I don't disagree that the Belt and Road Initiative is really a way to make Chinese GDP figures look better and receive goodwill from developing countries. While some Chinese projects may be supbar, it's a complex situation. I think it's a two sided coin. Many "Global South" leaders want quick wins without real reform to their economies and that's what China offers. It's easy for Westerners to sit back and say attack Chinese lending & projects. But African countries will continue to deal with China (as long as China is willing to lend) for three key reasons:
1) No economic conditions (like the IMF wanting devaluation, removal of fuel subsidies, or privatization of government owned firms)
2) China's non-interference policy (like the IMF or West asking for multiparty democracy or allowing elections to be fairer in conditions for loans) -- The West pushed Ivory Coast, Mozambique, Ghana, Mobutu's Congo, and other African nations to allow multiparty elections as conditions for aid in the 90s
3) Speed to build infrastructure
I'll give some examples in Africa.
1) Ethiopia: Ethiopia, as you know, has been incredibly fast growing and it's one of the few African countries that doesn't have a billion dollar mining sector or oil (Ethiopia mainly sells coffee). Ethiopia is also the 2nd largest debtor to China in Africa. China built railways that Addis Ababa needed to connect landlocked Ethiopia to Djibouti's coast line in roughly 4 years. When Ethiopia started to service its Chinese loan in 2016, Ethiopia struggled to repay so China extended loan maturities from 10 to 30 years.
Angola is the largest debtor to China in Africa. China provided infrastructure and loans that were collateralized with Angola's oil. Angola was obliterated by the 27 year civil war where America(and China!) backed the anti-communists while Soviet Union and the Organization of African Unity backed the communists. China wanted to win Angola's good graces so it was willing to spend in Angola to enhance good will and get cheap oil. Angola was utterly desolate in 2002 after the civil war. Angola, despite being mismanaged and horrifically corrupt, it is now a (lower) middle income country.
Guinea recently graduated from low-income to (lower) middle income, because the previous coup leader, Alpha Conde worked with China, so China can extract more bauxite at a reduced cost. Guinea now exports more Bauxite than Australia. Now Guinea is getting new ports, highways, and roads at a fast speed (although I have heard reports from my Guinean friends that China displaces and removes peoples homes so China can build). If it were the West, there would be environmental impact assessment tests and human rights assessments, which would delay the speed of the project.
I am not saying this to refute what you are saying. In fact I agree largely, with it. I am just pointing out that none of this will stop most of Africa from borrowing from China (as long as China is willing to lend) because most African countries want the infrastructure built quickly and most of them don't like interference in their economies.
Just a short comment, the roads and railways that China built in Ethiopia and Kenya are of such poor quality that they barely work. I would imagine they will be paying for 30 years for things that will have ceased to exist by the time the loan is paid. I say this as someone who has had the misfortune of travelling in both these countries.
Understood, I have also been across many African countries (west, South, east, etc.) I am also Ghanaian. Having cruddy roads and railways is still better than not having any at all.
But you are right by Western standards a lot of these infrastructure projects aren't stellar, but my Kenyan friends feel extremely grateful that Kenya's Nairobi expressway has been built at all. That expressway was funded between Kenya's government and china's board & bridge corporation.
I’d hesitate to generalize from yours or your friends’ experiences. “My friends think the projects helped the country, so they must have” isn’t an argument that’s backed by evidence. Now, granted, it’s not as if the West did the Global South any favors - far from it. Historically it’s clear they’ve been worse if anything.
But there’s an argument backed by evidence that China’s initiative has stopped lending and if that’s true, the Global South may be in a “meet the new boss, same as the old boss” situation. I hope your examples (Angola, Guinea, etc.) continue their growth due to China’s “help”, because God knows they deserve and need it, but the whole thing feels scammy to these eyes.
1) Even if you don't trust my anecdotes you can see income growth from different countries. Some African countries are growing fast and some are doing terribly. Over the past 10 years Ethiopians have more than doubled their incomes. Other countries that have seen good growth have been Ivory Coast, Kenya, and others.
Angola and the others are petro states with little economic diverisification. If crude oil prices go up Angola's economy does well, when crude oil goes down, Angola suffers. With Saudi Arabia and Russia cutting oil prices, then Angola will be helped with higher oil prices. In 2014, crude oil was nearly $110 a barrel. Post 2014 after the shale revolution, oil production skyrocketed and oil prices dropped to $32 by 2016, killing Angola and the other petro state's economy.
2) Also if you are interested in seeing investment in infrastructure, roads, sewage systems you can look at fixed capital investment:
Mauritania, Tanzania, Benin, Senegal, Gambia, Nigeria, DRC, Ivory Coast have all scaled up investment. Ethiopia peaked at investing 41% of its GDP in itself and now has decreased.
In places like Sudan and South Sudan its pretty scant.
The point is economies can borrow and make roads all they want but they still need to do basic things like growing food yields so you aren't wasting foreign currency on food and you can use foreign currency to buy technological licenses for catch up growth and make their own internationally recognized car, electronics, or toothpaste industries.
3) The West has put over $1T in foreign aid for poor countries from the World Bank and IMF. There's a lot of corruption and sometimes governments don't follow through on economic reforms (Mobutu in the DRC or Bokassa in Central African Republic are examples). The West has done a lot, but it just hasn't lead to a country like Chad making a world beating aerospace industry that competes with Airbus.
1960s was the infrastructure investing era for the World Bank & IMF, 1970 was the poverty reduction era, 1980s was the neoliberal era, 1990s was the democracy promotion era, 2000s was the debt relief era, 2010 has been the inclusive growth & digitization era, 2020s is looking to be a climate change era.
4) Also it's not just the West messing things up, the Soviet Union also played a large role. When Ethiopia had a communist revolution and followed Soviet farming it lead to famines there just like it did in Soviet Ukraine & Kazakhstan.
I remember as a child Kenya railways in its hayday - travelling from Nairobi to Mombasa or Nakuru. The expressway just doesn’t work according to the locals, so many problems. The roads around Addis in Ethiopia were almost destroyed the moment they were built because they were of such poor standard. I am all for progress, but quality does last as opposed to some of the current construction.
So, like the stadiums in Pittsburgh, PA (probably on a much smaller, per capita scale, but still), for the Steelers and Pirates, that none of us wanted to pay for but the State politicians said, no you will pay for them. And we are. And today, TV ratings, merchandise sales and ticket sales are down.
In Kenya, unless I'm living under the rock, Chinese infrastructures are of good quality than from local contractors. It's good to give credit where it's due.
In Kenya the problems are similar to those elsewhere, overextended borrowing, poor planning etc. If you can't service the debt,you can't maintain the infrastructure. There are a lot of problems with the freight side of the deal,https://www.reuters.com/article/us-kenya-railways-idUSKBN1Y70LT
Can you plese let us know from where you obtained this information? The Diplomat, a reliable source writes: "This urban rail (Addis Ababa) has also started to attract investments close to the lines. Apartments, malls, businesses, and condos are being built, changing the landscape and revitalizing entire districts and helping small businesses, as well.
As reported by Business Day, last month, China even announced a partial cancellation of Ethiopia’s debt."
I cannot found any reliable source mentioning widespread "shoddy construction." I have read that local populations have not exercised care for infrastructure and damages have resulted.
With the amount of expansion and building in Addis, it would not be a lie to say that apartments and businesses are springing up beside the line. I’m not entirely sure though whether it has that much to do with the railway though. Addis is unrecognisable after 39 years of rabid growth and upto 13% GDO growth at times as a economy.
