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Thread: The Silk Road

  1. #31
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    Don't want to guess , LOL ! The toilet paper of the day is what civilization was all about. Life without laptops, cellphones or Charmin.
    Last edited by PalmStriker; 07-25-2016 at 11:24 PM.

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  4. #34
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    More on the 'New Silk Road'

    The thing is, it's not about silk anymore.

    China's 'New Silk Road' brings great promise to eastern Europe


    From roads in Montenegro to industrial parks in Poland, China has become one of the biggest investors in eastern and southeastern Europe. The Beijing-led "16+1" initiative promises to boost cooperation with the region.
    Tschechien Staatsbesuch Xi Jinping und Milos Zeman (picture-alliance/AP Photo/M. Krumphanzl)

    Xi Jinping visited the Czech Republic earlier this year
    In the past 25 years, there have been a number of international platforms focusing on Central, East and Southeast Europe (CESEE). However, few have been as comprehensive and ambitious as the Beijing-led initiative dubbed "16+1," which brings together 16 post-socialist countries, eleven of which are European Union member states and five of which are in different stages of accession. China is aiming to promote "pragmatic cooperation" across a number of policy areas, with the goal of making the most out of CESEE's untapped economic potential.
    On November 5, leaders from China and CESEE countries will hold their fifth-annual summit in Riga. The high-level talks are accompanied by business forums, think-tank conferences and other sideline events. Beyond the summit, there have been a vast array of gatherings under the 16+1 framework that involved various branches of government, academia and business. Delegations of CESEE representatives are now regularly flown to China and vice versa.
    New era of cooperation
    The increased interaction has been an unlikely development. Only few years ago, contact between the two sides was limited and far from enthusiastic. In the 1990s and early 2000s, many CESEE governments pursued ideological anti-communist diplomacy, which was not fond of closer ties with China. Since then, as elsewhere in the EU, political issues have been pushed to the side, allowing economic diplomacy to flourish. Today, Sino-CESEE relations are said to be at their highest point since the founding of the People's Republic of China in 1949, when CESEE countries were among the first to recognize it - a fact that Beijing considers to be of special symbolic significance.
    Chinese policymakers and experts say that in 2016, China-CESEE relations are ready to move beyond the initial phase of rapprochement. Earlier this year Chinese President Xi Jinping visited the Czech Republic, Serbia and Poland - signifying the increased importance Beijing is placing on the region.
    16+1 has also become a crucial part of China's "Belt and Road Initiative" (BRI), also known as the "New Silk Road." Rooted in both its domestic imperatives (developing western Chinese regions and exporting overcapacity) as well as the thirst for capital across Asia, Africa and Europe, the BRI pushes for coordinated development and policy, promotes investment in infrastructure and financial integration and calls for "civilizational dialogue."
    In practice, the 16+1 cooperation has, in only a few years, led to a significant increase in the economic importance of CESEE for China and vice versa. In 2015, for example, China had almost as much total trade volume with the bloc of 16 as it had with Russia. Investments from both Chinese and state-owned enterprises have gradually increased. A number of transport infrastructure projects - including the Budapest-Belgrade high-speed rail line, a leg of the "China-Europe Land-Sea Express" from Hungary to Greece - are underway.
    Living up to its potential
    However, aside from these achievements, the overall impression is that 16+1 has yet to live up to its full potential. Much more is being promised and projected than actually delivered. The economic cooperation between China and CESEE nations is still dwarfed by China's partnership with the rest of the EU.
    Sino-CESEE relations have had to adjust to the "new normal" of the Chinese economy, which now grows at a rate of around 6.5 percent. CESEE countries, which often lack resources and experience, have struggled to keep up with the pace that China has set under the comprehensive 16+1 format. Domestic, regional and European-wide political circumstances are also limiting. Thus, for China too, the early stages of cooperation have been a learning experience. Unlike their CESEE counterparts, however, Chinese policymakers pace themselves for the long run - often milestones are set for the decades to come.
    The summit in Riga will provide an opportunity for Chinese and CESEE leaders to take stock of current developments and announce future measures and areas of cooperation. In a time when the EU faces multiple crises, from the rise of destructive political forces to increasing tensions between Russia and NATO, the 16+1 summit provides a rare opportunity to map out visions for global economic renewal. It is also understandable that sometimes the progress is slower than expected.
    Anastas Vangeli is a doctoral researcher at the Polish Academy of Sciences, Warsaw, and a Claussen-Simon PhD Fellow of the ZEIT-Stiftung Ebelin und Gerd Bucerius.
    Gene Ching
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    Part 16

