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Thread: CPEC and Developments

  1. #31
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    Btw, India is a part of BRI through 1 of its 6 corridors (Bangladesh-China-India-Myanmar Corridor, running from Southern China to India). The Indian objection is to CPEC, another of the 6 corridors that China has planned. This is more a political irritant to China than economic. Goes on to show that India can hit back hard w.r.t the Chinese playing spoil sport on our NSG bid, sanctioning of Masood Azhar, and other issues. But does it really affect the Chinese? No. The Chinese are probably worried about Indian capabilities w.r.t CPEC and the havoc India can cause as explained by DE sometime back. As about Chinese commentary about why India should join the BRI, it's for the masses of the 2 countries Pak and China, that India is the black sheep in the grand imperial project, whereas India is already in. Gainers include Pak Army and the CPC.

    CPEC: Clearing controversy - Andy Hu

    Since its announcement in April 2015, the $54.
    5 billion China-Pakistan Economic Corridor (CPEC) has helped South Asia’s second-largest economy achieve consecutive 4 percent-plus annual GDP growth rate year-on-year, expand its State Bank-held foreign exchange reserves from $11.
    61 billion in March 2015 to $16.
    37 billion in June 2017, and is expected to create 2.
    32 million jobs in Pakistan by the end of 2018.
    However, as Chinese Foreign Direct Investment (FDI) into Pakistan rose 3.
    4 times in two years while U.
    S.
    FDI into Islamabad fell 500 percent, the project has also attracted a growing amount of noise.
    Some critics, most notably Dr.
    C.
    Christine Fair in an article published on the website of Foreign Policy on July 3rd, have gone so far as to suggest that CPEC has left a surging nation in “unserviceable debt”, and that its ultimate aim is to set up a Chinese naval base off the coast of Gwadar.


    This cannot be further from the truth.
    In a way, blaming CPEC for magnifying Islamabad’s debt burdens and security troubles can be likened to accusing China’s vastly popular bike-rental startups of spreading communism.
    The claims are equally cynical.
    Granted, many rented-bike rides in China are free thanks to the subsidies of the industry’s top two players, neither of which has released profitability projections.
    But the Chinese bike-sharing economy is, at the core, a tale of how a few private firms with a bigger mindset boldly took the initiative to build and capture a market that has become increasingly chaotic for policymakers.
    For CPEC, despite key facilitation between multiple government bodies in both Beijing and Islamabad, the project’s overarching incentive is also economic in nature, and its contributions thus far in aiding a nation long ridden by chronic energy shortages and militant insurgency have been well acknowledged.
    Simply because no apples-to-apples comparisons exist for these scenarios doesn’t lend strength to the contention that Pakistanis “should be worried” about CPEC.

    That said, however, CPEC is a never-before-seen project for China and Pakistan alike, as is the Belt and Road Initiative (BRI) of which it serves as an integral part.
    And as such, it is bound to draw speculation, perhaps most intuitively and profoundly from institutions and analysts for whom understanding China as a problem solver rather than a troublemaker have always presented an enormous challenge.
    If anything, such is precisely the reason all stakeholders should come together for candid exchanges in these open initiatives.

    Beijing isn’t and will never be part of any power bloc.
    CPEC and BRI as a whole are thus uniquely placed to boost inter-regional development.
    Only last month, on June 29, the 80-member Asian Infrastructure Investment Bank (AIIB) received the highest credit rating from Moody’s Investors Service.
    The lending agency, of which India is the second largest stakeholder, serves the very purpose of supporting sustainable development of Asian economies through infrastructure investment, and can therefore play a vital role in both endeavors.
    In this context, New Delhi’s reservation on, if not outright opposition of CPEC and BRI and its attempts at linking Iran’s Chabahar Port with Afghanistan without engaging Pakistan or China are highly regrettable.

    According to the Stockholm-based think tank International Peace Research Institute, Indian opposition to CPEC reflects its concern over the internationalization of the Kashmir issue and China’s growing clout in the Indian Ocean.
    While Mehbooba Mufti, leader of India-controlled Jammu and Kashmir, may have repeatedly endorsed CPEC, from where Beijing stands, the Kashmir issue and CPEC are completely separate.
    China’s stance on either issue does not affect its position on the other, and the ball is in India’s court to join CPEC and BRI.

    Indeed, neither CPEC nor BRI can be accomplished without vibrant cross-border synergies.
    This was incidentally the theme of a recent international symposium in Beijing, which focused on reconnecting Afghanistan into the region under renewed opportunities made possible by BRI.
    Officials, scholars and corporate executives from all sides, including India and the U.
    S.
    , discussed extensively about the ways in which, for example, Iran’s Chabahar Port and Pakistan’s Gwadar Port are compatible with each other and can be used to boost the economy and build trust between Pakistan, Iran and Afghanistan.

    At the same time, in spite of consistently successful operations by the Pakistani military against extremist insurgents since 2014, security challenges from Kabul to Karachi continue to loom large.
    Year 2016 saw a total of 441 terrorist attacks across Pakistan, which caused 908 fatalities, compared to the 1,717 attacks that killed 2,451 people in 2013, the year BRI was unveiled.
    But to an extent, ethnic and sectarian violence in Pakistan worsened in the first half of this year.
    Specifically, the purported abduction and subsequent killing of two Chinese nationals in Quetta last month, allegedly at the hands of Islamic State extremists, drew considerable public attention in China, to the point that the Chinese foreign ministry responded to questions related to the incident on 14 different occasions in 10 days.

    In addition to the threat of Islamic militants, the socioeconomic roots of structural extremism can hardly go unnoticed.
    While China believes in peace through development, tribal regions in Balochistan and the Federally Administered Tribal Areas, for instance, are dramatically different and require innovative indigenous methodologies to nurture and foster positive social change.
    Given the multilateral nature of BRI and CPEC, the role of local institutions is paramount in these efforts.
    That is, while both initiatives can be seen as a means to boost institutional capacities, it is local agencies and stakeholders who must take concerted efforts and spearhead the action.

