If you're a small poor country and you borrow money from China to build infra on your territory, what happens if you simply... don't pay back the loan after the infra is built?
How China's “debt traps” work
161–170 of 204 posts
Re: How China's “debt traps” work
#162Earlier quoted context omitted.
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 integrat…
> 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?
This is pretty much solved by the enumerated powers clause. Outside of the dozen or so federal powers the central government handles, the states operate mostly autonomously (something non-Americans, particularly Europeans, find impossible to comprehend; at least based on common internet discourse).
Presumably, the same could be done for a Federated EU; but it's unlikely a good chunk of the nations (particularly the wealthy ones) would be willing to cede their ultimate sovereignty to a central power.
Re: How China's “debt traps” work
#163Earlier quoted context omitted.
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.
GDP is the wrong metric. Military strength and sustainability are the most important drivers for a country. Example: This is why North Korea is able to survive despite being blacklisted economically from most of the world. China is enabling its sustainability.
There is no wrong or right metric. Every aspect of a nation's existence has an effect on its survival.
Mexico has a very weak and self-defense oriented military, but is under no threat of occupation or annexation. Mostly because it's continued existence benefits both the US and Canada, which offer a proxy protection. It also keeps relatively good trade relations with many powerful nations and has a large consumer economy.
Or Mongolia, which exists because neither of it's neighbors could reasonably occupy it or would allow the other to do so.
Military strength is one way to ensure protection. It's certainly not the only way.
Re: How China's “debt traps” work
#164It'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.
Have you seen unfinished buildings of this scale anywhere else? These are just two examples from Guangzhou, one of the top cities in China.
Re: How China's “debt traps” work
#165Earlier quoted context omitted.
I am commenting because CNN portraits this as something negative when it comes to China. When in fact, it's fairly normal situation almost anywhere in the world.
I am in EU, own an unfinished - actually not even started yet - apartment. Can confirm, absolutely normal.
have you paid for your non-existent apartment in full already?
Re: How China's “debt traps” work
#166Earlier quoted context omitted.
"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.
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This is not true. In China, buyers have to pay the down payment and mortgage before the apartment is built, but for some reason if the builder left the apartment half built, buyers do get their money back from the bank.
Re: How China's “debt traps” work
#167This whole piece is remarkably silly depending on perspective. I mean I get it, China bad, sure. But when the author says "hospitals" ,"bridges" and such I think he does get that they exist in a place of desperation and poverty but can't seem to actually appreciate what that means. Not borrowing internationally, owing China money, poor quality constructions, chinese imported labor and conflicts with locals are all nothing when you consider just how bad poverty is. It's something.
It's like rich people telling poor people to stop getting avocado toast in the US.
Given China's hostility, you would think europe and america would wake up and get past their moral high grounds but having someone to look down on is hell of a drug.
Starving and impoverished people don't want a lecture on democracy and human rights.
To me, the most terrifying thing is considering how much of this democracy and human rights I enjoy here is dependent on our economy and military being #1.
Re: How China's “debt traps” work
#168Earlier quoted context omitted.
"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.
Have you seen unfinished buildings of this scale anywhere else? These are just two examples from Guangzhou, one of the top cities in China. https://www.youtube.com/watch?v=K368l0yNxvs https://www.youtube.com/watch?v=vhv424HlkGM
It's China, you can't see anything they do in the scale they do it in anywhere else in the world. What's worse, not building enough or building too many?
Re: How China's “debt traps” work
#169This article makes me think about "tofu-dreg projects" [0] Poor quality construction work prevalent in mainland china. If you look for content with this keyword, you will find jaw dropping videos of constructions workers bending or breaking "rebar" with their hands, Owners chipping away concrete in high-rise buildings like its sand, etc. Of course some of this can be propaganda, but considering it has a local name, t…
It does have a propaganda feeling to it. I went thru the top 25 YouTube videos for tofu dreg recently, and they had that undertone of hoping for China to collapse. There are crappy building practices in any country. The real question is prevalence, which I can’t seem to answer.
This is an incredibly naive take on an issue that is wide spread in China to the point of it being almost the norm.
Confucianism does not lend itself well to crucial infrastructure , you know, things you don’t want to collapse.
https://www.chinaexpatsociety.com/culture/the-chabuduo-minds...
It’s an entire mindset.
Re: How China's “debt traps” work
#170For 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 conflic…
Part of the reason that developing-world investment has traditionally been hard is because it likely requires a longer perspective than most investors have. Build a decent rail network in Laos and it might take 75 years for them to leverage it to a level of development that pays it back, which gives you 75 years of risk it might all come crashing down. You can't float that meaningfully on the public markets, but a state can justify it, both because they can wait on the payback, and swallow the loss if they have to, and because they can value the economic cooperation and dependency it generates.
I wonder if an alternate route would be to use aid money as subsidy to attract private investment. Juice the yield on bonds to too-compelling-to-ignore, or offer backfill on short-term revenues if the project is speculative, and you could attract the world's financiers.
On the other hand, perhaps there's a hostility to existing finance to begin with. A lot of the developing world has had bad experiences with the mainstream Western financial system-- their banks and associated institutions are the ones coming in and demanding austerity, privatizations, and currency manipulations to settle their debts. Perhaps China just represents a fresh face: all they need to do is squeeze a little less to look good by comparison.