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How China's “debt traps” work

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Re: How China's “debt traps” work

#61

Post by Symmetry »

NicoJuicy wrote: post #19
gruez wrote: post #12

Earlier quoted context omitted.

The part you're missing is that they poured millions/billions into said projects. Taking those outlays into account it's very reasonable to conclude that they lost, even if they got some money/land.

? China won, all that money invested was almost all to Chinese construction overcapacity. So that capacity was exported to useless prestige projects. Poor countries paid the bill ( mostly) and China is paid twice (foreign loans going to Chinese workers is a double win).

Clearly the Chinese construction companies that got the contracts won, but to the extent that the loans aren't paid back its money from Chinese taxpayers going to the people who own those companies. Japan had a big problem with this sort of corruption when they organized their foreign aid this way, which is why they no longer do.

Re: How China's “debt traps” work

#62

Post by stickfigure »

reisse wrote: post #34
Animats wrote: post #23

It's not just internationally. China has done that to its own people. Or worse. Look at Evergrand and Sunac. The government of China let developers sell un-built apartments to future residents. The residents not only paid down payments, but took on a mortgage obligation for an un-built building . "The majority of new properties in China — about 90% — are sold before being completed." - CNN. This produced a terrible i…

> The residents not only paid down payments, but took on a mortgage obligation for an un-built building. So what? They had a choice between paying more money for already built house now or paying less money but accepting the risks of developer's failure. > This produced a terrible incentive for developers to do huge numbers of housing starts and then not finish the building. Ugh, it's not like venture investing when…

> So what?

A very large number of Chinese citizens will lose their savings to these ponzi-esque construction schemes. Vast waves of defaults may take the banks with them. In Albania something similar caused mass civil unrest.

Re: How China's “debt traps” work

#63

Post by Loq »

ilickpoolalgae wrote: post #51
csomar wrote: post #48

I've recently rode through a Belt&Road project: The Lao high-speed train. In my opinion, it shows the complete failure of the Chinese government. The high-speed train is a reasonably great train that goes through dozens (hundreds?) of mountains and rivers (through tunnels and bridges). It does that while enabling you to work from the comfort of your chair. And while it's not high-speed (as in 300Km/h), it is reasonab…

I'm not sure if it's comparable, but the Japanese Shinkansen had similar issues when it's first built. A lot of the stations didn't go through the existing central stations due to costs and other logistical problems. This is why there are a lot of stations that the Shinkansen goes through that are called "Shin-XXX" (e.g. Shin Osaka). During a period of fast economic growth this isn't a big issue because the areas aro…

This is a much older phenomenon, called railway town, and it is so frequent that it has its own Wikipedia page [1]. At smaller scale this also happens in cities where new underground lines are built. It's a well-established way of paying for public transport. See [2] for a discussion.

[1] https://en.wikipedia.org/wiki/Railway_town

[2] https://pedestrianobservations.com/2017/09/07/meme-weeding-l...

Re: How China's “debt traps” work

#64

Post by littlestymaar »

username332211 wrote: post #45
teachrdan wrote: post #20

Earlier quoted context omitted.

This is a very humorous comment for you to have made. OP posted a quote from David Graeber that precedes China's Belt-and-Road plans by years. Graeber was instead writing about the West's use of debt to further exploit the global south, and how debt has long had a supposed moral dimension that makes renegotiating it (in the literal and metaphorical sense) exceedingly difficult. As someone who sporadically did politic…

I don't see how you can drag someone's credentials to prove he isn't a useful idiot. Malcolm Caldwell, famous for being the very embodiment of a useful idiot was a research fellow at UCL. Other defenders of the Red Khmers had even more impressive credentials. Need I remind you who was the writer of "Distortions at Fourth Hand" and "Manufacturing Consent"? By definition, all useful idiots have impressive credentials.…

> Other defenders of the Red Khmers

Are you talking about the entire Western block where in the 80 when western powers brought support to the milicia in order to piss off the Soviet Union-backed Vietnam, or what?