Always looking for negatives, reciting doubts, and willingness to accept madeup stories that challenge China.
These mentioned Addis Ababa projects are specifically a result of the light rail and not related to Addis Ababa spectacular growth.
The projects in Ethiopia originate from the Ethiopian government, which is not stupid, and not from China. China;s $18 trillion economy does not need to sell dubious projects and gain external problems.
From the Diplomat: "As for the Addis-Djibouti railway, in 2018 it was challenging to find the Furi Lebu railway station in the outskirts of the city, where there is no convincing infrastructure and dirt roads. This time we were prepared, but the circumstances awaiting us were another surprise: asphalt roads directly leading up to the station, roundabouts, new compounds, and small businesses in particular serving construction needs with locally made bricks, timber, and other building materials. While last year the station’s location resembled the “middle of nowhere,” this time it seemed to be the center of a new neighborhood, attracting an amazing number of construction projects. A parking lot was still missing, but already workers were preparing a site for it, so it seems that the project is still considered important for both sides.
Dan, I’m not sure the state of Chinese led infrastructure has much to do with the Chinese willingness to help. Quality is required at all levels for modern infrastructure to work. As for your source the Diplomat - they finally took note:
Neither of us have first class knowledge to evaluate the specifics in the Ethiopian projects. I'm sure there are problems, but the ultimate reasons and responsibilities are murky -- public negligence, untrained maintenance personnel, war in Ethiopia, corruption in government. I'm sure that China operated in good faith. The ex-im Bank has forgiven debts and delayed payments, something few foreign institutions ever do. if you want to see problems with a metro rail system, come to DC. Elevators, escalators, and train failures have occurred on a daily basis for the last ten years. It is punishing. Personnel make overtime pay and when you talk to them, they can't answer anything. How come nobody is criticizing Japan and other foreign nations for supplying hardware that have huge problems?
Very few of my fellow Americans could locate Djibouti on an unmarked map if they had to. Most probably can’t even spell it. It stuck in my brain, ever since my ship stopped there to get fuel, while I was in the Navy.
"Even Indonesia’s high-speed rail line in Jakarta, sometimes touted as the most successful Belt and Road project, had massive cost overruns and fell years behind schedule. (It also is only 88 miles long.)"
California High Speed Train: "Hold My Beer"
But seriously - very good article. I am now more informed, which is why I became a paid subscriber. I was going to pull the plug if all you are going to post is DNC campaign advertisements.
IDK when you normally post your articles, but I am in Spain, and this showed up around 11 am local time, which is 2 am in California.
CA has also begged and received big $ amounts (Billions) of federal dollars, has not laid a single foot of track and if the only section under construction is ever finished it will run from Merced to Shafter, about 150 miles with no significant transient populations. This is the most epic ripoff in the history of CA
HSR is not a complete failure, it's doing a lot of required improvements anyway.
yes, construction of the whole end-to-end project is mind-blowingly expensive, because there's no large scale high-throughput efficient industrial sector for it. of course it very very arguable how much sense does it make to order something this inefficient...
Wrong, it is a complete failure except for the funding of thousands of wasted union construction jobs and enormous amount of carbon pollution from the use of all the concrete. Even the current train to nowhere will probably never be finished and will certainly never be economically self sustaining.
What sort of "required improvements" are you talking about?
How can something that was sold to the voters as a $33.6B high-speed rail line from S.F. to Anaheim, then morphed into a line from San Jose to Bakersfield that would cost $100B can be seen as anything other than boondoggle?
The state of CA spend $20B and got a bunch of boilerplate paper (a big EIR) for which those of us who live here will still be repaying the bonds in another 20 years.
I detailed the reasons of why and how in my comment. (Lack of scale, lack of expertise & industrialization.) Throwing numbers around without context won't really lead to good answers.
Sorry, but no. I watched the video. I don't buy it. I spent 8 years as a local planning commissioner for a med-large city. I know a boondoggle when I see one.
By coincidence, my wife and I are about to board an actual working high speed train in Spain to go from Barcelona to Seville. This will be our third trip on their rail system this visit. The first two were just short trips from Madrid to Toledo and Segovia. Those took 30 minutes each. Would have taken me a solid hour to drive.
Too bad they cannot build things like this in the US, but let's face it, we cannot. Environmental reviews alone make it impossible. We should be thankful a prior generation (or two) got the interstate system done back in the 1950s and 60s, because that could not be built today.
Env review doesn't make it impossible at all. It makes it slower (and obviously it costs a lot of money to go along the planned route and catalogize plants, watch birds, etc... it needs manpower, and ... usually at least a few weeks every season, so it's really a lot of time).
At the end of the day there's an agency that has to write down that the permit is granted because the benefits outweigh the costs. That's it. It's very important to discover the costs (and quantify the env impact, etc), and it should be done. Similarly for the benefit side. How the agency decides and calculates depends on who is appointed, and that's not some mystery process.
You don't mean the "lunatic express" from Mombasa to Nairobi, thru Tsavo? We took the overnighter in a 1930s vintage British sleeper car pulled by a similarly class locomotive. Which broke down 20 miles from Nairobi. We loved it
What well do they want to dip into? The one where you think you’re getting something people will celebrate you for but instead your domestic opposition gets a talking point?
They want to dip into the well where they get to announce a billion dollar deal, cut a ribbon, and score some jobs and contracts for family and friends. Pretty compelling if, like a politician, you don’t take a long term view!
Doesn’t the food truck example sound a lot like our Federal student loan system. You induce teenagers to borrow huge sums of money, which goes to support bloated universities and the educational indoctrination complex, and then when the kids graduate with almost no practical skills, they still owe the loans and the government is very unforgiving on collection (until recently, when Biden decided the game would be up
It has been the universities who pushed the loans not so much the government. If one reviews some of the idiotic degree majors offered by those same colleges pushing borrowing, it once again goes back to them not the government, and of course the students who think they are going to party through and that the worthless degree will get them a job.
You are right, the universities push these loans on kids barely old enough to get a tattoo, subjecting them to a lifetime of debt slavery without a second thought.
100%. Many degrees have become almost useless in the process, also, because anyone can get them. In other words, kids who cannot do 6th grade english and math are able to get a college degree. The students who actually learn and know the stuff are competing for the same jobs as students who are just pushed through the system.
Very good article. However, it's more complicated than it appears.
There is a stronger case to be made that China didn't pursue the Belt and Road initiative for the global south but rather for itself: it was a clever way to export China's investment driven development model across the world and it allowed the Chinese to inflate their foreign reserves as they often lent in renminbi but would demand payment in dollars. I suspect a good chunk of China's massive foreign reserves is illiquid debt tied up in third world infrastructure projects.
There was also the additional advantage of selling China as an economic saviour in contrast to the West which by now mostly donates humanitarian aid.
It was, of course, mistaken. The Chinese were repeating the same mistakes the West had made in the 1960s and 1970s when ambitious international projects in Latin America and Africa were funded with western capital( Ghana's infamous and till today undeveloped steel complex comes to mind).
It failed. And it failed because economic development is not simply about capital. It is not a lack of money problem. It is more often a cultural and institutional problem.
The second Sri Lankan port in Hambantota failed because that was not an import replacing city and consequently had no need for a port in the first place, let alone of that size.
Billions of dollars doled out to East Africa and West Africa is irrelevant when these countries lack the skills and institutions to maintain what has been built.
Indeed, what the Belt and Road initiative reminds one of is Saudi Arabia's ambitious NEOM project that is estimated to run at over five hundred billion dollars. There are modest differences but the illusion underpinning the two are the same: development cannot be bought. It can only be earned and that, only gradually, with numerous political and cultural changes in tow.