    Gene Ching
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    Why the New Silk Road needs a digital revolution


    Kazakhstan looks set to become a major trading hub between China and Europe
    Image: REUTERS/Shamil Zhumatov

    Written by
    Mark Gottfredson
    Partner, Bain & Company
    Wolfgang Lehmacher
    Head of Supply Chain and Transport Industries, World Economic Forum
    Gerry Mattios
    Expert Vice President , Bain & Company

    Published Friday 13 January 2017

    This article is part of the World Economic Forum Annual Meeting 2017

    The ancient and historic trade route between China and Europe is coming back to life as one of the biggest infrastructure projects of the 21st century, with major implications for economies throughout the world.

    One Belt/One Road (OBOR), the all-encompassing effort to restore old trade routes and streamline the transport of goods from Asia to Europe, has already received more than $51 billion from China, and more than 100 countries have signed on, with free trade, collaboration agreements or other partnerships.

    The expected benefits are well known: 70,000 new jobs, vastly improved economies of countries such as Kazakhstan, and opportunities for small and medium enterprises, both from Asia and Europe, to enter new markets that today may not be easily accessible. But achieving that potential means overcoming four major obstacles: the slow speed with which goods now travel, the inconsistency of customs clearance, the high costs for everything from labour to logistics delays, and the lack of visibility into the status of goods making their way along the New Silk Road.

    When companies ship by air they only need to deal with the red tape of customs and inspections at the beginning and end of a journey. Ground transportation is less expensive, but it stalls each time you cross a border. Products not only move slowly but are also subject to increased costs, including potentially moving from one truck or train to another. There are also tariffs, arbitrary delays and possible system manipulation.


    Image: The Wall Street Journal

    However, if OBOR operated with a single unified customs system and effective methods of tracking the products on board, shipments could move smoothly across boundaries – replicating the efficiency of air shipments with the low cost of land transport.

    Fortunately, the solutions exist to help OBOR reach its full potential with technologies that improve infrastructure inefficiencies, connect people and create new opportunities. Companies could achieve real time supply chain visibility by deploying low-cost satellites with access by iPhones or other handheld devices, for example.

    Another move that could dramatically help is if the Asia-Pacific Economic Cooperation (APEC) introduced a standard customs procedure for OBOR freight by consolidating requirements and developing a common IT platform.

    For OBOR countries, the path to an efficient and cost-effective New Silk Road begins by systematically addressing the four pain points of the digital supply chain. Here are some ways to begin.

    •Speed: Companies could smooth shipments and make better use of resources by installing state-of-the-art warehouse and inventory management systems, including capacity planning and supplier collaboration.

    •Inconsistency: Countries could implement systems that standardize the clearance of goods while using common templates and replacing human decision-making with speedy Artificial Intelligence processes.

    •Costs: Companies could reduce labour costs and shipment-delay costs, with automation replacing such activities as loading and unloading.

    •Visibility: New advances such as digital ledger technology (DLT) could provide structured, real time tracking information to allow stakeholders to know when a shipment will arrive and to plan operations in advance.

