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

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

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

Oh wait, that was common sense..
True, those stupid top decision makers in China made China a laughingstocking after losing hundreds of billions and getting China a fancy name of global "debt trap" setter.
 
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I suggest everyone not to worry and trust GoC. Many loans are intended as "gift" and will be forgiven over the years, using financial engineering (restructured, write down) one way over another.

You cannot tell the people you give few millions to aliens. Uninformed people will get angry.

There are also write down, which in reality serve as some sort of payment.

For example, Laos borrowed a large sum to build HSR. Then some China GLC private companies come in and buy large amount of farmland in Laos, timber or mines. We do not know what went on under table.
 
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@beijingwalker in hindsight do you think it would have been better to provide finance to private corporations than to governments? Projects need to be profitable at an individual level. Every stretch of motorway, every airport terminal, every shipping terminal needs to be profitable on its own. This kind of profit centre accounting is better enforced through the private sector than government. Takeover of defaulting entities would also be easier than taking over something owned by the government.
 
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What if a sovereign nation "default" or confiscate China asset?

In theory they can do it. China cannot send war ship and attack. In reality they will pay a big price.

Today if Sri Lanka default China. Then next day, her credit rating falls and she got to borrow at 50% interest rate.

Also in future if Sri Lanka ask China to build Metro, roads, power, or buy Xiaomi from China, China will just ask Sri Lanka to pay her bad debt first.

Then there will be many under table dealings, and end up, Sri Lanka may have to lease a naval base -- for example.
 
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But what about those massive profits when the road is complete and fully operational and when goods move thru at high speed ?? It will be very prosperous right? Its the getting to that end point that is the goal….

Unless ofcourse we get a nuke armagaeddeon from ukraine/nato
 
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@beijingwalker in hindsight do you think it would have been better to provide finance to private corporations than to governments? Projects need to be profitable at an individual level. Every stretch of motorway, every airport terminal, every shipping terminal needs to be profitable on its own. This kind of profit centre accounting is better enforced through the private sector than government. Takeover of defaulting entities would also be easier than taking over something owned by the government.
I believe China made a big mistake , China believes what works in China could also work everywhere else and just uncreatively tries to copy China's business mode overseas, it's a very costly lesson to learn.
 
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I believe China made a big mistake , China believes what works in China could also work everywhere else and just uncreatively tries to copy China's business mode overseas, it's a very costly lesson to learn.
What isn't working exactly? Is it major cost overruns caused by delays or is it lack of demand for these infrastructure services?
 
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What isn't working exactly? Is it major cost overruns caused by delays or is it lack of demand for these infrastructure services?

Infrastructure always loss monies on paper. The west keep scandalizing that.

But the potential infrastucture unlocks is immense,
 
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Infrastructure always loss monies on paper. The west keep scandalizing that.

But the potential infrastucture unlocks is immense,
All infra projects will lose money initially because the capex costs are front loaded while the revenues accrue over 10-15-20 years or more. Debt servicing burden initially is huge and can be mitigated to some extent by structuring the loan accordingly. However eventually it has to be profitable to the infra company. Ancillary growth may be good for local governments, but if they don't contribute to the infra entity then it is a problem. China does not have a stake in the growth of local government revenues. It has to recover the cost from the project itself. If local government spend the additional revenues into populist schemes or other vanity projects, it is no good.
 
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I believe China made a big mistake , China believes what works in China could also work everywhere else and just uncreatively tries to copy China's business mode overseas, it's a very costly lesson to learn.

Guys - Keeping politics aside, China and its people are really hard-working, sincere, and an example to the developing world of how to grow in a short span of time...But remember that every nation is not like your nation. Again, the culture, aspiration, and motivation of any nation to grow are different from the way China perceives it.
 
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These countries need a way to have consultants to help make these projects sustainable. The other option is strategic, allowing Chinese ownership of certain projects to produce for sale in other markets; connecting hydropower dams to transmission lines and allowing the Chinese producers sell to neighboring countries, with the local governments protecting these investments. But this approach will require more potential political conflicts and likely something China will seek to avoid.

