China’s Belt and Road Initiative
Discussion
CCP have long used their currency as a political, rather than economic tool. Domestically, for example, they pumped money into regions to boost GDP and employment, building ghost cities.
The Belt and Road Initiative (BRI) was political in two dimensions; to increase the global use of Yuan (and thereby also reduce that of the $US) and also to win influence in developing economies to enable trade and access to natural resources or strategic infrastructure.
Since the introduciton of BRI in 2013, China has loaned out around US$85 billion, compared to just US$37 billion by the USA on similar projects.
Seems now they are forced into being a lender of last resort, as 128 rescue loans of up to US$240 billion had been undertaken to prevent BRI projects and loans going into default. Principally these are swap lines, so China is basically amassing a "basket of 'basket case' currencies".
It's fascinating to wonder how this will serve China in the long run, but it would seem their appetite is now severely blunted. What do we think is next?
Source:
https://www.international-construction.com/8027763...
The Belt and Road Initiative (BRI) was political in two dimensions; to increase the global use of Yuan (and thereby also reduce that of the $US) and also to win influence in developing economies to enable trade and access to natural resources or strategic infrastructure.
Since the introduciton of BRI in 2013, China has loaned out around US$85 billion, compared to just US$37 billion by the USA on similar projects.
Seems now they are forced into being a lender of last resort, as 128 rescue loans of up to US$240 billion had been undertaken to prevent BRI projects and loans going into default. Principally these are swap lines, so China is basically amassing a "basket of 'basket case' currencies".
It's fascinating to wonder how this will serve China in the long run, but it would seem their appetite is now severely blunted. What do we think is next?
Source:
https://www.international-construction.com/8027763...
I'm expecting people who understand economics to read this thread.
Peter Zeihan mentioned that Russia ended up with a load of Yuan after an oil deal. When Russia later tried to get their money into a different currency China refused to - they didn't want a ton of their own currency back. Russia lost out.
Google didn't help me find what he was describing. Can someone tell me what PZ was referring nto?
Peter Zeihan mentioned that Russia ended up with a load of Yuan after an oil deal. When Russia later tried to get their money into a different currency China refused to - they didn't want a ton of their own currency back. Russia lost out.
Google didn't help me find what he was describing. Can someone tell me what PZ was referring nto?
BikeBikeBIke said:
I'm expecting people who understand economics to read this thread.
Peter Zeihan mentioned that Russia ended up with a load of Yuan after an oil deal. When Russia later tried to get their money into a different currency China refused to - they didn't want a ton of their own currency back. Russia lost out.
Google didn't help me find what he was describing. Can someone tell me what PZ was referring nto?
They should have taken bitcoin as payment Peter Zeihan mentioned that Russia ended up with a load of Yuan after an oil deal. When Russia later tried to get their money into a different currency China refused to - they didn't want a ton of their own currency back. Russia lost out.
Google didn't help me find what he was describing. Can someone tell me what PZ was referring nto?
Seriously though, between the USA and China it’s getting a bit nerve wracking isn’t it.
They’re joined at the hip but increasingly distrust each other. The break up isn’t going to be smooth.
BikeBikeBIke said:
I'm expecting people who understand economics to read this thread.
Peter Zeihan mentioned that Russia ended up with a load of Yuan after an oil deal. When Russia later tried to get their money into a different currency China refused to - they didn't want a ton of their own currency back. Russia lost out.
Google didn't help me find what he was describing. Can someone tell me what PZ was referring nto?
I assume, from the bit in bold, that China have leveraged the present sanctions situation to basically say they will buy Russian oil and gas only in exchange for Chinese made goods.Peter Zeihan mentioned that Russia ended up with a load of Yuan after an oil deal. When Russia later tried to get their money into a different currency China refused to - they didn't want a ton of their own currency back. Russia lost out.
Google didn't help me find what he was describing. Can someone tell me what PZ was referring nto?
China dictated the terms, because they had a strong hand.
