initiative

The Group of 7 (G7) countries announced a $600 billion global infrastructure initiative by 2027 to counter China’s multi-billion-dollar Belt and Road Initiative which includes massive investments across emerging economies.

U.S. President Joe Biden and other G7 leaders relaunched the Partnership for Global Infrastructure and Investment (PGII) first announced at last year’s G7 talks in the UK when it was dubbed “Build Back Better World”.

The project is aimed to compete with China’s Belt and Road Initiative (BRI) which strengthened China’s ties with the developing world, especially in Asia and Africa, by offering finance for projects such as roads, railways and ports.

Speaking at the annual G7 gathering being held this year at Schloss Elmau in southern Germany, Biden said the United States would mobilize $200 billion in grants, federal funds and private investment over five years to support projects in low-and-middle-income countries that help tackle climate change as well as improve global health, gender equity and digital infrastructure.

“I want to be clear. This isn’t aid or charity. It’s an investment that will deliver returns for everyone,” Biden said, adding that it would allow countries to “see the concrete benefits of partnering with democracies.”

Biden highlighted several flagship projects, including:

• $2 billion solar development project in Angola with support from the Commerce Department, the U.S. Export-Import Bank, U.S. firm AfricaGlobal Schaffer, and U.S. project developer Sun Africa.
• In collaboration with G7 members as well as EU and multilateral organizations, the U.S. International Development Finance Corporation (DFC) is disbursing a $3.3 million technical assistance grant for early-stage project development for an industrial-scale flexible multi-vaccine manufacturing facility in Senegal.
• U.S. telecom company SubCom awarded a $600 million contract to build the 17,000 km Southeast Asia–Middle East–Western Europe 6 submarine telecommunications cable that will connect Singapore to France through Egypt and the Horn of Africa.
• DFC will invest up to $30 million in Omnivore Agritech and Climate Sustainability Fund 3, an impact venture capital fund that invests in entrepreneurs building the future of agriculture, food systems and the rural economy in India. 
• U.S. Government with U.S. firm NuScale Power will provide $14 million in support for the Front-End Engineering and Design study for Romania’s deployment of a first-of-its-kind small modular reactor (SMR) plant. 
• USAID will aim to commit up to $50 million over five years to the World Bank’s new global Childcare Incentive Fund.
• DFC will invest up to $25 million in the Uhuru Growth Fund I-A to support small-and-medium-sized enterprises in West Africa.
• Digital Invest program to mobilize up to $335 million in investment capital for internet service providers and financial technology companies in Africa, Asia, and Latin America.

Meanwhile, European countries will mobilize 300 billion euros for the initiative over the same period to build up a sustainable alternative to China’s Belt and Road Initiative project, said European Commission President Ursula von der Leyen.

The summit brings together the G7 leaders of members Canada, France, Germany, Italy, Japan, the U.K. and the U.S. to discuss the world’s most pressing political and economic issues. During the three-day summit that started June 26, the member countries will discuss rising inflation, climate change, energy, food security and the Ukraine war as well as security challenges.

On the first day of the summit, G7 leaders announced that they will be banning all imports of gold from Russia, which is one of the top five exporters of gold in the world. “Together, the G7 will announce that we will ban the import of Russian gold, a major export that rakes in tens of billions of dollars for Russia,” U.S. President Biden said.