    And as far as economics are concerned, as is the case with any grand initiative, there are short- and long-term implications, as well as short- and long-term winners.
    For the time being, the sectors of infrastructure and energy would appear to have benefited the most.
    On July 3, the 1,320-megawatt Sahiwal Coal Power Plant, CPEC’s first mega initiative, was completed in a record-22 months.
    The project will generate 9 billion KWH of power per year, and meet the energy needs of 10 million Pakistanis.
    Across Pakistan, similar projects, including the 660-megawatt Thar Coal-fired Power Plant Project in Sindh, the 870 megawatt Suki Kinari Hydropower Project in Khyber Pakhtunkhwa, and the Gwadar Port and Free Trade Zone – vital elements of CPEC – in Balochistan, are also set to demonstrate tangible progress.
    Surely there isn’t and can hardly ever be an even spread of projects among all regions, in Pakistan or elsewhere.
    If China’s own reform experiences are any indication, there is a process through which concrete benefits are felt by different communities.
    In the long term, everybody wins.
    For China, those in the coastal provinces were generally the first to reap the fruits of reform, followed by inhabitants of the more inland areas.
    While China’s reform cannot be replicated as is, the Chinese naturally perceive Gwadar as a new Shenzhen on the horizon – in a positive commercial sense.
    The success of Shenzhen, a fishing town of 314,000 people in 1979that’s become an urban metropolis of 10 million-plus residents with a $300 billion GDP in 2016, is deeply entrenched in Chinese collective memory as companies flock to Gwadar; meanwhile, the practice of establishing overseas naval outposts and stationing troops in a foreign country are alien and inconceivable concepts to China, which remains a constitutionally anti-imperialist, anti-hegemonic and anti-colonial state.

    Cross-border trade facilitation through BRI necessitates the promotion of connectivity and relies upon stable governance and economic environments.
    Putting up highways, railways, fiber optic cables and pipelines is the easier step in this unprecedented process; the hard part is getting countries of each region to focus on their mutual interests and put aside seemingly irreconcilable differences.
    The yet harder problem is addressing speculation and disturbance at a time of rising nationalist sentiment and global extremism.
    But for China, the overall logic is simple, and the path ahead is clear.
    One may recall the famous quote from Rolf Hochhuth: “When the missionaries came to Africa they had the Bible and we had the land.
    They said ‘Let us pray.
    ’ We closed our eyes.
    When we opened them we had the Bible and they had the land.
    ” As frustrating as it may be for external observers witnessing China’s rise, Beijing exports no Bible and seeks no land.
    Most of its overseas projects are market-oriented, or in other words, more “capitalistic” than altruistic.
    Its intention is never to “manage” or “contain” any nation, but to engage all in common development.
    In this sense, understanding CPEC and BRI requires overcoming the Cold War mentality, embracing potentially complementing visions, and sharing resources.
    And if China’s bike-sharing scheme offers a one-of-a-kind experience where bicycles can be picked up and left anywhere and the model can still be viable commercially, leaving bystanders baffled, why can’t the broader model of sharing economy that is BRI and CPEC work out just the same?

    The writer is a fellow with the National Institute of Strategic Communication at Peking University in Beijing, China.

  2. #32
    Turbanator Senior Contributor Double Edge's Avatar
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    Quote Originally Posted by Oracle View Post
    Paks meet their debt obligations by procuring more debt, in the latest case by borrowing $1 billion from China, which they've shown as FDI. Also the money that is involved in CPEC is shown as FDI. The point is this money isn't reflected on the register of the national bank of Pakistan because this money doesn't reach Pakistan, this money is disbursed in China, directly to Chinese companies building infrastructure in Pak. This and the rating agencies make it confusing.
    China bails out Pakistan with $1.2bn loans | FT | Apr 25 2017

    Rising imports and falling exports and remittances revive threat of forex crisis

    Trade imbalance: China is backing the new port at Gwadar, but a Pakistani foreign exchange crisis looms even after $1bn of Chinese bailout loans for Islamabad © AFP
    APRIL 25, 2017 by: Kiran Stacey, Farhan Bokhari and Henny Sender in Islamabad

    China has increased its economic sway in Pakistan during the past year, providing more than $1bn in loans to help its neighbour stave off a currency crisis.

    State-backed Chinese banks have twice come to the rescue of the nuclear-armed state, officials have told the Financial Times, with $900m in 2016 and $300m in the first three months of this year.

    The loans demonstrate the perilous fragility of Pakistan’s stocks of foreign currency, depleted in recent months by rising imports and falls in exports and remittances from Pakistanis abroad.

    China’s financial help also underlines an increasingly close relationship at a time of strains between Pakistan and the US.

    Beijing is preparing to invest at least $52bn in Pakistan to build a highway, energy pipelines, power-generation facilities and industrial parks from the western port of Gwadar on the Gulf to the Chinese border to the north.

    But despite its expected benefits, the China-Pakistan Economic Corridor infrastructure project is set to further deplete the foreign currency stocks, needed to pay contractors and suppliers.

    Figures from the State Bank of Pakistan show the country had $17.1bn of net reserves at the end of February, down from $18.9bn at the end of October.

    This has forced the country to seek emergency loans from outside sources to repay older loans made in foreign currencies.

    Of the $1.2bn from the Chinese institutions, $600m came from the government-run China Development Bank and $600m from the state-owned Industrial and Commercial Bank of China, the only mainland bank with a branch in Pakistan. Policy banks such as CDB often act on behalf of the central bank.

    One Pakistani official said: “China keeps a very close eye on our economic trends and they’re happy to come to our help wherever needed.”

    But experts warn that Pakistan is likely to have to return to institutions such as the International Monetary Fund, to which it sought recourse in 2013, for further support.

