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Thread: CPEC and Developments

  1. #46
    Turbanator Senior Contributor Double Edge's Avatar
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    Which is in line with what the VP at EXIM said in the reuters article posted earlier

    Relying on the assessments of the IMF, World Bank and the ADB, it notes 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 US$1 billion.” Likewise, it concludes that Pakistan’s ceiling for preferential loans should be $1 billion, and for non preferential loans no more than $1.5 billion per year.
    https://www.dawn.com/news/1333101

    Slow & steady

  2. #47
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    /\/\ 31 years..............even 5 years is too long a future. Anything can happen. And from the looks of Af-Pak scenario, the China+Pak combine has everything to lose, if India plays it's cards right.

    Btw, is that Samuel Jackson in disguise in your avatar?

  3. #48
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    Snakes in the backyard: China and Pakistan betray grand delusions
    Islamabad and Beijing think the infrastructure of terrorism can co-exist with economic infrastructure.

    The US State Department’s July 20 report on terrorism was stark in its assessment of Pakistan’s role in the fight against terrorism. Pakistan, the report said, provided “safe havens” for terrorist groups like the Lashkar-e-Taiba (LeT) and the Jaish-e-Mohammed (JeM).

    The annual US "Country Report on Terrorism 2016" articulates mounting US dissatisfaction with a one-time ally. Just five days before the report was released, the US House of Representatives tightened the screws on Pakistan. The legislation passed by the house makes it mandatory for the Pentagon to certify that Pakistan is not providing "military, financial, or logistical support" to individuals designated as terrorists operating in Pakistan or Afghanistan.

    The harshest indictment of Islamabad’s duplicity came from former secretary of state Hillary Clinton six years ago. "It's like that old story - you can't keep snakes in your backyard and expect them only to bite your neighbours," she told a press conference during an unannounced October 21, 2011 visit to Islamabad. “Eventually those snakes are going to turn on whoever has them in the backyard," Clinton added.

    Clinton’s rage was understandable. Her demarche came just five months after US special forces raided a compound in the garrison town of Abbotabad, Pakistan and killed 9/11 mastermind Osama bin Laden. There was mounting evidence that the Haqqani Network was being sheltered by Pakistan.

    Bin Laden was not the first terrorist to have been discovered in Pakistan. His lieutenant and 9/11 planner, Khalid Sheikh Mohammed, of Pakistani origin, was arrested from Rawalpindi in 2003. Taliban chief Mullah Mansour was killed by a CIA drone strike in May 2016, when he was driving through Pakistan.

    Pakistan’s deep state today shelters more terrorists than many European countries have Syrian refugees, a modern-day version of the ancient Taxila University which flourished there over 1,600 years ago with multi-hued global terrorists - Arabs, Chechens, Afghans, Kashmiris and Sikhs. All of them are "strategic weapons" that the Pakistani deep state can use against its neighbours. Heavy Industries Taxila is now Pakistan’s largest arms manufacturer. How’s that for irony?

    This terrorism university is what New Delhi describes as the "infrastructure of terrorism", an ecosystem which recruits, motivates, trains and finally infiltrates terrorists for deadly attacks into India and Afghanistan. Pakistan’s deep state neatly bifurcated their counter-terrorism drive after the 9/11 attacks and then US President George Bush’s “either you’re with us or against us” ultimatum.

    The deep state in Rawalpindi pretended to act against the Al-Qaeda and Taliban, occasionally serving up their leaders to claim cash bounties from the US. At the same time, it continued to push terrorists, its "strategic assets", against its neighbours.

    The US was aware of this, but perhaps turned a blind eye because the LeT and JeM were directed only in "Indian-administered Kashmir". Exactly how blurred these boundaries between good and bad terrorists are is revealed in a rigorously researched new book, The Exile. Investigative journalists Cathy Scott-Clark and Adrian Levy reveal how fleeing Al-Qaeda fighters were sheltered by the LeT and JeM.

    Osama bin Laden, in fact, received a respite when a JeM attack on India’s Parliament on December 13, 2001 triggered off a massive troop deployment along Pakistan’s western borders. This gave the Pakistan Army an excuse to pull out from the eastern borders where they had cornered Al-Qaeda fighters fleeing Afghanistan.