I'm sure that people with far more knowledge on this subject will put me right, but my basic understanding is that China have for many years been attempting to buy their way into countries such as Mozambique by building their roads and infrastructure for them, and then offering them the opportunity to pay it back via some sort of long term finance/loan deal, and obviously milking them for the interest during that time.
But, and here's the but, China only half expected these countries to pay them back, and the small print said that China would be able to take a stake in other assets that country possessed in the event of them not being able to pay. Something which was probably more valuable to China than the loan being repaid.
Is that anywhere near being correct?
But generally yes, I concur with the previous posters in that I'm not shocked at all that money is lent to countries like Mozambique and they don't pay it back as promised.
But, and here's the but, China only half expected these countries to pay them back, and the small print said that China would be able to take a stake in other assets that country possessed in the event of them not being able to pay. Something which was probably more valuable to China than the loan being repaid.
Is that anywhere near being correct?
But generally yes, I concur with the previous posters in that I'm not shocked at all that money is lent to countries like Mozambique and they don't pay it back as promised.
Lord Marylebone said:
I'm sure that people with far more knowledge on this subject will put me right, but my basic understanding is that China have for many years been attempting to buy their way into countries such as Mozambique by building their roads and infrastructure for them, and then offering them the opportunity to pay it back via some sort of long term finance/loan deal, and obviously milking them for the interest during that time.
But, and here's the but, China only half expected these countries to pay them back, and the small print said that China would be able to take a stake in other assets that country possessed in the event of them not being able to pay. Something which was probably more valuable to China than the loan being repaid.
Is that anywhere near being correct?
But generally yes, I concur with the previous posters in that I'm not shocked at all that money is lent to countries like Mozambique and they don't pay it back as promised.
Pretty much this - BRI is about getting stuck in to resource extraction and using the roads, ports, airfields and railways they've built and paid for to transport out resources. Even Serbia has a BRI railway.But, and here's the but, China only half expected these countries to pay them back, and the small print said that China would be able to take a stake in other assets that country possessed in the event of them not being able to pay. Something which was probably more valuable to China than the loan being repaid.
Is that anywhere near being correct?
But generally yes, I concur with the previous posters in that I'm not shocked at all that money is lent to countries like Mozambique and they don't pay it back as promised.
The Chinese policy of just building stuff, regardless of there being any point to it reminded me of something, anyone remember these guys ?
"The Doozers from FRAGGLE ROCK. They were always building towers to nowhere—it was the building itself that mattered, not the final result. If Fraggles didn’t occasionally come along and snack on their stuff, the Doozers would run out of space to build and die"
No Fraggles in China to eat the unwanted Theme Parks, Malls and flats.
"The Doozers from FRAGGLE ROCK. They were always building towers to nowhere—it was the building itself that mattered, not the final result. If Fraggles didn’t occasionally come along and snack on their stuff, the Doozers would run out of space to build and die"
No Fraggles in China to eat the unwanted Theme Parks, Malls and flats.
Lord Marylebone said:
I'm sure that people with far more knowledge on this subject will put me right, but my basic understanding is that China have for many years been attempting to buy their way into countries such as Mozambique by building their roads and infrastructure for them, and then offering them the opportunity to pay it back via some sort of long term finance/loan deal, and obviously milking them for the interest during that time.
But, and here's the but, China only half expected these countries to pay them back, and the small print said that China would be able to take a stake in other assets that country possessed in the event of them not being able to pay. Something which was probably more valuable to China than the loan being repaid.
Is that anywhere near being correct?
By my understanding (but I'm not a diplomat or economic analyst), yes that is pretty much it.But, and here's the but, China only half expected these countries to pay them back, and the small print said that China would be able to take a stake in other assets that country possessed in the event of them not being able to pay. Something which was probably more valuable to China than the loan being repaid.
Is that anywhere near being correct?
It's the economic colonialism model that Europeans used so successfully in Africa in the 19th century:
1) build a trading post to extract raw materials and sell industrial products to the territory.