    By investing in the IT infrastructure needed to address these four pain points, companies and countries will generate basic data, which, as it matures and gets structured, becomes invaluable when accumulated as big data. These are complex data sets that can be collected and analysed for insights that serve as a starting point for improving everything, from operations to the development of services, even allowing companies to transform their business models for greater success.

    With such systems in place, a few key areas of opportunity will emerge along the New Silk Road. First, a digital revolution will level the playing field for SMEs. For example, they’ll be able to adapt production plans to product supply and demand dynamics or identify new markets.

    The sharing economy will also blossom. With the right IT in place, on-demand manufacturing and warehouse management platforms could connect makers with factories. A sharing economy inspired by big data will create significant employment opportunities in OBOR countries.

    Finally, big data will attract more direct investment in OBOR countries from foreign sources. The money is already flowing to seed Kazakhstan’s growth. For example, Dubai-based port operator DP World is expected to invest $1 billion in the development of Khorgos-Eastern Gates Free Zone and Aktau Port in Kazakhstan.

    Foreign direct investment in new technology will also broaden the economic base of Kazakhstan, Uzbekistan and other countries along the New Silk Road. They could leverage such advances as 3D printing to develop their manufacturing industries. Smart manufacturing technologies would enable SMEs to make more of their money from selling intellectual property than from shipping end products to customers.

    The revived railway, combined with wise technology investments, creates exciting prospects. Imagine how half-empty container cars travelling across a desert in Central Asia could advertise their available space in real time – and at a discount – connecting en route with potential shippers looking for a low-cost way to send their wares. Centuries after it was established, the New Silk Road could define the future of trade between East and West – but only if it first overcomes the four big obstacles in its path.
    Kazakhstan. A Kung Fu brother put this place on the map for me when he fought an early MMA bout there decades ago.
    Gene Ching
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    One Belt, One Road, One Port

    Exclusive: China 'Silk Road' project in Sri Lanka delayed as Beijing toughens stance


    FILE PHOTO: Demonstrator shout at police officers at a protest against the launching of a $5 billion Chinese investment zone by China Merchants Port Holdings Company, in Mirijjawila, Sri Lanka January 7, 2017. REUTERS/Stringer/File Photo

    By Shihar Aneez | COLOMBO

    China will delay a planned $1.1 billion investment in a port on its modern-day "Silk Road" until Sri Lanka clears legal and political obstacles to a related project, sources familiar with the talks said, piling more pressure on the island nation.

    Heavily indebted Sri Lanka needs the money, but payment for China's interests in Hambantota port could be held up by several weeks or months, the sources added.

    After signing an agreement last December, state-run China Merchants Port Holdings had been expected to buy an 80 percent stake in the southern port before an initial target date of Jan. 7.

    Beijing also has a separate understanding with Colombo to develop a 15,000-acre industrial zone in the same area, a deal that Sri Lanka was hoping to finalize later.

    But Colombo's plans to sell the stake and acquire land for the industrial zone have run into stiff domestic opposition, backed by trade unions and former President Mahinda Rajapaksa.

    A legislator close to Rajapaksa is also challenging the government's plans in court.

    Now Beijing has linked the signing of the port deal with an agreement to develop the industrial zone, saying it would hold off on both until Colombo resolved domestic issues, officials on both sides of the talks said.

    "China has said that when they start the port, they want the land also," Sri Lankan Finance Minister Ravi Karunanayake said, although he added that China had not made it a precondition.

    Yi Xianliang, Chinese ambassador to Sri Lanka, said the two deals were related.

    "If we just have the port and no industrial zone, what is the use of the port? So you must have the port and you must have the industrial zone," he said.

    A source familiar with China's thinking said it may wait until May, when Sri Lankan Prime Minister Ranil Wickremesinghe visits Beijing, to sign both deals.

    Chinese Foreign Ministry spokesman Geng Shuang said the Hambantota project was important for both countries.

    "As far as we understand, at present the project is still progressing steadily," he told reporters in Beijing.

