China’s Junk-Rated Future

One Belt One Road: Leap Into the Uncertain Future

China’s Mr. Xi has attained the pinnacle of one-man power in The Middle Kingdom. In order to achieve his ambition to make China the leading global power in economic, political, and military terms, he has committed the nation to the massive infrastructure project known as One Belt One Road (OBOR).

The majority of the nations in OBOR are junk-rated or not graded by international rating firms. China’s Obor drive is actually beginning to encounter a backlash in some partner countries.

__ Brahma Chellaney

The overland portion of OBOR represents the greatest initial challenge, with the least obvious payoff. Sea-based transport is far less expensive and ultimately more profitable than land transport. The sea-based portion of OBOR holds more potential, but China remains limited in its sea-going potential due to a number of devastating “maritime chokepoints” off of China’s coastline and beyond.

Mr Xi’s vision, which he has called the “Chinese dream”, is essentially to make China the world’s preeminent power by 2049, the centenary of communist rule. The longest that any similar system has survived in modern history was 74 years in the Soviet Union. Mr Xi’s grip on power may [or may not] still be intact when China overtakes that record in less than seven years…

Mr Xi … sees the West in retreat and wants China to gain the upper hand globally… Mr Xi wants to make China the central player in the international order. ___ The National

Mr. Xi — like Mr. Putin before him — seems to have leaped too soon, and his nation is likely to pay very dearly for his miscalculation. The appearance of indomitable strength is not the same thing as indomitable strength. Mr. Xi appears to have taken his own propaganda and ginned up statistics too seriously — committing the particularly egregious sin of projecting past trends into the future far beyond their expiration dates.

China doesn’t always offer the best value to partnering countries. Projects are often tied to political pacts through which China’s state-owned enterprises get exclusive bidding rights, as opposed to competitive tenders between SOEs and other international firms. Research by the Economist Intelligence Unit shows that in the case of Kenya, Chinese companies have delivered the centerpiece Standard Gauge Railway at a cost of $5.6 million per km, close to three times the international standard and four times the original estimate.

Poorly chosen projects funded by cheap loans from China’s may undermine the host countries’ ability to repay debts, which may ultimately put pressure on China’s banks. China has extended huge credit lines, estimated by Fitch Ratings at some $900 billion so far, to support the OBOR strategy, with much of the money being channeled into countries where the risk of debt default is high, such as Kenya, Ethiopia, and Sri Lanka.

Given the speed at which the Chinese government is hoping to expand the OBOR strategy, the above factors raise the risk of ultimately dampening its effectiveness and undermining China’s efforts to expand its global influence. __ Problems with OBOR

China’s looming debt mountain — combined with the deadly toxic China Bubble — represent problems that the thoroughly corrupted dragon has not even begun to face.

More:

China’s overcapacity/overproduction problem

China’s fantasy future

A sadder reality for most.

So why does Xi Jinping believe that the Party is fighting for its life? Because he knows that behind this gleaming facade lies another reality. He knows that the people who live and work in the soaring buildings dare not drink tap water, their life expectancy has been cut by five years by polluted air, and cancer is growing in their babies’ lungs due to levels of PM2.5 invisible to the eye but clearly shown by an app on my iPhone.

… It is not only their savings that the rich are trying to move abroad; China is suffering from the greatest brain drain in the history of the world (by 2006, 750,000 students who had studied abroad had failed to return to China.)

… It is not only their rulers whom the common people distrust: they tell me their distrust runs horizontally as well as vertically. They shake their heads and say: “In China there is no trust, and no truth.”

Mr. Xi Takes a Wild Leap

Going back thousands of years, China’s history is full of ambitious expansions followed by devastating collapse. Today’s Chinese Communist Party of Mr. Xi appears ready to take another wild ride on the cyclic China Express. It is difficult to see any other outcome than bloodshed on a grand scale — a phenomenon that historians often airbrush out of their portraits of time.

China’s geopolitics through the ages as “cycles of reunifications and expansions, followed by decay and fragmentations.” __ A Precipitate and Irrational Expansion

Always watch the fundamentals and discount the official public pronouncements and rah! rah! cheerleading. Remember that right up until the Soviet Union fell, it was still being promoted as the successor world superpower destined to replace the US — by a mainstream media and world punditry that remains similarly blindered and tunnel-visioned today.

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1 Response to China’s Junk-Rated Future

  1. John Q Public says:

    Yep, but it is very unpopular to think this way, even in NRx!

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