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Biden starts infrastructure bet with US far behind China
WED, MAR 24, 2021 - 5:50 AMBLOOMBERG
Washington
US President Joe Biden is betting that a multi-trillion-dollar economic plan centred on infrastructure spending will do more than bolster an American economy hammered by the coronavirus pandemic: It will ensure his country's competitiveness against China for decades to come.
"If we don't get moving, they're going to eat our lunch," Mr Biden told lawmakers in a pitch for his proposal shortly after his call last month with Chinese President Xi Jinping. "We just have to step up."
Mr Biden's advisers will present him this week with a detailed proposal for a plan whose cost could touch US$3 trillion, according to three people familiar with the deliberations. Infrastructure and climate change have long been described as key efforts in the pending programme, and the new details show the administration is eyeing some US$400 billion in so-called green spending, according to one of the people.
Even if he gets all he asks for, catching up to China on infrastructure won't be easy.
While US officials have been promising an approaching "infrastructure week" since the early days of the Trump administration, China has been ploughing ahead for years. In February, Mr Xi's government set out a 15-year plan for the country's transportation network. It pledges to extend China's rail network from 146,300 kilometres in 2020 to about 200,000 km by 2035 - enough to circle the equator more than five times.
The plan also calls for adding 162 new civilian airports, after Beijing's new US$11 billion international airport opened last year.
In contrast, the US has built just one major airport - Denver International - since the mid-1990s. And on rail, even a bipartisan effort to build the long-sought "Gateway" rail tunnel between New York and New Jersey - part of the busiest rail line in the US - has foundered in recent years.
China's infrastructure efforts aren't limited to China. Since Mr Xi introducing the so-called Belt and Road initiative in 2013, the World Bank estimated China has built or pledged to construct US$575 billion in energy plants, railways, roads, ports and other projects across the globe from Sri Lanka to Greece. Morgan Stanley in 2018 said total spending on the effort could reach US$1.3 trillion by 2027.
Mr Biden is hoping to begin leveling the playing field. If he can win support for his plan in a deeply divided Congress, there's certainly no shortage of projects to work on.
The US got an early start on all its infrastructure, but much of it is now aging or decrepit. According to the American Society of Civil Engineers 2021 Infrastructure Report Card, 43 per cent of US public roadways are in poor or mediocre condition, and 42 per cent of the nation's 617,000 bridges are at least 50 years old. About 7.5 per cent of them are considered structurally deficient.
"The United States is entering what could be a decades-long competition in which economic and technological power will matter just as much, if not more, than military might," Jonathan Hillman, a senior fellow at the Center for Strategic and International Studies, wrote last month. "Starting this race with decaying infrastructure is like lining up for a marathon with a broken ankle." The engineering report doesn't go into another challenge that may have a defining imprint on competitiveness between the US and China: technology infrastructure.
The US is still mired in domestic political debates about how to get broadband technology rolled out across the nation. More than a third of Americans in rural areas still lack high-speed access, according to the Federal Communications Commission. Money to help close that gap is expected to be part of any new US proposal.
Despite Mr Biden's impulse to push for big spending, the track record of recent presidents suggest he's likely to fall short.
Donald Trump, a real estate developer who was touted as a potential "builder president" upon his arrival in Washington, proposed a US$1 trillion infrastructure plan - funded mostly by private investment - that never won approval.
Former president Barack Obama vowed to bet big on high-speed rail as a tool to help the US emerge from the 2008 financial crisis. He spoke frequently in his first term about developing a rail network that could grow to rival the interstate highway system and included US$8 billion in his 2009 economic stimulus package for high-speed rail lines. But Republican governors in states like Ohio, Wisconsin and Florida rejected the money, and a decade later a line in California that most of the rejected money was funnelled to is still only in its early stages.
"Shovel-ready was not as shovel-ready as we expected," Mr Obama said in 2011 when reflecting on his struggles to harness infrastructure projects to jump-start the economy.
Mr Biden could face similar hurdles and it's not a given that the new president will get his plan approved. He is expected to make his case for his so-called Build Back Better programme in a joint address to Congress in April. Democratic aides have increasingly expected the program will be split into more than one package, given legislative challenges. BLOOMBERG