    The net result? The core of Al-Qaeda, including bin Laden and his deputy, Ayman al-Zawahiri, spilled over into Pakistan and escaped annihilation.

    But with decreased US flows, it has brought about a recent rethink within Rawalpindi. Pakistan Army's search for a new benefactor has ended up at the Karakoram Highway and in the wholehearted embrace of a questionable new project offered by China’s President Xi Jinping in 2013.

    The $62 billion China-Pakistan Economic Corridor, a supersized version of a project first offered by China to then Pakistan President Pervez Musharraf in 2003 proposes to build a network of power projects and industrial projects across the length of the country, providing it with an economic spine that will propel growth.

    Economic activity cannot go hand-in-hand with terrorism. But as the US State Department report shows, there has been no let up in Pakistan’s sponsorship of terror. Terrorist groups within Pakistan are something Beijing is entirely comfortable with, judging by its repeated blocking of Indian attempts in the United Nations to get the JeM’s Masood Azhar declared a global terrorist.

    Is Pakistan confident that the snakes it rears in its backyard will not turn on the CPEC? Is China confident that the corridor it is building through Pakistan will only be unidirectional? That is, the poisonous Islamist ideology being propagated by the deep state, the LeT and the JeM, will not flow into China’s restive Xinjiang province.

    These are the questions Beijing and Islamabad believe they have the answers for.

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  5. #50
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    Nuanced discourse on CPEC

    The zeitgeist of the present age is globalisation which has shrunk the world into a small village via the onslaught of means of information and technology.
    The phenomenon of globalisation, unleashed in the post-cold war era, has holistically changed the matrix of world politics.

    Where it has significantly impacted states in their social and political spheres, there it has phenomenally influenced statesí interaction with one another in economic spheres.
    Given that, in the globalised world and a free market, the more a state is economically well-connected, the more efficiently it can cope with vicissitudes of globalisation.


    Isolation is no more an option for any state in an era dictated by globalisation.
    Knowing the price of economic isolation, which is almost akin to suicide in the present globalised world, not only states individually but, also collectively, in the shape of regions through formation of economic corridors, have been striving hard to create multiple avenues for their economic ventures in order to effectively catch up with the spirit of globalisation.

    Like in the rest of the world, where states, either in their individual capacity or collectively in the shape of a region, have been striving to catch up with globalisation through multifarious economic ventures, South Asia, a region pitted against frail economies, political downfall, social and religious cleavages and the resultant inherent discords among various states, has been witnessing one such economic venture which is, though, bilateral in nature, will impact the whole region.

    Yes, the venture is China Pakistan Economic Corridor (CPEC), which is one of the projects of Chinaís 13 five-year development plans that will help her connect with Central Asia, Middle East and Europe.

    CPEC, which is a $61 billion project stewarded by China and will last from 2015 to 2030, is being touted as a game changer for Pakistanís economy, which we (the authors) support, because of the huge development it is bringing in its lap through a plethora of projects.

    Yet there is a cynical approach prevalent among some sectors, which once used to be important pillars of Pakistanís economy, as the government has not been completely clear about its plans vis-ŗ-vis CPEC; as a result, a sense of disillusionment among some sectors is gaining momentum with respect to true nature of the CPEC.
    There is a dire need to approach this project in a more nuanced way so that the grievances of those having a major stake in Pakistaniís economy can be catered to.

    To impress upon the readers a nuanced understanding of CPEC, here is an illustration.

    Under CPEC, Chinese state-owned companies are, and will be, allowed to develop Special Economic Zones (SEZs) in Pakistan.

    What will be the nature, scope and working of the SEZs? We donít know.

    How will they impact the Pakistani industry and agriculture? How will Pakistani industrialists and agriculturalists be able to compete with Chinese state-owned companies? Wonít it have unimaginably dangerous effects for the local business class of Pakistan? The answers to these questions, we believe, might not subscribe to the ongoing political discourse about CPEC which is very rosy in nature.

    No rocket science is needed to comprehend the grievances of the local business community.

    For example, China is a bigger economy and has the latest technological tools to enhance their productivity to better excel in the market.

