China hit by surge in Belt and Road bad loans, $78bn renegotiated or written off in past 3 years

[beijingwalker]

Projects are started when friendly governments are in power, but in the next 10-20 years a lot can change. Countries realign with other countries and may be willing to jeopardise these projects.

Yes, this is also a big risk if you put in too much.

 

[Vikramaditya-I]

It is a learning curve. Chinese thinks things will work the way it works in China. There is a reason many of these countries don't get big-ticket investments from the West. Because they know these countries are corrupt and funds would go to some fat politician who eventually will end up in the West. Look at the Brits for example, every crook from poor countries goes there and lives lavishly.

 

[FuturePAF]

It's against China's foreign policy to get too involved in internal politics.


The vast majority of the defaults is due to the countries never intending to pay off any of their debts.


Aka, these defaults are not some accident, it's simply due to these countries being basket cases 100% by choice.


This is why it's a fool's errand to provide below market rate loans to basket cases.


Even lenders charging 17+% interest rates in USD loans often lose money to these countries, so the fantasy that ~2-4% interest rate "loans" (More like free money) was ever going to get anywhere close to breaking even is just madness.


Doing it privately wouldn't help, as countries that are basket cases are basket cases through and through.


This is why the IMF and World Bank are the only institutions that have any chance of reforming these countries, as the IMF and World bank are post-colonial colonial institutions, as only colonialism can realistically fix a basket case.


The natural way for a basket case to be fixed is by going through a long enough famine for the country to choose to be less of a basket case.


This is why the U.S.'s masterstroke in the cold war was to start providing food aid to basket case countries so that basket case countries would never choose to stop being basket cases.

Sure, China has always tried to stay out of politics, but if it wants BRI to be successful, especially vis a vi these basket case countries, it’s going to have to find a way to work better with the political system of these countries.

“Digital advisors” seems like the best way to help manage projects but ultimately the political instability of these countries are what will hold them back. In the worst case countries, outside of absolute pointless cases, building trans-national projects like continent spanning rail corridors maybe strategically useful for China and not expected to produce a financial ROI. In which case, projects will have to be build and legally protected when a friendly government is in power, allowing China to try to weather the storm of a less friendly government when political winds shift.

 

[beijingwalker]

What's worse is that even China wants to cut loss now , it just can't , being sucked in too deep already.

 

[uhuru]

Did the chinese govt give loans to corrupt immoral politicians of those countries ??? Any ordinary person in those countries would’ve told u NOT to give them a penny….your own fault….

Either spend/manage the project entirely yourself, or don’t get into it, or eat your losses and try to recover when it starts working.

Oh wait, that was common sense..

We see it a lot here; these chinese come up with hair brained ideas etc and massively inflated prices; then bribe the right officials to have it done; they have recouped a lot in terms of minerals and other concessions which the op master wumao propaganda agent here will never see but will post rubbish ... only 5cents to post these?

 

[dbc]

BRI is conceptually good and I don't dispute that. I am only enquiring about the structuring of it as I am not very well read on the specifics. For example, has China ever taken over a project after default? If yes, how easy was it? Are these contracts governed by international law? Can they be enforced by neutral international tribunals? For example, I worked on an airport project where the host country threw our company out. The arbitration council in Singapore upheld the host country's decision and we couldn't do anything about it. Enforceability is very important in such projects. Projects are started when friendly governments are in power, but in the next 10-20 years a lot can change. Countries realign with other countries and may be willing to jeopardise these projects.

BRI/CPEC loans are largely denominated in USD and some in EURO. Imagine going to a bank for a mortgage, the bank agrees to finance your new home at very attractive financial terms provided you purchase construction materials from the bank owners son-in-law. All services are sourced from businesses with close links to the bank owner and you agree to purchase utilities at a fixed annual rate from providers chosen by the bank, regardless of actual consumption. Finally, the bank doesn't seem to care about the feasibility of the venture, I tell the bank I want to build a house in the middle of the pacific ocean, the bank agrees and is willing to finance it. Sure everyone knows a house in the middle of nowhere has no commercial value.

I don't know about you but I'd run a million miles from such an arrangement.

The BRI/CPEC is a vehicle for capital flight out of China, state officials and their cohorts get to secure their nest egg in places out of the reach of the next grand Winnie the pubah. They also get to earn RMB from sourcing and services, bill for those services in USD/ EURO. It's a genius high IQ scheme and has met all the objectives of the people that conceived it.