    The previously unreported setback for Sri Lanka suggests Beijing is digging in its heels as it negotiates its global "One Belt, One Road" initiative to open up new land and sea routes for Chinese goods.

    SPEED BUMPS, MOUNTING DEBTS

    President Maithripala Sirisena is struggling to contain popular opposition to land acquisition for the huge Chinese industrial zone, including from Rajapaksa, who remains an influential opposition legislator.

    The deal for the port development and industrial zone has also been challenged in court, which means it is stuck at least until the next hearing on March 3.

    Asked whether the agreement would be delayed until the court had ruled, Yi, the Chinese ambassador, said: "Oh yes. We will follow the rule of law. We have the patience to wait."

    Rajapaksa's role, the court case and violent protests by people afraid they could be evicted from their land underlined how Beijing does not always get its own way even in countries that badly need investment. Sri Lanka wants Chinese money to help alleviate its debt burden; the government had expected to have the proceeds from the stake sale within six months of signing the agreement before Jan. 7.

    Sri Lanka has been under pressure from the International Monetary Fund to cut its deficit, shore up foreign exchange reserves and increase tax revenues as part of a $1.5 billion loan agreement struck in 2016. At least part of the money from the port deal would have gone toward paying down some of the more expensive loans on the government's books, some of which are from China, a senior Sri Lankan government official said.

    Hambantota port and a nearby airport were built from 2008 by the Rajapaksa government with the help of $1.7 billion in Chinese loans.

    When Sirisena unseated Rajapaksa in an upset victory in 2015, he froze all Chinese investments, alleging unfair dealings by his predecessor.

    Sirisena eventually negotiated a new deal with the Chinese government that involved the stake sale and further plans for the Chinese to develop an industrial zone.

    The Chinese government expects to invest about $5 billion to develop the area within 3-5 years. Sirisena also agreed to give land to the Chinese on a 99-year lease. The terms did not go down well with port trade unions, which have asked the government to reduce the Chinese stake to 65 percent and lease period to 50 years.

    Hundreds of protesters clashed with police in January when a demonstration against the planned industrial zone turned violent.

    (Additional reporting by Ranga Sirilal, and Ben Blanchard in BEIJING; Editing by Mike Collett-White and Paritosh Bansal)
    99-year lease. That sounds familiar.
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    One Belt, One Road Initiative summit

    For those of you who have some sense of what globalization means and have been following this thread.

    China is hosting a summit on the new 'Silk Road' — a massive global trade project
    Laurent Thomet, AFP
    May 13, 2017, 3:51 PM

    President Xi Jinping will host leaders from 29 nations in Beijing for a two-day forum on his signature foreign policy programme, a revival of the Silk Road dubbed the One Belt, One Road Initiative © AFP/File Fred DUFOUR

    Beijing (AFP) - China opens on Sunday a summit to promote its massive global trade infrastructure project, highlighting Beijing's ambitions to spearhead a new era of globalisation as Washington shifts toward inward-looking policies.

    President Xi Jinping will host leaders from 29 nations in Beijing for a two-day forum on his signature foreign policy programme, a revival of the Silk Road dubbed the One Belt, One Road Initiative.

    The Chinese-bankrolled project, unveiled in 2013, seeks to link the country with Africa, Asia and Europe through an enormous network of ports, railways, roads and industrial parks.

    The initiative spans some 65 countries representing 60 percent of the world population and around a third of global gross domestic product. The China Development Bank has earmarked $890 billion for some 900 projects.

    Belt and Road is seen as a practical solution to relieve China's industrial overcapacity. But it could also serve Beijing's geopolitical ambitions.

    "In my view, Belt and Road is intended to create greater economic interdependence between China and its neighbours, which Beijing hopes will translate into increased political influence," said Bonnie Glaser, director of the China Power Project at the Washington-based Center for Strategic and International Studies.

    "Xi Jinping wants China to become the dominant regional power in an essentially Sino-centric order," Glaser told AFP.

