I've been living in Panama since 2006. I've followed a lot of the articles around the Nicaraguan canal to try to get some sense of how it will affect Panama. M

I've been living in Panama since 2006. I've followed a lot of the articles around the Nicaraguan canal to try to get some sense of how it will affect Panama. My conclusion is a canal in Nicaragua makes no economic sense, there must be some hidden motivation at play here, such as personal glory for Wang Jing or a ploy to secure land rights and tax exemptions. The reasoning is as follows: 1) The possible ROI from a ~$70 billion investment is very low. The same revenue can be achieved by building a third set of locks in Panama for ~$15 billion. Right away it looks like bad business. Most ways you can spend $70 billion will yield a better return with less risk. 2) The Chinese government is not involved. If it were a political thing, it could explain why someone would forge ahead despite the poor ROI, but the government is not financing it and government companies won't touch it with a stick. 3) Wang Jing is a telcom billionaire and neither he nor his company have any experience with construction or engineering. 4) A Chinese construction and engineering company has offered to finance and build a fourth set of super-sized locks in Panama for ~17 billion. This would compete directly with a hypothetical Nicaraguan Canal for the largest ships, but at a much smaller investment. Given two nearly identical products, the company with lower costs will be able to offer lower prices while still making a profit. That will clearly be Panama. There's just no logic in the Federation's move here. Jorge Quijano, who leads the Panama Canal Authority, has come to the same conclusion. [1] http://www.bloomberg.com/news/articles/2015-04-23/panama-canal-says-china-billionaire-s-nicaragua-plan-won-t-work http://www.bloomberg.com/news/articles/2015-04-23/panama-can... [2] http://insidecostarica.com/2015/04/14/chinese-interested-financing-nicaragua-canal-panama-official/ http://insidecostarica.com/2015/04/14/chinese-interested-fin... [4] http://www.reuters.com/article/2015/03/26/us-panama-canal-idUSKBN0MM24I20150326 http://www.reuters.com/article/2015/03/26/us-panama-canal-id...