‘Powerful signal’: Biden’s infrastructure bill sends message to China
President Joe Biden has billed the $1 trillion infrastructure investment package under consideration in the Senate as critical to keeping the U.S. ahead of China. In February, he told senators that Beijing’s infrastructure investments were far outpacing Washington’s, and warned that without similar investment, “[China is] going to eat our lunch.”
He’d better guard that proverbial midday meal closely, because Chinese leader Xi Jinping is already digging in.
Biden’s signature effort, the bipartisan infrastructure deal the Senate will likely approve this weekend, includes $550 billion in new funding for roads, bridges, railways, broadband and electrical vehicle technology, among other areas.
That number doesn’t reflect what America’s states, cities, and counties — not to mention the private sector — will spend over the same 10-year period. Although U.S. accounting regulations don’t obligate firms to disclose details of capital spending, publicly available data on private sector infrastructure spending patterns underscore the scale of their contribution. The Washington, D.C.-based Progressive Policy Institute estimates that capital investment by U.S. broadband providers, including AT&T and Verizon, totaled $52 billion in the first half of fiscal year 2020 alone.
But a review of proposed spending in Beijing’s latest annual budget and five-year plan indicate that the U.S. faces an enormous challenge merely in keeping up. Here’s a number that is illustrative of the gap: China poured more cement from 2011-2013 than the U.S. did in the entire 20th century.
Numbers from the National Bureau of Statistics show that China spent about $8 trillion on infrastructure investment in 2020. The U.S. spent $146 billion in federal money over the same period. A comparison of 2018 infrastructure spending as a percentage of GDP by 48 Organization for Economic Co-operation and Development countries ranked China first at 5.57 percent compared to 0.52 percent for the U.S.
And China isn’t slowing down. Its 2021 budget alone allocates $94 billion in spending for “new projects” that include “the development of new infrastructure.” That figure is supplemented by local government special bond issuances that primarily fund infrastructure construction. From January to April 2021, the value of those special bond issuances totaled $36.4 billion.
The Biden plan seeks to play catch-up — with a fraction of the funding — to improve and expand key infrastructure sectors that China has been laser-focused on with vast allocations over decades. One of those is rail, with the Biden plan allocating $66 billion to Amtrak. The lion’s share of that spending addresses various issues, including eliminating Amtrak’s maintenance backlog and modernizing the Northeast Corridor, but will also fund building new long-distance train routes. The White House said the investment will “bring world-class rail service to areas outside the Northeast and mid-Atlantic.”
In contrast, China grew its rail network by 21 percent to 91,000 miles between 2015 and 2020 and plans to build another 31,000 miles of track by the end of 2035. That will put China on a path to surpass the 161,000-mile rail network in the U.S. by the middle of the century.
The infrastructure bill has allocated $110 billion for roads, bridges and major projects. Although a hefty focus of that spending will fund repairs and upgrades, it will also underwrite new construction. Meanwhile, China intends to extend its expressway system 47 percent by 2035. That growth will extend China’s expressway network to a length of 124,000 miles, surpassing the size of the current U.S. expressway network of 98,000 miles.
The bill proposes spending $7.5 billion to create a national network of public electrical vehicle (EV) charging stations to “address the climate crisis and support domestic manufacturing jobs.” The U.S. currently has a total of 42,000 public EV charging stations, compared to China’s 1.68 million. The Chinese total reflects a failure to reach a 2020 target of 4.8 million EV stations.
In February 2014, Biden provoked a furor by describing New York City’s LaGuardia Airport as being of “third-world country” quality compared to the “modern airport” in Hong Kong. LaGuardia is currently undergoing a $4 billion renovation, but Biden’s infrastructure bill allocates $25 billion for airports to address deficiencies, including reducing repair and maintenance backlogs. U.S. airports also benefit from passenger, tenant and local user fees as well as concession rental. Meanwhile, in February, the Chinese government announced that it will build 162 new airports by 2035.
The bill also directs $65 billion to create high-speed broadband internet access nationwide. Those funds are designed to address the absence of broadband internet in rural American communities. In contrast, Chinese state media announced in 2019 that 98 percent of the country’s rural communities had access to fiber optic or 4G broadband internet service.
Jarring statistical comparisons of cement poured and highways built can provide a deceptively rosy perception of China’s infrastructure, cautioned Min Ye, associate professor of international relations at Boston University. “In terms of overall infrastructure, China is quite behind the U.S., in particular in [central] and western China,” Ye said.
Ye also advised U.S. policymakers to avoid an “oversell of China threat” in relation to the country’s infrastructure investment.
Biden’s justification of a sharp increase in U.S. spending to compete with China’s infrastructure boom likely struck a chord on both sides of the aisle, Jonathan E. Hillman, senior fellow with the Center for Strategic and International Studies and director of the Reconnecting Asia Project told POLITICO.
“I think it’s encouraging to see that there is bipartisan recognition of the challenge that China presents,” Hillman said.
The Senate’s approval of the bill would indicate that lawmakers understand that competition with China “is first and foremost economic [and] technological, and in order to compete, we need to make these investments in ourselves,” he said.
Hillman added that one of the important side effects of bipartisan support for the bill is its “powerful signal” to Chinese officials who “believe that the United States is in decline.”
Biden’s narrative of Chinese infrastructure development threatening U.S. interests amounts to creating “imaginary enemies,” said Liu Ge, a senior research fellow at the Chongyang Institute for Financial Studies at China’s Renmin University.
The administration should recognize that “China is not the Soviet Union and not an enemy that poses threats to the security of the US,” Liu urged in a recent op-ed in Global Times, the state media platform.
Ye said the bill’s passage would prove a key Biden talking point as he sought bipartisan support: “Democracy can deliver.”
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