 

[beijingwalker]

BRI/CPEC loans are largely denominated in USD and some in EURO. Imagine going to a bank for a mortgage, the bank agrees to finance your new home at very attractive financial terms provided you purchase construction materials from the bank owners son-in-law. All services are sourced from businesses with close links to the bank owner and you agree to purchase utilities at a fixed annual rate from providers chosen by the bank, regardless of actual consumption. Finally, the bank doesn't seem to care about the feasibility of the venture, I tell the bank I want to build a house in the middle of the pacific ocean, the bank agrees and is willing to finance it. Sure everyone knows a house in the middle of nowhere has no commercial value.

I don't know about you but I'd run a million miles from such an arrangement.

The BRI/CPEC is a vehicle for capital flight out of China, state officials and their cohorts get to secure their nest egg in places out of the reach of the next grand Winnie the pubah. They also get to earn RMB from sourcing and services, bill for those services in USD/ EURO. It's a genius high IQ scheme and has met all the objectives of the people that conceived it.

You sound like this American woman

American woman: "I've been very concerned lately about China. They are lending money to countries to build ports and different infrastructure"
Greek Finance Minister : " What's wrong with it? countries need ports, get ports"
American woman: "But they are making people depend on..., I know its the same thing that we've done.."
Greek Finance Minister : "No, it's not, they are far more humanistic that the United States ever was"

 

[dbc]

You sound like this American woman

American woman: "I've been very concerned lately about China. They are lending money to countries to build ports and different infrastructure"
Greek Finance Minister : " What's wrong with it? countries need ports, get ports"
American woman: "But they are making people depend on..., I know its the same thing that we've done.."
Greek Finance Minister : "No, it's not, they are far more humanistic that the United States ever was"

nah! she is a dumb blonde, I'm blonde but not dumb.

 

[mike2000 is back]

Xi Jinpings grand pet project. Lol
To be honest, it really seems like Xi Jinping is the most powerful Chinese leader since Mao as people say. He had committed quite a few blunder which has cost China alot, yet he not only managed to stay in power but even suceeded in modifying the constitution so he can remain in power indefinitely but he also managed to get all his loyalist into the powerful 7 member standing committee, something which is also unprecedented since Mao's time. This all despite his 3 year lockdown of the country with his drastic Zero covid policy which brought China's economy down and name many small medium businesses out of business increasing unemployment and making the country grow at its slowest rate for decades. Also Belt and Road has proven to be a fiasco with tens of billion dollars defaults, rife with corruption and mismanagement, not counting the crackdown on private chinese tech companies who used to challenge the biggest US tech companies in valuations and scale, today they are a shadow of themselves with low valuations and revenues. It seems other past Chinese leaders would have probably lost their re-election due to this, much less getting another record breaking third term which Xi Jinping has managed to do. Plus , I don't believe he will leave after his third term at all. From looking at past experience of politicians and greed for power, I can say for sure that he will want to remain in power for as long as he is physically capable of ruling. So expect him to be in power for decades more to come like Putin before him .

 

[beijingwalker]

Xi Jinpings grand pet project. Lol
To be honest, it really seems like Xi Jinping is the most powerful Chinese leader since Mao as people say. He had committed quite a few blunder which has cost China alot, yet he not only managed to stay in power but even suceeded in modifying the constitution so he can remain in power indefinitely but he also managed to get all his loyalist into the powerful 7 member standing committee, something which is also unprecedented since Mao's time. This all despite his 3 year lockdown of the country with his drastic Zero covid policy which brought China's economy down and name many small medium businesses out of business increasing unemployment and making the country grow at its slowest rate for decades. Also Belt and Road has proven to be a fiasco with tens of billion dollars defaults, rife with corruption and mismanagement, not counting the crackdown on chinese tech companies who used to challenge tge biggest US tech companies in valuations today they are a shafow of themselves with low valuations and revenues. It seems other past Chinese leaders would have probably lost their re-election due to this, much less getting another record breaking third term which Xi Jinping has managed to do. Plus , I don't believe he will leave after his third term at all. From looking at past experience of politicians and greed for power I can say for sure that he will want to remain in power for as long as he is physically capable of ruling. So expect him to be in power for decades more to come like Putin before him .

China is being ruled collectively, we don't just blame or praise one leader for all the achievements and mistakes, for 3 years covid lock down, the first year was absolutely neccessary, it helped China dodge a bullet cause in the beginning scientists and doctors knew nothing about the virus and if the strict lockdown was not in place, China would have suffered catastraphic loss of human lives worse than US and India, the strict the lockdown helped China weather the storm.

