US is Lagging Behind China on Infrastructure & Biden’s $2trn Plan is no Solution

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by Tom Fowdy
US is lagging behind China on infrastructure & Biden’s $2trn plan is no solution – because America only ever spends big on wars
FILE PHOTO: China Railway High-speed Harmony bullet trains are seen at a high-speed train maintenance base, as the Spring Festival travel rush begins, in Wuhan, Hubei province, China February 1, 2018 © REUTERS/Darley Shen

Joe Biden’s $2 trillion infrastructure plan, aimed at digging the US out of its Covid-19 slump, is also an attempt to play catch-up with China. But competing with Beijing on infrastructure is a nonstarter for a variety of reasons.

China is “going to eat our lunch” if the US doesn’t get moving on infrastructure, Biden remarked earlier in February.

The plan Biden unveiled on Wednesday proposes splashing out on the modernization of railways, roads and ports, as well as America’s development of electric vehicles. It would invest in manufacturing in the area of core technology, such as semiconductors, as well as building homes and broadband infrastructure, and helping needy groups in society. There’s a big environmental focus, too. You have to hand it to him, it’s ambitious.

However, it also seems to be an attempt to emulate China. The question is whether it will work. Of course, you cannot attribute the entire purpose of the proposal to that alone, but it’s arguably a big chunk of its motivation. It’s well known that Beijing builds big on high-speed railways, airports and other infrastructure to drive its economic development. Yet, the Biden-proposed “once in a generation” program ultimately remains only a fraction of what China has utilized, with over $7.5 trillion of projects planned last year alone (not all of which are commissioned at once though). It might also be worth noting that China has slowed the pace down due to debt fears. Either way, America can’t win at this game. The stark differences in the two political systems and the hurdles Biden faces ultimately means America cannot emulate Beijing’s methods to steam ahead.

China’s political system is conveniently suited to grandspeed infrastructural development, and arguably nowhere else in the world is comparable. Its completely centralized and hierarchical means of decision making instantly bypasses all the haggling and bureaucratic constraints of budgeting, planning, approval and domestic politics which makes the construction of infrastructure in the West a timely process. Of course, this does bring the associated disadvantages of building some things in excess as well as failing to protect people’s homes, property and sometimes the environment. Yet, it arguably works, and China subsequently has been able to construct the world’s longest high-speed rail network, 5G network and the world’s largest airport (Beijing Daxing) in unprecedented time.

Biden is clearly inspired by this. He realizes that America needs to catch up, but he simply can’t. The US process for infrastructure spending is long, tedious, tiresome and is being contemplated in an environment of extreme political polarization.

First of all, there is no centralized leadership like in China. Congress constitutionally holds the power of the purse, not the president. He has to negotiate with them. Whilst Biden has the privilege of having his own party control both houses of Congress, this still does not make it an easy task. The bill will not be blocked, but he will have to substantially modify its contents in order to appease the interests of various constituencies and party factions, which will change areas of it. What the president is imposing now is a vision, but any keen observer knows this is an opening gambit. The end product will in fact be a consensus, it will be watered down.

Meanwhile, the Republicans, even if they cannot block the bill, are already attacking it. The Grand Old Party is seizing on Biden’s intentions to raise corporation taxes to pay for it, Sen. Mitch McConnell has slammed it as a “Trojan horse,” and all the usual “big government” critiques are going out.

The environment phase is facing significant resistance too. What this scenario reveals is that when Biden says the bill is “once in a generation,” he means it, because the political capital required to sustain consensus on such spending is huge.

China, as a one-party state with no opposition, can do it again and again where needed, but in America the cogs of the entire political system have to be rolling. Agreeing to spend such an astronomical amount of money, before you even get to the question of ‘how,’ is simply exhausting. When the Republicans dominated the Senate before the election, the bid for a second stimulus relief package simply got nowhere. Right now, it is Biden’s honeymoon period, as the opposition party tends to dominate Congress from the mid-term onwards.

In this case, an attempt to compete with China on infrastructure is a nonstarter. America, of course, desperately needs better infrastructure regardless of geopolitical considerations. However, two very different systems of government mean the game in each country is totally different.

What Biden is proposing is otherwise piecemeal for Beijing. It’s a short-term boost, but not a long-term strategy, and soon the gridlock of the US political system will ultimately weigh down on him as it always does.

In America, unless it is about arms and wars, spending money is controversial, which is unfortunate when your biggest geopolitical adversary is all about spending money relentlessly – be it at home or overseas.

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