China and Africa

Forgot to click reply. @TK3600

China trades useless toilet paper dollars for actual physical resources albeit with higher prices.

Africa can do whatever it wants with Chinese loans, however the whole world knows that China always collects its debts eventually (can be even multi-century long). It might temporarily play dumb, but it will eventually come to collect its debts in due time

Likewise, even now China plays the rich naive boy act, but when American hegemony crumbles and China has its deserved place in the world stage, don't be surprised if your local Chinese ambassador knocks on your random African country president's door to request payment of old debt with a huge interest and penalty applied on top. After all, Western or Eastern, the majesty and dignity of a superpower is inviolable.

Overbom said:

Forgot to click reply. @TK3600

China trades useless toilet paper dollars for actual physical resources albeit with higher prices.

Africa can do whatever it wants with Chinese loans, however the whole world knows that China always collects its debts eventually (can be even multi-century long). It might temporarily play dumb, but it will eventually come to collect its debts in due time

Likewise, even now China plays the rich naive boy act, but when American hegemony crumbles and China has its deserved place in the world stage, don't be surprised if your local Chinese ambassador knocks on your random African country president's door to request payment of old debt with a huge interest and penalty applied on top. After all, Western or Eastern, the majesty and dignity of a superpower is inviolable.

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If China is as edgy as you described then I wont be here worrying. So far Chinese leaders are genuinely kind and forgiving. Border disputes are settled, it takes a brat like India for China to not forgive. There are also multiple Chinese genocide unsettled yet. It is time for China to take off the gloves and these third world country will like it.

They all wish to live an easy life proped by a foriegn overlord. That was how they were colonized in first place. If France could handle these warlords China can do better with a stick 10x the size and carrots 10x bigger.

Regarding Africa, China simply needs a place to offload its dollars, otherwise the whole point of accepting dollars is moot.

Power doesn't come from having money, many African countries are not poor in monetary terms, or at least the officials aren't poor. Power comes from the capability you get when you circulate the money.

DRC the Sicomines deal with China. The infra part of the deal was increased from $3 bn to $7 bn.

Which...won't really mean much on ground. Of the existing $3 bn infra tranche, only ~$1 bn has met the shovel over last 16 years. It's nearly impossible to build any large scale infra in Congo as state capacity remains near non-existent. The nominal promised figure can be pushed higher to any arbitrary number. Unlikely to mean much on ground.

The initial demand from DRC was much higher.

N00B said:

The demand on this venture is an eye watering $17 billion, and he wants the Congolese govt share in the venture to be raised from current 38% to 70%!

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They only got $7 billion in the end. And of course there was no change in ownership share. Tax regime remains unchanged as well but yearly royalties was increased a bit. The whole thing was kind of expected as I wrote here.

N00B said:

If Tshisekedi asks for a greater cut, it's not a big deal, as long as he is reasonable. His asking price is too high but I think that's just a negotiation tactic + signalling to domestic audience (elections coming up this December). He knows fully well that Congo needs China. Talks are currently ongoing. Let's see.

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Congo is basically a warzone right now. They have an active conflict (M23 rebels) in the area close to the border with Rwanda.

Congo is hugeeee country by area, so local conflicts on small parts of territory cant generalize as entire country being a warzone. Haters gonna hate

KYli said:

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N00B said:

This line is currently struggling due to a lack of rolling stock, and operating at a level far below its design capacity. Virtually all minerals from DRC and Zambia travel over road to Dar-Es-Salam/Beira/Durban ports today. An extremely inefficient and costly method of transport. And very risky too.

Pretty much all of that traffic can redirect to TAZARA if the lease works out. But it would require China (or somebody else) to take an additional similar lease on the DRC section of the route as well - from Kolwezi to Sakania - and operate it. None of the three countries' state run railways are capable of handling such volumes at present.

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At first this was supposed to be only a concession (China will just operate the line). Then the Zambians wanted more. The updated came through a month ago and it's about as batshit insane as it can get.

This line is currently operational and maintenance is okayish. The bottleneck is due to lack of sufficient rolling stock. A simple $100 million cash infusion could have made it profitable and from there, they could have taken the next step. Instead, they have come up of with a $1 BILLION plan to fully rebuild the line to standard gauge!

There is stupidity, then there is insanity and then there is China in Africa. Also, exhibit #8888 why IMF is irreplaceable.

I mean are these people out of their mind? Is there anyone at the wheel? Consider the following -

1. Converting the existing cape gauge line (1067 mm) to standard gauge (1435 mm) will cut the line off of the entire Southern African network incl. the rest of Zambia. DRC, where bulk of the freight originates, is Cape gauge. So is Zimbabwe. Even Zambia's own copper mines are further west and are on the cape gauge network. The mines in DRC (Kolwezi area) are already fully connected to rail. Yes, SNCC is in the shitter, but it is much easier to refurbish a line than to gauge-convert it. Is China going to pay for that too? And why would DRC agree even?

2. Why the sudden urge to convert it to standard gauge? 'Coz that's considered 'advanced/modern' in SSA these days. Nigeria, Ethiopia, Kenya, Tanzania - all are building new 1435 mm lines (and running out of cash in the process). Why would the proud country of Zambia be left behind? Except there is no real need for it. Narrow gauge lines are perfectly capable of handling bulk freight whether it's meter gauge (Brazil) or cape gauge (South Africa).

3. Proposing $0.5 billion additional loan for Zambia (half of the line is in Zambia) at this point of time is comical. The country defaulted just a few months ago and is currently in an IMF bailout program discussion. There are ongoing slap-fights over which schmuck creditor will be left holding the bag.

4. Do the Chinese negotiators even give a shit at this point? Just because a clueless African govt has some misconceived ideas about trains, you don't have to entertain them. Do you? If someone asks for a loan for assisted suicide, would you sanction that too?

I hope IMF comes down with a hammer on Lusaka and drills some sense into Beijing.