    Vaqar Ahmed, deputy executive director of the Sustainable Development Policy Institute in Islamabad, said: “Technically speaking we should have gone back to the IMF in January, but ministers are likely to try and wait until after the election [for parliament planned for 2018].”

    One member of the ruling Pakistan Muslim League-Nawaz told the Financial Times ministers were loath to turn to the IMF until after the election in an effort to limit the political fallout.

    “The IMF is a politically volatile issue in our country. If we go to the IMF to deal with our needs, that will send a very negative political signal and the opposition [parties] will use that against the government,” the person said.

    It was only last year that Pakistan cleared the IMF debt incurred in 2013, a repayment that led policymakers in Islamabad and abroad to express optimism about prospects for economic stability.

    Christine Lagarde, the head of the IMF, called it a*“moment of opportunity” for the country.

    This story has been amended to reflect the fact that Pakistan’s state net reserves did not peak at $25bn several years ago. This figure included other banks’ reserves and should not have been compared with last year’s state reserves of $17.1bn.
    ok, so that's the source for the 1bn. If its coming in as FDI then what is the Pak govts liability here ? its up to the Chinese companies that implement projects to get a return.

    The other part i don't understand is if its coming in as FDI how can it be used to repay older loans.

    Quote Originally Posted by Oracle View Post
    By the way, as part of BRI, $1.1 billion investment in a port in Sri Lanka has made SLanka fall into a debt trap.
    Pak Finance Ministry begs to differ

    External debt servicing obligations for Pakistan are an average of US$ 5 billion per annum until 2021. Keeping in view the track record of the country, this amount of repayments should not raise any concern. Pakistan has successfully met higher obligations in excess of US$ 6 billion per annum in FY 2013 and FY 2014, even with much smaller volume of FX reserves.
    Last edited by Double Edge; 09 Jul 17, at 17:25.

  3. #33
    Turbanator Senior Contributor Double Edge's Avatar
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    Quote Originally Posted by DOR View Post
    Double Edge,

    There is no plausible scenario where the US would adjust its economic, monetary or fiscal policies for the purpose of inflicting damage on another nation. The last time we did that was World War II, and I don't consider WWIII plausible. WWWI, perhaps, but cyberwar is a whole different subject.

    Any policy that hurt China by way of its holding of US dollars would hurt the US at least as much, if not more. The world uses dollars to trade, which takes them out of US control.
    .
    True but when holding trillions of $ what the Fed does has effects which may be hard to control. Hu mentioned this earlier

    http://www.worldaffairsboard.com/showthread.php?t=58333

    So diversifying and reducing exposure is one way. Also we've seen how effective global led sanctions against Iran and Russia have been, what happens to China if they get sanctioned in the future ? would they be more vulnerable or less vulnerable. Dollars aren't helping Russia right now.


    In addition, don’t confuse China’s foreign reserves with the government’s money.
    It doesn’t belong to the government any more than your own personal bank deposit belongs to the bank.
    That’s just a place it’s being held.

    What you’re looking for is fiscal or budgetary capabilities.
    Can China raise more in taxes?
    Can one government borrow more domestically than the other?
    What about international borrowing? Who’s more credit-worthy?

    All of these point to China having a vast edge, but none of it has anything to do with foreign exchange reserves (except, international borrowing, but that’s difficult when you’re buying heavy arms).

    ADD: Oracle,

    Anything China does with its foreign reserves will have to be very, very slow and long-term. Otherwise, it only hurts itself -- through a collapse in bond prices -- and helps the US, by making it ever cheaper to borrow.

    Cheaper US$? Wow, is that going to hammer China's exports!
    So you're saying the foreign reserves will remain as is, that BRI will be funded in other ways, taxes , borrowing.

  4. #34
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    Quote Originally Posted by Double Edge View Post
    China bails out Pakistan with $1.2bn loans | FT | Apr 25 2017

    ok, so that's the source for the 1bn. If its coming in as FDI then what is the Pak govts liability here ? its up to the Chinese companies that implement projects to get a return.

    The other part i don't understand is if its coming in as FDI how can it be used to repay older loans.
    It is coming as loan. They have to pay it back with interest, which they keep hidden. The Paks show it as FDI to fool their public into believing that CPEC is attracting billions of FDI. Propaganda, which both the Chinese and Pakistan are very good at.

    Quote Originally Posted by Double Edge View Post
    Pak Finance Ministry begs to differ
    Yeah, and the average Abdul believes that they won the 1965 war.

  5. #35
    Senior Contributor DOR's Avatar
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    Quote Originally Posted by Double Edge View Post
    True but when holding trillions of $ what the Fed does has effects which may be hard to control. Hu mentioned this earlier

    http://www.worldaffairsboard.com/showthread.php?t=58333
    So you're saying the foreign reserves will remain as is, that BRI will be funded in other ways, taxes , borrowing.
    That's right.

    Actually, it isn't. The forex reserves are declining, quite a bit in recent years, for reasons that have nothing to do with One Belt, One Road or any other investment / diplomatic initiative. It's a lack of global demand coupled with the long-awaited shift toward consumer demand.

    Like the bank that hold your own deposit, the People's Bank of China is empowered to invest the funds it has. But, as a central bank, it is wholly focused on preserving stability and its capital. My wife used to be a banker to central bankers, and she has explained from an insider's perspective the difficulty of switching investments from one currency to another (never mind from one type of financial instrument to another):

    Banker: We can offer you New Zealand, Australian and euro-denominated bonds!
    Central Banker: That would let us diversify out of dollars ...
    B: Great! Shall we say, NZ$10 million?
    CB: Um, we don't deal in less than US$100 million lots.
    B: Oh. Well, how about €100 million?
    CB: Ah, hmm. You see that 6-inch stack of documentation? That's what we'd have to fill out for each transaction. But, for dollar-denominated instruments, we just fill in this single piece of paper. No committee approvals that are reviewed by the State Council two weeks later. Much easier.
    B: Ah. OK, dollars it is.

