Tag Archives: New Silk Road

The EU bows to ‘systemic rival’ China, by Pepe Escobar

China is making inroads into Europe. From Pepe Escobar at atimes.com:

The EU bows to ‘systemic rival’ China

European Commission President Jean-Claude Juncker (left), Chinese President Xi Jinping, French President Emmanuel Macron and German Chancellor Angela Merkel at the Elysee presidential palace in Paris on March 26, 2019. Photo: AFP/Thibault Camus

Slowly but surely, the EU is shifting its priorities to the East

Let’s start with the essential background for the meeting in Paris on Tuesday between Chinese President Xi Jinping and three EU heavyweights – French President Emmanuel Macron, German Chancellor Angela Merkel and President of the European Commission (EC) Jean-Claude Juncker.

As imperfect as these figures may be, economic growth for the past 10 years after the 2008 financial crisis – which was a made in the West phenomenon – do tell an enlightening story.

China’s growth: 139%. India’s growth: 96%. the US’ growth: 34%. EU growth: a negative2%.

French mainstream media, controlled by a rarified group of oligarchs, spun a risible narrative that Macron “imposed” this four-way meeting on Xi to press on him the new EC strategy aiming to “clarify” Chinese ambiguity in relation to the New Silk Roads, or Belt and Road Initiative (BRI).

As I previously reported, the EC now brands China a “systemic rival,” and seems to have realized that Beijing is an “economic competitor in search of technological leadership.” And that may translate as a threat to European values and norms.

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Postcard From A Brave New World Order, from Clarmond Wealth Limited

The Belt and Road Initiative (New Silk Road) is already having a huge impact. From Clarmond Wealth Limited via zerohedge.com:

Dear Mustafa,

I arrived in Karachi at 5.30am this morning on the direct PIA flight from Heathrow. The city of 26 million people had not yet woken up and I made it to the Sind Club in under 20 minutes. But as I write this now I can hear the horn-filled throb of city life on all four sides of the Club walls; this city pulsates with growth.

If you click on the map I attach here you will see one of the main reasons – the Chinese Economic Corridors – otherwise know as ‘One Belt…One Road’. Pakistan lies directly on one of these routes, but look at this map carefully as it will change our world and world order, wherever we live.

Lets look a some facts on ‘One Belt…One Road’:

  • It connects 65 countries and 4.4 billion people.
  • In 2016 Chinese companies signed 8,158 contracts in 61 countries worth $150b.
  • In 2016 China’s trade with the One Belt…One Road countries reached $953b.

Over the next 10 years China will spend $2 trillion on ‘One Belt…One Road’ infrastructure, and, more amazingly, they are not asking the investee countries and corporates to pay it back; 80% of the money spent will be a perpetual bond, with only the interest needed to be paid. The principal is never returned.

What is also very clear from the map is that China has no interest in controlling the seas. In fact they have taken a conscious decision to bypass the seas, to bypass the 7th, 8th and 9th US fleets that currently ring the Eurasian landmass. The US navy can sail the oceans to their heart’s content, the action is now on land. And to that end the first test train from China arrived directly in London in July this year; it took 20 days less than by sea. This is all pretty revolutionary stuff.

China is attempting ‘the project of the century.’

And as I am served a cool lemonade at the Club, a final remnant of the British empire, it is another empire – the American empire – that may be taking its last few sips of leadership.

See you in London next week.

Chris

http://www.zerohedge.com/news/2017-10-26/postcard-brave-new-world-order

Xi’s road map to the Chinese Dream, by Pepe Escobar

China has a different way of asserting its claim to world leadership than the US. From Pepe Escobar at atimes.com:

It all starts with Hong Kong as a major BRI financing hub. Photo: iStock

It all starts with Hong Kong as a major BRI financing hub. Photo: iStock
China’s Belt and Road Initiative – the New Silk Road – will spark the country’s development and turn the dream into reality
Now that President Xi Jinping has been duly elevated to the Chinese Communist Party pantheon in the rarified company of Mao Zedong Thought and Deng Xiaoping Theory, the world will have plenty of time to digest the meaning of “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era.”