    The Chinese government describes the initiative as a partnership.

    "What we need is not a hero that acts alone, but partners of cooperation that stick together," Chinese Foreign Minister Wang Yi said recently.

    One-way street?

    State-run media has worked hard to explain the project to the world.

    The English-language newspaper China Daily has bombarded social media with quirky videos, including an American father telling his daughter bedtime stories about Xi's programme and children singing, "We'll share the goodness now, the Belt and Road is how."

    But few Western leaders are attending the event. The prime ministers of Italy, Spain and Greece are expected, while Washington is sending a senior White House adviser.

    Xi is championing globalisation at a time when the concept's traditional leader, the United States, is focused on "America First" under US President Donald Trump. The two countries, however, sealed a deal Friday for China to export cooked poultry to America and resume US beef imports.

    Europe, meanwhile, is mired in Britain's looming EU exit.

    "The structure of the global economy is changing. ... In this situation we want to be completely open and outward looking," said Zhang Xueliang, economics professor at Shanghai University of Finance and Economics.

    At the same time, the European Union has pressed China to practise what it preaches and further open its own market.

    "Hopefully (Belt and Road) is not a one-way street but a two-way," said Joerg Wuttke, president of the European chamber of commerce in Beijing.

    Indian concerns

    Other leaders attending the summit include Russian President Vladimir Putin and Turkey's Recep Tayyip Erdogan.

    Among neighbours, Philippine President Rodrigo Duterte, Pakistani Prime Minister Nawaz Sharif and a delegation from North Korea are coming.

    But Indian Prime Minister Narendra Modi did not confirm his attendance.

    India has voiced displeasure at the China-Pakistan Economic Corridor, a Belt and Road project aimed at linking northwestern China to the Arabian Sea.

    The route cuts through Gilgit and Baltistan in Pakistan-administered Kashmir, disputed territory that India claims is illegally occupied.

    Human Rights Watch raised concerns on Saturday about the treatment of people along the new Silk Road route in Central Asian nations with poor track records in infrastructure projects.

    The US-based organisation said Chinese authorities have "heightened surveillance and repression to prevent potential unrest that could impede" Belt and Road plans in the western Xinjiang region.
    Gene Ching
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    One rap song to tell you what exactly is the Belt and Road



    I now understand OBOR - it's about the metaphor of the The Silk Road, but still, I will never understand China.
    Gene Ching
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  12. #42
    Quote Originally Posted by GeneChing View Post


    I now understand OBOR - it's about the metaphor of the The Silk Road, but still, I will never understand China.

    Greetings,

    I will have to raise you one.

    https://www.youtube.com/watch?v=ONjMiLMw66g


    mickey

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    Solar Po



    China embraces Kung Fu Panda Power to electrify its new Silk Road
    4 July 2017 | By Joe Quirke

    A solar farm made to look like a giant panda has been connected to the grid in the city of Datong in China’s northern Shanxi province. It will be the first of 100 panda-shaped solar farms that will follow China’s modern Silk Road.

    The 50MW Panda Power Plant covers a total area of 248 acres, with the black part of the panda composed of monocrystalline silicone and the grey and white parts made of thin film solar cells.

    The panda in the photos of the solar farm bears a resemblance to the panda cubs from Dreamworks’ Kung Fu Panda films.

    Designed to improve “youth engagement and innovation” the UN Development Programme (UNDP) and China Merchants New Energy say they will “work together to promote and popularise the promotion of new energy through summer camps and open innovation design contests”.


    Image courtesy of Panda Green Energy

    The camp “will offer participants a deeper understanding of green energies and first-hand experience of environmental protection, with top notch mentors and facilitators in the field to monitor and provide on-site support”.

    The UNDP “will identify outstanding, marginalised youth groups in China to develop and strengthen their leadership skills through an international exchange initiative”.

    There are plans over the next five years build 100 similar plants along the new Silk Road, with some being built outside China.