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    Name:  CGCHBrBVAAAP1vh.jpg
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    This has gone viral among Paks. A quick google resulted only in Pak boards being the source, and a Pak lady on twitter. Even the supposedly intellectual Najam Sethi also quoted this crap in a talk show without verifying the source. There is no Cynthia Hall a journalist, either. A Cynthia Hall is a singer, another works in marketing and business development. The whole Pak seems to be high on ISI weed.

  7. #37
    Turbanator Senior Contributor Double Edge's Avatar
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    Quote Originally Posted by Oracle View Post
    It is coming as loan. They have to pay it back with interest, which they keep hidden. The Paks show it as FDI to fool their public into believing that CPEC is attracting billions of FDI. Propaganda, which both the Chinese and Pakistan are very good at.
    And the ratings agencies show they can handle that debt. The moment there is a problem CPEC gets put on hold. Chinese aren't going to throw good money away. By creating a positive environment, it incentivises others to invest as well. All this talk about debt repayment is putting the cart before the horse.

    Yeah, and the average Abdul believes that they won the 1965 war.
    That's why they're putting out those rejoinders. The bulk of which are targeted at Pak reporters. Maybe if things became more transparent there would be less confusion.
    Last edited by Double Edge; 12 Jul 17, at 04:53.

  8. #38
    Turbanator Senior Contributor Double Edge's Avatar
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    Quote Originally Posted by DOR View Post
    That's right.

    Actually, it isn't. The forex reserves are declining, quite a bit in recent years, for reasons that have nothing to do with One Belt, One Road or any other investment / diplomatic initiative. It's a lack of global demand coupled with the long-awaited shift toward consumer demand.

    Like the bank that hold your own deposit, the People's Bank of China is empowered to invest the funds it has. But, as a central bank, it is wholly focused on preserving stability and its capital. My wife used to be a banker to central bankers, and she has explained from an insider's perspective the difficulty of switching investments from one currency to another (never mind from one type of financial instrument to another):

    Banker: We can offer you New Zealand, Australian and euro-denominated bonds!
    Central Banker: That would let us diversify out of dollars ...
    B: Great! Shall we say, NZ$10 million?
    CB: Um, we don't deal in less than US$100 million lots.
    B: Oh. Well, how about €100 million?
    CB: Ah, hmm. You see that 6-inch stack of documentation? That's what we'd have to fill out for each transaction. But, for dollar-denominated instruments, we just fill in this single piece of paper. No committee approvals that are reviewed by the State Council two weeks later. Much easier.
    B: Ah. OK, dollars it is.
    Thanks, the idea came to me when i tried to connect too much US bonds and then this BRI initiative springs out of nowhere.

    The outstanding question still remains. How long can the Chinese hope to fund this project. So long as Xi is in office unless he manages an extension., after who knows : )

    If it shows returns then it continues.
    Last edited by Double Edge; 12 Jul 17, at 05:02.

  9. #39
    Senior Contributor DOR's Avatar
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    Quote Originally Posted by Double Edge View Post
    Thanks, the idea came to me when i tried to connect too much US bonds and then this BRI initiative springs out of nowhere.

    The outstanding question still remains. How long can the Chinese hope to fund this project. So long as Xi is in office unless he manages an extension., after who knows : )

    If it shows returns then it continues.

    What is China actually funding?

    Congressional Research Service:

    The AIIB was initially conceived as a regional financing mechanism for Chinese President Xi Jinping’s “One Belt, One Road(OBOR)” initiative.

    The AIIB's initial total capital is $100 billion, with 20% paid-in and 80% callable. China is contributing $50 billion, half of the initial subscribed capital. India is the second-largest shareholder, contributing $8.4 billion.

    https://fas.org/sgp/crs/row/R44754.pdf

    So, $50 billion.
    One-off.
    After that, the AIIB raises money through the capital markets, and China doesn't necessarily have to buy those bonds.


    Forbes:
    The China-conceived Asian Infrastructure Investment Bank (AIIB) will celebrate its first year of operations on January 16, having invested in nine projects across Europe, Asia and the Middle East. When the AIIB was announced, critics feared that it would be used to advance China’s national interests while lowering environmental and human rights standards. Happily, this has not occurred, in part because cooperation with multilateral institutions has helped to inoculate the development bank against criticism in these areas. Rather, through the AIIB, China has been able to advance its economic interests using soft power.

    Project commitments in 2016
    Looking back to 2016, we mark nine major development projects. President Jin Liqun stated that the bank aimed to lend $1.2 billion in 2016, and it has more than met the target, extending over $1.7 billion of loans last year.

    Some of the first loans approved in June of last year included a $165 million loan for a Power Distribution System Upgrade and Expansion Project in Bangladesh, a $216.5 million loan for a National Slum Upgrading Project in Indonesia, a $27.5 million loan for the Dushanbe-Uzbekistan Border Road Improvement Project in Tajikistan, and a $100 million loan for the Shorkot-Khanewal Section of National Motorway M-4 in Pakistan. All of these, with the exception of the Bangladesh power project, are co-financed by other multilateral institutions.

    Additional loans were approved in September of last year, including a $300 million loan for a hydropower project in Pakistan and a $20 million loan to a power plant in Myanmar. The AIIB has also committed to $301 million in Oman for the construction of maritime infrastructure at Duqm Port and preparation of the country’s first railway system.

    In a little publicized deal approved just before Christmas, the AIIB approved a $600 million loan to construction of the Trans-Anatolian gas pipeline (TANAP), which will connect Azerbaijan to Europe. In this deal, the AIIB has partnered with the World Bank, which has committed to an $800 million loan. The project will be further financed by other multilateral institutions as well as private finance, for a total expected cost of $11.7 billion.