    Pakistani business class is, on the contrary, facing so many problems, ranging from shortage of power to waves of political instability.

    If a product costs China 20 rupees, thus setting a market price, for instance, 28 rupees for that product in Pakistan; however, the same product is being made by a Pakistani company in 30 rupees.

    How will it be able for any Pakistani businessman to compete in the market?

    Policy makers at the helm in CPEC are cold-shouldering business owners by being indifferent to their concerns, expressed Ijaz Khokhar, Central Chairman Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA).

    If objectively studied, a popular narrative has been rearing its ugly head in the unfolding of CPEC discourse in Pakistan in which any one coming up with a counter-narrative to the rosy picture of CPEC is cornered in the mainstream media and is branded as a traitor who is against Pakistan making its way through this venture to economic development.


    Prudence dictates listening to what our own business class is feeling, observing and expecting to come out of CPEC.

    How can the state protect its interests in the face of large and powerful Chinese companies? How will Pakistani companies market themselves when they donít have the facilities to capitalise on this opportunity?

    Overall, the government in Pakistan has a bad tendency of papering over the cracks in policy making.

    There is nothing bad if someone has some reservations regarding the CPEC.

    CPEC is not a holy cow, or a divine thing.

    Every Pakistani has a right to question and to know what the government is doing or intends to do.

    We pay taxes and have a democratically elected government.

    Our representatives are answerable to us; hence, it is urged, on behalf of concerned citizensí lot, to policy makers at the helm to make CPEC as inclusive as possible by sharing terms and agreements signed with China.

    Moreover, as students of politics, our advocacy for a more inclusive approach towards CPEC on part of Pakistan is not solely to make CPEC win-win in its nature, but also is aimed at bringing into the spotlight an interplay of politics and economics in the aftermath of actualisation of CPEC.

    There is no gainsaying the fact that politics and economics deeply influence each other in reciprocal ways.

    Any blind economic venture with China on part of Pakistan without taking into confidence its citizensí lot, might turn out to be a short-changed transaction, and because of social backlash it will invoke among citizens.

    We need not reject CPEC, but we must have a selectively protectionist approach because China is an economic giant and we are politically a fragile democracy.


    Cooperation is the only rule to survive in the age of globalisation, but blind economic cooperation on the part of any state without taking into confidence its citizensí trust, who bear its brunt directly, will not ultimately lead to long lasting desired outcome of economic cooperation.

  6. #51
    Senior Contributor DOR's Avatar
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    What will be the nature, scope and working of the SEZs? We don’t know.

    How will they impact the Pakistani industry and agriculture? How will Pakistani industrialists and agriculturalists be able to compete with Chinese state-owned companies? Won’t it have unimaginably dangerous effects for the local business class of Pakistan? The answers to these questions, we believe, might not subscribe to the ongoing political discourse about CPEC which is very rosy in nature.

    No rocket science is needed to comprehend the grievances of the local business community.
    China has a long SEZ history; any variation from that style will be introduced by the host country.

    SEZs have a very positive impact on agriculture in that they make urban workers rich enough to be able to pay more for food products. The impact on industry is also quite positive, and all the more so in an economy where regulation is both extremely extensive and very poorly enforced.

    Local business community grievances?
    I suspect those will be limited to “Why don’t you just expand the SEZ to cover the entire economy?”
    Trust me?
    I'm an economist!

  7. #52
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    DE, I was talking about this article and another one which I am yet to find.

    In Nigeria, Chinese Investment Comes With a Downside

    Emeka Ezelugha was excited to open a computer training center. He could teach his countrymen some skills and earn a living.

    But soon after the center opened in a rough, two-story concrete building in Lagos, a blaze broke out in the main classroom. The flames incinerated 30 desktop computers, as well as televisions and air-conditioners.

    The culprit was unmistakable: one of two dozen power strips in the classroom. The faulty equipment was made in China, even though the salesman said it was British.

    “The guy tried to convince me it was from the U.K. — I was surprised when it happened,” Mr. Ezelugha said.

    Across this populous African nation, low-cost Chinese goods are everywhere, evidence of Beijing’s growing dominance in global trade. The trade flow has helped keep life affordable for millions of Nigerian families, at a time when the country is struggling with economic stagnation and plunging prices, as well as the deadly costs of the Boko Haram insurgency.