2) build a port so larger ships can get to the trading post and goods can be exchanged more easily
3) build a fort at the port with a small military detachment to provide security and customs with the agreement of the local ruler (who is getting rich by getting a cut of the trade profits and customs duties)
4) build a railway into the hinterland to more efficiently bring resources to the port
5) build an administrative centre at the other end of the railway to serve your commercial resource-extracting interests.
6) build a fort at the administrative centre to provide security and governance to your civilian citizens running your mines, railways, plantations and ranches.
7) agree with the local rulers that Europeans in the territory (of which there are an increasing number) will be subject to European laws, law enforcement and justice, controlled by European military and administrative staff. In return for a cut of the taxes and some shipments of European weapons.
8) Stoke an existing tribal/ethnic/caste conflict in the region or create one through subversion and unequal treatment.
9) When the conflict boils out into an actual war, send in a gunboat to protect your assets and civilians and install a puppet leader with a European administrative ruler to 'restore order.' The new treaty allows the European nation to freely extract resources while paying no indigenous taxes.
10) Now you control the entire country, all its resources and all its transport infrastructure. You can colour in another part of the map!
Murph7355 said:
Digga said:
So if BRI is so successful at enabling overseas mineral extraction and access to transport infrastructure, why stop now?
Have they stopped yet?linked article said:
China is pivoting away from investment in new infrastructure projects beyond its borders under the multi-billion-dollar Belt and Road Initiative (BRI).
coanda said:
Lord Marylebone said:
I'm sure that people with far more knowledge on this subject will put me right, but my basic understanding is that China have for many years been attempting to buy their way into countries such as Mozambique by building their roads and infrastructure for them, and then offering them the opportunity to pay it back via some sort of long term finance/loan deal, and obviously milking them for the interest during that time.
But, and here's the but, China only half expected these countries to pay them back, and the small print said that China would be able to take a stake in other assets that country possessed in the event of them not being able to pay. Something which was probably more valuable to China than the loan being repaid.
Is that anywhere near being correct?
But generally yes, I concur with the previous posters in that I'm not shocked at all that money is lent to countries like Mozambique and they don't pay it back as promised.
Pretty much this - BRI is about getting stuck in to resource extraction and using the roads, ports, airfields and railways they've built and paid for to transport out resources. Even Serbia has a BRI railway.But, and here's the but, China only half expected these countries to pay them back, and the small print said that China would be able to take a stake in other assets that country possessed in the event of them not being able to pay. Something which was probably more valuable to China than the loan being repaid.
Is that anywhere near being correct?
But generally yes, I concur with the previous posters in that I'm not shocked at all that money is lent to countries like Mozambique and they don't pay it back as promised.
skwdenyer said:
Murph7355 said:
Digga said:
So if BRI is so successful at enabling overseas mineral extraction and access to transport infrastructure, why stop now?
Have they stopped yet?linked article said:
China is pivoting away from investment in new infrastructure projects beyond its borders under the multi-billion-dollar Belt and Road Initiative (BRI).
linked article said:
Nonetheless, other regions saw strong increases. Investments in East Asia rose 151% in 2022, with a 76% rise in construction contracts, for example. Investment in Middle Eastern countries has also expanded.
They haven't stopped...my money would be on the areas that are slowing down simply being into the next phase of a long game they are playing.
Murph7355 said:
They haven't stopped...my money would be on the areas that are slowing down simply being into the next phase of a long game they are playing.
I'm not sure it's really sustainable though, given their GDP and the relative size of spend.Aside from political influence and access to natural resources, the scheme also props up Chinese manufacturing, by tying in supply of equipment of all types.
They were 'at it' before the official BRI scheme began in 2013. The first place I ever saw Chinese made excavators (didn't even know they existed) was in Kenya in 2008. Conspicuous not only because it wasn't one of the usual, EMEA used equipment suspect favourites - like Caterpillar or Komatsu - but also because it was brand new:
Down here in the Falklands, the Belt & Road Deal they did with Argentina is already beginning to have some "interesting" effects.