    Although some analysts have argued that China's broader agenda in building infrastructure abroad may be to provide jobs to Chinese nationals without due diligence, this does not appear to be the case with the AIIB. This is a far cry from China’s infrastructure investment in Africa that smacked of imperialism, supporting China’s export of natural resources from the continent, ignoring human rights and environmental issues, and (literally) giving ammunition to despots.
    https://www.forbes.com/sites/sarahsu.../#44541a915a7f

  10. #40
    Turbanator Senior Contributor Double Edge's Avatar
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    Quote Originally Posted by DOR View Post

    Congressional Research Service:



    The AIIB was initially conceived as a regional financing mechanism for Chinese President Xi Jinping’s “One Belt, One Road(OBOR)” initiative.

    The AIIB's initial total capital is $100 billion, with 20% paid-in and 80% callable. China is contributing $50 billion, half of the initial subscribed capital. India is the second-largest shareholder, contributing $8.4 billion.

    https://fas.org/sgp/crs/row/R44754.pdf

    So, $50 billion.
    One-off.
    Keyword there is initially. They've since distanced obor from aiib. Otherwise India would never have got on board and put forward as much capital.

    Listen to AIIB's CFO

    AIIB is not part of China's One Belt, One Road initiative | CNBC.com | Jun 2017

    AIIB is not an instrument of OBOR, the main instruments of OBOR are

    - The silk road fund
    - The China development Bank
    - The China Exim bank.

    OBOR is a national Initiative. AIIB is international
    Was listening to a talk given Dec last in India by one of AIIB's VP, ex-Lib dem MP Danny Alexander and he mentioned as far as he knew AIIB has not funded any CPEC projects.



    This means those two projects above in Pakistan aren't CPEC, they're AIIB, WB & DFID funded. AIIB does co-financing with other institutions so its projects are transparent and follow international norms. AIIB's rates are modest according to Danny but he stresses AIIB isn't an aid org.

    Reports seem to conflate OBOR with AIIB and others. They seem so similar, energy, infrastructure. They are not. One is commercial, the other is from the Chinese govt. The commercial chinese banks don't want to get into obor

    Quote Originally Posted by DOR View Post
    What is China actually funding?
    That is the question. China has three vehicles with which to fund OBOR. So how much goes into them

    http://www.reuters.com/article/us-ch...-idUSKBN18A02I

    China pledges $124 billion for new Silk Road from two policy banks (CDB & EXIM) and 60 billion yuan in aid to developing countries and international bodies in countries along the new trade routes. Xi did not give a time frame for the new loans, aid and funding pledged
    So that's a tentative $124b over a period of time

    http://www.reuters.com/article/us-ch...-idUSKCN18B0YS

    two days later, the figure has risen to $200b with a further $55b

    EXIM, seeking to contain risk, says it has imposed a debt ceiling for each country.

    CDB says it has applied strict limits on sovereign borrowers' credit lines and controls the concentration of loans.

    "For some countries, if we give them too many loans, too much debt, then the sustainability of its debt is questionable," Sun Ping, vice governor of EXIM, told reporters last week.
    They are following IMF limits for poorer countries in terms of rates and period.

    Belt and Road infrastructure loans so far have been primarily negotiated government to government, with interest rates below those offered by commercial banks and extended repayment schedules, bankers and analysts said.
    Obor is not commercial its G to G.

    The loans carry a 10-year grace period. A 60 percent portion is denominated in U.S. dollars carrying a 2 percent interest rate, and the remaining 40 percent calculated in Chinese yuan, carrying a 3.4 percent rate, according to a note by Bank of China International.
    The AIIB CFO mentioned AIIB's loans are also in dollars.

    "The broader concern is that capital continues to be mis-allocated by Chinese banks."

    China's state-owned commercial banks are being pushed to support the government initiative. Top lender Industrial and Commercial Bank of China participated in 212 Belt and Road projects, providing $67.4 billion in credit in total, Chairman Yi Huiman said on Monday.

    Bank of China plans to offer $100 billion in credit to such projects by year-end.
    Losing track, how much we upto now, $400b ?

    They are still waiting to get back $65b from Venuezuela.

    Massive government capital injections, bonds priced as sovereign debt and access to the central bank's pledged supplementary lending program keep CDB and EXIM funding costs at rock bottom.
    Cost might be low but China is the one spending here.

  11. #41
    Turbanator Senior Contributor Double Edge's Avatar
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    Let's see which projects are actually cpec

    http://www.cpecinfo.com/home

    Look for a header called CPEC projects and they list them out under the various fields. That's the lot. The trick is to find out how they're funded. Is there any info about that.

    What surprises me is all of them cost as much as $46 or so billion. Unless there is more to come
    Last edited by Double Edge; 14 Jul 17, at 14:16.

  12. #42
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    DE, check this.
    Advancing CPEC by stealth

    Only 15% of China's land is agrarian, and the Chinese have been buying/leasing land in many countries for agriculture. China is also a food surplus country. Its population also is about to fall. I understand food security if the CPC has to control a huge population, but, why such measures?
    Last edited by Oracle; 20 Jul 17, at 15:14.

  13. #43
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    Pakistan China's new colony? Leaked papers reveal Beijing's stake in economy, key projects
    Leaked documents reveal China's plans to gain a controlling stake in large swathes of Pakistan's economy, from farms and textiles to power projects, even the stock exchange.

    When Mao Zedong's People's Liberation Army marched into the restive Muslim-majority region on China's western frontier in 1949, the Chairman decided to christen the People's Republic's newest province Xinjiang, literally meaning 'new frontier'- a historical name used intermittently for China's borderlands. Today, for many in Beijing, Pakistan is China's new new frontier. If the 20-year blueprint envisioned by China's leaders and Pakistan's current government comes to fruition, Beijing will soon have a say in how almost every aspect of the Pakistani economy is run.