However, the BRI will not be abandoned. The commitments involved on both sides are too steep now. What it will proceed to morph into is a new scramble for resources as China abandons every veneer of selflessness and nakedly pursues raw resources for its burgeoning industries.
Frankly, I consider that a better situation. Debtor countries have always eagerly borrowed funds on the assumption that the money would keep rolling in and then painted their creditors in an unflattering light when the deals go south. Creditor countries have always assumed debtor countries will pay back their loans with the same zeal that they solicit them.
Now that they realize they are both mistaken, necessary concessions can begin.
Good points all. Ex-pat living in Africa here... Let's not forget that China needed to build these roads, rail lines and ports in order to efficiently remove the minerals, oil, timber, fish etc. and ship them straight to China. Much harder to do so with muddy dirt roads and no deep water ports.
I wonder if this humanitarian aid refers to the F-86 fighter jets on the Korean Peninsula? Or Agent Orange in Indochina? Or the rifle bullet that killed a US Navy SEAL in Somalia? Or the Muslim women in Iraq who were raped by American soldiers? Or the Muslim man who was sexually assaulted by an American female soldier in Guantanamo? Or is it a Mexican drug gang supported by the CIA? Or was it Noriega who was captured in Grenada?
The list of questions could go on and on. What is ridiculous is that the West, which claims to be humanitarian, has exported so many wars. China, which has been slandered by public opinion as a threat, has not had a war in decades.
In fact, the essence of the matter is that you group of exploiters can no longer suck blood like before, so you have started to smear and slander us.
You are the Rome that is collapsing.Western humanitarian aid? Hahahahaha.
I wonder if this humanitarian aid refers to the F-86 fighter jets on the Korean Peninsula? Or Agent Orange in Indochina? Or the rifle bullet that killed a US Navy SEAL in Somalia? Or the Muslim women in Iraq who were raped by American soldiers? Or the Muslim man who was sexually assaulted by an American female soldier in Guantanamo? Or is it a Mexican drug gang supported by the CIA? Or was it Noriega who was captured in Grenada?
The list of questions could go on and on. What is ridiculous is that the West, which claims to be humanitarian, has exported so many wars. China, which has been slandered by public opinion as a threat, has not had a war in decades.
In fact, the essence of the matter is that you group of exploiters can no longer suck blood like before, so you have started to smear and slander us.
You are the collapsing Rome, greedy and hypocritical.
It's interesting that on paper there is nothing wrong with China serving as lender and builder, developing countries needing infrastructure, the possibility of a win-win business relationship. What's bad is that in each specific instance the construction was shoddy, the infrastructure poorly picked, and China lends last but wants to be paid first.
I am not sure I buy that this has even been a short-term success for China. We see how nervous they are about getting paid back and the pieces of infrastructure they are getting are not worth what they cost to make. Xi wanted this to generate goodwill and it's doing the opposite. It seems like China's corruption problem is preventing them from fulfilling their ambitions even if their geopolitical heft is insulating them from most of the consequences.
When a country ranking 101 on the corruption index (Ecuador) does business with a country that ranks 65, is it any surprise the dam doesn't hold water?
Well said. If the projects were properly constructed and not the result of chronic corruption then the degree of satisfaction and success might have paid off to the Chinese.
I am surprised at the incomplete descriptions in this article, which have one-sided comments. I trust the author and commentators want a more open discussion and I offer these comments. Selecting failures of a few projects, which are a small percentage of the total projects. and are much less in projects of this type is unacceptable. Bridges, dams, and nuclear plants, have consistently had problems throughout the world and in all centuries.
Most troubling is the resurrection of the entirely false description of Sri Lanka’s debt problem, in which China rescued Sri Lanka from default to the IMF and is posed as a financial predator.
"Steep payments on international sovereign bonds, which comprised nearly 40 percent of the country’s external debt, put Sirisena’s government in dire fiscal straits almost immediately. When Sirisena took office, Sri Lanka owed more to Japan, the World Bank, and the Asian Development Bank than to China. Of the $4.5 billion in debt service Sri Lanka would pay in 2017, only 5 percent was because of Hambantota. The Central Bank governors under both Rajapaksa and Sirisena do not agree on much, but they both told us that Hambantota, and Chinese finance in general, was not the source of the country’s financial distress.
Colombo arranged a bailout from the International Monetary Fund, and decided to raise much-needed dollars by leasing out the underperforming Hambantota Port to an experienced company—just as the Canadians had recommended. There was not an open tender, and the only two bids came from China Merchants and China Harbor; Sri Lanka chose China Merchants, making it the majority shareholder with a 99-year lease, and used the $1.12 billion cash infusion to bolster its foreign reserves, not to pay off China Eximbank."
"However, data indicates the BRI strategy has been largely successful. For example, as of 2021, China has signed Memorandums-of-Understanding (MOUs) with 140 countries and 32 international organizations, among which 46 are in Africa, 37 in Asia, 27 in Europe, 11 in North America, 11 in the Pacific and eight in Latin America. Additionally, in 2012, China’s outbound foreign direct investment (FDI) was $82 billion, but in 2020, it was $154 billion, ranked as the world’s number one overseas investor. The increase in Chinese investment in BRI countries has also been impressive."
The World Bank presents the BRI as a positive move and not as the article’s author describes.
WASHINGTON, June 18, 2019—China’s Belt and Road Initiative (BRI) could speed up economic development and reduce poverty for dozens of developing countries—but it must be accompanied by deep policy reforms that increase transparency, improve debt sustainability, and mitigate environmental, social, and corruption risks, a new World Bank Group study on the BRI transportation corridors has found.
By, the way, The World Bank and IMF have been severely criticized for their loan efforts and project management.
Is this an example of the mentality guiding these comments?
I used facts presented by respected institutions.
Isn't there any guidelines for comments and means to censor insulting rabble rousers who accuse someone born in the Bronx, NY of being a Chinese troll?
That may be so, I don't know anything about the Sri Lanka situation, but as a long time resident of an African country, what Noah and others here are saying about China and BRI in Africa are also accurate. In fact it's much worse. I think pro-Chinese commenters should talk to average residents of these countries, the majority, who are not being personally enriched by these massive, wasteful, corrupt and ill-conceived projects. Or try driving across Angola or Ethiopia in heavy rain. I've done it. Many times. Bring a winch. Lots of extra tires. Good luck.
Apparently true, but I'm trying to ascertain what drives people who have no interest in content that does not fit their subjective agendas and delight in using forums to annoy others. Doesn't that embarrass the author?
Definitely seems like PRC leadership constructed this mental model of what neo-imperialism looks like and then decided (like Japan in the early 20th c.) that instead of opposing it they should emulate it.
This is so odd. I searched and these two comments are the only ones to point to John Perkins, the economic hit man, who told this story years ago, not about what China did but where America was the villain. It was a #1 NYT bestseller. He's an unusually engaging fellow who still is doing yeoman work tuning people into a reality we by and large were oblivious to, and it's thanks to him that we know what we are dealing with. I have a little gallery of "Thought Shapers making sense of these times." Here's John Perkins: https://tinyurl.com/3h7p5346.
Hasn’t this article - very eloquently- simply summarised the business model of the IMF and US over the last 100 years? It’s ok if we do it but not China? The WHOLE SYSTEM needs to change!!!!
No, IMF does the other thing, where it leverages (pun intended) rescue financing and debt forgiveness for political concessions. That’s the thing people assumed China would do (and which Noah thinks they should in fact have done) but which it is not doing, pursing repayment and hard assets instead.