    Image courtesy of Wikimedia Commons/Johann Balleis

    On the subject of pandas, in March this year China announced that it would link up 67 existing reserves to increase the population of wild bears, creating a space three times the size of America’s Yellowstone National park.

    In 2016 the International Union for Conservation of Nature removed pandas from the endangered species list, they are now listed as “vulnerable”.

    Recently the European Investment Bank supported China’s Silk Road strategy and Chinese President Xi Jinping pledged an extra $122bn for international infrastructure schemes as part of the development.

    Top image courtesy of the UNDP
    Kung Fu Panda meets the Silk Road
    Gene Ching
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    Bring on the nay-sayers

    The ‘Silk Road’ Verdict Why China's massive infrastructure plan won't measure up to economic reality By Valentin Schmid, Epoch Times | July 20, 2017 AT 10:54 AM Last Updated: July 20, 2017 2:18 pm


    Chinese workers at a pier in Qingdao, China, on April 13, 2017. The Belt and Road Initiative is supposed to boost trade both by land and by sea. (STR/AFP/GETTY IMAGES)


    The idea, at first, sounded good: Plow trillions of dollars into infrastructure projects in the barren wasteland that is most of central Asia, and trade will start to bloom, economies will prosper, and peace will reign. However, most experts believe real world problems will result in the whole idea turning into nothing but a pipe dream.


    (VCG/VCG VIA GETTY IMAGES)
    The concept is called the Belt and Road Initiative (BRI), also known as One Belt, One Road, launched by Chinese regime leader Xi Jinping in March 2015. It has two elements: one landlocked route from China to Europe through Asia, called the Silk Road Economic Belt, and one seaborne route going from China to Europe past India and Africa, called the Maritime Silk Road.

    Although estimates vary, China has called for up to $5 trillion in infrastructure investments over the next five years in the 65 countries along these routes. Ports in Sri Lanka, railways in Thailand, and massive roads and power plants in Pakistan are just a few examples of the planned investments.

    Speaking at the Belt and Road Forum in Beijing in May this year, Xi said: “In pursuing the Belt and Road Initiative, we should focus on the fundamental issue of development, release the growth potential of various countries, and achieve economic integration and interconnected development, and deliver benefits to all.”

    His statement sums up the problems with the multitrillion dollar project: It talks about desirable outcomes but is exceedingly vague on the details. This is just like the BRI’s official plans. They call for improving intergovernmental communication, coordinating infrastructure plans, developing soft infrastructure, and strengthening tourism and trade, but the specifics are shaded over.

    “There are no concrete action items set out in the Chinese government’s action plan for what has become one of Xi’s most visible policy initiatives. The document contains a number of generic proposals interspersed with platitudes about cooperation and understanding,” research firm Geopolitical Futures states in a July report.

    But despite the lack of concrete programs, the vast sums involved show that the BRI has garnered support from many countries. China-led institutions, like the Asian Infrastructure and Investment Bank, have also pledged $269 billion dollars for the project. Even Japanese Prime Minister Shinzo Abe voiced his support at the recent G20 meeting in Hamburg, Germany.

    It is completely overhyped. The numbers they published, $4 trillion to $5 trillion, they are completely unrealistic.
    — Christopher Balding, professor of economics, Peking University
    Objectives Measured Against Reality
    China’s objectives, explicit and implicit, need to be measured against reality. On this account, most experts think the project is not economically viable—but it will allow China to gain political influence.

    “It is completely overhyped. The numbers they published, $4 trillion to $5 trillion, they are completely unrealistic,” said Christopher Balding, professor of economics at Peking University.

    Economically, it is mostly about investment and exports. “China has surplus capital and excess productive capacity, which is motivating this set of initiatives. With a high savings rate in China and a slowdown in industrial investment at home, they are looking for overseas projects that can be financed and a new outlet for Chinese exports,” said James Nolt, professor of international relations at New York University.

