Build Back Better World (B3W)
Source : Indian Express
International Relation

What is discussed under Build Back Better World (B3W) ?

1. Guideline principles
2. What are the challenges posed by China-BRI ?
3. How China’s BRI impact India and region ?

Why in News ?

G-7 leaders  proposed Build Back Better World (B3W) to counter China’s rising influence across 100-plus countries through Belt Road Initiative (BRI) projects.

• The space which has been increasingly captured by China through 2,600 BRI projects with trillions of dollars of investment.

Key Facts

• What is the news ?
  • B3W aims to address the infrastructure investment deficit in developing and lower income countries.
  • It would leverage the G-7’s development finance tools in investments in low- and middle-income countries around the globe.
  • G-7 leaders should also be able to leverage their domestic and international experience to enhance equity and address the needs of vulnerable populations.
  • According to G-7 countries the low and middle income countries need $40+ trillion infrastructure requirement.
  • G-7 and their partners also have deep experience with bilateral and multilateral development finance, which could help address the $40+ trillion global infrastructure gap that has been identified by the G-7.
• Build Back Better World (B3W)

  

  • Initiative undertaken by G7 countries launched on June 21.
  • Providing support for the infrastructure development of the low and middle income countries
  • B3W aims to catalyze funding for quality infrastructure from the private sector and will encourage private-sector investments.
  • This also support climate, health and health security, digital technology, and gender equity and equality.
  • Guideline principles :
    • Values-Driven :Infrastructure development carried out in a transparent and sustainable manner—financially, environmentally, and socially.
    • Climate-Friendly : The investments will be made in a manner consistent with achieving the goals of the Paris Climate Agreement.
    • Strategic Partnerships : Infrastructure that is developed in partnership with parties whom it benefits will last longer and generate more development impact.
    • Private Partnership : Significant increase in private capital to address infrastructure needs. 
    • Multilateral Public Finance : Make use of Multilateral development banks standards for project planning, implementation, social and environmental safeguards, and analytical capability. 

What are the challenges posed by China-BRI ?

• Belt and Road Initiative
  • The BRI seeks to build rail, maritime and road links from Asia to Europe and Africa in a revival of ancient Silk Road trading routes.
    • BRI, earlier known as One Belt One Road (OBOR).
    • South-east Asia to Eastern Europe and Africa, Belt and Road includes 71 countries that account for half the world’s population and a quarter of global GDP.
  • Improving regional integration, increasing trade and stimulating economic growth are the major aim.
  • Belt and Road Initiative is expected to cost more than $1tn.
  • BRI projects broadly aim to facilitate cross-border transportation of goods, access to energy, creating demand for existing excess capacity in Chinese industries.
  • Objectives of the projects undertaken in different countries vary but overall focus is on developing transportation, logistics and communications.
    • This would reduce trade and transaction cost for China’s trade, give more market access to Chinese markets and ensure stable supply of energy and other resources.
• What is its impact ?
  • China’s FDI  outflow to inflow ratio increased to 1 from around 0.34 during 2001-10.
  • In volume terms the FDI  outflow increased to an average of $140 billion in 2016-19 from an annual average $25 billion during 2001-10.
  • China’s share of FDI outflows increased from 2.3 per cent during 2001-10 to 10.7 per cent during 2016-2019.
  • China has signed diverse projects worth $548.4 billion, including four-fifths in the BRI participating countries ($461 billion).
    • Presence in Africa
      • China has an exposure of vast contracts worth around $123 billion in Sub-Saharan Africa (SSA).
      • Mainly with Nigeria, Zambia, Ethiopia, Angola, Tanzania and Kenya, mostly focusing on hydro and oil energy, shipping and rail transport.
      • Kenya the African hub and plans to connect it with other land-locked countries in the region, including Uganda, South Sudan, Rwanda, etc.
    • China’s second preferred region under the BRI as construction contracts worth $110 billion are under way, and 80 per cent contracts are concentrated in Pakistan, Bangladesh, Russia, Iran and Kazakhstan.
    • China-Pakistan Economic Corridor (CPEC), the Bangladesh-China, India, the Myanmar Economic Corridor (BCIM) and the Colombo Port City Project in Sri Lanka are other projects.
    • China has signed construction contracts worth around $96 billion under BRI, largely focusing on Saudi Arabia, UAE and Egypt, with 70 per cent allocation of total regional contract agreements.
    • East Asian Region
      • Biggest contracts have been with Indonesia, Malaysia and Laos worth $18.5 billion, $17.1 billion and $11.2 billion respectively.
      • Focusing on transportation, railways, roadways and waterways, for better integration between China and ASEAN countries.
    • China with Europe
      • Major projects include a freight train project from Ukraine to Kazakhstan through Georgia, Azerbaijan, Kazakhstan.
      • Greek port Pireaus, the China-Belarus Industrial Park, and the Green Ecological Silk Road Investment Fund are other major projects.

How China’s BRI impact India and region ?

• Many countries, including India, would see an adverse trade impact on their products’ competitiveness, market access, resource extraction etc. due to Chinese competition.
• China has stepped up its huge infrastructure investments in Bangladesh, Nepal, Sri Lanka and Maldives rising concerns of its growing influence in India’s immediate neighbourhood.
• India and US raise concerns over debt-diplomacy of China
  • As part of this policy recently Sri Lanka handed over its Hambantota Port to a state-run Chinese firm in 2017 for a 99 years’ lease in a debt swap amounting to $1.2 billion.
  • Malaysia has also deferred several projects under the BRI, citing cost revaluation.
  • Djibouti, Kyrgyzstan, Laos, the Maldives, Mongolia, Montenegro, Pakistan and Tajikistan are among the poorest in their respective regions and will owe more than half of all their foreign debt to China.
• India was the only country in the eight-nation Shanghai Cooperation Organisation grouping which opposed the initiative.

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