China's Westward One Belt One Road Strategy


Dolcevita

Senior Member
ONE BELT ONE ROAD -
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...

China opens new freight service from Xiamen to Moscow. The latest China-Europe freight train route reduces cargo transport time between the two cities by at least 10 hours.

"The latest China-Europe freight train route reduces cargo transport time between the two cities by at least 10 hours."?

Should be 10 days. No?
 

Blackstone

Brigadier
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First "silk road" freight train from Xi'an, China arrives in Budapest, Hungary.


Halford Mackinder said the Central Asia area was the "geographic pivot of history," and the nation that controls it will control the world. I don't think he had China in mind in that role, because I don't think China wants to control the world. Do business, secure its interests, and extend influence, yes, but not to control in the manner of Pax Britannia, or dare I say... Pax Americana?
 

timepass

Brigadier
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portfolio keeps increasing, but does it really add value?

It was January 2017 and a big day for
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as the island nation
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handed over the Hambantota deep sea port as well as 15,000 acres of its rich agricultural land to establish a new Chinese-operated industrial zone – in exchange of writing-off its $1.1 billion debt.

Sri Lanka’s premier called it a “once in a lifetime opportunity” but there were scores of Buddhist Monks protesting against conversion of their land into a Chinese Colony.

In
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, anti-Chinese sentiments are growing as the Chinese-financed landmark $3.6 billion Myitsone Dam project would cause permanent harm to the dynamic of river settlements – destroying fishery stocks and displacing thousands of villagers.

The question of the hour is: What goes wrong with these billion dollar infrastructure investments by China?

China has emerged as the leading source of development assistance with a focus on infrastructure and energy sector. Developing countries with diminishing foreign reserves are eager to accept such investments without thoroughly working out the business case.

Now we see that in
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, Chinese construction companies have built the world’s emptiest airport – not to mention other white elephants such as a five-star hotel, world-class convention center and a cricket stadium. It is still unknown if these infrastructure investments provided any economic uplift to this poor region.

Similarly, in Myanmar, the wrong dam project was given the go-ahead and by the time the government realised its mistake, it was too late. Now if the project is scrapped, the government has to pay a whopping $800 million to Chinese against costs for conducting feasibility studies. Moreover, China is its biggest trading partner so backing-off from a megaproject deal might not be a good idea.

Similarly, Africans have reservations too, that China has taken proprietorship of their resources without transferring skills and technology and they take away primary goods to sells back manufactured ones.
Root cause of failed investments

The key to take away here is to realise that China is no doubt a specialist in building infrastructure but it is primarily the responsibility of the loan-recipient country to conduct extensive project appraisal and feasibility studies.

One solid symptom of a weak business case is a lack of any Private-Public Partnership (PPP) based arrangements in project financing. If the primary funding of any infrastructure project involves only sovereign guarantees with no Special Purpose Vehicle (SPV) to isolate project-based cash flows, it is a ‘red flag’ that the business case is not market-driven and not lucrative enough for investors.

Drawing parallels with CPEC

When it comes to finalising the scope of the China-Pakistan Economic Corridor (CPEC), the government seems to be kicking the can down the road. The portfolio cost has already increased to $62 billion as the brand CPEC has become a magic word that ensures acceptance of any project – relevant or not.

The portfolio is losing its focus and costs are spiralling out of control. We don’t see any focus on designing a set of enabling policies that will ensure organic growth (not Chinese-led) of special-economic zones on CPEC routes. At the same time, we also see that projects with good business case (such as Tarbela extension and motorways) are not a part of CPEC but funded by the likes of Asian Development Bank.

Adopting a corridor approach to CPEC means that the government has to engage a wide array of regional stakeholder with possibly conflicting interests. The key strategic bits of the CPEC master plan should be based on our regional trading partners and identifying trade bottlenecks – both hardware (infrastructure) and software (policy blueprints).

This thought process should become a litmus test for proposing a new project in CPEC portfolio. For example, before approving a cricket stadium project as part of CPEC, it is important to ask the question whether developing a stadium add to the CPEC vision of eliminating trade bottlenecks.

The writer is a Cambridge graduate and is working as a management consultant.



Published in The Express Tribune, April 24th, 2017.

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AndrewS

Captain
Registered Member
Halford Mackinder said the Central Asia area was the "geographic pivot of history," and the nation that controls it will control the world. I don't think he had China in mind in that role, because I don't think China wants to control the world. Do business, secure its interests, and extend influence, yes, but not to control in the manner of Pax Britannia, or dare I say... Pax Americana?
I don't agree with that Mackinder statement.

Long distance land transport is just so much more difficult and costly compared to seaborne transport.

That stunts the growth of inland cities, which are far from a seaport.

And long distances over land make power projection difficult because of the vast amount of strategic depth afforded.

Also note that the British Empire did end up with direct colonial rule over large swathes of population and territory, backed by the Royal Navy. Although it did have a huge informal trading empire as well.

