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How China's “debt traps” work

noahpinion.blog

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Re: How China's “debt traps” work

#71

Post by littlestymaar »

neilwilson wrote: post #32

The problem with listening to economists is that if your only tool is interest rates everything looks like a loan. No sovereign nation should be borrowing from anywhere other than itself. Instead firms should be selling equity denominated in the local currency for foreign currency - where they need foreign imported capital equipment. If nobody wants to invest on those terms then you have to build the equipment yourse…

> listening to economists

Noah Smith isn't even an economist, he's just some know-it-all internet pundit who happened to have graduated in economics a decade ago.

Re: How China's “debt traps” work

#72

Post by beebeepka »

0xDEF wrote: post #40
3seashells wrote: post #18

The multipolar World looks like the uni polar, it's just more of its crap.

There is no multipolar world. It's just the US and China. Their combined GDP is bigger than the next 33 countries combined. As a Danish person I wish the EU had actual hard power but in the end of the day Denmark doesn't have the same geopolitical interests as Hungary, Bulgaria, and Slovakia. In fact their views are the polar opposite of ours.

What do you mean our views are opposite? I am Bulgarian and I very much agree with you that we need an actual European army.

Now, you can always assume I only say this because I live in a poor country that everyone pushes around. But when we zoom out a bit, the same could soon apply to the entire continent. We are not united and that's bad for all of us because our competitors are more much bigger and better integrated.

Did you have something else in mind? I don't exactly pay any attention to US politics but I am sure their states are competing with each other because they have their own interests in mind. But that applies to cities too, does it not?

Re: How China's “debt traps” work

#73

Post by neaden »

It seems like the very real risk for China here is if all these countries decide to act collectively on the debt. National debt isn't like other sorts after all, there is ultimately no higher authority that can intervene or that China can appeal too.

Re: How China's “debt traps” work

#74

Post by kridsdale3 »

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…

It seems like everything you said applies to Airports as well. Hardly any of them are anywhere near where you'd actually want to be (city center). Over the decades, the infrastructure will build up to connect the airport to the city. In my home (Vancouver) they weren't connected by a train for 73 years.

Airports of course also have enormous 'processing' time. It's normal to arrive 2 hours early.

Re: How China's “debt traps” work

#75

Post by wheelerof4te »

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 majority of new properties in China — about 90% — are sold before being completed." - CNN"

Not sure if this is some kind of joke. Many countries have laws that permit selling appartments when they are about 80% complete. Some have lower, some higher percentages.

Just your average low-tier negative CNN propaganda, I guess.

Re: How China's “debt traps” work

#76

Post by plagiarist »

oceanplexian wrote: post #46
andrepd wrote: post #37

Earlier quoted context omitted.

The view that "you have _your_ money and then the government takes it away from you" ignores that without the society that you are inserted in, the very concept of money would be meaningless. More accurate to say is that part of the social contract for participating in a society that enables you to """make""" that money is that you have a pay a "fee", i.e. taxes (among other things, e.g. abiding by laws which are dem…

Sure, there are some beneficial things that the government does. Like roads, police, fire, regulatory agencies; all the usual things that are cited as "We live in a society" line items. But those things are a tiny minority of government spending. The VAST majority of the federal budget goes to entitlements. Another massive chunk goes to paying interest on debt because we spent money we didn't have on entitlements. An…

"Entitlements."

The real parasitic drain on the economy is the large accumulations of capital that prevent the Invisible Hand from manifesting. Being alive is an inelastic good. If people have to choose between starving to death or labor for scrip to use at the company grocery, it breaks the efficiency of the market at valuing labor.

Re: How China's “debt traps” work

#77

Post by kiba »

neilwilson wrote: post #32

The problem with listening to economists is that if your only tool is interest rates everything looks like a loan. No sovereign nation should be borrowing from anywhere other than itself. Instead firms should be selling equity denominated in the local currency for foreign currency - where they need foreign imported capital equipment. If nobody wants to invest on those terms then you have to build the equipment yourse…

The problem with listening to economists is that if your only tool is interest rates everything looks like a loan.

Economists don't only study interest rate and banking?

Re: How China's “debt traps” work

#78

Post by ipnon »

jxramos wrote: post #30
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…

There's something very powerful behind incentives level thinking, it really does push you into second and third order effects and meta level interactions to think "if this then what next". I've been wanting to step up my level of engaging and contemplating incentives in the generic.

Read an introduction to economics textbooks. Use one from a popular MOOC syllabus. Cowen and Tabarrok is a great example.

Once you can turn everything into a model and an equilibrium the biggest systems of the world become much clearer.

Re: How China's “debt traps” work

#79

Post by slantedview »

belltaco wrote: post #6
slantedview wrote: post #2

It's worth pointing out that debt trap diplomacy was pioneered by the US backed IMF. While China has been exploitative, it goes without saying, that the US has been even moreso.

Any quick sources to back that up? IMF appears to set some conditions to put the economy back on track before lending.

Sure: two somewhat recent books that cover this are "Silent Coup" by Claire Provost and Matt Kennard, and "The Divide" by Jason Hickel. Another that covers this topic is "Superimperialism" by Michael Hudson.

The purpose of the IMF is not to help countries out of some kind of benevolence, it's to use debt as a control mechanism over other countries.

Re: How China's “debt traps” work

#80

Post by local_crmdgeon »

littlestymaar wrote: post #71
neilwilson wrote: post #32

The problem with listening to economists is that if your only tool is interest rates everything looks like a loan. No sovereign nation should be borrowing from anywhere other than itself. Instead firms should be selling equity denominated in the local currency for foreign currency - where they need foreign imported capital equipment. If nobody wants to invest on those terms then you have to build the equipment yourse…

> listening to economists Noah Smith isn't even an economist, he's just some know-it-all internet pundit who happened to have graduated in economics a decade ago.

That's the definition of an economist
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