IMF has required countries to hand over ownership of their utilities, natural resources, agricultural policy, education, healthcare, infrastructure, media - literally everything - so that they may receive loans they only need because of imperialism in the first place.
Your points are valid and I don’t disagree - everting is nuanced and there are no simple answers. I was thinking more of the suicide rates of farmers in India - literally forced by the IMF to move to mono GM production, decimating centuries of knowledge and locally adapted practice.
Everything is connected in our finely balanced systems - so it really is not nonsense. Suggesting wholesale takeover of Indian and global south agriculture by western interests is irrelevant to the conversation is, may I suggest, the real nonsense.
Forcing farmers off their land or forcing farmers to only use gm mono crops that devestste their biodiversity is no different from building crap housing or unsafe bridges.
From my understanding, most staple grains don’t really grow all that well in the majority of Africa. You uh, kinda need something GM to have yields remotely commensurate with the places comparatively advantaged for growing them.
IMF and World Bank do enough worthy of condemnation, but GMO crops good, actually. If you have something good I’d love to read it, but time and time again it feels like most anti-GMO sentiment is just green vibesposting, e.g.:
College students who’ve never grown in their lives or heard about hybrid vigor complaining about “Wahhhhh they don’t make good seeds”, ignoring that farmers have bought seeds for frickin’ ever.
Or the general anger at companies making money.
Or a strange yet sincere belief that the fact that it’s harder to grow maize in Ghana, a tropical climate, than the midwestern US, the temperate climate in which it evolved, is a form of imperialism since the US can sell corn for cheaper than Ghanaian farmers.
Thinking out loud now, it’s kinda funny that I simultaneously see arguments about how these GMOs destroy biodiversity AND that they’re shit because they can’t grow again from seeds after the first year, as if those aren’t damn near diametrically opposed concepts.
China is under the magnifying glass in notable ways the US was not 100 years ago when we started doing the same sorts of things. That's not a double standard, though- it's just a function of the world becoming slightly more transparent and vastly more connected, and more and more people are able to understand what's happening.
I'm an American. I lived and worked in Peru, specifically Iquitos, during the 2010's for 10 years. I saw first-hand the whole Belt & Road BS at the end of my street everyday for far too long. The Chinese came in and provided funding for a wastewater treatment plant for the whole of Iquitos--located in the middle of the Amazon rainforest. A processing plant was built and for months and months, the streets were torn open, drains lines and pumps were installed, then eventually it was all put back together after months and months of daily disruption and chaos. All the surveyors and project managers were clearly Chinese, while the back-breaking work was done by poor, local Peruvians. (Like Peru isn't advanced enough to have its own qualified civil engineers?) Before the whole thing went online, the power plant was inundated during the "high water" season, burning out all the pumps. This was not some rate torrential storm, but a regular, seasonally, well-understood and predictable shift between high and low water levels on the Amazon River. The pumps were never repaired or replaced and to this day, almost 10 years later, all that work, all those resources and all the disruption to our daily lives lead to NOTHING. Wastewater from sinks and toilets continue to run raw and directly into the Amazon River and the tributaries surrounding the major city of Iquitos. And don't get me started on what amount of money from this project went into the pockets of local politicians. I assume Peru is still holding the debt for this boondoggle and it certainly left no goodwill for the Chinese by anyone. What a waste!
Japan International Cooperation Agency (JICA) provided ¥6.66 billion (about $58m) in loans for the plant, which was intended to stem the flow of raw sewage into the Amazon River.
Japan financed the plant and it was built before the Belt and Road started. It had no relation to the Belt and Road. If you are an honest person, I'm sure you will provide a correction.
I worked for the World Bank for 27 years. There is a reason that we and other international development banks do pretty rigorous evaluation of the economic feasibility of the projects we finance and are scrupulous in insisting on competitive bidding. And we don't bat 100.
That said, borrowing countries did sign the notes and could have done their own evaluations. They are not wholly innocent victims. AND the consequences of default on a Chinese loan are less than on a loan from an international development bank.
China's Third World investment strategy sounds a lot like the Soviet Union's with one major difference: the USSR provided its clients with "security assistance" meaning that the KGB would run their internal security services. China doesn't do this, such that they don't get control of the government (except through endless bribery). I see this in the Caribbean where China has lost a lot of money with nothing strategic to show for it.
China lends money to the US so that its government can run huge deficits and provide handouts to American citizens so they can import Chinese goods.
Sounds a lot like Belt and Road and has been going on a lot longer. And, as in the developing world, China spends quite a bit of money buying politicians (thanks, Joe!)
Note that the CCP will be a massive beneficiary of the IRA- providing the wind turbines, the solar panels the batteries (sometimes just the battery IP and the bulk of the components and raw materials).
Many of the American investments in the IRA will prove to be overpriced white elephants. Would you rather your debt go toward a new port or paying a bunch of rich people to buy luxury cars?
Is China lending money to the US? My understanding is that total Chinese holdings of US bonds is less than a single year’s borrowing by the US government, and the vast majority of new loans are being provided by individual domestic investors who like holding bonds.
Excellent piece! I have often argued with peers that there was no way the 'Chinese' infrastructure would be sound, that BRI projects would deteriorate. I gave up the WSJ years ago so missed the January report! Thank you for covering here. I will turn those peers (and friends) your way.
I don't disagree that the Belt and Road Initiative is really a way to make Chinese GDP figures look better and receive goodwill from developing countries. While some Chinese projects may be supbar, it's a complex situation. I think it's a two sided coin. Many "Global South" leaders want quick wins without real reform to their economies and that's what China offers. It's easy for Westerners to sit back and say attack Chinese lending & projects. But African countries will continue to deal with China (as long as China is willing to lend) for three key reasons:
1) No economic conditions (like the IMF wanting devaluation, removal of fuel subsidies, or privatization of government owned firms)
2) China's non-interference policy (like the IMF or West asking for multiparty democracy or allowing elections to be fairer in conditions for loans) -- The West pushed Ivory Coast, Mozambique, Ghana, Mobutu's Congo, and other African nations to allow multiparty elections as conditions for aid in the 90s
3) Speed to build infrastructure
I'll give some examples in Africa.
1) Ethiopia: Ethiopia, as you know, has been incredibly fast growing and it's one of the few African countries that doesn't have a billion dollar mining sector or oil (Ethiopia mainly sells coffee). Ethiopia is also the 2nd largest debtor to China in Africa. China built railways that Addis Ababa needed to connect landlocked Ethiopia to Djibouti's coast line in roughly 4 years. When Ethiopia started to service its Chinese loan in 2016, Ethiopia struggled to repay so China extended loan maturities from 10 to 30 years.
https://www.africanews.com/2018/09/07/china-extends-repayment-of-ethiopia-railway-loan-to-30-years-pm//
2) Angola: https://yawboadu.substack.com/p/angola
Angola is the largest debtor to China in Africa. China provided infrastructure and loans that were collateralized with Angola's oil. Angola was obliterated by the 27 year civil war where America(and China!) backed the anti-communists while Soviet Union and the Organization of African Unity backed the communists. China wanted to win Angola's good graces so it was willing to spend in Angola to enhance good will and get cheap oil. Angola was utterly desolate in 2002 after the civil war. Angola, despite being mismanaged and horrifically corrupt, it is now a (lower) middle income country.
