Belt and Road Initiative

[Colin]

China would win and lose at the same time, they would lose large swathes of global trade, Taiwan would be wrecked, Chinese products would banned, Vietnam would be start looking for support from Russia as well of the US. 

[BansheeOne]

To continue the Lithuania thing first noted here:

Quote

Date 21.11.2021

China downgrades diplomatic ties with Lithuania

China said it took the punitive step after self-ruled Taiwan opened a de facto embassy in Lithuania.

China downgraded diplomatic ties with Lithuania to the level of charge d'affaires on Sunday, China's state-owned broadcaster CCTV said in a statement.

This was a response to self-governed Taiwan opening a representative office in Lithuania's capital Vilnius two days earlier, CCTV explained in a post on Chinese social media platform Weibo.

"The Chinese government had to lower diplomatic relations between the two countries... to safeguard its sovereignty and the basic norms of international relations," the Foreign Ministry said in a statement. "The Lithuanian government must bear all consequences that arise from this," the ministry stated.

Why has China downgraded diplomatic ties with Lithuania?

Beijing views self-governed Taiwan as a Chinese province and vows to reunify it with the mainland, even by force if necessary. Under its "One China" policy, Beijing wants countries to officially recognize the Chinese government over that of Taiwan and break formal political ties with the island.

The Foreign Ministry's statement said that setting up the office in Lithuania "blatantly creates 'one China, one Taiwan'" which is not permitted under Chinese diplomacy.

Lithuania "regrettably" ignored the position of the Chinese government by allowing a representative office in the country under the name of Taiwan, the statement added.

Other Taiwan offices in Europe and the United States use the name of the city Taipei, avoiding a reference to the island itself.

[...]

https://www.dw.com/en/china-downgrades-diplomatic-ties-with-lithuania/a-59892943

[BansheeOne]

Quote

Lithuania's diplomats leave Beijing

3h ago

Lithuanian diplomats in China returned to Vilnius for consultations, according to the Foreign Ministry. Vilnius called back its diplomats in response to Beijing's efforts to downgrade its embassy.

Lithuania's top diplomats in Beijing left for Vilnius on Wednesday amid worsening bilateral relations with China over Lithuania's decision to develop diplomatic ties with Taiwan.

According to a statement on the website of the Lithuanian Foreign Ministry, the country's "Charge d'affaires ad interim in China, Audra Ciapiene, returns to Vilnius for consultations."

Reuters reports all 19 Lithuanian Embassy personnel and dependents left Beijing and were on a plane to Paris. A diplomatic source said they left due to "safety considerations" in response to "intimidation."

Foreign Minister Gabrielius Landsbergis confirmed the diplomats' departure in a press briefing. He responded to a question about the reports of Lithuanian diplomats facing pressure in China, "Uncertainty creates various possible interpretations."

Landsbergis added, "I want to say very strictly that this is not the closure of the embassy."

Local news outlet Delfi reported that the ministry said there were currently discussions between Beijing and Vilnius regarding the status of the countries' diplomatic missions in the other's respective capital. Vilnius is awaiting a decision as to whether Beijing will extend the accreditation of Lithuanian diplomats in China.

In the ministry's statement, Vilnius said the embassy would operate remotely for the time being and consular services for Lithuanian citizens in China would continue but in a limited capacity.

"Lithuania is ready to continue the dialogue with China and restore the functions of the embassy to their full extent once a mutually beneficial agreement has been reached," the statement said.

[...] 

In late November, China downgraded diplomatic relations with Vilnius,recalled its ambassador permanently and labeled the Lithuanian ambassador in Beijing persona non grata, effectively forcing him back to Vilnius.

Lithuania's critical views of Beijing

As a small nation that spent half of the last century occupied by an authoritarian giant next door, Lithuanians share and can relate to many of the fears Taiwan experiences.

In September, the Defense Ministry advised Lithuanian consumers to ditch their Chinese-made smartphones. The country's cybersecurity agency had found a censorship tool that could be triggered at any time without warning, officials said.

As Vilnius expands its 5G networks, Chinese firms have been excluded due to "safety reasons." Early last year, Vilnius left the Chinese-Central European economic cooperation forum 17+1, the only country to do so to date.

Policy guided by principle and economics

In November, Landsbergis, told reporters, "economic relations established with democratic states are more sustainable and long-lasting," because "they are more based on the principle of rule of law," and "therefore they are more in line with Lithuanian interests."