There is currently an expansion of the Port in Ushuaia which is designed to better service the Cruising market and also to keep them as a major player in Antarctica, both in tourism and science fields. Port Stanley was to be developed in a similar fashion but once the cost estimates started getting to fruity for the Falklands Government, the project was shelved and £15m in consultancy fees written off. Rumours abound of a seperate, Chinese only base being built. Remember, the seas in this part of the world are hugely strategic, especially if the Panama canal became an unviable route for any reason. Having any sort of Chinese surface fleet based 400 miles west would be of serious concern.
I would expect, in the coming years, to see an expansion in the Ushuaia based fishing fleet. The Ilex Squid is the major source of the Falklands Income and it doesn't take a large leap of the imagination to see the potential for issues to arise there. Argentina is still the economic basket case it's been for decades so the chance of a larger share of the catch may prove too tempting to resist. The Falklands has comissioned a new fisheries protection vessel which comes into service later this year, but effectively, all we'll be able to do about any infractions will be to complain to the UN.
Another potential source of tension are the two oilfields offshore. After years of talking, it looks like we are about to get a final funding comittment to extract or not. If Rockhopper & Navitas finally start pulling multi millions of barrels of oil out of the South Atlantic, I'm sure that won't go without comment in Buenos Aries.
With the Chinese offering the Argentines some interesting options regarding military equipment - including fighter jets, the Americans are pushing hard to do a deal to supply them with F-16's to try and keep them onside. Of course, on the Islands, this is not seen as great news. I believe the British Government has raised it's concerns with the Biden Administration and been told to bugger off, only in slightly more diplomatic language. Either the Argentines get Chinese or American Fighters, a huge step forward from where they are now. We have the 4 Typhoons based here, which are very capable aircraft but couple Argentine jets with Chinese surface craft, or worse, a submarine or two and the balance of power goes out the window pretty quickly.
We've just seen the 40th Anniversary of the conflict last year.
Ask yourself, as british voters and taxpayers these questions.
If, in the worst case scenario, a repeat of 1982 was to happen, could the UK muster a task force to reclaim the islands? Given said task force might face sterner opposition on the way down from the Air, could a task force make the 8000 mile plus journey and get here with enough strength and condition to fight?
Given Irag and Afghanistan and the current situation in Ukraine, would the British voter of today be happy to back an effort in the same way that happened in 1982? Is there the will to make it happen, both politically and in the streets?
The Falkland Islands are resolutely British and without doubt want to stay that way. The Argentines sabre rattling about Los Malvinas is increasing month on month. We have, within the last few weeks seen graffiti appear on a memorial and also a mini protest at Stanley airfield from some Argentinian tourists that arrived on the weekly flight from Chile. They have blocked access to airspace to allow us a commercial flight directly to Brazil. All these small signs are bubbling away under the surface and it's difficult to see it not increasing as time goes by.
As for China, they may well have to slow the number of these deals they do, although I suspect more than one other South American country is watching very closely to see how this unfolds. However, in the case of their African clients, again all chosen because of their mineral wealth etc I believe some will regret signing. When they try to default on the deal, it won't be like telling the IMF or World Bank that sorry, we can't pay, wait a few years and then back on the tit for more as has often been the case for the last 50 years. I imagine the Chinese will be more than happy to install and support a client state government to protect their interests and there might not be such a great future in being a failed African leader anymore.
China has had and continues to have two main advantages.
A - It doesn't answer to electoral cycles so if it needs to wait 30 years for a policy to deliver the right outcome it can.
B - It's big enough that nobody really wants to fight it in any meaningful way.
It's apt that the old Chinese curse is "May you live in interesting times" - well things are starting to get just a little too intesting down here in the Southern Oceans - watch this space.....