Xi himself, in his 3½-hour speech at the start of the 19th Party Congress, pointed to a rather simplified “socialist democracy” – extolling its virtues as the only counter-model to Western liberal democracy. Economically, the debate remains open on whether this walks and talks more like “neoliberalism with Chinese characteristics”.

  • “Moderately prosperous society” by 2020.
  • Basically modernized nation by 2035.
  • Rich and powerful socialist nation by 2050.

Xi himself, since 2013, has encapsulated the process in one mantra; the “Chinese dream”. The dream must become reality in a little over three decades. The inexorable modernization drive unleashed by Deng’s reforms has lasted a little less than four decades. Recent history tell us there’s no reason to believe phase 2 of this seismic Sino-Renaissance won’t be fulfilled.

Xi emphasized, “the dreams of the Chinese people and those of other peoples around the world are closely linked. The realization of the Chinese dream will not be possible without a peaceful international environment and a stable international order.”

He mentioned only briefly the New Silk Roads, a.k.a. Belt and Road Initiative (BRI) as having “created a favorable environment for the country’s overall development”. He didn’t dwell on BRI’s ambition and extraordinary scope, as he does in every major international summit as well as in Davos earlier this year.

To continue reading: Xi’s road map to the Chinese Dream

One Belt, One Road, and One Debt Hangover, by Jim Rickards

Debt can wreck the best laid plans of mice and China. From Jim Rickards at dailyreckoning.com:

China is not only one of the world’s largest debtors, it is one of the world’s largest creditors.

China uses debt not in the customary financial manner, but as a political tool to generate employment and maintain social stability. Likewise China uses loans and investment as a tool to advance its strategic interests. This may be good geopolitics in the short run, but it will be a disaster economically in the long run.

Just as Chinese state owned enterprises (SOEs) can’t repay debts to Chinese banks, China’s foreign partners will not be able to repay debts to China itself. These twin disasters-in-the-making may converge in such a way that China’s assets disappear or become illiquid at exactly the time they are most needed to bail-out its own banking system.

China has launched four major overseas investment initiatives in the past ten years. The oldest is their sovereign wealth fund, China Investment Corporation, or CIC, established in 2007. Sovereign wealth funds are a way for countries to invest their reserves in securities other than safe instruments such as U.S. Treasury notes.

CIC today has assets of over $800 billion, spread among stocks, corporate bonds, hedge funds, private equity, commodities, and commercial real estate. Some of CIC’s investments are directly-owned enterprises, including gold mines in Zimbabwe.

While these assets may outperform Treasury notes over time, they are also illiquid, and would tend to decline in value during a financial panic. This means that about 20%, of China’s reserves are unavailable for critical tasks such as bailing out the banking system or defending the currency.

The second and third initiatives are the New Development Bank, NDB, created by the BRICS in 2014, and the Asia Infrastructure Investment Bank, AIIB, created by China in 2016. These have participation from 35 countries in the Asia/Australia region, and 18 other countries from outside that region, mostly in Europe. The United States refused to join.

Although NDB and AIIB are both multilateral institutions, China was the principal sponsor and a major source of funding. It provided about $10 billion to NDB and $30 billion to AIIB.

These banks will expand their lending capacity by issuing notes and will fund infrastructure projects in competition with the World Bank and its regional development banks — without interference from the U.S. on priorities.

To continue reading: One Belt, One Road, And One Debt Hangover

Scandal At China’s Grand Silk Road Summit As India Skips, Warns Of “Unsustainable Debt”, by Tyler Durden

There are going to be bumps in the road, especially a road as grand as China’s envisioned New Silk Road. From Tyler Durden at zerohedge.com:

It was supposed to be China’s day of celebrating massive infrastructure spending for the sake of spending (read ghost towns, only now outside China’s borders) as Xi Jinping pledged $124 billion on Sunday for his new Silk Road plan to forge “a path of peace, inclusiveness and free trade” while calling for the abandonment of old models based on rivalry and diplomatic power games. However, it did not go quite as smoothly as expected.