Kai-Olaf Lang, a Baltic affairs specialist at the German Institute for International and Security Affairs (SWP), told DW Lithuania can afford the stance it does because just 1.1% of its exports last year were sold to China.

https://m.dw.com/en/lithuanias-diplomats-leave-beijing/a-60126554

[Simon Tan]

Great! Be like Lithuania! Tell the Chynese where to get off. Moooaaarrr. 

[Roman Alymov]

Meanwhile Russian Rail have transported 1 000 000 transit containers from China to Europe since the start of Y2021 

 

[KV7]

This is to avoid bottlenecks in ports ? Or simply a natural development of the land route ?

[Simon Tan]

It is a natural use of the Evil Empire's logistical network to lull Western Europe with Chinesium while allowing preparation for mass movement of Chinese divisions to Ukrainian Front. 

[glenn239]

5 hours ago, Roman Alymov said:

Meanwhile Russian Rail have transported 1 000 000 transit containers from China to Europe since the start of Y2021 

Cheaper to take the Trans-Siberian RR to Europe than book freight on a container ship these days.  My last quote (yesterday) to Canada was $18,500 - the TSRR can probably do it to Europe for 1/3rd of that.

Edited December 16, 2021 by glenn239

[Simon Tan]

The shipping companies are making up for the list income from lockdowns. Fair enough I guess. It also helps to mop up all the QE. 

[Roman Alymov]

On 12/16/2021 at 1:24 PM, KV7 said:

This is to avoid bottlenecks in ports ? Or simply a natural development of the land route ?

It depends on what you consider “natural”. Russian Rail invested heavily for many years in development of both railways itself and accompanying infrastructure, making transit as fast and transparent as possible. Unfortunately, one of negative aspects here is we de-facto lost ability to deploy rail-based ICBMs – they will be next to impossible to hide in constant stream of international transit cargo in situation when cargo owners could track every container online.

[BansheeOne]

Quote

Road to Nowhere

Debts Mount with China's Prestigious Silk Road Project

Chinese leader Xi Jinping is hoping to create new markets for his country and establish his legacy with the New Silk Road project. But has he bitten off more than he can chew? Debts are mounting – and not only in China.

By Georg Fahrion, Christoph Giesen und Laura Höflinger in Beijing and Bangalore

24.08.2022, 09.30 Uhr

The tower of Colombo can be seen from quite a distance. It's dome is clad in pink glass shaped like petals, while the shaft is of green concrete. Chinese companies built the Lotus Tower in Sri Lanka's biggest city as a symbol of Beijing's friendship and Sri Lanka's golden future: The island nation's economy was to blossom like a lotus flower.

Today, the tower looms over the city like a 350-meter admonition. The premises are either empty or remain unfinished, 10 years after the start of construction. The lighting is switched off at night, and the Lotus Tower stands in darkness, as do many of the city's streets. Sri Lanka has to save money.

The South Asian country is bankrupt, with the government declaring insolvency in May. Sri Lanka owes creditors abroad more than $50 billion, and because the country can no longer pay for all the imports it needs, it is suffering through shortages of fuel, food and medicines. What Sri Lanka does have in abundance, however, are the many "white elephants," as they call the outsized construction projects that are neither economically productive nor necessary. Many were designed by Chinese companies, built by Chinese workers flown in and, above all, financed with Chinese loans – money from the Silk Road project.

Beijing Promised the World $1 Trillion in Investments

In 2013, Chinese leader Xi Jinping presented his vision of a "New Silk Road" for the first time. According to the propaganda, the whole world stands to benefit: New streets, ports and communications networks were to ensure more trade and prosperity. Officially, the program is somewhat clumsily called, "One Belt, One Road," or referred to as the Belt and Road Initiative (BRI).

In May 2017, the Chinese leadership hosted the official launch event, the Belt and Road Forum, in Beijing. Authorities cordoned off large parts of the city center as representatives from 130 countries gathered at the National Convention Center. It was said that China intended to invest $1 trillion around the world. In his speech, Xi painted an image of a networked world. Afterwards, state guests sung their praises for the Chinese. "President Xi deserves thanks for this initiative, which is very promising and timely," Vladimir Putin said. And Recep Tayyip Erdoğan of Turkey even described it as an "initiative that will put an end to terrorism."

In truth, the initiative serves not least to salvage the Chinese economy. The growth model of the People's Republic reached its limit years ago, and to ensure that economic growth increases year after year, the state itself invests in roads, new airports and in the dense high-speed rail network. The result is a significant mountain of debt. The national railway alone has accumulated debts of almost 1 trillion euros. One important aim of the New Silk Road is to create additional markets for Chinese corporations.