3) Guinea: https://yawboadu.substack.com/p/the-economics-and-geopolitics-of
Guinea recently graduated from low-income to (lower) middle income, because the previous coup leader, Alpha Conde worked with China, so China can extract more bauxite at a reduced cost. Guinea now exports more Bauxite than Australia. Now Guinea is getting new ports, highways, and roads at a fast speed (although I have heard reports from my Guinean friends that China displaces and removes peoples homes so China can build). If it were the West, there would be environmental impact assessment tests and human rights assessments, which would delay the speed of the project.
I am not saying this to refute what you are saying. In fact I agree largely, with it. I am just pointing out that none of this will stop most of Africa from borrowing from China (as long as China is willing to lend) because most African countries want the infrastructure built quickly and most of them don't like interference in their economies.
Just a short comment, the roads and railways that China built in Ethiopia and Kenya are of such poor quality that they barely work. I would imagine they will be paying for 30 years for things that will have ceased to exist by the time the loan is paid. I say this as someone who has had the misfortune of travelling in both these countries.
Understood, I have also been across many African countries (west, South, east, etc.) I am also Ghanaian. Having cruddy roads and railways is still better than not having any at all.
But you are right by Western standards a lot of these infrastructure projects aren't stellar, but my Kenyan friends feel extremely grateful that Kenya's Nairobi expressway has been built at all. That expressway was funded between Kenya's government and china's board & bridge corporation.
I’d hesitate to generalize from yours or your friends’ experiences. “My friends think the projects helped the country, so they must have” isn’t an argument that’s backed by evidence. Now, granted, it’s not as if the West did the Global South any favors - far from it. Historically it’s clear they’ve been worse if anything.
But there’s an argument backed by evidence that China’s initiative has stopped lending and if that’s true, the Global South may be in a “meet the new boss, same as the old boss” situation. I hope your examples (Angola, Guinea, etc.) continue their growth due to China’s “help”, because God knows they deserve and need it, but the whole thing feels scammy to these eyes.
A lot to respond to:
1) Even if you don't trust my anecdotes you can see income growth from different countries. Some African countries are growing fast and some are doing terribly. Over the past 10 years Ethiopians have more than doubled their incomes. Other countries that have seen good growth have been Ivory Coast, Kenya, and others.
https://data.worldbank.org/indicator/NY.GNP.PCAP.CD?end=2022&locations=KE-ET-CI&start=2012
Some countries like Burundi has seen no progress.
https://data.worldbank.org/indicator/NY.GNP.PCAP.CD?end=2022&locations=ET-BI&start=2012
Some petro states countries like Congo-Brazzaville, Chad, Angola, Gabon, and Nigeria have regressed over the last 10 years.
https://data.worldbank.org/indicator/NY.GNP.PCAP.CD?end=2022&locations=AO-NG-TD-GA-CG&start=2012
Angola and the others are petro states with little economic diverisification. If crude oil prices go up Angola's economy does well, when crude oil goes down, Angola suffers. With Saudi Arabia and Russia cutting oil prices, then Angola will be helped with higher oil prices. In 2014, crude oil was nearly $110 a barrel. Post 2014 after the shale revolution, oil production skyrocketed and oil prices dropped to $32 by 2016, killing Angola and the other petro state's economy.
2) Also if you are interested in seeing investment in infrastructure, roads, sewage systems you can look at fixed capital investment:
https://data.worldbank.org/indicator/NE.GDI.FTOT.ZS?end=2022&locations=KE-ET-ZG&most_recent_value_desc=true&start=2012
Mauritania, Tanzania, Benin, Senegal, Gambia, Nigeria, DRC, Ivory Coast have all scaled up investment. Ethiopia peaked at investing 41% of its GDP in itself and now has decreased.
In places like Sudan and South Sudan its pretty scant.
The point is economies can borrow and make roads all they want but they still need to do basic things like growing food yields so you aren't wasting foreign currency on food and you can use foreign currency to buy technological licenses for catch up growth and make their own internationally recognized car, electronics, or toothpaste industries.
3) The West has put over $1T in foreign aid for poor countries from the World Bank and IMF. There's a lot of corruption and sometimes governments don't follow through on economic reforms (Mobutu in the DRC or Bokassa in Central African Republic are examples). The West has done a lot, but it just hasn't lead to a country like Chad making a world beating aerospace industry that competes with Airbus.
1960s was the infrastructure investing era for the World Bank & IMF, 1970 was the poverty reduction era, 1980s was the neoliberal era, 1990s was the democracy promotion era, 2000s was the debt relief era, 2010 has been the inclusive growth & digitization era, 2020s is looking to be a climate change era.
4) Also it's not just the West messing things up, the Soviet Union also played a large role. When Ethiopia had a communist revolution and followed Soviet farming it lead to famines there just like it did in Soviet Ukraine & Kazakhstan.
I remember as a child Kenya railways in its hayday - travelling from Nairobi to Mombasa or Nakuru. The expressway just doesn’t work according to the locals, so many problems. The roads around Addis in Ethiopia were almost destroyed the moment they were built because they were of such poor standard. I am all for progress, but quality does last as opposed to some of the current construction.
So, like the stadiums in Pittsburgh, PA (probably on a much smaller, per capita scale, but still), for the Steelers and Pirates, that none of us wanted to pay for but the State politicians said, no you will pay for them. And we are. And today, TV ratings, merchandise sales and ticket sales are down.
In Kenya, unless I'm living under the rock, Chinese infrastructures are of good quality than from local contractors. It's good to give credit where it's due.
In Kenya the problems are similar to those elsewhere, overextended borrowing, poor planning etc. If you can't service the debt,you can't maintain the infrastructure. There are a lot of problems with the freight side of the deal,https://www.reuters.com/article/us-kenya-railways-idUSKBN1Y70LT
The locals are not pleased.
Can you plese let us know from where you obtained this information? The Diplomat, a reliable source writes: "This urban rail (Addis Ababa) has also started to attract investments close to the lines. Apartments, malls, businesses, and condos are being built, changing the landscape and revitalizing entire districts and helping small businesses, as well.
As reported by Business Day, last month, China even announced a partial cancellation of Ethiopia’s debt."
I cannot found any reliable source mentioning widespread "shoddy construction." I have read that local populations have not exercised care for infrastructure and damages have resulted.
With the amount of expansion and building in Addis, it would not be a lie to say that apartments and businesses are springing up beside the line. I’m not entirely sure though whether it has that much to do with the railway though. Addis is unrecognisable after 39 years of rabid growth and upto 13% GDO growth at times as a economy.
Knowing how scummy the CCP is, I’m inclined to believe you.
Always looking for negatives, reciting doubts, and willingness to accept madeup stories that challenge China.
These mentioned Addis Ababa projects are specifically a result of the light rail and not related to Addis Ababa spectacular growth.
The projects in Ethiopia originate from the Ethiopian government, which is not stupid, and not from China. China;s $18 trillion economy does not need to sell dubious projects and gain external problems.
From the Diplomat: "As for the Addis-Djibouti railway, in 2018 it was challenging to find the Furi Lebu railway station in the outskirts of the city, where there is no convincing infrastructure and dirt roads. This time we were prepared, but the circumstances awaiting us were another surprise: asphalt roads directly leading up to the station, roundabouts, new compounds, and small businesses in particular serving construction needs with locally made bricks, timber, and other building materials. While last year the station’s location resembled the “middle of nowhere,” this time it seemed to be the center of a new neighborhood, attracting an amazing number of construction projects. A parking lot was still missing, but already workers were preparing a site for it, so it seems that the project is still considered important for both sides.