A celebration years in the making, Xi hosted dozens of world leaders – including a piano-playing Vladimir Putin – on Sunday for the country’s biggest diplomatic showcase of the year, touting his vision of a new “Silk Road” that opens trade routes across the globe. Xi used the summit to “bolster China’s global leadership ambitions” as U.S. President Donald Trump promotes “America First” and questions existing global free trade deals.

After scoring 2 hat tricks in Sochi, Putin returns to Moscow where he places 1st in annual Van Cliburn competition

11:19 AM – 14 May 2017

In total, leaders from 29 countries attended the forum, including some of China’s close allies and partners such as Russian President Vladimir Putin, Cambodian Prime Minister Hun Sen, Kazakh President Nursultan Nazarbayev, Turkey’s quasi-dictator Tayyip Erdogan, as well as the heads of the United Nations, and the CapEx leeches from the IMF and World Bank.

“We should build an open platform of cooperation and uphold and grow an open world economy,” China’s president Xi told the opening of the two-day gathering in Beijing.

 

The Ultimate 21st Century Choice; OBOR or War, by Pepe Escobar

China is trying hard to move Asia out of the US orbit, and it’s a good bet it will succeed. From Pepe Escobar at sputniknews.com:

The G20 meets in tech hub Hangzhou, China, at an extremely tense geopolitical juncture.

China has invested immense political/economic capital to prepare this summit. The debates will revolve around the main theme of seeking solutions “towards an innovative, invigorated, interconnected and inclusive world economy.”

G20 Trade Ministers have already agreed to lay down nine core principles for global investment. At the summit, China will keep pressing for emerging markets to have a bigger say in the Bretton Woods system.

But most of all China will seek greater G20 backing for the New Silk Roads – or One Belt, One Road (OBOR), as they are officially known – as well as the new Asian Infrastructure Investment Bank (AIIB).

So at the heart of the G20 we will have the two projects which are competing head on to geopolitically shape the young 21st century.

China has proposed OBOR; a pan-Eurasian connectivity spectacular designed to configure a hypermarket at least 10 times the size of the US market within the next two decades.

The US hyperpower – not the Atlanticist West, because Europe is mired in fear and stagnation — “proposes” the current neocon/neoliberalcon status quo; the usual Divide and Rule tactics; and the primacy of fear, enshrined in the Pentagon array of “threats” that must be fought, from Russia and China to Iran. The geopolitical rumble in the background high-tech jungle is all about the “containment” of top G20 members Russia and China.

It doesn’t take an oracle to divine which project is intriguing — and in many ways seducing — the Global South, as well as an array of G20 member-nations.

That connectivity frenzy

Shuttling between the West and Asia, one can glimpse, in myriad forms, the graphic contrast between paralysis and paranoia and an immensely ambitious $1.4 trillion project potentially touching 64 nations, no less than 4.4 billion people and around 40 per cent of the global economy which will, among other features, create new “innovative, invigorated, interconnected and inclusive” trade horizons and arguably install a post-geopolitics win-win era.

An array of financial mechanisms is already in place. The AIIB (which will fund way beyond the initial commitment of $100 billion); the Silk Road Fund ($40 billion already committed); the BRICS’s New Development Bank (NDB), initially committing $100 billion; plus assorted players such as the China Development Bank and the Hong Kong-based China Merchants Holdings International.

Chinese state companies and funds are relentlessly buying up ports and tech companies in Western Europe – from Greece to the UK.

Cargo trains are now plying the route from Zhejiang to Tehran in 14 days, through Kazakhstan and Turkmenistan; soon this will be all part of a trans-Eurasia high-speed rail network, including a high-speed Transiberian.

The $46 billion China-Pakistan Economic Corridor (CPEC) has the potential to unblock vast swathes of South Asia, with Gwadar, operated by China Overseas Port Holdings, slated to become a key naval hub of the New Silk Roads.

To continue reading: The Ultimate 21st Century Choice; OBOR or War