    The result is the BRI, which would see China team up with countries along the routes to raise money for building infrastructure to facilitate trade. And Chinese companies would do the construction.

    The China Overseas Ports Holding Company has expanded the Gwadar Port in Pakistan and has an operating lease until 2059. This is just the first, small step in connecting the Silk Road Economic Belt with the Maritime Silk Road. Highways, pipelines, power plants, optical connections, and railways are planned for the China–Pakistan Economic Corridor, with a total investment of $62 billion.

    Of course, local and international companies are going to bid for these projects as well, but with China providing most of the funds, Chinese state owned enterprises (SOEs) will get most of the contracts.

    If Chinese companies got $5 trillion in contracts, this would indeed boost exports, but there are several problems with this notion even in theory.

    First, infrastructure projects are very resource intensive, and with few exceptions China simply doesn’t produce commodities. Much of the value-added, therefore, will be absorbed by international commodity producers like Australia (though the Chinese steel industry will certainly get a boost).

    Impossible to Finance
    Then there is the question of financing these investments. The countries where the investments are going to take place, like Pakistan and Cambodia, don’t have the money to spend trillions and also can’t raise it in international financial markets. This leaves China to come up with a way to get the hard currency financing to achieve its economic goals.

    At the beginning of the BRI, China still had almost $4 trillion in foreign exchange reserves, and it was looking to diversify. These have dropped to $3 trillion in 2017, a threshold the central planners in Beijing have made clear they will not cross.

    “They have to tap international bond markets for that money, or they have to exhaust their foreign exchange reserves and even then go out and borrow. Even by global bond market standards, a $5 trillion bond sales program spread out over a couple of years is an enormous number. They are not going to shoulder that type of repayment risk and they are not going to deplete their reserves,” said Balding.

    Research by investment bank Natixis estimates that such a borrowing binge would increase Chinese external debt from 12 percent to 50 percent of GDP. This would expose the country to exchange rate risks and put it in the same vulnerable position that the Asian tiger economies were in during the financial crisis of 1998.

    Loans from China denominated in yuan from Chinese banks are not an option for two reasons. This “poses its own risks to the overly stretched balance sheets of Chinese banks. In fact, their doubtful loans have done nothing but increase during the last few years, which is eating up the banks’ room to lend further,” especially for risky projects, wrote Natixis Chief Economist for the Asia Pacific Alicia García-Herrero, in a blog post.



    In addition, recipient countries could only pay back a loan in yuan by selling goods and services to China, thus procuring the Chinese currency. This would be directly counterproductive to the goal of promoting exports from China with construction contracts and eventually through improved trade infrastructure.

    “How is Pakistan to repay a yuan loan? They are going to generate a trade surplus in yuan. So China has to run a trade deficit with all the countries it lends to. Even if they don’t do that, Pakistan is going to have to generate some type of trade surplus with another country to have enough capital to pay back China,” said Balding.

    Given that most of the infrastructure will be built to facilitate trade with China, this is highly unlikely. So in the end, China will be left to vendor finance these projects. The only way to achieve its economic objectives will be hard currency loans that are completely repaid, with interest—which China currently has no clear means of financing.
    continued next post
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    Continued from previous post

    Bad Risks
    All of the economic indicators regarding the most prominent BRI projects point against this repayment scenario.

    There is a reason countries like Cambodia, Laos, Thailand, Pakistan, and Mongolia don’t have good infrastructure. They have a generally poor macroeconomic framework, underdeveloped institutions, and a high degree of corruption. Building roads and railways will not change that.

    Additionally, “Central Asia, a patchwork of states whose borders were drawn to make the countries more easily controlled from Moscow during the Soviet era, is hardly a promising market for Chinese goods,” states the Geopolitical Futures report.

    “People talk about [the BRI] as if China is giving away money. In almost every case, it’s the Chinese credit card company giving a credit card to a despotic dictator, like in Sri Lanka or Venezuela. None of that has ended well,” said Balding.