    But shoddy or counterfeit products are a national problem in Nigeria, Africa’s largest economy, where impoverished consumers have few alternatives. Some shoddy goods are benign, like the Chinese-made shirts, trousers and dresses with uneven stitching and stray threads that fill street markets. But electrical wiring, outlets and power strips from China, ubiquitous in new homes and offices, are connected to dozens of fires a year in Lagos alone.

    The relationship between China and Nigeria is a complex web of dependency, one replicated in dozens of developing countries around the world, like Chile, Ethiopia and Indonesia. Such ties are integral to China’s global ambitions. President Xi Jinping of China, who was in Africa this week emphasizing economic diplomacy, just committed $60 billion in development assistance to the Continent.

    But such efforts also pose new and unpredictable challenges for Beijing. China has lent heavily to commodity-exporting countries, which are now struggling with low commodity prices. At the same time, China’s highly competitive manufacturing sector has devastated many smaller-scale rivals across Africa, Asia and Latin America. Mr. Xi’s pledge in Africa, in part, seemed aimed at quelling criticism over what some see as a lopsided relationship that largely benefits China.

    To support its swelling trade in Nigeria, China is funneling billions of dollars to build roads, rail lines, airport terminals, power plants and other desperately needed infrastructure. China is the top lender to Nigeria, where political instability and violence have made Western interests skittish.

    Nigeria, in turn, has become the biggest overseas customer of Chinese construction companies. It is an important market for Beijing, at a time when China’s own growth is slowing.

    But China’s extensive reach is now meeting resistance in Nigeria, part of the broader risks for Beijing’s global strategy.

    In Abuja, the capital, the new government is conducting anticorruption investigations into large Chinese construction contracts signed by the previous leadership. Nigerian state governments are struggling to pay for many of those projects, exposing China to potentially heavy losses.

    In Kano, angry protesters in the streets blame widespread joblessness on China, which is manufacturing African fabric designs in shimmering hues more cheaply than Nigeria. Employment in Nigeria’s textile and apparel sector has plummeted to 20,000 people, from 600,000 two decades ago.


    In Lagos, authorities are trying to stamp out subpar Chinese electric goods. Imported power strips and wiring have inadequate copper to handle Nigeria’s 240-volt system, said Wanza Kussiy, the chief safety officer of the Nigerian government’s Standards Organization.

    Zhang Sen, the vice secretary general of China’s government-controlled Electronic Product Association, said that the group was reviewing Nigeria’s fires. “We still need to do some research before we can say the quality of the Chinese products is to blame,” he said.

    Nigerian authorities are stymied. Corruption is endemic, making it more difficult to enforce safety standards. And Chinese goods are so dominant that consumer have few other choices.

    In Lagos, Mr. Ezelugha borrowed heavily to reopen his computer training center after the fire. But the power strips are still made in China. He couldn’t find anything else.

    Idle Factories, Idle Hands
    Kano’s cloth industry started in the walled ancient city, a labyrinth of mud brick houses and dirt roads.

    The city’s blue dye has long been made from the leaves of local indigo plants, which are crushed and mixed with cooking ashes and potassium. Swaths of white cotton fabric are dunked in the dye, which fills six-foot-deep pits lined with animal skins.

    But employment at the centuries-old dye pits has dropped to 250 people, from nearly 1,500 a decade ago. Chinese companies produce virtually identical patterns of fabrics using synthetic dyes, and their sales now dominate in Kano’s open-air market.

    “They are learning our arts and taking them to their country and doing them similarly to us, and bringing the goods back to Nigeria and selling them to our people,” said Bala Ibrahim, 45, who has labored in the pits since his early teens. Now he spends whole days idle.

    Such stories are common across Nigeria’s garment industry. The city’s tanneries, which made Moroccan leather from goatskins for centuries, have laid off most of their staffs. Dozens of modern fabric factories on the outskirts of Kano have closed.

    In theory, Nigeria should have a manufacturing edge, at least in labor-intensive industries like sewing.

    With high unemployment in Nigeria, factory owners can easily find workers willing to accept the minimum wage, just $80 a month. By comparison, garment factories in coastal China now pay around $550 a month and still can’t find enough workers.

