Growing Importance of China-Global South Cooperation Calls for A More Equitable Approach to Promoting Infrastructure-Led Development

The Chinese Foreign Minister Qin Gang begins a five-nation, week-long tour of Africa as his first pubic appearance in his new role. His trip continues a 33-year tradition of setting Africa as Chinese foreign ministers’ first diplomatic visit and marks the continued importance of Africa-China relations. Moreover, his planned visit to the headquarters of the African Union and the Arab League highlight the growing importance of countries in the Global South in China’s diplomatic relations amid U.S.-China competition at all fronts.

Of the diversifying forms of cooperation between China and the Global South, infrastructure cooperation continues to be a critical component. As the world faces an enormous infrastructure gap, China has taken the lead in providing infrastructure financing across the developing world that has triggered Western investments as well. China’s infrastructure-led approach in its foreign economic engagement and in South–South Cooperation has attracted increased attention in recent years. The Belt and Road Initiative (BRI), by providing loans to support developing countries to enhance infrastructure connectivity and industrial capacity, further highlight the potentials of infrastructure in helping countries grow.

In using infrastructure to stimulate economic growth, policymakers should not assume that a rising tide naturally lifts all boats. As the importance of China-Global South cooperation continues to grows, it is important to consider the widening inequality gaps in the developing world and take a more equitable approach to promoting infrastructure-led development that attend to both benefit and cost, and winners and losers.

Among infrastructure projects that Chinese entities are building around the world, megaprojects attract particular attention because of their large scales and salient visibility. They offer huge potentials for national transformation, and vigorous debate on their cost and benefit. According to Chinese overseas investment data from China Global Investment Tracker, megaprojects exceeding $1 billion account for 18% of the total number of BRI projects and 56% of BRI total investment.

To be sure, megaproject development is not a new phenomenon. It dates back to ancient time as exemplified by the Great Wall and the Pyramids. Over the past few decades, it has been widely applied in post-war reconstruction (e.g. the Marshall Plan), international development (e.g. World Bank’s support for megaprojects between 1960s and 1970s), and industrialization (e.g. worldwide industrial park development).

China’s recent development offers some new features that add promise to the infrastructure-led approach. First is how China cooperates. China engages in South-South Cooperation by introducing a pragmatic infrastructure-led logic rather than applying a one-size-fits-all model used wildly elsewhere. Second is its economic model. It offers infrastructure to the Global South more efficiently and at a lower cost and inspire host countries with its own development trajectory. It addresses the structural transformation needs of China and host countries—by allowing Chinese firms to leverage their infrastructure; it resolves host countries’ connectivity and investment bottleneck and facilitates their industrialization, growth and jobs creation. Third is its lack of political strings. China adopts a need-based, economic-centered, no-strings attached approach in working with the Global South, and generally does not interfere with host countries’ governance approach and development pathways.

The benefit of infrastructure-led development may not be distributed evenly. In my dissertation, for example, I assessed the perceived socio-economic impact of the Kenyan Standard Gauge Railway, a flagship BRI project and the largest infrastructure investment that Kenya has undertaken in a century. I conducted an original survey with 132 experts and interviews with 91 community residents across five cities and towns. I find that while the SGR addresses economic development as a shared priority among stakeholders and has significantly helped tourism and moderately enhanced employment. Meanwhile, it has also created winners and losers divided by business sizes, sectors and locations.

For example, the tourism sector benefited from the introduction of the railway because of significant increase in domestic tourists. However, the road transportation sector has been hit hard by the railway. While those who have used the railway hail the efficiency and convenience of the railway, those whose livelihoods have been negatively impacted comment bitterly about the railway. My research finds that this uneven distribution of interests and the divided narrative about the SGR is starting to shape public opinion of not only the SGR, but infrastructure megaproject development at large. An initial full-hearted welcome has gradually transitioned to doubts about its developmental benefits from interest groups.

As illustrated with the example above, the positive changes introduced by China-financed infrastructure must be accompanied by a more inclusive approach to make infrastructure development sustainable. In recent years, the Chinese project developers have introduced growing corporate social responsibility efforts such as building schools in small villages and digging wells for places suffering from drought.

While these efforts support local livelihoods, the local government, which understands local needs and have more resource mobilization capability locally, must be more involved in attending to local needs. These include offering more supporting facilities and services along the physical infrastructure. For example, a brand-new railway station may be accompanied by more reasonable rules for street vendors, so they can sell to customers along the railway and support railway development.

To maximize positive impact, China’s infrastructure-led model may benefit from integrating “hard” and “soft” infrastructure development, that is, combining physical infrastructure construction with development of supporting services and facilities to promote more equitable growth worldwide.

As the world faces an enormous infrastructure gap, China has taken the lead in providing infrastructure financing across the developing world. Megaprojects offer huge potentials for national transformation, and vigorous debate on their cost and benefit. While China’s recent development offers some new features that add promise to the infrastructure-led approach, positive changes introduced by China-financed infrastructure must be accompanied by a more inclusive approach to make infrastructure development sustainable and equitable.

Keren Zhu is an ASCIR-CA/AC fellow, a postdoctoral researcher at the Boston University Global Development Policy Center