    The nature of the value proposition of the BRI leads to the worst countries needing the most infrastructure and the most financing. Economically stable and healthy countries like Malaysia and Vietnam need less investment than troubled states like the Kyrgyz Republic and civil war-torn Ukraine. These countries have an economic health ranking of 44 and 38.2, respectively, compared to Malaysia’s 66.8, according to a ranking by Oxford Economics.

    “Where financial development is relatively weak and governments are heavily indebted, BRI financing will be crucial,” states the report by Oxford Economics. It is precisely these places that offer the lowest chance of repayment.

    “While a new airport or railway can be built in just a few years, amassing the human and institutional capital needed for them to operate efficiently and contribute to economic and social progress is a slower process,” states a report by research firm TS Lombard.

    Small Scope
    Given the constraints in viable economic projects as well as available financing, the scope of the BRI will likely remain small, while China can still focus on its political objective to exert greater influence over the participating countries.

    “What this leaves us with is a much more modest program of $15 billion to $30 billion a year,” commensurate with the $269 billion already pledged by the China-led institutions, Balding said. “I don’t want to say that it’s irrelevant, but it is irrelevant. The United States is spending $300 billion in direct investment every year overseas.”

    One of the initiatives that makes sense but needs little infrastructure and investment is protecting ships from pirates. “The cooperation with Singapore to keep the sea-lanes safe is promising, and that would have happened either way,” said Nolt.

    While Chinese propaganda is touting that the BRI will revive the spirit of the ancient Silk Road through central Asia to Europe, it may have missed the boat on that one.

    Given advances in shipping technology, it is far easier and cheaper to transport goods by ship rather than by land. That’s why most of China’s and the world’s trade (80 percent) is done by sea.

    In the end, keeping out pirates and building a few ports in Pakistan and East Africa is a worthwhile endeavor—but it’s one that falls far short of building trillions worth of landlocked infrastructure.

    “The Silk Road was a constantly evolving marketplace that moved goods across a vast continent where they could be exchanged for other goods. And unlike today, Eurasia was the center of world civilization, home to the most important economies,” states the Geopolitical Futures report.

    Today, the most important economy, also for China, is the United States, and it is best reached by sea through the Pacific Ocean, far away from the Maritime Silk Road and the One Belt.

    CHINESE INFRASTRUCTURE PROJECTS IN ASIA


    BOATS AT THE GWADAR PORT IN PAKISTAN ON THE ARABIAN SEA. China Overseas Ports Holding Company is leasing the port until 2059 and has already started expanding it. China has been looking to secure sea trading lanes along the so-called Maritime Silk Road, and the Pakistani port is an important piece in the puzzle. (J. PATRICK FISCHER/CC BY-SA)


    A SKY TRAIN IN BANGKOK ON MARCH 20, 2013. Thailand will borrow a total of $69.5 billion to fund high-speed railways and other transportation mega projects, with most of the money coming from China and Chinese companies providing the construction. Thailand’s railways will form part of the Kunming– Singapore railway system. However, Thailand will repay the loans with rice and rubber exports, thus running a trade surplus with China and going against the objective to generate export growth. (NICOLAS ASFOURI/AFP/GETTY IMAGES)


    THE BANKS OF THE IRRAWADDY RIVER IN BURMA ON OCT. 2, 2015. Although not officially part of the Belt and Road Initiative, the $3.6 billion Myitsone Dam project is an example of a Chinese infrastructure project in a very poor country that hasn’t gone as planned. Construction has been suspended for six years, as both countries could not agree on how to proceed. (YE AUNG THU/AFP/GETTY IMAGES)
    A lot of criticism has come out in the press on this lately.
    Gene Ching
    Publisher www.KungFuMagazine.com
    Author of Shaolin Trips
    Support our forum by getting your gear at MartialArtSmart

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