The American Empire only had a few colonies, with a much larger informal trading empire, backed by the US Navy.

So what should China do?

China is already the world's largest trading nation and net international investor last year. So it now has a vital stake in a liberal environment for its trade and for its multi-nationals to invest globally.

Yet China's economy still has decades of catchup growth potential ahead of it, so its trade and investment profile is set to grow much larger.

Also, China's historical narrative is as a victim of nasty colonial powers like the UK, Japan etc

So China should probably aim for a soft hegemony model as currently practiced by the USA, backed by the Chinese Navy.

We can see this with AIIB, OBOR, RCEP, FTAAP etc in the economic realm.

And in the military realm, such a global economic profile will eventually require a global navy. So we can see the medium-term Navy plan is to increase personnel by 15% to 270K, and the Marine Corps by almost 500% to 100K personnel.
 

delft

Brigadier
So China should probably aim for a soft hegemony model as currently practiced by the USA, backed by the Chinese Navy.
US hegemony has become less soft as it fails to maintain its economy and lives more and more on debt and creating dollars out of thin air. Also you cannot call the destruction of Iraq and Libya and the support for the effort to destroy Syria as soft hegemony.
 

delft

Brigadier
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portfolio keeps increasing, but does it really add value?

It was January 2017 and a big day for
Please, Log in or Register to view URLs content!
as the island nation
Please, Log in or Register to view URLs content!
handed over the Hambantota deep sea port as well as 15,000 acres of its rich agricultural land to establish a new Chinese-operated industrial zone – in exchange of writing-off its $1.1 billion debt.

Sri Lanka’s premier called it a “once in a lifetime opportunity” but there were scores of Buddhist Monks protesting against conversion of their land into a Chinese Colony.

In
Please, Log in or Register to view URLs content!
, anti-Chinese sentiments are growing as the Chinese-financed landmark $3.6 billion Myitsone Dam project would cause permanent harm to the dynamic of river settlements – destroying fishery stocks and displacing thousands of villagers.

The question of the hour is: What goes wrong with these billion dollar infrastructure investments by China?

China has emerged as the leading source of development assistance with a focus on infrastructure and energy sector. Developing countries with diminishing foreign reserves are eager to accept such investments without thoroughly working out the business case.

Now we see that in
Please, Log in or Register to view URLs content!
, Chinese construction companies have built the world’s emptiest airport – not to mention other white elephants such as a five-star hotel, world-class convention center and a cricket stadium. It is still unknown if these infrastructure investments provided any economic uplift to this poor region.

Similarly, in Myanmar, the wrong dam project was given the go-ahead and by the time the government realised its mistake, it was too late. Now if the project is scrapped, the government has to pay a whopping $800 million to Chinese against costs for conducting feasibility studies. Moreover, China is its biggest trading partner so backing-off from a megaproject deal might not be a good idea.

Similarly, Africans have reservations too, that China has taken proprietorship of their resources without transferring skills and technology and they take away primary goods to sells back manufactured ones.
Root cause of failed investments

The key to take away here is to realise that China is no doubt a specialist in building infrastructure but it is primarily the responsibility of the loan-recipient country to conduct extensive project appraisal and feasibility studies.

One solid symptom of a weak business case is a lack of any Private-Public Partnership (PPP) based arrangements in project financing. If the primary funding of any infrastructure project involves only sovereign guarantees with no Special Purpose Vehicle (SPV) to isolate project-based cash flows, it is a ‘red flag’ that the business case is not market-driven and not lucrative enough for investors.

Drawing parallels with CPEC

When it comes to finalising the scope of the China-Pakistan Economic Corridor (CPEC), the government seems to be kicking the can down the road. The portfolio cost has already increased to $62 billion as the brand CPEC has become a magic word that ensures acceptance of any project – relevant or not.

The portfolio is losing its focus and costs are spiralling out of control. We don’t see any focus on designing a set of enabling policies that will ensure organic growth (not Chinese-led) of special-economic zones on CPEC routes. At the same time, we also see that projects with good business case (such as Tarbela extension and motorways) are not a part of CPEC but funded by the likes of Asian Development Bank.

Adopting a corridor approach to CPEC means that the government has to engage a wide array of regional stakeholder with possibly conflicting interests. The key strategic bits of the CPEC master plan should be based on our regional trading partners and identifying trade bottlenecks – both hardware (infrastructure) and software (policy blueprints).

This thought process should become a litmus test for proposing a new project in CPEC portfolio. For example, before approving a cricket stadium project as part of CPEC, it is important to ask the question whether developing a stadium add to the CPEC vision of eliminating trade bottlenecks.

The writer is a Cambridge graduate and is working as a management consultant.



Published in The Express Tribune, April 24th, 2017.

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Was this article originally written for New York Times? The Express Tribune cooperates with NYT.
 

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