Dan, I’m not sure the state of Chinese led infrastructure has much to do with the Chinese willingness to help. Quality is required at all levels for modern infrastructure to work. As for your source the Diplomat - they finally took note:
https://thediplomat.com/2023/02/china-and-ethiopia-the-addis-light-train-stuck-in-slow-motion/
Neither of us have first class knowledge to evaluate the specifics in the Ethiopian projects. I'm sure there are problems, but the ultimate reasons and responsibilities are murky -- public negligence, untrained maintenance personnel, war in Ethiopia, corruption in government. I'm sure that China operated in good faith. The ex-im Bank has forgiven debts and delayed payments, something few foreign institutions ever do. if you want to see problems with a metro rail system, come to DC. Elevators, escalators, and train failures have occurred on a daily basis for the last ten years. It is punishing. Personnel make overtime pay and when you talk to them, they can't answer anything. How come nobody is criticizing Japan and other foreign nations for supplying hardware that have huge problems?
Thank you for sharing this. Enlightening for an average American.
Very few of my fellow Americans could locate Djibouti on an unmarked map if they had to. Most probably can’t even spell it. It stuck in my brain, ever since my ship stopped there to get fuel, while I was in the Navy.
"Even Indonesia’s high-speed rail line in Jakarta, sometimes touted as the most successful Belt and Road project, had massive cost overruns and fell years behind schedule. (It also is only 88 miles long.)"
California High Speed Train: "Hold My Beer"
But seriously - very good article. I am now more informed, which is why I became a paid subscriber. I was going to pull the plug if all you are going to post is DNC campaign advertisements.
IDK when you normally post your articles, but I am in Spain, and this showed up around 11 am local time, which is 2 am in California.
Yeah... But at least California proposed, financed, planned, and built High Speed Rail by themselves, so there is no one else for them to blame.
If the whole project was part of Canada's Suspenders and Ice Road Initiative, then there would be a lot more angry Californians.
CA has also begged and received big $ amounts (Billions) of federal dollars, has not laid a single foot of track and if the only section under construction is ever finished it will run from Merced to Shafter, about 150 miles with no significant transient populations. This is the most epic ripoff in the history of CA
My wife grew up in Bakersfield (West High class of 1977). They had a naughty joke back then about "Shafter" ...
I can promise you that DoT has paid for some of that railroad.
HSR is not a complete failure, it's doing a lot of required improvements anyway.
yes, construction of the whole end-to-end project is mind-blowingly expensive, because there's no large scale high-throughput efficient industrial sector for it. of course it very very arguable how much sense does it make to order something this inefficient...
Wrong, it is a complete failure except for the funding of thousands of wasted union construction jobs and enormous amount of carbon pollution from the use of all the concrete. Even the current train to nowhere will probably never be finished and will certainly never be economically self sustaining.
What sort of "required improvements" are you talking about?
How can something that was sold to the voters as a $33.6B high-speed rail line from S.F. to Anaheim, then morphed into a line from San Jose to Bakersfield that would cost $100B can be seen as anything other than boondoggle?
The state of CA spend $20B and got a bunch of boilerplate paper (a big EIR) for which those of us who live here will still be repaying the bonds in another 20 years.
I detailed the reasons of why and how in my comment. (Lack of scale, lack of expertise & industrialization.) Throwing numbers around without context won't really lead to good answers.
https://www.youtube.com/watch?v=rcjr4jbGuJg
Sorry, but no. I watched the video. I don't buy it. I spent 8 years as a local planning commissioner for a med-large city. I know a boondoggle when I see one.
Thanks for watching it and replying!
By coincidence, my wife and I are about to board an actual working high speed train in Spain to go from Barcelona to Seville. This will be our third trip on their rail system this visit. The first two were just short trips from Madrid to Toledo and Segovia. Those took 30 minutes each. Would have taken me a solid hour to drive.
Too bad they cannot build things like this in the US, but let's face it, we cannot. Environmental reviews alone make it impossible. We should be thankful a prior generation (or two) got the interstate system done back in the 1950s and 60s, because that could not be built today.
Env review doesn't make it impossible at all. It makes it slower (and obviously it costs a lot of money to go along the planned route and catalogize plants, watch birds, etc... it needs manpower, and ... usually at least a few weeks every season, so it's really a lot of time).
At the end of the day there's an agency that has to write down that the permit is granted because the benefits outweigh the costs. That's it. It's very important to discover the costs (and quantify the env impact, etc), and it should be done. Similarly for the benefit side. How the agency decides and calculates depends on who is appointed, and that's not some mystery process.
I think there’s a wrinkle to your straightforward narrative.
Countries won’t necessarily blame China for their BRI debt predicament.
Take Kenya’s Nairobi to Mombassa rail as an example. One would have thought blame for that white elephant would fall at China’s feet.
But the Kenyan opposition party sees domestic political advantage in blaming the government for stuffing that project up.
Furthermore, it not in the opposition’s interest to traduce China, because they want to dip into that well themselves when in government.
So Kenya is burdened with debt and China gets of scott-free.
You don't mean the "lunatic express" from Mombasa to Nairobi, thru Tsavo? We took the overnighter in a 1930s vintage British sleeper car pulled by a similarly class locomotive. Which broke down 20 miles from Nairobi. We loved it
What well do they want to dip into? The one where you think you’re getting something people will celebrate you for but instead your domestic opposition gets a talking point?
They want to dip into the well where they get to announce a billion dollar deal, cut a ribbon, and score some jobs and contracts for family and friends. Pretty compelling if, like a politician, you don’t take a long term view!
Love the analogy of food truck!
Doesn’t the food truck example sound a lot like our Federal student loan system. You induce teenagers to borrow huge sums of money, which goes to support bloated universities and the educational indoctrination complex, and then when the kids graduate with almost no practical skills, they still owe the loans and the government is very unforgiving on collection (until recently, when Biden decided the game would be up
It has been the universities who pushed the loans not so much the government. If one reviews some of the idiotic degree majors offered by those same colleges pushing borrowing, it once again goes back to them not the government, and of course the students who think they are going to party through and that the worthless degree will get them a job.
You are right, the universities push these loans on kids barely old enough to get a tattoo, subjecting them to a lifetime of debt slavery without a second thought.
100%. Many degrees have become almost useless in the process, also, because anyone can get them. In other words, kids who cannot do 6th grade english and math are able to get a college degree. The students who actually learn and know the stuff are competing for the same jobs as students who are just pushed through the system.
Very good article. However, it's more complicated than it appears.
There is a stronger case to be made that China didn't pursue the Belt and Road initiative for the global south but rather for itself: it was a clever way to export China's investment driven development model across the world and it allowed the Chinese to inflate their foreign reserves as they often lent in renminbi but would demand payment in dollars. I suspect a good chunk of China's massive foreign reserves is illiquid debt tied up in third world infrastructure projects.
There was also the additional advantage of selling China as an economic saviour in contrast to the West which by now mostly donates humanitarian aid.
It was, of course, mistaken. The Chinese were repeating the same mistakes the West had made in the 1960s and 1970s when ambitious international projects in Latin America and Africa were funded with western capital( Ghana's infamous and till today undeveloped steel complex comes to mind).
It failed. And it failed because economic development is not simply about capital. It is not a lack of money problem. It is more often a cultural and institutional problem.
The second Sri Lankan port in Hambantota failed because that was not an import replacing city and consequently had no need for a port in the first place, let alone of that size.
Billions of dollars doled out to East Africa and West Africa is irrelevant when these countries lack the skills and institutions to maintain what has been built.
Indeed, what the Belt and Road initiative reminds one of is Saudi Arabia's ambitious NEOM project that is estimated to run at over five hundred billion dollars. There are modest differences but the illusion underpinning the two are the same: development cannot be bought. It can only be earned and that, only gradually, with numerous political and cultural changes in tow.