    In the three years since the China Pakistan Economic Corridor (CPEC) project was launched, this transformation has already begun to unfold. A draft CPEC masterplan, conceived of by China's National Development and Reform Commission and Pakistan's ministry of planning and published by Pakistan's Dawn newspaper, and the most sweeping Chinese assessment till date about the project- an internal review undertaken by Beijing's Renmin University and shared with India Today- both underline the enormous scale of the planned economic takeover, from roads and power plants to even agricultural projects.

    PAKISTAN'S NEW OLD FRIEND


    Today, Chinese companies are building and managing the country's key transport networks, from national highways to Lahore's metro rail. China has bought a stake in Pakistan's stock exchange. It is building Pakistan's power sector, coal plant by coal plant, and will eventually, many experts believe, have a say in how much Pakistani citizens pay their government for electricity.

    Ties between China and Pakistan go back to the early 1960s, a relationship forged in their mutual animosity towards India in the wake of their respective wars. Since then, both governments, and particularly militaries, have developed close relations. China has supported Pakistan as a counterweight to India in South Asia, most notably through its continuing support of the country's nuclear programme. China, however, fell out of prominence in the wake of America's 'war on terror' after the September 11, 2001 attacks. This also coincided with Beijing more carefully balancing its growing relations with India after the 1988 normalisation of ties. In the years following 9/11, the US began leaning heavily on Pakistan for its war in Afghanistan, emerging as the biggest financial donor.

    That is now no longer the case. China has now replaced the US as Pakistan's biggest benefactor. The launch of CPEC has only further reinforced this position: China's trade with Pakistan has already risen threefold in the past few years, to $13.7 billion in 2015-16, up from just $4 billion in 2007. Today, China accounts for 40 per cent of Pakistan's foreign direct investment, which is only around $2 billion. According to the Pakistani government, it was China's $600 million that contributed to a 38 per cent rise in FDI in 2015-'16.

    Attachment 44216

    THE TAKEOVER BLUEPRINT

    CPEC will usher in an even more sweeping takeover of the Pakistani economy. A draft masterplan says thousands of acres of Pakistani land will be transferred to Chinese companies to grow crops, build meat processing plants and develop free trade zones. Chinese garment factories will, en masse, be transferred to Pakistan, while China will manage and run tourism projects and special economic zones along the southern coast, with rather ambitious plans for even yacht clubs and hot spring hotels to develop an unlikely tourism hub in the restive Balochistan province, of all places.

    "There are fears that Pakistan will become just another province of China, or will be reduced to being a 'vassal state'," S. Akbar Zaidi, a leading Pakistani political economist and professor at Columbia University's School of International and Public Affairs, has argued in a paper.

    For Beijing, the stakes are high. The internal assessment by Renmin University's Chongyang Institute for Financial Studies, which sent scholars to visit Pakistan and study CPEC projects late last year, warned of numerous risks, from political infighting in Pakistan to terrorism. The report, however, came to the final conclusion that the only way for China to guarantee success is to assume even more sweeping control.

    'Neither China nor Pakistan can afford the consequences of the failure of constructing the corridor,' the Chinese report concluded. 'If the current uncertainty was to continue, it would not only delay the opening of the flagship project but CPEC would end up becoming a burden on China and have a great negative impact,' it said, of President Xi Jinping's pet One Belt, One Road (OBOR) initiative.

    The most surprising aspect of the draft masterplan is its revelation of the wide ambit of conceived projects. Previously, CPEC was thought to be limited to power and infrastructure projects in Pakistan. The $46 billion cited estimate of the total initiative envisages $11 billion investment in highways and transport networks, and $35 billion in coal and hydropower plants aimed at tackling Pakistan's energy deficit.

    The draft plan, however, reveals that CPEC will eventually be far more sweeping than power plants and roads: it envisages a complete takeover of almost every aspect of the Pakistani economy. Agriculture, surprisingly, is the focus. Around 6,500 acres will be leased to China for agricultural demonstration projects, the masterplan draft says. It lists 17 projects, including a fertiliser plant with an annual 800,000 tonne output. Vegetable and grain processing plants with a 1 million tonne capacity have also been planned.

    Power projects that will cut Pakistan's soaring energy deficit are also central to the plan. China has announced 17 projects with a total investment of $35 billion. The first of these, a coal-powered plant at Sahiwal in the Punjab, went online in May. Pakistan suffers an energy deficit of around 7 GW, with a capacity of 22 GW that, however, only produces around 12 GW a year. The total energy from China's projects, once they go online in the next few years, is an estimated 12.1 GW, which China says will end up bridging Pakistan's energy gap and ultimately contribute between 40 and 50 per cent of the country's energy needs. In addition to this, the Chinese are planning to overhaul Pakistan's road and rail infrastructure. Apart from upgrading the Karakoram highway that will serve as a key arterial link connecting Xinjiang and Gwadar, it is already being used to ship goods transported from Xinjiang by road, by sea to West Asia-China is also revamping the country's crumbling national highway and railway network, starting with upgrading sections of the Karachi-Peshawar road and rail line.

    THE XINJIANG MODEL

    Essentially, the 'Xinjiang model' will be adopted in Pakistan. In the 1950s, Mao set up the Xinjiang Production and Construction Corps (XPCC), a state within a state tasked with carrying out agriculture and development projects in what was then China's wild west. The CPEC plan even conceives of a role for the XPCC. 'We will impart advanced planting and breeding techniques to peasant households or farmers by means of land acquisition by the government, renting to China-invested enterprises and building planting and breeding bases,' it says.

    'China-invested enterprises will establish factories to produce fertilisers, pesticides, vaccines and feedstuffs' while 'China-invested enterprises will, in the form of joint ventures, shareholding or acquisition, cooperate with local enterprises of Pakistan to build a three-level warehousing system (purchase and storage warehouse, transit warehouse and port warehouse)'. China will even construct a national storage network of warehouses for Pakistan, starting in Islamabad and Gwadar and then in Karachi, Lahore and Peshawar.
    The draft also outlines a move to transport China's waning textile industry, currently grappling with rising wages, to Pakistan. As a start, a cotton processing plant with a 100,000 tonne output has been planned. The longer-term plan, Renmin University's assessment suggests, is 'shifting China's garment industries directly to Pakistan'. Beyond the lower wages and availability of land, China sees the favourable export tariffs Pakistan enjoys as a motivation.

