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Who will win and lose if Silk Road economy prospers


middleground

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Disagreement between the U.S. and China is increasing across trade and global influence issues. Reports from the recent Asian economic summit show a bitterness in it. Established economies like the U.S. and Australia want to develop a naval base in Papua New Guinea to contain China. The U.S. is cautioning poorer countries from borrowing money from China. Excerpts below from a BBC report show the deep levels of enmity.

Apec summit ends without statement over US-China division - BBC News

An Asian economic summit has ended without a formal leaders' statement for the first time because of US-China divisions over trade.

The US and China revealed competing visions for the region at the summit.

The two countries have been engaged in a tit-for-tat trade war this year.

During the summit, the US said it would join Australia in developing a naval base in Papua New Guinea, in an apparent move to curb China's growing influence.

Mr Pence later said he was prepared to "more than double" the tariffs imposed on Chinese goods.

He also criticised China's massive Belt-and-Road infrastructure programme, warning smaller countries that "opaque" Chinese development loans led to "staggering debt".

He urged countries to work with the US instead, saying the US did not "coerce, corrupt or compromise your independence".


Old economies are never pleased to see emerging economies that are more flexible, energetic, and pro-active in creating new trade models. The Belt and Road Initiative is a development strategy adopted by the Chinese government involving infrastructure development and investments in Silk Road countries in Europe, Asia, and Africa on both overland and sea routes.

Building infrastructure in these countries is a much sounder economic model than locating mobile multi-national enterprises or military bases or occupation. The downside is that it can involve incurring substantial debt which eventually requires getting a country’s finances into better shape to afford repayments in order to own the assets.

Beijing’s multi-billions dollar Belt and Road Initiative (BRI) has been called a Chinese Marshall Plan, a state-backed campaign for global dominance, a stimulus package for a slowing economy, and a massive marketing campaign for something that was already happening – Chinese investment around the world.

Between 2014 and 2016, China's total trade volume in the countries along the Belt and Road exceeded $3 trillion, created $1.1 billion revenues, and 180,000 jobs for the countries involved.

Is the U.S. losing ground to China? Should countries refrain from borrowing from China? What are the implications for Europe of a prosperous Silk Road economy?
 

Lumpy Talbot

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No
The Silk Road really is an attempt to extend Chinese soft power utilising exactly the same free market principles much espoused by the west for much of the last two centuries.

Building a base in Papua New Guinea, which I believe is somewhat North of Australia, seems to be out of the strategic plan of drawing new lines further and further back and issuing dire warnings if China dare cross that new line.

It was hugely funny watching the Americans in particular warning of China's attempted influence in the South China Sea. The irony was magnificent.

It was the equivalent of the Chinese or Russians warning of increased American naval activity off Hawaii.
 

Lumpy Talbot

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No
To answer the question- the new Silk Road plans are a solid indicator that Beijing understands exactly what Washington was preaching through World Trade Organisation talks for many decades:)
 

Socratus O' Pericles

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Disagreement between the U.S. and China is increasing across trade and global influence issues. Reports from the recent Asian economic summit show a bitterness in it. Established economies like the U.S. and Australia want to develop a naval base in Papua New Guinea to contain China. The U.S. is cautioning poorer countries from borrowing money from China. Excerpts below from a BBC report show the deep levels of enmity.

Apec summit ends without statement over US-China division - BBC News

An Asian economic summit has ended without a formal leaders' statement for the first time because of US-China divisions over trade.

The US and China revealed competing visions for the region at the summit.

The two countries have been engaged in a tit-for-tat trade war this year.

During the summit, the US said it would join Australia in developing a naval base in Papua New Guinea, in an apparent move to curb China's growing influence.

Mr Pence later said he was prepared to "more than double" the tariffs imposed on Chinese goods.

He also criticised China's massive Belt-and-Road infrastructure programme, warning smaller countries that "opaque" Chinese development loans led to "staggering debt".

He urged countries to work with the US instead, saying the US did not "coerce, corrupt or compromise your independence".