Re: How China's “debt traps” work

#65

Post by TulliusCicero »

pphysch wrote: post #25

For those who are curious about a serious analysis of China's foreign development policies, rather than a misinformational blog post: https://www.chathamhouse.org/2020/08/debunking-myth-debt-tra... That one is from 2020 but there are a lot of serious people looking at these complex issues.

Is the chart in the blog wrong? Because it looks like investments for Belt & Road have collapsed, which would be odd if it had been a success rather than a failure.

Re: How China's “debt traps” work

#66

Post by packetslave »

csomar wrote: post #48

I've recently rode through a Belt&Road project: The Lao high-speed train. In my opinion, it shows the complete failure of the Chinese government. The high-speed train is a reasonably great train that goes through dozens (hundreds?) of mountains and rivers (through tunnels and bridges). It does that while enabling you to work from the comfort of your chair. And while it's not high-speed (as in 300Km/h), it is reasonab…

[flagged]

Re: How China's “debt traps” work

#67

Post by wheelerof4te »

stickfigure wrote: post #56
jhp123 wrote: post #41

Earlier quoted context omitted.

US Imperialism is even more brazen than that. Here's a video of the US President commenting on how US troops are in Syria "only for the oil": https://www.youtube.com/watch?v=U10p3Tn9V5Y

This is the same guy who suggested injecting disinfectant or "bringing light inside the body" to cure covid. He also continues to lie about his election loss in a desperate attempt to cling to power. Trump is shameful, but he doesn't represent the long history of the US.

"the long history of the US."

You mean, the long history of overthrowing governments, imperialistic wars and debt-trapping entire nations into selling their state-owned assets to US interest groups and funds?

Your memory may be short lived, but there are many of us who know and remember.

And, by the way, China hasn't started invading random countries all over the world...yet.

Re: How China's “debt traps” work

#68

Post by neaden »

ypeterholmes wrote: post #60
gruez wrote: post #14

Earlier quoted context omitted.

Except if you read the article it's arguing that the opposite happened. >Note that although this is a debt trap, it isn’t really a case of “debt-trap diplomacy”, as some people accuse. Debt-trap diplomacy is where you get a country to owe you money, and you force it to make geopolitical concessions in exchange for loan forbearance. China doesn’t appear to be doing that; instead it appears to simply be walking away wi…

They ended up with ownership of a port and a lot more though. The point of the article is that they are being short-sighted by angering everyone, but you saying that they did the opposite of predatory lending is wrong. It was absolutely predatory lending, just not well executed.

Is the port worth it though? The article points out it's not very busy and doesn't seem to have been made well. It seems like China is acting on very short term thinking here.

Re: How China's “debt traps” work

#69

Post by [deleted] »

NicoJuicy wrote: post #19
gruez wrote: post #12

Earlier quoted context omitted.

The part you're missing is that they poured millions/billions into said projects. Taking those outlays into account it's very reasonable to conclude that they lost, even if they got some money/land.

? China won, all that money invested was almost all to Chinese construction overcapacity. So that capacity was exported to useless prestige projects. Poor countries paid the bill ( mostly) and China is paid twice (foreign loans going to Chinese workers is a double win).

[deleted]

Re: How China's “debt traps” work

#70

Post by hackandthink »

pphysch wrote: post #25

For those who are curious about a serious analysis of China's foreign development policies, rather than a misinformational blog post: https://www.chathamhouse.org/2020/08/debunking-myth-debt-tra... That one is from 2020 but there are a lot of serious people looking at these complex issues.

It is a hard problem.

Poor countries need a lot of investment (0). Historically many investments failed and creditors ruined the country and made live of the involved people even more miserable. My gut feeling is that chinese investors are a little bit smarter but there are obviously problems as well.

(another gut feeling: china has too much money, they can't invest in US treasuries anymore) (1)

This US/China conflict is just stupid. Nearly everybody looses.

(0) Adam Tooze "The west has failed to keep its promises on aid"

https://www.ft.com/content/75d35382-32e4-4548-82e6-0d20d9984...

(1) https://markets.businessinsider.com/news/bonds/dedollarizati...

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