China needs a system like Palantir Foundry, which will help mange these projects around the world. Many decision makers in partner nations are probably not technically trained people, such as politicians. If decisions are made with “digital advisors” in place, the chances these projects become sustainable increases. These method will also be able to continue operations when governments or officials change in each country. Almost like making the enterprises inside a digital SEZ.

This kind of software could also help local governments find where resources are being squandered and direct people to stop what is likely a form of corruption or low productivity, increases the chances inputs and outputs are being processed efficiently to earning the country revenue, so it can pay back the loan.

Use of such software could employ data scientists, sitting safely in China, with local partner data scientists in the field working with them.

Many of these countries with Chinese investment are poorly managed and highly inefficient. Helping these countries become efficient will save these investments, employ Chinese ai and data scientists, and create a market to support Chinese growth. It’s the most obvious way to save BRI and create a new engine for Chinese and partner growth; win win for China and its partners.

An app like this would also keep Chinese companies in line. It will be a form of digital regulations that all parties can reference and appeal to, whose upholding will increase Chinese soft power, making it more likely investors would invest alongside Chinese investors and share in the risk as well as the reward of current and future BRI projects.

This will raise the expectations of all developing nations as all investors, Chinese and Non-Chinese will be better able to compete and the ensuring competition will speed up development in the developing world.

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


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


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


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


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


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


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


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


This is why the U.S.'s masterstroke in the cold war was to start providing food aid to basket case countries so that basket case countries would never choose to stop being basket cases.
 
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All infra projects will lose money initially because the capex costs are front loaded while the revenues accrue over 10-15-20 years or more. Debt servicing burden initially is huge and can be mitigated to some extent by structuring the loan accordingly. However eventually it has to be profitable to the infra company. Ancillary growth may be good for local governments, but if they don't contribute to the infra entity then it is a problem. China does not have a stake in the growth of local government revenues. It has to recover the cost from the project itself. If local government spend the additional revenues into populist schemes it is no good.

Africa is sitting large mines few hundreds km inland. Without infra, these African will leave like caveman for the rest of their life.

As they are so poor, white man come in, give them rifle and instigate to kill one another.

Then China come and say, I build the road, power, rail, water, and you pretend to owe me monies. And my quasi private companies will be share owners of the mine. You will have jobs, training to run modern industries, decent life and schools.

Everyone is rich.

Everywhere is peaceful

You choose
 
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What if a sovereign nation "default" or confiscate China asset?

In theory they can do it. China cannot send war ship and attack. In reality they will pay a big price.

Today if Sri Lanka default China. Then next day, her credit rating falls and she got to borrow at 50% interest rate.

Also in future if Sri Lanka ask China to build Metro, roads, power, or buy Xiaomi from China, China will just ask Sri Lanka to pay her bad debt first.

Then there will be many under table dealings, and end up, Sri Lanka may have to lease a naval base -- for example.
You will never get a military base if the hosting country is unwilling and uncooperative or unless you station large number of troops there as in Japan and Germany.
 
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Africa is sitting large mines few hundreds km inland. Without infra, these African will leave like caveman for the rest of their life.

As they are so poor, white man come in, give them rifle and instigate to kill one another.

Then China come and say, I build the road, power, rail, water, and you pretend to owe me monies. And my quasi private companies will be share owners of the mine. You will have jobs, training to run modern industries, decent life and schools.

Everyone is rich.

Everywhere is peaceful

You choose

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

It is the West whose loan and aid are debt trap that is deliberately designed to put nations into slavery.

I give an example. The Western aid comes as loan often given directly to their CIA puppet and traitors such as Zelensky or equivalent.

These puppets then took every single cent, and circulate it back to Swiss bank or Wall St, never intent to benefit people.

Then West put a debt on sovereign nation.

China is another way.

Chinese most frequently give loans but this is in terms of infrastructure spending. The corrupt leaders are not able to siphon everything. And monies goes to people. China also make sure there are mines or other economic potential nodes, that such infrastructure benefit everyone including China,
 
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