The Staggering Impact of China’s 'Belt and Road' Initiative - The Atlantic

The Staggering Impact of China’s 'Belt and Road' Initiative - The Atlantic



...Unlike the United States and Europe, China uses aid, trade, and foreign direct investment strategically to build goodwill, expand its political sway, and secure the natural resources it needs to grow. ....



...Most of its funding will come in the form of loans, not grants, and Chinese state-owned enterprises will also be encouraged to invest. This means, for example, that if Pakistan can’t pay back its loans, China could own many of its coal mines, oil pipelines, and power plants, and thus have enormous leverage over the Pakistani government. In the meantime, China has the rights to operate the Gwadar port for 40 years.



...For one thing, China is too dependent on its eastern seaboard and the narrow Malacca Strait near Singapore to get goods in and out of its vast territory; for example, over 80 percent of its oil goes through the Strait. So building trade routes through Pakistan and Central Asia makes sense. Belt and Road also helps China invest its huge currency reserves and put its many idling state-owned enterprises to work....



...Scholars who looked at Chinese investment in Africa 1991 to 2010 found that Chinese assistance does not appear to help economic growth, and that inexpensive Chinese imports often displace African local firms, and thus hurt employment in small enterprises. China usually requires donee countries to use Chinese firms to build roads and ports, and so doesn’t employ local firms or train local workers. 



In Pakistan, for example, 7,000 Chinese nationals are working on the economic corridor—they bring their own cooks, have separate housing, and don’t interact much with the locals. Relatively few Pakistanis are working on the actual road and rail-building (and thus developing skills)—but Pakistan has deployed nearly 15,000 security personnelto guard the Chinese. Soldiering is not a skill Pakistan needs more of.



... Chinese loans used to have low interest rates around 2.5 percent, they are now creeping up to near 5 percent or more...



...explained that he likes Chinese investment because they “don’t ask too many questions,” and “come with … big money, not small money.”...