4 ms·

China might not care about the cash returns so much as the real estate and political leverage.

by hnzix 7y ago

yorwba 7y ago
There is not much political leverage to be gained by building a port named after the current president [1], if he then loses the next elections and his successor decides to pay the debt by handing them the port. Gaining that real estate might look like a win for China, except of course now they're stuck operating it for very little profit. (Certainly less profit than the interest on the loan was planned to be, since otherwise the Sri Lankan government would've just repaid it.) Many Chinese infrastructure projects in other countries appear irrational if you consider the Chinese government as a single actor. However, they become rational if you consider that they are a way to turn money from the coffers of the Chinese state into foreign currency in the hands of a Chinese construction company. Some of that money will certainly find its way back into the pockets of the decision makers approving the project. [1] https://en.m.wikipedia.org/wiki/Magampura_Mahinda_Rajapaksa_Port https://en.m.wikipedia.org/wiki/Magampura_Mahinda_Rajapaksa_...
- InvaderFizz 7y ago
  My impression of what China is doing with the whole BRI is to colonize Africa and bring it under their sphere of influence. It appears to me that in another decade everyone will be shocked that the Great Firewall encompasses large portions of Africa and Asia. Additionally everyone will be surprised that a lot of manufacturing has become too expensive domestically in China and is now outsourced to Africa. At least, that is my read of the whole situation.
  - BurningFrog 7y ago
    I think "colonize" is way too crude, but "bring it under their sphere of influence" is probably correct. And there is nothing wrong with a powerful country winning influence by helping out poorer nations around the world. The US did it with the Marshall Plan, and it was a good thing for everyone involved.
- hakfoo 7y ago
  I'd argue "location, location, location" particularly as a long-play aspect. In 30 years, when your economy finally catches fire and is growing 20% year-over-year, the best possible port/airport/railway locations were long ago sold to China.
throwaway2048 7y ago
Colonialism is ultimately self defeating, as European powers found out with time. The elites of a nation push for it because it gives them a chance to make a lot of money off exploiting both the colony and the government funding infrastructure. However in the end it becomes a bottomless pit for money in sum for a nation, and in the end you cant hold onto what you tried to control anyways, because the harder you try, the more and more resentment builds up until you are forced out. And it dosen't sound like the Chinese are too interested in making friends, more in making underhanded deals that hand them control over critical resources.
- krageon 7y ago
  > Colonialism is ultimately self defeating, as European powers found out with time. They found out it was untenable to continue being that cruel in the face of a populace that now wanted very slightly less obvious cruelty. I have never seen a compelling argument being made that it was about money, as domestic slavery and other forms of exploitation of people you basically own is always going to be nice and profitable.
  - BurningFrog 7y ago
    The colonizing European powers were no richer than the non colonizing ones. In the end, the costs and benefits of having colonies more or less cancelled out.
  - throwaway2048 7y ago
    Germany for instance had no colonies of any real consequence, and neither did Russia or Italy, yet all were majorly powerful nations, on par with a colonial empire that owned 25% of the planet, and another that owned almost as much (Britain and France). If colonies were capable of providing wealth and economic power at scale, the UK alone would have been vastly more powerful than all 3 aforementioned nations combined. In fact you can make a reasonably persuasive argument that the UK's laser focus on colonialism rather than native industry was directly responsible for Germany's rise to begin with. The UK was far more interested in pouring economic resources into colonial ventures (especially in India), which in the end didn't yield net gains, while Germany went from a patchwork network of independent, mostly underdeveloped state, to a world superpower in less than 50 years through obsessive focus on industrial development. Plenty of British industrialists and inventors found a far more receptive audience in Germany after their attempts to raise funding at home were ignored. The German chemical industry largely owed its origins to this for instance. There is also plenty of argument to be made that slavery as a purely economic concern is far less efficient and profitable in the long run than free men doing the same jobs.[2] Again, its something that's very profitable for elites, but it is a handicap for a nation as a whole. [2] https://www.economist.com/free-exchange/2013/09/27/did-slavery-make-economic-sense https://www.economist.com/free-exchange/2013/09/27/did-slave...