However, the BRI will not be abandoned. The commitments involved on both sides are too steep now. What it will proceed to morph into is a new scramble for resources as China abandons every veneer of selflessness and nakedly pursues raw resources for its burgeoning industries.
Frankly, I consider that a better situation. Debtor countries have always eagerly borrowed funds on the assumption that the money would keep rolling in and then painted their creditors in an unflattering light when the deals go south. Creditor countries have always assumed debtor countries will pay back their loans with the same zeal that they solicit them.
Now that they realize they are both mistaken, necessary concessions can begin.
Good points all. Ex-pat living in Africa here... Let's not forget that China needed to build these roads, rail lines and ports in order to efficiently remove the minerals, oil, timber, fish etc. and ship them straight to China. Much harder to do so with muddy dirt roads and no deep water ports.
Western humanitarian aid? Hahahahaha.
I wonder if this humanitarian aid refers to the F-86 fighter jets on the Korean Peninsula? Or Agent Orange in Indochina? Or the rifle bullet that killed a US Navy SEAL in Somalia? Or the Muslim women in Iraq who were raped by American soldiers? Or the Muslim man who was sexually assaulted by an American female soldier in Guantanamo? Or is it a Mexican drug gang supported by the CIA? Or was it Noriega who was captured in Grenada?
The list of questions could go on and on. What is ridiculous is that the West, which claims to be humanitarian, has exported so many wars. China, which has been slandered by public opinion as a threat, has not had a war in decades.
In fact, the essence of the matter is that you group of exploiters can no longer suck blood like before, so you have started to smear and slander us.
You are the Rome that is collapsing.Western humanitarian aid? Hahahahaha.
I wonder if this humanitarian aid refers to the F-86 fighter jets on the Korean Peninsula? Or Agent Orange in Indochina? Or the rifle bullet that killed a US Navy SEAL in Somalia? Or the Muslim women in Iraq who were raped by American soldiers? Or the Muslim man who was sexually assaulted by an American female soldier in Guantanamo? Or is it a Mexican drug gang supported by the CIA? Or was it Noriega who was captured in Grenada?
The list of questions could go on and on. What is ridiculous is that the West, which claims to be humanitarian, has exported so many wars. China, which has been slandered by public opinion as a threat, has not had a war in decades.
In fact, the essence of the matter is that you group of exploiters can no longer suck blood like before, so you have started to smear and slander us.
You are the collapsing Rome, greedy and hypocritical.
It's interesting that on paper there is nothing wrong with China serving as lender and builder, developing countries needing infrastructure, the possibility of a win-win business relationship. What's bad is that in each specific instance the construction was shoddy, the infrastructure poorly picked, and China lends last but wants to be paid first.
I am not sure I buy that this has even been a short-term success for China. We see how nervous they are about getting paid back and the pieces of infrastructure they are getting are not worth what they cost to make. Xi wanted this to generate goodwill and it's doing the opposite. It seems like China's corruption problem is preventing them from fulfilling their ambitions even if their geopolitical heft is insulating them from most of the consequences.
When a country ranking 101 on the corruption index (Ecuador) does business with a country that ranks 65, is it any surprise the dam doesn't hold water?
Well said. If the projects were properly constructed and not the result of chronic corruption then the degree of satisfaction and success might have paid off to the Chinese.
I am surprised at the incomplete descriptions in this article, which have one-sided comments. I trust the author and commentators want a more open discussion and I offer these comments. Selecting failures of a few projects, which are a small percentage of the total projects. and are much less in projects of this type is unacceptable. Bridges, dams, and nuclear plants, have consistently had problems throughout the world and in all centuries.
Most troubling is the resurrection of the entirely false description of Sri Lanka’s debt problem, in which China rescued Sri Lanka from default to the IMF and is posed as a financial predator.
From The Atlantic at: https://www.theatlantic.com/international/archive/2021/02/china-debt-trap-diplomacy/617953/
"Steep payments on international sovereign bonds, which comprised nearly 40 percent of the country’s external debt, put Sirisena’s government in dire fiscal straits almost immediately. When Sirisena took office, Sri Lanka owed more to Japan, the World Bank, and the Asian Development Bank than to China. Of the $4.5 billion in debt service Sri Lanka would pay in 2017, only 5 percent was because of Hambantota. The Central Bank governors under both Rajapaksa and Sirisena do not agree on much, but they both told us that Hambantota, and Chinese finance in general, was not the source of the country’s financial distress.
Colombo arranged a bailout from the International Monetary Fund, and decided to raise much-needed dollars by leasing out the underperforming Hambantota Port to an experienced company—just as the Canadians had recommended. There was not an open tender, and the only two bids came from China Merchants and China Harbor; Sri Lanka chose China Merchants, making it the majority shareholder with a 99-year lease, and used the $1.12 billion cash infusion to bolster its foreign reserves, not to pay off China Eximbank."
Others present facts that the BRI has been successful. From The Boston University Global Development Policy (GDP) Center at https://www.bu.edu/gdp/2022/09/06/ten-years-of-the-belt-and-road-reflections-and-recent-trends/#:~:text=The%20BRI's%20main%20accomplishment%20was,economic%20problems%20have%20been%20varied.
"However, data indicates the BRI strategy has been largely successful. For example, as of 2021, China has signed Memorandums-of-Understanding (MOUs) with 140 countries and 32 international organizations, among which 46 are in Africa, 37 in Asia, 27 in Europe, 11 in North America, 11 in the Pacific and eight in Latin America. Additionally, in 2012, China’s outbound foreign direct investment (FDI) was $82 billion, but in 2020, it was $154 billion, ranked as the world’s number one overseas investor. The increase in Chinese investment in BRI countries has also been impressive."
The World Bank presents the BRI as a positive move and not as the article’s author describes.
WASHINGTON, June 18, 2019—China’s Belt and Road Initiative (BRI) could speed up economic development and reduce poverty for dozens of developing countries—but it must be accompanied by deep policy reforms that increase transparency, improve debt sustainability, and mitigate environmental, social, and corruption risks, a new World Bank Group study on the BRI transportation corridors has found.
By, the way, The World Bank and IMF have been severely criticized for their loan efforts and project management.
“The World Bank is wrong. The data show that most long-term recipients of World Bank money are no better off today than they were when they received their first loan. Many are actually worse off. Go to: https://www.heritage.org/trade/report/the-world-bank-and-economic-growth-50-years-failure
“Of 763 programmes between 1980 and 2015, 512 were interrupted, of which 291 did not resume – as our data from the IMF Monitor Database shows. This is a very high failure rate given that the IMF enters into every agreement on the basis that it wants to see it completed.” Go to: https://theconversation.com/lots-of-imf-programmes-are-never-completed-because-theyre-unworkable-161905
How do you say your name in Chinese?
Is this an example of the mentality guiding these comments?
I used facts presented by respected institutions.
Isn't there any guidelines for comments and means to censor insulting rabble rousers who accuse someone born in the Bronx, NY of being a Chinese troll?
Disgusting!
"and means to censor insulting rabble rousers"
really?
Sorry, the poor English gives it away. Send our regards to Pooh.
I too am from NY, in particular Queens, NY fellow American!
This forum is not a designated "safe space" for academic snowflakes or anyone one else. If you can't take a punch, don't get in the ring.
Sorry, but I'm Sri Lankan and what Dan is saying about Sri Lanka is accurate.
