In an event put on by the Peterson Institute, Brian Deese, director of the White House National Economic Council, discussed the Biden administration's Build Back Better World (B3W) partnership, and in that context offered some comments on how the administration's effort relate to China's Belt and Road Initiative.
In his opening remarks, he said that "our hope is that by pushing a multilateral approach that we can actually encourage more of a positive race to the top globally toward investing in a high road low carbon way that puts workers and worker rights at the center of our efforts":
So if we can get this right, by dramatically increasing our public capital investment in climate finance, by refashioning our direct financing tools, and by partnering with allies, our hope is to provide a positive alternative to the prevailing infrastructure investment regime, and to be explicit the China's Belt and Road Initiative, that has, over the last several years, too often been opaque, been a tool or a vector for corruption or investments that lack environmental, social and governance standards, and that create the risk that countries end up in the kind of debt traps that the Peterson Institute, that you, Adam, and others have been studying for years, and ultimately don't serve in the long term interest of the recipient countries and their people, or our climate objectives. So our hope is that by pushing a multilateral approach that we can actually encourage more of a positive race to the top globally toward investing in a high road low carbon way that puts workers and worker rights at the center of our efforts. And I would note that in this vein, it was notable that President Xi in his speech to the UN General Assembly, just a few weeks ago committed to no longer build new coal fired power projects abroad. It was a welcome sign.
In the Q & A portion of the event with Peterson Institute president Adam Posen, Deese elaborated on some of these points. Posen asked about how the administration could convince developing countries to participate in B3W rather than Belt and Road:
Adam Posen: Some of the issues here that make this complicated is the very aggressive, some ways generous, in some ways extremely forceful, or biased, lending by China bilaterally through a number of agencies. My colleague at Peterson Anna Gelpern and co authors have done a real yeoman work, you spoke of transparency, documenting how many of the Chinese Belt and Road Initiative loans have conditions that most of us would not approve of. On the other hand, there are some conditions that the US, Europe or Japan, G7 members put on that some governments, particularly less than high road governments, don't want. So how do you see this playing out, how do you make the value proposition for developing countries that you want to take the high road money from the G7 and not the low road money from China, or, alternatively, making them feel like they're not having to make a choice. You know, you can see some countries would want to say I don't want to be offending anybody, you know, both. And some countries might say I want to try to play off against each other and see who gives me the best bid.
Deese responded by suggesting that having the United States entering the development finance market with significant amounts of capital was important here:
Brian Deese: We get the question a lot ... , is B3W an explicit answer or counter to China's Belt and Road Initiative ... . One key element of the answer to that question is, in order to have a real serious conversation with developing countries that have extraordinary infrastructure needs, and extraordinary climate challenges in their own countries, is there has to be a viable option, with capital at scale. You can't ask a country that has immediate human needs to wait and pause and not take capital or investment on the uncertain prospect that there might be a high road opportunity there in the future. So the first step from our perspective was really putting our money where our mouth was, committing real resources and real energy to partner to create a viable high road alternative. I wouldn't underestimate the importance of that because there is skepticism, independent of a country that may want to play, you know, multiple actors off each other, there's a real skepticism that the high road capital opportunities even exist or are availing because of the commitments that haven't been fully delivered on. So the United States stepping up, providing a $11 billion a year in public capital investment, working to have one of the outcomes of this COP be that we can credibly show that that $100 billion is going to, that we're going to achieve that, that is a very important element of how we answer that question.