The United States’ US$1.2 Trillion Infrastructure Bill: How Does It and ‘Build Back Better’ Act Compare with China’s BRI?

Posted by Reading Time: 4 minutes

US-Infrastructure Reading the financing detail reveals massive differences 

Op/Ed by Chris Devonshire-Ellis

The US House of Representatives finally passed the long-awaited US$1.2 trillion infrastructure bill on Friday after prolonged wrangling for months over its contents. It should be noted that the US infrastructure bill has a companion bill, the ‘Build Back Better Act’ (BBB), which is valued at US$1.75 trillion. Friday’s bill was passed after promises were made to also approve the BBB Act, which is expected to get passed around November 15. It’s not yet certain that it will pass – no Republican senators are expected to approve meaning every single Democrat senator will be required to sign it into law. Despite the promises, a lot could happen in a week. The infrastructure bill was passed only after the BBB Act value was reduced by 50 percent. So how do they compare with China’s Belt & Road Initiative (BRI)?

The US infrastructure bill

The infrastructure bill deals with traditional infrastructure and will largely be devoted to investments into the US (not overseas) infrastructure in roads, bridges, water systems, transit, and broadband connectivity. The funding is broken down as follows: 

  • Roads and bridges: US$110 billion
  • Railroads: US$66 billion
  • Power grid: US$65 billion
  • Broadband: US$65 billion
  • Water infrastructure: US$55 billion
  • Cybersecurity and climate change: US$47 billion
  • Public transit: US$39 billion
  • Airports: US$25 billion
  • Environment: US$21 billion
  • Ports: US$17 billion
  • Highway safety: US11 billion
  • Drought prevention: US$8 billion
  • EV charging stations: US$7.5 billion
  • EV school buses: US$7.5 billion

The total expenditure, which will be implemented in phases over an eight-year period, will be worth about US$120 billion per annum – equivalent to the annual budget for US Homeland Security. It should be noted that while the bill will be good news initially for US manufacturers involved in supplying necessary equipment (and the foreign multinational companies, including Chinese, who supply needed components), a boost to the US economy will take time to filter in; all these projects need to be built first. In effect, the results of the spending will not be seen for another decade. In contrast, China’s BRI build began seven years ago and has now largely entered service. An example is the huge increase in China-EU rail freight. It will take a while for new US infrastructure to kick in. It should be noted that the bill is purely aimed at US infrastructure and not at building infrastructure in other countries.

The Build Back Better Act

The BBB Act deals primarily with US social infrastructure. It currently has a value of US$1.75 trillion but is yet to be passed – we’ll know more about what it contains later this month after the political wrangling stops. It should be noted that despite being touted to the media as an ‘alternative’ to China’s BRI, it is far from being so. US President Biden spoke of it being worth US$3.5 trillion, an amount now cut by 50 percent. The BBB Act is designed as an investment “into the American people” according to Biden and deals largely with US healthcare, childcare, elderly care, prescription drugs, and preschool. It also provides for tax cuts for the US middle class. The proposed BBB bill currently contains the following provisions:

  • Clean energy: US$500 billion
  • US childcare and family medical leave: US$400 billion
  • Child tax credit: US$200 billion
  • Elderly home care: US$150 billion
  • Housing: US$150 billion
  • ACA credits: US$130 billion
  • Immigration: US$100 billion
  • Equity investments: US$90 billion
  • Vocational training: US$40 billion
  • Medicare: US$35 billion
  • SME development: US$25 billion
  • Child nutrition: US$10 billion
  • Supply chain development: US$5 billion

What got cut from BBB

Planned expenditure increases in or from:

  • Billionaires Income Tax
  • Free Community College Education
  • Medicare for Dental & Eyesight
  • Agriculture & Forestry
  • Banking Committee
  • Commerce Committee
  • Energy & Natural Resources
  • Environment & Public Works
  • Working-Class Tax Cuts
  • Labor & Pensions
  • Homeland Security
  • Judiciary
  • Native American Indians
  • US Military Veterans

In short, there is nothing really in either the bipartisan infrastructure bill or the BBB Act that contains any indication that the US intends to finance any overseas logistics infrastructure at all. The sole entry within these expenditures is investments into American ports (US$17 billion), railways (US$66 billion), roads and bridges (US$110 billion), and supply chains (US$5 billion). There are no provisions or commitments to investing or financing any overseas infrastructure, and no mention of any new funding being put into US policy banks or overseas investment or trade development programs. It follows a long tradition of the ‘World’ meaning America. The benefits to the global community from the BBB Act will be improved US infrastructure, which could take (depending on the project) five to 10 years to materialize. It must be noted here that ‘Build Back Better World’ (B3W) – which sounds similar to the BBB Act – is different. It isn’t US infrastructure spending along the BRI lines but is a US-led G7 initiative, launched in June this year, to offer a strategic alternative to the Chinese BRI – in low- and middle-income countries who need US$40 trillion worth of infrastructure by 2035. B3W is slated to be in line with the standards and principles of the Blue Dot Network, which facilitates development financing related to the environment and climate, labor and social safeguards, financing, construction, anticorruption, and other areas.

One down, one to go

Next up is the European Union’s (EU) ‘Global Gateway’. Brussels has been touting that as a €1 trillion expenditure, but it too has yet to be agreed upon, and questions remain over its funding. It, too, will almost certainly be watered down, and like the US, mostly diverted to internal projects. However, the EU is a different animal from the US; after all, it sits on the same Eurasian landmass as Russia, the Middle East, Central Asia, and China and is just a few kilometers off the northern shores of Africa. EU funding of Eurasian and African infrastructure makes far more sense than for the US. In real terms, the US infrastructure bill details domestic infrastructure expenditure of about US$120 billion per annum. China’s 2021 domestic infrastructure expenditure is estimated to be about US$131 billion. In addition to that, China is estimated to have invested some US$85 billion annually overseas in infrastructure development since the BRI began. Neither the US nor the EU comes close. There is no comparison to China’s Belt & Road, there is little appetite to actually compete with it. And when it comes to infrastructure spend comparisons, Biden’s infrastructure bill, at US$120 billion, sees the US spending it on itself while China overseas infrastructure funding amounts to US$85 billion.

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