    'With Pakistan in 2015 acquiring duty-free access to the EU even as China's tariffs increased from 9 to 12 per cent, this is worth considering,' the study advises. China is also planning to develop Pakistan's mineral resources, particularly in Balochistan and Khyber-Pakhtunkhwa, eyeing gold reserves as well as setting up marble and granite processing sites.

    HEART OF THE PLAN

    Gwadar, a dusty town of less than a hundred thousand people that sits on the Arabian Sea in Balochistan, is the CPEC hub. China has already built a port here that it is managing. Beyond the port, which will give China access to the Indian Ocean, it envisages a free trade zone and manufacturing hub that could serve as a launch pad for exports to West Asia and Africa. China has already secured a 23-year tax-free deal for its companies that will operate out of Gwadar.

    The CPEC masterplan rather ambitiously even envisages a coastal tourism belt in restive Balochistan, planning 'international cruise clubs' in Gwadar that would 'provide marine tourists private rooms that would feel as though they were "living in the ocean''.' A coastal tourism zone will feature 'yacht wharfs, cruise homeports, nightlife, city parks, public squares, theatres, golf courses and spas, hot spring hotels and water sports', the Dawn report noted, running all the way to the Iran border.
    China sees the Gwadar port as the heart of the plan. The Renmin University study forecasts an ambitious annual cargo throughput of 300-400 million tonnes, more than 10 times Pakistan's current biggest port, Karachi, and, the study pointedly adds, almost equivalent to India's total current throughput. The university's researchers found that Gwadar, still nowhere close to capacity, had been transformed under Chinese management. In February 2013, the China Overseas Port Holdings Limited acquired the rights to operate the port from the Singapore Port Authority, which left the port in a state of ruin, 'filled with rubbish and garbage', until the Chinese took over. Since then, a first shipping route was opened by the Chinese state-run Shipping Ocean Company (COSCO) in May 2015 exporting local seafood to Dubai. In November, the first CPEC export was flagged, as a convoy carrying 60 containers of a range of Chinese goods, from machinery to appliances, to be exported to West Asia and Africa, arrived in Gwadar after travelling 3,000 kilometres from Xinjiang along the Karakoram highway.

    SECURITY FEARS

    China is certainly more than aware that a lot can go wrong with this ambitious economic blueprint in one of the world's most volatile regions. A significant portion of the Renmin University assessment was devoted to assessing risks, the biggest of which, in the Chinese view, is Pakistan's unpredictable domestic political environment. For instance, it cited a project in Sindh that faced a lack of support from the local government. 'The project is ratified by the federal government but the Sindh government believes the centre does not have the authority,' it said. The report also noted the heated controversy between states over the CPEC's alignment, with widespread resentment that Punjab, where Prime Minister Nawaz Sharif and his brother Shahbaz, the chief minister, are dominant figures, was acquiring prime projects.

    The Chinese study warned of 'ethnic and provincial conflicts in Punjab, Sindh and Balochistan', but was optimistic that most provinces and parties were supportive as 'except Balochistan no other ethnic group party opposes CPEC'. The report concluded that a government under Nawaz Sharif would ensure the project's progress, expressing concern about his weakening domestic position after the Panama Papers revelations. 'If there are no exceptions, the chances for PML-N (Sharif's party) to reassume power are high, and the continuation of the government can guarantee the continuation and support of the government to CPEC,' the report said.

    Security is the other major concern, highlighted by the kidnapping and reported killing of two young Chinese from Quetta, Balochistan, in May. The Chinese study cited a number of other incidents that had targeted its citizens in 2016. In May, a Chinese engineer at the Kazmu project was targeted by a bomb attack claimed by an outfit called the Sindh Revolutionary Force. Two months later, a bomb attack in Quetta killed 74 people, while in November last year, a team from a Chinese oil and natural gas exploration company was targeted in an attack by a group called the Baloch Revolutionary Army in which two Pakistani security personnel killed.

    The Pakistan army has deployed a special security division of 15,000 troops to protect Chinese personnel and assets, but the report argued that 'a troop size of 15,000 can hardly guarantee the safety of projects around the country.... And considering that Pakistan needs to deploy a large number of troops in its eastern borders adjoining India and now needs to deploy troops in Afghan border, allocating 15,000 is the largest capacity.' The wider concern was because of security, Chinese staff in Gwadar, for instance, will have to be 'cloistered within the Chinese zone as the situation around the city is not stable'. The Chinese report worried this will alienate the local population because 'Chinese personnel are carrying out work under the protection of armed forces and this inhibits improving relations with local people to the extent that it could lead to opposition and lack of people's support'.

    Attachment 44217

    FINANCIAL RISKS

    Then there are the financial hazards. China's exposure, so far, is much less than the advertised $46 billion figure, with estimates that in the past three years, its total investments would be in the $5 billion range, spent largely on coal power projects that are being built, the widening of the Karakoram highway and sections of the Karachi-Peshawar expressway.

    Chinese assessments suggest the $46 billion figure that Pakistani officials regularly cite may not materialise for a long time yet. The CPEC draft masterplan from China's planning agency noted, as the Dawn reported, that 'Pakistan's economy cannot absorb FDI much above $2 billion per year without giving rise to stresses in its economy....It is recommended that China's maximum annual direct investment in Pakistan should be around $1 billion'-a damning reality check to fanciful figures of $50 billion being invested in the country.

    For some in Pakistan, the long-term fear is that this blueprint will, as economist Zaidi notes, render it a 'vassal state' deep in China's economic orbit. After one year of the project, bilateral trade was up 15 per cent to $13.77 billion in 2015-16, while Pakistan's trade deficit with China was a whopping $12 billion. There are already murmurs of discontent about the favourable terms for Chinese companies.