Old economies are never pleased to see emerging economies that are more flexible, energetic, and pro-active in creating new trade models. The Belt and Road Initiative is a development strategy adopted by the Chinese government involving infrastructure development and investments in Silk Road countries in Europe, Asia, and Africa on both overland and sea routes.

Building infrastructure in these countries is a much sounder economic model than locating mobile multi-national enterprises or military bases or occupation. The downside is that it can involve incurring substantial debt which eventually requires getting a country’s finances into better shape to afford repayments in order to own the assets.

Beijing’s multi-billions dollar Belt and Road Initiative (BRI) has been called a Chinese Marshall Plan, a state-backed campaign for global dominance, a stimulus package for a slowing economy, and a massive marketing campaign for something that was already happening – Chinese investment around the world.

Between 2014 and 2016, China's total trade volume in the countries along the Belt and Road exceeded $3 trillion, created $1.1 billion revenues, and 180,000 jobs for the countries involved.

Is the U.S. losing ground to China? Should countries refrain from borrowing from China? What are the implications for Europe of a prosperous Silk Road economy?
There are two types of people those who have money and those who don't. Guess who always comes out on top.
 

middleground

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To answer the question- the new Silk Road plans are a solid indicator that Beijing understands exactly what Washington was preaching through World Trade Organisation talks for many decades:)
Agree China has learned well and are developing quickly and quietly. There should be export opportunities for many European countries if their enterprises are willing to do the work required to develop new markets. A strong Asian-European gateway would be welcome.
 

publicrealm

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Is there any region that the US hasn't insulted or attacked recently (apart from Saudi Arabia)?
 

Lumpy Talbot

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No
Thinking further on the dynamics of the new Silk Road policy it certainly makes sense from the Chinese point of view. The outlay and scope of the project matches a series of Trade Agreements, with such huge amounts of Chinese infrastructure investment they get to influence the voting patterns at the UN with many countries along the route while simultaneously the US is retracting its spend outside the US and becoming more internally focused (the Chinese have the money to spend, the US doesn't).

It is clever in that it is a mix of Monopoly and Risk at exactly the right time. If you think back to Reagan's supercharging the US economy in the 80s which effectively drove the Soviet Union into financial collapse the Americans are in no position to get into an economic pissing match with Beijing so it is the right thing for Beijing to do in filling the international vacuum.

They have such huge reserves of foreign currency and the Yuan about to emerge as an exchange currency, along with the ability to directly intervene in domestic economics way beyond any level that could be contemplated in the west, that they really are the bankers in the Monopoly game now. And the Silk Road project gives them a strategic spending target allied to both economic and political gains.

As for the winners and losers, the countries along the route closest to Chinese interests probably won't feel any different. It gets interesting as you get to Pakistan and India, where India is fuming about the Chinese infrastructure spend in Pakistan and refusing to have anything to do with the Silk Road project accordingly, which doesn't bother China or Pakistan all that much.

The western European plans will be interesting- I believe significant infrastructure projects and new links are planned right through to Rotterdam.

Might give some European countries a bit more hesitation in following the US line on voting at the UN ultimately.
 

Lumpy Talbot

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Heh- just remembered that the High Speed Rail Line between London and the Channel Tunnel is already owned by a subsidiary company owned ultimately by Li Ka-Shing, the multibillionaire who is a senior economic advisor to the politburo in Beijing.
 

middleground

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There are two types of people those who have money and those who don't. Guess who always comes out on top.
Yes two types of persons but three types of empire: past, present, and future. It will be future empires that will have the money!

Around 90 countries in the Belt Road Initiative (BRI) so it is much different than more recent bilateral engagements by the U.S. Infrastructural projects deliver employment at local level even if it is only housing and feeding the workers.

The Belt and Road Initiative: Country Profiles | HKTDC

The future will be a bullet train across Europe and Asia.
 

Socratus O' Pericles

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Yes two types of persons but three types of empire: past, present, and future. It will be future empires that will have the money!

Around 90 countries in the Belt Road Initiative (BRI) so it is much different than more recent bilateral engagements by the U.S. Infrastructural projects deliver employment at local level even if it is only housing and feeding the workers.