According to a survey by the American Enterprise Institute, projects valued at $838 billion were underway by the end of 2021. The trillion-dollar figure targeted by Xi isn't far off. But numerous loans are at risk of default. A study by the analyst firm Rhodium Group estimates the total value of Chinese foreign loans that needed to be renegotiated in 2020 and 2021 at $52 billion. There have also been several reports about bridge loans that Chinese banks have granted to prevent payment defaults. Such emergency loans have been granted to Pakistan, Belarus, Mongolia, Argentina and Sri Lanka.

For the leadership in Beijing, the threat of loan defaults comes at an inopportune time: The country's strict zero-COVID policy is weighing heavily on China's economy. And Xi is hoping to expand his power even further at the upcoming 20th party congress this fall. In such a politically sensitive phase, concerning economic news is even more unwelcome than usual, especially given that domestic debt is also becoming a problem. The real estate market is currently experiencing a severe crisis, and many construction companies are in the red. Thousands of Chinese are refusing to pay their monthly installments for apartments still under construction out of fear that the real estate companies will declare bankruptcy before the buildings are completed.

[...]

Now, new BRI projects have come under more intense scrutiny, as a recent study by Shanghai's Fudan University shows. For this study, Christoph Nedopil, an assistant professor of economics, examined deals concluded in the first half of 2022. In the past, a large share of the loans went to infrastructure projects, which the recipient countries backed with government guarantees. "That's not possible to the same extent now," says Nedopil. "Many of the Belt-and-Road partner countries are heavily indebted and can no longer afford it." As a result, not only the overall volume of orders that is shrinking. Also the nature of the projects is changing: Instead of building railroads or roads, loans are now more often used to natural gas or oil extraction.

[...]

The fact that China is now recalibrating its initiative does not, however, answer the question of what will happen to the billions that are already on the brink of default. What if other recipient countries like Laos, Pakistan, Argentina or Egypt also slip into insolvency? These countries first suffered from the pandemic, and now they're being hit by the price shock for oil and food caused by the war in Ukraine.

Debt haircuts would be a difficult sell domestically in China. The New Silk Road is Xi's legacy. It has long since become part of the communist creed and has been enshrined in the party constitution since 2017. Also, the Chinese population isn't particularly understanding when large sums of money are forgiven abroad. One year after the big BRI summit, Xi invited African leaders to Beijing for the China-Africa Summit in September 2018. Nearly 50 leaders traveled to the event. When Xi announced $60 billion in Chinese economic aid, the internet censors could barely keep up with deleting angry comments. The general tone: Why is the government distributing money abroad rather than giving it to the Chinese?

But the biggest test case is likely yet to come: In Pakistan, Chinese companies are building a $62-billion corridor to connect China's west with the Arabian Sea. The project is considered the crown jewel of the Silk Road Initiative and would allow China to expand its influence in South Asia in the immediate vicinity of its rival India, at least in theory. In reality, many construction projects are now lying idle. Furthermore, two children were killed in a suicide attack aimed at Chinese workers in the port city of Gwadar last year.

Not only does Pakistan struggle with terrorism, but it is also an impoverished country that has repeatedly been on the verge of national bankruptcy. The country's foreign currency reserves have also hit dangerous lows recently. In July, the International Monetary Fund approved a $1.2 billion rescue tranche. One month earlier, money flowed in from China, a new, $2.3-billion loan to prevent, or at least postpone, the next, arguably much larger, crisis in its immediate neighborhood.

https://www.spiegel.de/international/world/road-to-nowhere-debts-mount-with-china-s-prestigious-silk-road-project-a-74d6c558-34b2-4bd7-baa8-da8577d75feb

[Josh]

The Chinese economic success has been heavily underpinned by their real-estate market, which citizens use as their primary form of investment, and infrastructure projects, which have created entire train lines, airports, and even small cities that are dramatically under utilized. Something like 1/5 of all housing is unoccupied. This is partially because of excess construction but also due to housing being bought up as an investment due to a lack of other investment mechanisms in China. One reason for the BRI was to give Chinese companies and workers somewhere else to install infrastructure to help the construction sector with additional money and jobs.

The blow back of the property industry collapsing (which hasn't happened yet but seems relatively inevitable) would be devastating not only because it represents 1/4 of GDP currently (more than the US in 2008) but also the extreme damage it would do to the construction industry, on top of the fact BRI is now also being scaled back. This is compounded by the fact that China has both a lack of jobs and at the same time a lack of workers - young college educated Chinese can't find work, leading to unemployment rate for those under 25 at ~20%, but at the same time industry jobs are having problems staffing as older workers age out while the work force, if not the entire population, declines. The work force is incredibly unbalanced for the economy's needs. This is hardly unique to China but it is perhaps the most extreme example and it will be compounded in the medium term by population inversion due to the One Child policy. Long term, the population problem is at this point unavoidable - the fertility rate remains the same even after barriers were lifted to three children. China's population will decline by double digits over the next couple decades. Some projections say it won't stabilize until it is half its current size.