    Despite the high cost of labor, it remains cheaper and easier to mass-produce garments in China.

    One obstacle to setting up a large-scale sewing industry like Bangladesh’s is that Nigeria imposes significant tariffs on imported fabric, a legacy of its past as a big producer of hand-woven fabric and as a large grower of cotton. Another challenge is that electricity from Nigeria’s national grid is unreliable. So operations must rely on diesel generators, buying fuel at a cost per kilowatt-hour generated that is six times what garment makers in China pay.

    The Nigerian government wants to revive manufacturing, particularly given low prices now for its oil exports. Abdulkadir Musa, the recently retired permanent secretary of Nigeria’s ministry of industry, trade and investment, said the government was mulling reductions in tariffs on garment materials that are not produced in Nigeria, possibly including buttons. “We want to start that all over now that oil is no longer at a high price,” Mr. Musa said, adding that overreliance on oil exports “has been more of a problem for us than a solution.”

    For now, Nigerians just can’t compete.

    Chimezie Cyril Okwuosa scrimped for years to set up his own small garment factory near Lagos in 2005. He had 25 sewing machines, 30 workers and a noisy diesel generator. The factory failed within five years.

    “I was spending so much on diesel that at the end of the day, I had no profit — and some days, there was no diesel at all, and I could not operate,” Mr. Okwuosa said.

    Mr. Okwuosa now runs Greentomato Apparels, a small-scale importer of children’s trousers. He pays $2.50 a pair to a factory in Guangzhou, China, and then only 10 or 12 cents a pair for shipping. He sells the pants for about $3.25 a pair, leaving him a small profit margin.

    The collapse of manufacturing is more than just a financial issue.

    It has also fanned worries about the possible spread of Boko Haram, an insurgency condemned for its large-scale abductions and sexual enslavement of women and girls. Boko Haram has drawn young men to its ranks in destitute northeastern Nigeria, the country’s poorest region.

    Emir Muhammadu Sanusi II, the traditional ruler of Kano in northern Nigeria, has seen the devastation up close. Outside his palace, a low maroon building with battlements, is a large burn mark. Late last year, a group linked by the government to Boko Haram set off three bombs in a large crowd and then used automatic weapons to spray bullets at the survivors. As many as 500 people were killed.

    The Chinese basically copy every textile product in Nigeria,” Emir Sanusi said. “I worry about what could happen to Kano when we have a large number of youths and large numbers of industries are down.”

    A Flood of Chinese Steel

    At a Lagos steelyard of Dorman-Long Engineering, the only activity on a recent afternoon was the welding of an oil storage tank. With the steep drop in world oil prices, longtime customers like Exxon Mobil and Royal Dutch Shell are no longer commissioning as many helipads and footbridges for their offshore drilling platforms.

    The locally owned engineering firm had expected Chinese construction companies operating in Nigeria to help offset the slump. But Chinese construction companies, mostly state-owned, have largely imported their steel girders, reinforcing beams and other materials from home.

    “I just don’t see a lot of local content in what they do,” said Timi Austen-Peters, the company’s chairman.

    Infrastructure financed and built by China was supposed to be the great hope for Nigeria.

    Nigeria endured coups and a civil war in the 1960s, then effectively nationalized many foreign-owned companies in the 1970s. Nigeria developed a reputation for breaking or renegotiating contracts, antagonizing many foreign partners.

    The risks have prompted Western companies to demand very fat profits before putting money into the country — returns on the order of 25 to 40 percent a year. Their Chinese counterparts have been willing to accept 10 percent or less.

    “Unless the West changes its risk assessment, the Chinese will beat them to the African market,” said Osadebe Osakwe, a former Nigerian banker who is now the managing director of North China Construction Nigeria. The company is a subsidiary of a state-owned enterprise in Beijing. “The Chinese are trying to prove that they can do what the Western companies can do and they can do it better.”

    Chinese companies have piled into the country. Mostly state-owned Chinese construction companies have started $24.6 billion worth of projects since 2005, the highest of anywhere in the world, according to the American Enterprise Institute, a Washington research group.