    "Estimates range from Pakistan having to pay $3 to $3.5 billion annually back to China for the next 30 years for Chinese loans after 2020, to a probable severe balance of payments crisis," argues Zaidi, noting how in Sri Lanka and Tajikistan, "with rising costs and debts incurred by the host countries, large chunks of land were handed over to the Chinese in lieu of unpaid funds. Sovereign guarantees to Chinese power producers have been made, where the Pakistan government will, 'if the power purchaser defaults on payments, pick up the liability and pay 22 per cent of the bills of Chinese power producers upfront'". As he puts it, "CPEC is a Chinese project, for Chinese interests." And Pakistan, he says, just happens to be part of the geographical terrain.

    IMPLICATIONS FOR INDIA

    What does it mean for India? On May 13 this year, India refused to participate in China's Belt and Road with a strongly-worded statement. "No country can accept a project that ignores its core concerns on sovereignty and territorial integrity," MEA spokesperson Gopal Baglay said. OBOR passing through Pakistan-occupied Kashmir is the primary reason New Delhi boycotted the project. For long, India has held the Kashmir issue as a bilateral dispute with Pakistan, with no room for outside intervention. China has now willy-nilly become a party to it. "Since CPEC was announced, Pakistan has stepped up its activities inside Kashmir. Funding to separatist elements has increased," says Jayadeva Ranade, former additional secretary in the Research and Analysis Wing (R&AW). The presence of Chinese personnel within Pakistan is something India must take into account in the event of hostilities, he says.

    For instance, China and Pakistan have begun joint patrols in PoK near the Xinjiang border, Chinese media reports have said. Even as China now lambasts India as a "third party" with a "hidden agenda" for "intervening" in its dispute on the Doklam plateau with Bhutan, Beijing has quietly deployed its frontier troops on the soil of PoK, which India considers its territory. In the event of an Indo-Pak conflict, Indian officials do not expect China to intervene directly, but the infrastructure it is laying down in PoK can be used to back Pakistan with massive logistics support.

    The larger concern is that collusion between the two countries is now assuming sinister dimensions. Gwadar is likely to become China's second overseas naval base after Djibouti near the Gulf of Aden. The port also sits astride the sea routes from where more than 55 per cent of India's energy needs flow in. China's clandestine backing of Pakistan goes back decades starting from the alleged transfer of nuclear weapon blueprints in the early 1980s. The 2016 sale of eight Yuan class submarines to Pakistan not only attempts to checkmate the Indian navy in its backyard, but adds another nuclear dimension. Pakistan is now working to equip them with nuclear-tipped variants of the Chinese 'Babur' land attack cruise missiles.

    Then there is the diplomatic protection China offers Pakistan, which some in Delhi believe is emboldening Islamabad to hurt Indian interests. In the past, Beijing had largely kept away from issues such as the Kashmir dispute. That caution is now giving way to what some see as an open backing of Pakistan. This was evident in Beijing issuing stapled visas to Indian residents of Jammu & Kashmir-which subsequently ended after India stopped defence exchanges-even while it opened the door to Pakistani residents from Gilgit-Baltistan to freely cross the border into Xinjiang to open up trading offices in Kashgar, where ironically India had a consulate and trading presence until 1950.

    This renewed China-Pakistan nexus has once again begun to cast a shadow on India's relations with China. In two issues that have recently strained relations-China's blocking of India's attempts to sanction the Pakistani terrorist Masood Azhar at the United Nations Security Council 1267 sanctions committee and India's failed entry to the Nuclear Suppliers Group-the Pakistan factor has loomed large in China's calculus. Beijing in 2016 stymied the bid to sanction Azhar, and once again in January placed another 'technical hold' on a fresh application backed by the US, UK and France. On the NSG, Beijing's officials have openly said that "other non-NPT countries" (those that have not signed the nuclear non-proliferation treaty) besides India also had legitimate aspirations to join the grouping, referring to Pakistan. Chinese nuclear negotiators pointedly visited Islamabad after talks in Delhi to underline how Beijing is linking India and Pakistan, despite the impeccable non-proliferation record of the former and the questionable track record of the latter. As Beijing further deepens its economic and strategic embrace with its 'iron brother', its relations with India are set to undergo a transformative shift. And for Delhi, confronting this renewed China-Pakistan nexus has become perhaps the most pressing diplomatic and military challenge.

  14. #44
    Turbanator Senior Contributor Double Edge's Avatar
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    Quote Originally Posted by Oracle View Post
    DE, check this.
    Advancing CPEC by stealth

    Only 15% of China's land is agrarian, and the Chinese have been buying/leasing land in many countries for agriculture. China is also a food surplus country. Its population also is about to fall. I understand food security if the CPC has to control a huge population, but, why such measures?
    An entire website has been created simply for the purpose of purveying information about specific CPEC projects, but there are many that find no mention on that site.
    That's the part i had trouble with, couldn't figure out how the few projects listed on the cpec website totalled up to $46bn. The list must be incomplete. The tactic by the Pak journalists seems to be to claim stuff and force the govt to reveal more. In other words the Pak media are fishing.

    Yet to go through this leaked blueprint the author has published earlier.
    Last edited by Double Edge; 22 Jul 17, at 05:04.

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    What caught my eye is - Pakistan's economy cannot absorb FDI much above $2 billion per year without giving rise to stresses in its economy....It is recommended that China's maximum annual direct investment in Pakistan should be around $1 billion'-a damning reality check to fanciful figures of $50 billion being invested in the country.

    And the things I said about the security situation in Pak. The Chinese are a rational people when it comes to making money. Actually every country should be.

    And it would need 31 years to absorb $62 billion in CPEC funds, if we consider an investment of $2 billion every year. 31 years is a long time.
    Last edited by Oracle; 22 Jul 17, at 06:59.

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