There is currently an expansion of the Port in Ushuaia which is designed to better service the Cruising market and also to keep them as a major player in Antarctica, both in tourism and science fields. Port Stanley was to be developed in a similar fashion but once the cost estimates started getting to fruity for the Falklands Government, the project was shelved and £15m in consultancy fees written off. Rumours abound of a seperate, Chinese only base being built. Remember, the seas in this part of the world are hugely strategic, especially if the Panama canal became an unviable route for any reason. Having any sort of Chinese surface fleet based 400 miles west would be of serious concern.
I would expect, in the coming years, to see an expansion in the Ushuaia based fishing fleet. The Ilex Squid is the major source of the Falklands Income and it doesn't take a large leap of the imagination to see the potential for issues to arise there. Argentina is still the economic basket case it's been for decades so the chance of a larger share of the catch may prove too tempting to resist. The Falklands has comissioned a new fisheries protection vessel which comes into service later this year, but effectively, all we'll be able to do about any infractions will be to complain to the UN.
Another potential source of tension are the two oilfields offshore. After years of talking, it looks like we are about to get a final funding comittment to extract or not. If Rockhopper & Navitas finally start pulling multi millions of barrels of oil out of the South Atlantic, I'm sure that won't go without comment in Buenos Aries.
With the Chinese offering the Argentines some interesting options regarding military equipment - including fighter jets, the Americans are pushing hard to do a deal to supply them with F-16's to try and keep them onside. Of course, on the Islands, this is not seen as great news. I believe the British Government has raised it's concerns with the Biden Administration and been told to bugger off, only in slightly more diplomatic language. Either the Argentines get Chinese or American Fighters, a huge step forward from where they are now. We have the 4 Typhoons based here, which are very capable aircraft but couple Argentine jets with Chinese surface craft, or worse, a submarine or two and the balance of power goes out the window pretty quickly.
We've just seen the 40th Anniversary of the conflict last year.
Ask yourself, as british voters and taxpayers these questions.
If, in the worst case scenario, a repeat of 1982 was to happen, could the UK muster a task force to reclaim the islands? Given said task force might face sterner opposition on the way down from the Air, could a task force make the 8000 mile plus journey and get here with enough strength and condition to fight?
Given Irag and Afghanistan and the current situation in Ukraine, would the British voter of today be happy to back an effort in the same way that happened in 1982? Is there the will to make it happen, both politically and in the streets?
The Falkland Islands are resolutely British and without doubt want to stay that way. The Argentines sabre rattling about Los Malvinas is increasing month on month. We have, within the last few weeks seen graffiti appear on a memorial and also a mini protest at Stanley airfield from some Argentinian tourists that arrived on the weekly flight from Chile. They have blocked access to airspace to allow us a commercial flight directly to Brazil. All these small signs are bubbling away under the surface and it's difficult to see it not increasing as time goes by.
As for China, they may well have to slow the number of these deals they do, although I suspect more than one other South American country is watching very closely to see how this unfolds. However, in the case of their African clients, again all chosen because of their mineral wealth etc I believe some will regret signing. When they try to default on the deal, it won't be like telling the IMF or World Bank that sorry, we can't pay, wait a few years and then back on the tit for more as has often been the case for the last 50 years. I imagine the Chinese will be more than happy to install and support a client state government to protect their interests and there might not be such a great future in being a failed African leader anymore.
China has had and continues to have two main advantages.
A - It doesn't answer to electoral cycles so if it needs to wait 30 years for a policy to deliver the right outcome it can.
B - It's big enough that nobody really wants to fight it in any meaningful way.
It's apt that the old Chinese curse is "May you live in interesting times" - well things are starting to get just a little too intesting down here in the Southern Oceans - watch this space.....
Digga said:
I'm not sure it's really sustainable though, given their GDP and the relative size of spend....
They've bought themselves rather a lot of minerals that everywhere wants and will want on an increasing basis.And as noted above, seem to be developing strategic geographical footholds.
It's all quite clever really.
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