China might not care about the cash returns so much as the real estate and political leverage.

by hnzix 7y ago

China might not care about the cash returns so much as the real estate and political leverage.

There is not much political leverage to be gained by building a port named after the current president [1], if he then loses the next elections and his successor decides to pay the debt by handing them the port. Gaining that real estate might look like a win for China, except of course now they're stuck operating it for very little profit. (Certainly less profit than the interest on the loan was planned to be, since otherwise the Sri Lankan government would've just repaid it.) Many Chinese infrastructure projects in other countries appear irrational if you consider the Chinese government as a single actor. However, they become rational if you consider that they are a way to turn money from the coffers of the Chinese state into foreign currency in the hands of a Chinese construction company. Some of that money will certainly find its way back into the pockets of the decision makers approving the project. [1] https://en.m.wikipedia.org/wiki/Magampura_Mahinda_Rajapaksa_Port https://en.m.wikipedia.org/wiki/Magampura_Mahinda_Rajapaksa_...

InvaderFizz 7y ago
My impression of what China is doing with the whole BRI is to colonize Africa and bring it under their sphere of influence. It appears to me that in another decade everyone will be shocked that the Great Firewall encompasses large portions of Africa and Asia. Additionally everyone will be surprised that a lot of manufacturing has become too expensive domestically in China and is now outsourced to Africa. At least, that is my read of the whole situation.
- BurningFrog 7y ago
  I think "colonize" is way too crude, but "bring it under their sphere of influence" is probably correct. And there is nothing wrong with a powerful country winning influence by helping out poorer nations around the world. The US did it with the Marshall Plan, and it was a good thing for everyone involved.
hakfoo 7y ago
I'd argue "location, location, location" particularly as a long-play aspect. In 30 years, when your economy finally catches fire and is growing 20% year-over-year, the best possible port/airport/railway locations were long ago sold to China.

throwaway2048 7y ago

Colonialism is ultimately self defeating, as European powers found out with time. The elites of a nation push for it because it gives them a chance to make a lot of money off exploiting both the colony and the government funding infrastructure. However in the end it becomes a bottomless pit for money in sum for a nation, and in the end you cant hold onto what you tried to control anyways, because the harder you try, the more and more resentment builds up until you are forced out. And it dosen't sound like the Chinese are too interested in making friends, more in making underhanded deals that hand them control over critical resources.

krageon 7y ago
> Colonialism is ultimately self defeating, as European powers found out with time. They found out it was untenable to continue being that cruel in the face of a populace that now wanted very slightly less obvious cruelty. I have never seen a compelling argument being made that it was about money, as domestic slavery and other forms of exploitation of people you basically own is always going to be nice and profitable.
- BurningFrog 7y ago
  The colonizing European powers were no richer than the non colonizing ones. In the end, the costs and benefits of having colonies more or less cancelled out.
- throwaway2048 7y ago
  Germany for instance had no colonies of any real consequence, and neither did Russia or Italy, yet all were majorly powerful nations, on par with a colonial empire that owned 25% of the planet, and another that owned almost as much (Britain and France). If colonies were capable of providing wealth and economic power at scale, the UK alone would have been vastly more powerful than all 3 aforementioned nations combined. In fact you can make a reasonably persuasive argument that the UK's laser focus on colonialism rather than native industry was directly responsible for Germany's rise to begin with. The UK was far more interested in pouring economic resources into colonial ventures (especially in India), which in the end didn't yield net gains, while Germany went from a patchwork network of independent, mostly underdeveloped state, to a world superpower in less than 50 years through obsessive focus on industrial development. Plenty of British industrialists and inventors found a far more receptive audience in Germany after their attempts to raise funding at home were ignored. The German chemical industry largely owed its origins to this for instance. There is also plenty of argument to be made that slavery as a purely economic concern is far less efficient and profitable in the long run than free men doing the same jobs.[2] Again, its something that's very profitable for elites, but it is a handicap for a nation as a whole. [2] https://www.economist.com/free-exchange/2013/09/27/did-slavery-make-economic-sense https://www.economist.com/free-exchange/2013/09/27/did-slave...