By Cory
The ‘Silk Road’ Verdict
This is a great article by our friend Valentin Schmid over at the Epoch Times. With the consistent weak data out of China people who want to be optimistic point to the One Belt, One Road plan. Valentin has some issues with this overall plan…
Click here to visit the Epoch Times website and read more of Valentin’s articles.
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Why China’s massive infrastructure plan won’t measure up to economic reality
The idea, at first, sounded good: Plow trillions of dollars into infrastructure projects in the barren wasteland that is most of central Asia, and trade will start to bloom, economies will prosper, and peace will reign. However, most experts believe real world problems will result in the whole idea turning into nothing but a pipe dream.
(VCG/VCG VIA GETTY IMAGES)
The concept is called the Belt and Road Initiative (BRI), also known as One Belt, One Road, launched by Chinese regime leader Xi Jinping in March 2015. It has two elements: one landlocked route from China to Europe through Asia, called the Silk Road Economic Belt, and one seaborne route going from China to Europe past India and Africa, called the Maritime Silk Road.
Although estimates vary, China has called for up to $5 trillion in infrastructure investments over the next five years in the 65 countries along these routes. Ports in Sri Lanka, railways in Thailand, and massive roads and power plants in Pakistan are just a few examples of the planned investments.
Speaking at the Belt and Road Forum in Beijing in May this year, Xi said: “In pursuing the Belt and Road Initiative, we should focus on the fundamental issue of development, release the growth potential of various countries, and achieve economic integration and interconnected development, and deliver benefits to all.”
His statement sums up the problems with the multitrillion dollar project: It talks about desirable outcomes but is exceedingly vague on the details. This is just like the BRI’s official plans. They call for improving intergovernmental communication, coordinating infrastructure plans, developing soft infrastructure, and strengthening tourism and trade, but the specifics are shaded over.
“There are no concrete action items set out in the Chinese government’s action plan for what has become one of Xi’s most visible policy initiatives. The document contains a number of generic proposals interspersed with platitudes about cooperation and understanding,” research firm Geopolitical Futures states in a July report.
But despite the lack of concrete programs, the vast sums involved show that the BRI has garnered support from many countries. China-led institutions, like the Asian Infrastructure and Investment Bank, have also pledged $269 billion dollars for the project. Even Japanese Prime Minister Shinzo Abe voiced his support at the recent G20 meeting in Hamburg, Germany.
It is completely overhyped. The numbers they published, $4 trillion to $5 trillion, they are completely unrealistic.
— Christopher Balding, professor of economics, Peking University
Objectives Measured Against Reality
China’s objectives, explicit and implicit, need to be measured against reality. On this account, most experts think the project is not economically viable—but it will allow China to gain political influence.
Source:: The Korelin Economics Report
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