After we learned much knowledge and developed some effective treatment, China should've gradual loosened the restriction and allowed things slowly back to normal, but the government stubbornly stuck to it and didn't adjust the policy accordingly with the changing situation, that caused a lot of discontent among the public and dented the economy. But we are not sure if the policy was Xi's idea or collectively the government's.

As for how Xi's performance in the economic growth, it's mediocre, not good, not bad, similar to his predessasors.

 

[villageidiot]

China, while you are already taking losses, take a bitter sip, as we say and write off all our loans.
Like a big brother

You do that, and you'll be ensure that next time, we'll be able to pay on time

 

[FuturePAF]

We see it a lot here; these chinese come up with hair brained ideas etc and massively inflated prices; then bribe the right officials to have it done; they have recouped a lot in terms of minerals and other concessions which the op master wumao propaganda agent here will never see but will post rubbish ... only 5cents to post these?

Companies Bribing officials undermine a fair assessment of the viability of a project. China should have an independent feasibility study agency, if they hope to make BRI viable.

 

[mike2000 is back]

China is being ruled collectively, we don't just blame or praise one leader for all the achievements and mistakes,

Yeah, that was the case previously, but not with the rise of Xi Jinping. He has far more power and ability to push throw any rules or policy he wants with little to no obstacle. Xi Jinping seems to have a far more personal type of rule than previous Chinese leaders who relied more on collective leadership, its not the case with Xi. The hell, he even has his name and thought in the bloody constitution (Xi Jinping thought)of the country , In short to be against his policy is almost equal to crime or unconstitutional. Lol If you think Xi Jinping is the same like other Chinese leader before him then I can say that's wrong. He has way passed his 2 previous predecessors who relied more on collective leadership and the party.
I'm fact just looking at your state TV (CCTV) this past years/decade ,one can easily notice that during Hu Jintao rule for example when CCTV was talking about any achievements and praise, they always did so while praising the party( CCP) mostly/leadership , the focus wasn't much on Hu Jintao. . However with the rise if Xi to power it has been mostly Xi Jinpings name you hear all the time when state TV talks about most achievements and the praise almost always goes to him, tge party has been relegated to second place in their praises. This shows a radical change from before. This alone is a very good example. Xi seems to be trying to cultivate some sort of cult of personality to be honest.
This is not a bad thing per se. Since there are advantages to such an accumulation of power since it helps in implementing policies faster and decision making . But it also has pitfalls as well. Depends on how things playout overall.

 

[mike2000 is back]

the first year was absolutely neccessary, it helped China dodge a bullet cause in the beginning scientists and doctors knew nothing about the virus and if the strict lockdown was not in place, China would have suffered catastraphic loss of human lives worse than US and India, the strict the lockdown helped China weather the storm.

Of course, almost every country had a lockdown or some sort of lockdown( even African countries) in the first year of covid. However , almost every country realise the futility of this method after the first year and so they slowly opened up, except China since Xi Jinping had taken the Zero Covid policy as one of his major political initiatives/policy. So it was kinda difficult to just let go suddenly like that which I understand politically speaking. So it persisted for over 2 more years for Nothing at the end of the day. In fact if not for some disgruntled Chinese citizens who had more than had enough and where willing to even risk imprisonment to come out and protest publicly against the lockdown, then China will still be in lovkdown for years to come..Xi used the protest to lift off the lockdown, as that was the best time to do so while ensuring little political cost, since it could be justified as listening to the people's demand. Without the protest then it would have been hard for him to lift the lockdowns by himself after justifying and banking on it for so long.

 

[Communism]

Companies Bribing officials undermine a fair assessment of the viability of a project. China should have an independent feasibility study agency, if they hope to make BRI viable.

Bribing officials is a hard requirement to do business in most countries.


As mentioned earlier, pushing for local political change is against China's foreign policy.


I wouldn't worry so much about Guyana.


One should separate loans to countries like Guyana, which is an economically viable country, and loans to basket cases, aka, economically unviable countries.


If you didn't get the hint earlier, I'm saying economically unviable countries should be colonized by the IMF and World Bank, as there is simply no realistic way to develop them without either doing that or having a long enough famine to ensure that countries choose to be less of a basket case.


Project viability depends entirely on the willingness to pay back the loan, and the willingness to pay back the loan is what is meant by the classification "basket cases".



Currently, the BRI is effectively giving free money to basket cases, which is simply a bad idea.



Despite the sensationalism about "unviable projects", nearly the whole problem is simply trusting basket cases to be willing to pay back a loan in the first place.