The Belt and Road Initiative: Country Profiles | HKTDC
I agree. The Chinese have money and lots of it and are posseors of a model that will make many trillions more. Exaggeration of THEIR debt problem is nonsense:

Most people think of China's growth coming from its burgeoning export sector. But it has a very strong domestic economy and a large public spending program – its called ‘nation building’. ... [T]here is no discussion [in China] about the country drowning in debt and all of that nonsense. [The Chinese] know full well that they are sovereign in their own currency and can deficit spend to further their sense of public purpose." : From "The government really is instrumental in creating growth" by Bill Mitchell, 20 January 2016
 

middleground

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Here is the start of the EU strategic response to the Belt Road Initiative:

Europes Belt and Road | The Diplomat

Reminds me of a man at the post-Christmas sales rush, quietly queueing while all the goods are being snatched up by experienced shoppers :giggle:
 

middleground

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Not everyone happy about the possible economic changes that the One Belt Initiative may bring to traditional communities according to a BBC website report:

Gunmen have killed at least four people in an attack on the Chinese consulate in the Pakistani port city of Karachi.

Gunshots were heard at about 09:30 local time (04:30 GMT) outside the consulate in the upmarket Clifton area. Police shot dead three attackers.

Separatist militants who oppose Chinese investment projects in western Pakistan say they carried out the attack.
 

Clanrickard

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Yes two types of persons but three types of empire: past, present, and future. It will be future empires that will have the money!

Around 90 countries in the Belt Road Initiative (BRI) so it is much different than more recent bilateral engagements by the U.S. Infrastructural projects deliver employment at local level even if it is only housing and feeding the workers.

The Belt and Road Initiative: Country Profiles | HKTDC

The future will be a bullet train across Europe and Asia.
Except China is a nasty totalitarian dictatorship that eats people up and spits them out. Any comparison between it and western democracies are fraudulent.
 

Ardillaun

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Not everyone happy about the possible economic changes that the One Belt Initiative may bring to traditional communities according to a BBC website report:

Gunmen have killed at least four people in an attack on the Chinese consulate in the Pakistani port city of Karachi.

Gunshots were heard at about 09:30 local time (04:30 GMT) outside the consulate in the upmarket Clifton area. Police shot dead three attackers.

Separatist militants who oppose Chinese investment projects in western Pakistan say they carried out the attack.
We have a tale of two ports, 100km apart: Chabahar in Iran, developed with Indian support, and China’s Gwadar port in Pakistan. There are teething troubles with both:

https://www.newdelhitimes.com/suicide-bomber-attack-irans-chabahar-port/

Karachi attack: A gunfight in Karachi shakes up Pakistan and China's all-weather alliance - The Economic Times

China’s relationship with Pakistan involves a lot more money but also far more resentment. The Pakistanis are well aware of Chinese attitudes to Muslims and South Asians and, given Pakistani levels of paranoia never being much being much below 11/10, we should be in for quite the show.
 

SideysGhost

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In a way the Belt & Road initiative is really just marketing for what has been going on for a long time. For instance in Africa while the West has long walked away it is China that has stepped in to build infrastructure, power plants, ports, railways and healthcare etc. This has been going on for so long now, that it is what was really behind George W Bush suddenly professing concern over Africa and boosting AIDS spending, if any of you remember that far back. But as usual with the US it was too little, too late, with no strategic long-term commitment and follow-through.

In another sense it is an interesting throwback 2000 years to the era of the Roman and Han empires, except with modern technology, telecoms and transport links, which could have interesting and unforeseeable consequences. There's also more than a touch of Mackinder's century-old Heartland/World-Island theory of geo-political dominance.

Definitely one to watch - though, as with Mao and the French Revolution, we'll all be long dead before the full implications and consequences of this become obvious.
 

stopdoingstuff

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It's way too big and complicated to make specific predictions about the project as a whole. Its success or otherwise will be based on the extent to which the projects service existing demand or create new demand. Chinese infrastructural investment is massively inefficient in some respects and utterly awe-inspiring in other respects. It's hard to apply a hard and fast rule to something that is half-politics and half-economics. However I hope it works out as economic growth on that scale is definitely not a zero sum game.
 

Ardillaun

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