B3W vs China: why is India so jumpy?

Before discussing the Build Back Better World (B3W) initiative, it may be prudent to analyse its evolutionary process. B3W is actually the new form of two previous initiatives led by the American government, the United States Innovation and Competition Act (USICA) and the Blue Dot initiative. USICA is a $200 billion plan aimed at countering China’s influence domestically and abroad. As reported by the American media, USICA has gained bipartisan support and has been labelled as a “must-pass” legislation, but the negotiation process has resulted in the inclusion of amendments and provisions that deviate from the bill’s original goal.

The main provisions of USICA, as enunciated by the American Action Forum, are reproduced here:

The bill proposes an expanded role for the federal government in “strategic sectors” — including semiconductors, drones, wireless broadband, and artificial intelligence — with increased funding, supervision, and regulation of various industries. It also further expands the use of trade provisions in order to restrict the flow of Chinese goods and services and to bolster President Joe Biden’s Buy American agenda.

This legislation was initially introduced in 2020 by Senators Chuck Schumer and Todd Young as the Endless Frontier Act (EFA). The EFA was then expanded in the past few weeks to include several other provisions. It is now a division within the expanded package which has now been renamed as USICA.

Proponents of the bill believe the legislation is meant to counter China’s political and economic influence. To this end, it pours billions of taxpayer funds into US technology to counter China’s growing economic and political influence. The bill has support from both sides and is likely one of the few bipartisan legislative packages that will come out of Congress this year.

Following are the discerned strategic thrust lines:

It is supposed to include a strategy to increase public investment, lending, and trade abroad, focusing mainly on Latin America, the Caribbean, Taiwan, Africa and Southeast Asia.

“It establishes intellectual property protections from foreign nations, exclusion from funding programmes, and diminishing purchases of goods and services from specified nations.

It highlights the importance of regaining leadership positions in international standard-setting boards in order to ensure international trade standards benefit the US. It also aims to counter the influence China has gained through its increased investment in regions such as Africa, Southeast Asia, and Latin America, which apparently has allowed it to foster better trade relations and favourable terms for its enterprises.”

The bill facilitates research and development in “key-technology focus areas” including robotics, artificial intelligence, and advanced energy sources. These provisions expand the federal government’s role in incentivising higher education institutions to do more on these fronts.Now we come to the morphing of the Blue Dot Initiative into B3W. Asia Times has summarised the main thrust lines of the Blue Dot Initiative as given below.Amid an escalating new cold war, the Biden administration has tried to mobilise allies and partners to slow China’s technological strides and arrest its rising global influence. The US has doubled down on reviving the Blue Dot Network, a long-dormant initiative launched by the previous Trump administration to counter Beijing’s Belt and Road Initiative (BRI), and it has now morphed into B3W.

As highlighted by the White House website, B3W is an affirmative initiative for meeting the tremendous infrastructure needs of low- and middle-income countries. President Biden and G-7 partners agreed to launch the bold new global infrastructure initiative B3W, a value-driven, high-standard, and transparent infrastructure partnership led by major democracies to help narrow the $40+ trillion infrastructure need in the developing world, which has been exacerbated by the Covid-19 pandemic.

Through B3W, the G-7 and other like-minded partners will coordinate in mobilising private-sector capital in four areas of focus — climate, health and health security, digital technology, and gender equity and equality — with catalytic investments from our respective development finance institutions.

How has China responded? Chinese media, led by Global Times, came hard on USICA and B3W and blasted the neo-colonist policies of the western bloc. China has labelled it as a fabrication of the so-called “China threat” to preserve the US global hegemony and seeks to deprive China of its legitimate development rights through technological and economic “decoupling”.

China harshly criticised the US Senate’s passing of innovation and competition bill, saying that the legislation is full of Cold War mentality, grossly interferes in China’s internal affairs and is doomed to fail, urging Washington to halt the legislation to avoid further damaging China-US relations and cooperation.

Resolute countermeasures from China are expected including trade war and legislative amendments. NPC’s Standing Committee is moving ahead with an anti-foreign sanctions draft law this week, which aims to counter unilateral and discriminatory sanctions imposed by foreign governments on Chinese entities and individuals. The Chinese media stated that the US bill will not change the increasingly confrontational China-US ties and will only reinforce China’s head-on pursuit of technological independence, as per analysts.

Meanwhile, Indian media went overboard projecting the B3W initiative as if it’s going to bring in a new era of prosperity for 900 million Indians surviving on food stamps issued by the Modi government. The same euphoria was displayed when India joined QUAD, however, nothing concrete has come up. India lost 1,450 square km in Ladakh to the Chinese army, but Quad never came to her rescue, resulting in an embarrassment of the world’s third largest army.

It may also be interesting to have a look at the economic state of G-7 members. Since the seven countries first got together in the 1970s, their share of global GDP has halved to 40%. Can B3W take on China’s BRI, then?

Unlike the new world order crafted after World War II, western countries may have lost the appetite to jump into another cold war. Italy joined the BRI in 2019, and could find her hands tight.

The G-7 are some of the most indebted countries in the world. Today, US public debt stands at $28 trillion, the UK’s at $3 trillion, France $3.2 trillion, Canada $2.3 trillion, Italy $3.3 trillion, Japan $1.3 trillion and Germany is almost at $3 trillion. How can these paper tigers confront the BRI backed by a surplus Chinese economy?

China has already engaged over 100 countries in BRI. The G-7 is selling a red herring which exists on paper only. Let’s see if B3W becomes a practical reality or not.

Published in The Express Tribune, June 29^th, 2021.

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