 

In the short term, Zero COVID seems to have shot China in the foot as well. The US reaction to COVID was unorganized and probably cost tens of thousands of lives unnecessarily. But between exposure and effective vaccines, the US has largely moved on from COVID. China's population however has not been exposed in any meaningful way and its vaccines are largely ineffective against the spread of the most recent variants - they might prevent extreme cases and death to some degree, but they are generally ineffective at preventing sickness and the general spread. Additionally something like 70-80% of the oldest segment of the population is unvaccinated at all. At this point, China is left with an incredibly vulnerable population that would be devastated if there *wasn't* a Zero COVID policy - they are painted into a corner. The only way out of that situation is an effective Chinese vaccine, because buying a western vaccine is politically unacceptable (depending on the West for a vital technology). A Chinese mRNA vaccine is completing trials soon but has yet to be distributed.

 

Most recently China has gone through the worst heat wave most anyone has ever documented. This has forced factory areas to shut down as hydroelectric power generation drops and AC usage rises. That is more bad luck than a result of any specific government policies but the timing could hardly be worse for Xi. Never the less I expect him to get his third term.

All in all, China has a raft of economic challenges that would be incredibly difficult for any nation to navigate. That could be dangerous for everyone else, given the size of China's economy (it will definitely drag on the world GDP) and the possibility of a more aggressive China deflecting from its domestic problems by initiating regional conflict.

Edited August 24, 2022 by Josh

[Ssnake]

Some of it I posted before, but...

 

 

 

 

[BansheeOne]

Quote

Italy minister: joining China's Belt and Road was 'atrocious' decision

By Alvise Armellini

July 30, 2023 5:23 PM GMT+2 Updated 17 hours ago

ROME, July 30 (Reuters) - Italy made an "improvised and atrocious" decision when it joined China's Belt and Road Initiative (BRI) four years ago as it did little to boost exports, Italian Defence Minister Guido Crosetto said in an interview published on Sunday.

Italy signed up to the BRI under a previous government, becoming the only major Western country to have taken such a step. Crosetto is part of an administration that is considering how to break free of the agreement.

The BRI scheme envisions rebuilding the old Silk Road to connect China with Asia, Europe and beyond with large infrastructure spending. Critics see it as a tool for China to spread its geopolitical and economic influence.

"The decision to join the (new) Silk Road was an improvised and atrocious act" that multiplied China's exports to Italy but did not have the same effect on Italian exports to China, Crosetto told the Corriere della Sera newspaper.

"The issue today is: how to walk back (from the BRI) without damaging relations (with Beijing). Because it is true that China is a competitor, but it is also a partner," the defence minister added.

After a White House meeting with U.S. President Joe Biden on Thursday, Italian Prime Minister Giorgia Meloni said her government was still deliberating on the BRI and announced a trip to Beijing in the near future.

"We'll take a decision before December," Meloni told U.S. broadcaster Fox News in an interview aired on Sunday, adding that the issue required discussions with the Chinese government and within the Italian parliament.

Meloni reiterated her view that it is a "paradox" that while Italy is part of the BRI, it is not the G7 country with the biggest trade with China, and said that shows it is possible to have good relations with Beijing without the Belt and Road.

https://www.reuters.com/world/joining-chinas-belt-road-was-an-atrocious-decision-italy-minister-2023-07-30/

[BansheeOne]

Quote

China raps Italy for 'malicious' criticism of Belt and Road

30 minutes ago

China's trillion-dollar infrastructure plan is meant to improve trade between Asia and Europe. Rome is now trying to withdraw from the deal, saying the previous government made an "atrocious" decision to join.

China on Friday blamed "some forces" within the Italian government who it said had "politicized" the Asian country's huge Belt and Road Initiative (BRI), of which Italy is a member.

In a statement, the Chinese Foreign Ministry said it believed the recent criticism by Rome of its links to the BRI was an attempt to "disrupt cooperation and create division."

It warned that the "malicious hype" created by Italy's far-right government "goes against the trend of history and will hurt others without benefiting oneself."

The ministry was responding to Italian Defense Minister Guido Crosetto's labeling last week of his country's decision to join the BRI as an "improvised and atrocious act."

[...]

