The Biden administration has championed the revival of manufacturing and building infrastructure through industrial policies such as the Inflation Reduction Act (IRA), CHIPS and Science Act and the Bipartisan Infrastructure Law (BIL). While the administration successfully overcame the hurdle of getting the bills passed in various houses, the administration in the last six months is beginning to understand/grapple with the challenges of building infrastructure, from labor shortages to land acquisition and cost overruns. These challenges are not new, however.
Despite such challenges at home, the U.S. is ambitiously pursuing infrastructure building on a global scale through multilateral initiatives, such as the Partnership for Global Infrastructure Investment competing with China’s Belt and Road Initiative (BRI).
America’s infrastructure building drive at home has lessons for its infrastructure building abroad. The Biden administration should heed the recent challenges — and could even learn from Hawaii’s very own “Skyline” on the myriad trials of infrastructure building.
On June 30, the Honolulu rail project embarked on its first passenger operations, turning a new page for the enterprise fraught with cost overruns and delays. Construction on the 10.75 miles of track from Kapolei to Halawa first broke ground 12-plus years ago in early 2011, following narrow approval from voters in 2008. Promoted as a way to modernize islandwide linkages and ease traffic, then-Mayor Mufi Hannemann promised 20 miles of track by 2020 ending at Ala Moana Center and the University of Hawaii, for $5 billion. Instead, in 2020 the city delivered a revised cost estimate of $12.4 billion and a projected completion date in 2031 — even prompting the U.S. Department of Justice to open a criminal investigation over misuse of federal funds.
Each mile of track in Hawaii takes two years and $620 million to build — while China has put up more than 23,500 miles of high-speed rail and city transport lines in the last 15.
Oahu’s Skyline is a prime example of how the U.S. is buckling under the weight of its own infrastructure needs, but it is hardly unique. Houston is spending $7.9 billion to widen 24 miles of freeway. Last year, California state withheld funds from San Francisco over a proposal for a public bathroom that would cost $1.7 million.
While Biden paints the picture of America as a builder, it continues to struggle to build quality infrastructure, and more importantly, without cost overruns and on time. The Skyline is representative of a much larger problem.
China’s BRI that runs and flows (land and maritime parts) across five continents and four oceans is a trillion-dollar-plus infrastructure building initiative that includes bridges, ports, railway lines, roads and even metros. Over the last decade, it has transformed small towns and villages from Peru to Cambodia. While mired by controversy and notoriety, the Initiative has nonetheless retained support among leaders of several developing nations.
China has aggressively expanded its infrastructure building drive in the Global South, particularly in Hawaii’s backyard in the Pacific — all through bilateral deals. It was able to achieve this feat through two attributes unique to East Asian economies: centralization and vertical integration.
Unlike the U.S., China does not have to coordinate across various departments, engage multiple contractors and developers, nor work through the vagaries of democratic transitions. It has vertically integrated businesses across sectors giving large state-owned enterprises ready access to materials, from a bolt to a crane. Furthermore, centralized power paradoxically gives China a distinct advantage in executing economic statecraft on a global scale. In America’s case, it has to work with private contractors and financiers and when a new administration comes in, has to accommodate the policy changes.
Despite these limitations, the Western alliance can succeed in delivering public goods and infrastructure to the Pacific Islands and the broader Global South if it deploys nations that have similar structures to the Chinese system. Of note, the U.S. should leverage Japan and South Korea’s industrial and manufacturing capacity to deliver infrastructure in the wider Pacific region by engaging directly and with its European partners.
Akhil Ramesh is senior fellow at the Pacific Forum, a Honolulu-based foreign policy institute; Brandt K. Mabuni is a research fellow there with a specialty in energy-related statecraft.