EU-US plan to counter China's $1trillion global infrastructure, explained

beijingwalker · Oct 13, 2022

EU-US plan to counter China's $1trillion global infrastructure, explained

October 13 2022

The launch of Global Gateway is a reflection of US and EU's growing worry over China's more assertive foreign policy and the expansion of BRI into Europe.

The President of the European Commission Ursula von der Leyen has announced that a conference between the EU and the US will be held to coordinate efforts for value-based international investment.

She said the meeting will "bring forward a value-based investment agenda for the world" alongside US President Joe Biden when speaking to EU ambassadors at their annual conference in Brussels on Wednesday.

The cooperation would complement the EU's Global Gateway Initiative. It is a connectivity strategy that the European Union (EU) unveiled in December 2021 with the intention of building efficient, sustainable, and secure connections with nations all over the world.

It will influence the future of business by investing in supportive infrastructure, which is seen as a symbol of a changing world.

In an effort to challenge China's unprecedented $1 trillion infrastructure investments in numerous economies throughout the world, the project intends to increase the union's influence.

China’s Belt and Road Initiative (BRI) is the country’s most significant geopolitical tool for enhancing its soft power and carrying out its ambitions. The project aims to connect China and other nations economically through ports, trains, and other infrastructure.

The Global Gateway program places a strong emphasis on democratic principles, ethical leadership and openness, equitable collaborations, and environmentally sound infrastructure.

The Commission declares that it will "invest in international stability and cooperation and demonstrate how democratic values offer certainty and fairness for investors, sustainability for partners, and long-term benefits for people around the world" in what can only be seen as the EU drawing a clear contrast to the Chinese model.

The EU says it would provide partners with sound financial conditions, including grants, advantageous loans, and budgetary guarantees, to lower investment risks and enhance debt sustainability, in yet another criticism of the Chinese strategy.

This appears to be a reference to claims that China engages in "debt-trap diplomacy," a strategy that has come to be known as "predatory lending," in order to obtain influence over the nations in which it finances projects.

But China argues that the Belt and Road Initiative, like the Global Gateway, is an effort on its part to assist developing nations in gaining access to the necessary funds for significant infrastructure projects.

China refutes accusations that it is engaging in such malevolent tactics.

Numerous nations, including some EU members, support the BRI as well, including Bulgaria, the Czech Republic, Estonia, Greece, Hungary, Italy, Latvia, Luxembourg, and Poland, have joined the BRI.

The UK's Centre for Economics and Business Research has revealed that the project may increase global GDP by USD 7.1 trillion annually by 2040.

The launch of Global Gateway by the EU is a reflection of its growing worry over China's more assertive foreign policy and the expansion of BRI into Europe.

But the Global Gateway has also drawn criticism for choosing to rebrand ongoing programmes rather than providing additional cash for networking initiatives.

This raises the possibility that the programme may just turn into a collection of projects rather than a comprehensive connectivity plan that makes use of additional financing.