What is Italy's involvement in BRI?

In 2019, Italy became the first and so far only G7 nation to join the BRI, signing a total of 29 deals, worth $2.8 billion.

Chinese President Xi Jinping traveled to Italy to sign the agreement with then-Prime Minister Giuseppe Conte.

Noting that China had recently acquired a large stake in Greece's Port of Piraeus, the Italian government said its involvement with the BRI would ensure many Chinese-made goods would still arrive through Italian ports and then be transported onto the rest of Europe via Italian road and rail links.

Rome was also keen to find new sources of trade as it was still struggling economically following the 2011 euro debt crisis and the 2008/9 global financial crisis. Still, the decision took many Western leaders by surprise.

Will Italy soon pull out of the deal?

Italy is seen as highly unlikely to renew its BRI deal when it expires in March 2024, and Prime Minister Giorgia Meloni said in May it was possible to have good relations with Beijing without being part of the pact.

[...]

https://www.dw.com/en/china-raps-italy-for-malicious-criticism-of-belt-and-road/a-66438871

[futon]

https://flyteam.jp/news/amp/139484

[lucklucky]

JASDF F15 to celebrate the Italian deployment of 4 F35, AEW, Tanker, C-130J. Remember also that Italy and Japan are with UK in Tempest combat aircraft. There are also Japanese pilots being trained in Italy.

[BansheeOne]

Quote

US and EU back new India-Middle East transport corridor

Project agreed on G20 sidelines would counter growing Chinese influence in Arab states

James Politi and Henry Foy in New Delhi and Andrew England in London

42 MINUTES AGO

The US and EU have backed the development of a new ship and rail corridor connecting India to the Middle East and the Mediterranean Sea in a challenge to China’s economic clout in the region.

The plan was launched on the sidelines of the G20 summit in New Delhi on Saturday, through a memorandum of understanding agreed by leaders including US president Joe Biden, Indian prime minister Narendra Modi and Saudi Crown Prince Mohammed bin Salman, who all shook hands at the end of the event.

The proposed corridor would stretch across the Arabian Sea from India to the United Arab Emirates, then cross Saudi Arabia, Jordan and Israel before linking up to Europe.

Talks about such a project, which would also include a new undersea cable and energy transport infrastructure, have been going on behind the scenes between the countries involved for months, but they will now proceed on a more formal basis. No binding financial commitments were made but the parties agreed to come up with an “action plan” over the next 60 days.

Biden said the corridor would offer “endless opportunities” for the countries involved, “making it far easier to trade [and] export clean energy”, and “lay cable that will connect communities”. He said it would “contribute to a more stable and prosperous Middle East”.

“This is nothing less than historic. It will be the most direct connection to date between India, the Arabian Gulf and Europe,” European Commission president Ursula von der Leyen said at the launch of the project.

“It is a green and digital bridge across continents and civilisations,” she said, adding that the rail link would make trade between India and Europe 40 per cent faster.

For the US, the project could act as a counter to Beijing’s growing influence in the region, at a time when Washington’s traditional Arab partners, including the UAE and Saudi Arabia, are deepening ties with China, India and other Asian powers.

The planned corridor’s passage through Jordan and Israel could also support the Biden administration’s efforts to build on the recent normalisation of relations between Israel and several Arab states, including the UAE, as it pushes Saudi Arabia to follow suit and formalise ties, a person briefed on the discussions said.

[...]

The EU’s role in the agreement was negotiated during a visit by von der Leyen to Abu Dhabi on Thursday, EU officials said, during talks with UAE president Sheikh Mohammed bin Zayed al-Nahyan.

The collaboration is a central part of the EU’s effort to deepen trade and investment ties with Gulf countries, the officials added, particularly in response to Russia’s war against Ukraine.

The EU has earmarked spending of up to €300bn on overseas infrastructure investments between 2021 and 2027 through its Global Gateway project, launched in part to rival China’s Belt and Road Initiative and defend European interests in key trade partners.

Both Saudi Arabia, the world’s top oil exporter, and the UAE, the Middle East’s dominant finance centre, are seeking to project themselves as key logistics and trade hubs between east and west. 

However, ambitious cross-border infrastructure projects in the Arab world have historically gained little traction, including a planned 2,117-km rail network connecting the six members of the Gulf Cooperation Council — Saudi Arabia, the UAE, Kuwait, Qatar, Oman and Bahrain. It is still only part built more than a decade after its inception.

[...]

https://www.ft.com/content/d33883cf-38b4-48e7-ab04-102e4ace7940

Edited September 9, 2023 by BansheeOne