That may be so, I don't know anything about the Sri Lanka situation, but as a long time resident of an African country, what Noah and others here are saying about China and BRI in Africa are also accurate. In fact it's much worse. I think pro-Chinese commenters should talk to average residents of these countries, the majority, who are not being personally enriched by these massive, wasteful, corrupt and ill-conceived projects. Or try driving across Angola or Ethiopia in heavy rain. I've done it. Many times. Bring a winch. Lots of extra tires. Good luck.
The problem is not China but corrupt governments.
Apparently true, but I'm trying to ascertain what drives people who have no interest in content that does not fit their subjective agendas and delight in using forums to annoy others. Doesn't that embarrass the author?
I once read an odd book called Confessions of an Economic Hit Man, and it sounds like that's the model China was going for... https://en.m.wikipedia.org/wiki/Confessions_of_an_Economic_Hit_Man
Definitely seems like PRC leadership constructed this mental model of what neo-imperialism looks like and then decided (like Japan in the early 20th c.) that instead of opposing it they should emulate it.
He’s written a second book, New Confessions of an Economic Hit Man.
This is so odd. I searched and these two comments are the only ones to point to John Perkins, the economic hit man, who told this story years ago, not about what China did but where America was the villain. It was a #1 NYT bestseller. He's an unusually engaging fellow who still is doing yeoman work tuning people into a reality we by and large were oblivious to, and it's thanks to him that we know what we are dealing with. I have a little gallery of "Thought Shapers making sense of these times." Here's John Perkins: https://tinyurl.com/3h7p5346.
Where is the here for that?
Hasn’t this article - very eloquently- simply summarised the business model of the IMF and US over the last 100 years? It’s ok if we do it but not China? The WHOLE SYSTEM needs to change!!!!
No, IMF does the other thing, where it leverages (pun intended) rescue financing and debt forgiveness for political concessions. That’s the thing people assumed China would do (and which Noah thinks they should in fact have done) but which it is not doing, pursing repayment and hard assets instead.
IMF has required countries to hand over ownership of their utilities, natural resources, agricultural policy, education, healthcare, infrastructure, media - literally everything - so that they may receive loans they only need because of imperialism in the first place.
Your points are valid and I don’t disagree - everting is nuanced and there are no simple answers. I was thinking more of the suicide rates of farmers in India - literally forced by the IMF to move to mono GM production, decimating centuries of knowledge and locally adapted practice.
Blaming improved crop varieties for what is happening to Indian farmers is pure nonsense.
Everything is connected in our finely balanced systems - so it really is not nonsense. Suggesting wholesale takeover of Indian and global south agriculture by western interests is irrelevant to the conversation is, may I suggest, the real nonsense.
Forcing farmers off their land or forcing farmers to only use gm mono crops that devestste their biodiversity is no different from building crap housing or unsafe bridges.
From my understanding, most staple grains don’t really grow all that well in the majority of Africa. You uh, kinda need something GM to have yields remotely commensurate with the places comparatively advantaged for growing them.
IMF and World Bank do enough worthy of condemnation, but GMO crops good, actually. If you have something good I’d love to read it, but time and time again it feels like most anti-GMO sentiment is just green vibesposting, e.g.:
College students who’ve never grown in their lives or heard about hybrid vigor complaining about “Wahhhhh they don’t make good seeds”, ignoring that farmers have bought seeds for frickin’ ever.
Or the general anger at companies making money.
Or a strange yet sincere belief that the fact that it’s harder to grow maize in Ghana, a tropical climate, than the midwestern US, the temperate climate in which it evolved, is a form of imperialism since the US can sell corn for cheaper than Ghanaian farmers.
Thinking out loud now, it’s kinda funny that I simultaneously see arguments about how these GMOs destroy biodiversity AND that they’re shit because they can’t grow again from seeds after the first year, as if those aren’t damn near diametrically opposed concepts.
These exploits were done by multinational western corporations, not governments.
I agree that there should be a more attention and regulation between corporate lobbying and members of government with conflicts of interest.
The outcome is exactly the same though - sovereignty is rescinded and the people suffer.
It's a bit different, China is going for more money and fewer political concessions
The World Bank is a lot less bad, especially at infrastructure. Unfortunately, it is doing a lot less infrastructure nowadays.
China is under the magnifying glass in notable ways the US was not 100 years ago when we started doing the same sorts of things. That's not a double standard, though- it's just a function of the world becoming slightly more transparent and vastly more connected, and more and more people are able to understand what's happening.
I'm an American. I lived and worked in Peru, specifically Iquitos, during the 2010's for 10 years. I saw first-hand the whole Belt & Road BS at the end of my street everyday for far too long. The Chinese came in and provided funding for a wastewater treatment plant for the whole of Iquitos--located in the middle of the Amazon rainforest. A processing plant was built and for months and months, the streets were torn open, drains lines and pumps were installed, then eventually it was all put back together after months and months of daily disruption and chaos. All the surveyors and project managers were clearly Chinese, while the back-breaking work was done by poor, local Peruvians. (Like Peru isn't advanced enough to have its own qualified civil engineers?) Before the whole thing went online, the power plant was inundated during the "high water" season, burning out all the pumps. This was not some rate torrential storm, but a regular, seasonally, well-understood and predictable shift between high and low water levels on the Amazon River. The pumps were never repaired or replaced and to this day, almost 10 years later, all that work, all those resources and all the disruption to our daily lives lead to NOTHING. Wastewater from sinks and toilets continue to run raw and directly into the Amazon River and the tributaries surrounding the major city of Iquitos. And don't get me started on what amount of money from this project went into the pockets of local politicians. I assume Peru is still holding the debt for this boondoggle and it certainly left no goodwill for the Chinese by anyone. What a waste!
Japan International Cooperation Agency (JICA) provided ¥6.66 billion (about $58m) in loans for the plant, which was intended to stem the flow of raw sewage into the Amazon River.
Japan financed the plant and it was built before the Belt and Road started. It had no relation to the Belt and Road. If you are an honest person, I'm sure you will provide a correction.
Wow, thanks for your comment.
I worked for the World Bank for 27 years. There is a reason that we and other international development banks do pretty rigorous evaluation of the economic feasibility of the projects we finance and are scrupulous in insisting on competitive bidding. And we don't bat 100.
That said, borrowing countries did sign the notes and could have done their own evaluations. They are not wholly innocent victims. AND the consequences of default on a Chinese loan are less than on a loan from an international development bank.
China's Third World investment strategy sounds a lot like the Soviet Union's with one major difference: the USSR provided its clients with "security assistance" meaning that the KGB would run their internal security services. China doesn't do this, such that they don't get control of the government (except through endless bribery). I see this in the Caribbean where China has lost a lot of money with nothing strategic to show for it.
China lends money to the US so that its government can run huge deficits and provide handouts to American citizens so they can import Chinese goods.
Sounds a lot like Belt and Road and has been going on a lot longer. And, as in the developing world, China spends quite a bit of money buying politicians (thanks, Joe!)
Note that the CCP will be a massive beneficiary of the IRA- providing the wind turbines, the solar panels the batteries (sometimes just the battery IP and the bulk of the components and raw materials).
Many of the American investments in the IRA will prove to be overpriced white elephants. Would you rather your debt go toward a new port or paying a bunch of rich people to buy luxury cars?
Is China lending money to the US? My understanding is that total Chinese holdings of US bonds is less than a single year’s borrowing by the US government, and the vast majority of new loans are being provided by individual domestic investors who like holding bonds.
Excellent piece! I have often argued with peers that there was no way the 'Chinese' infrastructure would be sound, that BRI projects would deteriorate. I gave up the WSJ years ago so missed the January report! Thank you for covering here. I will turn those peers (and friends) your way.