Population growth, migration and urbanization across the world need a continued supply of infrastructure. Estimates from Standard & Poor’s in 2014 show that by 2030, the total investment in global infrastructure will hit $57 trillion, which means $3.4 trillion a year.

On a global scale, the need for infrastructure is more urgent in emerging economies. In Africa, for example, only 40 percent of the population have access to electricity, 33 percent of rural population have access to public transportation, and 5 percent of farmland has access to irrigation. As much as $100 billion are needed annually for infrastructure investment.

It’s fair to say that the shortage of infrastructure investment will continue to be a key bottleneck for regional social and economic development.

As an integral part of a country’s national economy, infrastructure investment can directly increase national income with the output generated by it. Infrastructure investment can also promote the upgrading of other industrial structures through the linkage effect between industries. At the international level, infrastructure connectivity will also produce a huge “spillover effect” in logistics, trade, information and other fields, and promote the flow of economic elements, efficient allocation of resources and deep integration of markets.

Especially for developing countries and countries in transition, infrastructure acts as a catalyst to their economic and social development. The weaker the development foundation and the lower the per-capita income, the stronger the role infrastructure plays in a country’s introduction of external resources and economic growth.

Therefore, both the 17 Sustainable Development Goals (SDGs) and the Paris Agreement incorporate the building of green, clean and quality infrastructure as goals. For example, the Goal 9 advocates “to build resilient infrastructure, promote sustainable industrialization and foster innovation”.

To improve infrastructure investment and to make it more sustainable, it is necessary to integrate it deeply with the 17 SDGs of the 2030 Agenda for Sustainable Development. A mature infrastructure means convenience in transportation, communication and production as it reduces trade costs, improves logistics efficiency, facilitates exports, attracts capital inflows, promotes national economic growth, and offsets the impact of declining global trade on countries. It also helps create jobs, promotes technology transfer and human capital development, and enhances the competitiveness of enterprises, which ultimately attain the sustainable development goals.

Apart from Goal 9, infrastructure construction can also make a difference in many other sustainable development goals, for example, through improved infrastructure and public services to reduce people’s exposure and vulnerability to climate-related extreme events and to reduce the environmental shocks and disasters (Goal 1); through increased investment in the infrastructure of rural areas to achieve food security, to address the nutritional needs of people and to promote sustainable agriculture (Goal 2); to provide access to essential healthcare services for all through investment in quality urban rural health-care centers and hospitals (Goal 3); through sustainable water infrastructure to improve people’s lives and manage scarce resources in a sustainable way (Goal 6); to ensure sustainable and modern energy supplies by the expansion of energy infrastructure (Goal 7).

Besides, we need to avoid traditional high-carbon investment and to reduce the negative externality in the environment and society.

Infrastructure projects often involve environmental pollution, ecological destruction, resource development, land acquisition, resettlement and compensation, community impact and a series of other complex and unavoidable problems. As a result, in the construction of infrastructure, we need to take into consideration many aspects, such as whether the investment is rational enough and whether it is well planned. It is imperative to lower the negative externality as much as possible to make room for the ambitious goal of decarbonizing the world economy by 2050.

Let’s take the Asian Infrastructure Investment Bank (AIIB) as an example. This multilateral financial institution initiated by China focuses on infrastructure construction to fill the long-term huge void in financing in Asia. It also incorporates the concept of greenness in its mission “lean, clean and green”, which is totally different from traditional investment banks.

The Chinese government has also issued a series of policy documents to regulate overseas investment, and to closely monitor all relevant shareholders in its overseas investment, so as to ensure that enterprises deal with environmental and social risks seriously. The documents include the Green Credit Guidelines issued by the China Banking Regulatory Commission in 2012; the Guiding Opinions of the China Banking Regulatory Commission on Regulating Banking Services for Enterprises Heading Overseas and Strengthening Risk Prevention and Control in 2017; the Guideline of Environment Protection for Overseas Investment and Cooperation released jointly by the Ministry of Commerce and the Ministry of Ecology and Environment in 2013; the Guidelines for Social Responsibility in Outbound Mining Investments and Chinese Due Diligence Guidelines for Responsible Mineral Supply Chains by the China Chamber of Commerce of Metals, Minerals & Chemicals Importers & Exporters (CCCMC) in 2015; and the Environmental Risk Management Initiative for China’s Overseas Investment released by seven major associations including the China Banking Association in January 2017.

All these documents, though having a different context from the 2030 Agenda, have set sustainable development as the main goal and are dedicated to the low-carbon construction and management of infrastructure.

Last but not least, to enhance infrastructure investment and its sustainability, there should be closer financial and policy links between countries and regions to increase the global supply of public goods.

Infrastructure connectivity is the key to sustainable development and common prosperity on a global scale. In regions with weak infrastructure, improving the connectivity of cross-border infrastructure can reduce transportation costs, promote trade, improve the value chain of regional and global trade, and help them to be part of the global trade and supply network.

To achieve this connectivity, it is key to strengthen the planning of infrastructure construction and the docking of technical standards.

Cross-border infrastructure investment, though highly needed, is faced with challenges brought about by complicated technologies, environmental pressure, resource transfer, differences in the system and management framework, and it is not cost-effective. When it comes to the application of operational standards, participating countries need to work together.

At the G20 Hangzhou Summit in 2016, leaders of the bloc initiated a Global Infrastructure Connectivity Alliance, or GICA, to promote the construction of a cross-border infrastructure network, and the flow of logistics, work force, information and other elements. Its membership has now grown to 17, including not only sovereign nations but also multilateral development banks, international organizations and associations.

In 2017, UN Environment and China’s Ministry of Ecology and Environment jointly initiated the Belt and Road International Alliance for Green Development. It aims at greener development along the BRI routes while helping improve infrastructure there under the BRI framework. The alliance was formally established in 2019 at the second Belt and Road Forum for International Cooperation, with more than 80 institutions as partners.

All these measures will help strengthen the overall coordination of infrastructure projects, promote close cooperation between the private sector, the public sector and multilateral institutions, and push the global economy toward the goal of “strong, sustainable, balanced and inclusive growth”.

Tian Huifang is a senior research fellow with the Institute of World Economics and Politics, Chinese Academy of Social Sciences.

The author contributed this article to China Watch exclusively. The views expressed do not necessarily reflect those of China Watch.

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