    “Africa has a real demand for infrastructure and industrial developments — in those areas, China has strong ability and surplus capacity to invest and build,” China’s prime minister, Li Keqiang, said during a visit to Nigeria last year.

    But as demand at home falters, Chinese companies have been shipping huge quantities of steel girders, piping and other industrial materials at extremely low prices to emerging markets like Nigeria. So there is little benefit for local players like Dorman-Long Engineering that used to fabricate much of this equipment.


    Executives at Chinese construction companies say they do buy some local materials. But they add that China’s exports are often more readily available and better made, so they can be quickly and reliably included in complex projects.

    The new Nigerian government is starting to question whether all the construction projects are in the country’s best interest. Many projects, like new international or refurbished airport terminals in Lagos, Abuja, Kano and Port Harcourt, help the country’s elite but may do less for the poor.

    The new government is now searching for signs of fraud, corruption or other misconduct in existing contracts. President Muhammadu Buhari of Nigeria announced on Aug. 10 that his government had already found that hundreds of millions of dollars were mysteriously diverted from one Chinese-backed rail project to other government projects, although it was not immediately clear if corruption was involved.

    Bullet Train Boondoggle
    The pride of the previous Nigerian administration, which left office in May, was supposed to be a new passenger train line that links Abuja to Kaduna. With trains traveling at nearly 120 miles per hour, the $874 million line is supposed to cut the three-hour highway trip in half.

    But the line may not draw many passengers.

    A graceful new train station is a 40-minute drive from downtown, surrounded by cornfields and cow pastures. The extension of the line into downtown Abuja has been severely delayed, and money is running short for its completion. And even though Nigeria desperately needs more freight trains, the rail line with its fragile-looking bridges is too lightly built to support heavily laden cargo cars.

    The fate of the line — like dozens of Chinese projects around Nigeria — is a potential problem for Beijing.

    Infrastructure projects in Nigeria have been fueled by the same manic lending that has also created mountains of debt for China’s economy at home. State-controlled Chinese banks have lent money at rock-bottom interest rates in deeply indebted Nigeria.

    They have done so based on the assumption that the Chinese government will repay them if Nigeria cannot.

    A little-known Chinese government agency, Sinosure, has guaranteed the loans. Sinosure insured $427 billion worth of Chinese exports and overseas construction projects around the world in 2013, the most recent year available. The Export-Import Bank of the United States, by comparison, issued just $5 billion worth of credit in each of the last two years.

    Nigeria is a particularly shaky bet for China. The corruption investigations could prompt the government to cancel contracts outright. Government revenue has dropped by more than half since the fall in world oil prices, so the country may not have the money to make good on the Chinese deals.

    The riskiest projects of all may be those like the high-speed rail line that are widely viewed as the previous administration’s vanity projects.

    A Chinese construction manager at the new station on Abuja’s outskirts, who identified himself only as Mr. Zhang, said the project would be finished by next March. It was only behind schedule, he added, because of shipping delays.

    “We’re waiting for materials from China,” Mr. Zhang said, “like toilets.”
    The template has already been tried and tested. I don't think the Chinese will do anything differently w.r.t CPEC/BRI.

    Poinf of observation - Pak already has a robust terrorism industry. What happens when millions more become unemployed as the article mentions the conditions ripe for employment in Boko Haram in Nigeria?

    Another one, Chinese investment in Africa: Beijing’s testing ground
    Last edited by Oracle; 25 Jul 17, at 16:41.

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    Below are 2 articles that showcase Chinese attitude in times of crisis, in host countries where they invest.

    Ebola Crisis: What About China’s Role?

    Africa's Ebola Should Be China's Problem

    The Chinese are everywhere. In countries the US has intervened militarily, having lost men and money, the Chinese silently creep in after the war, not for humanitarian assistance or help build the economy, but to get mining rights and keep the lamp in Chinese factories burning. If I am wrong, please correct me.

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    Quetta incident: JIT submits report on Chinese kidnapping

    As usual, blame the victims, and no action against the terrorists. Pak, China, NK all three treat their civilians as fodder for strategic gains. Hail CPEC!

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    Data suggest Pakistan faces prospect of financial meltdown

    High imports, driven by CPEC, combined with stagnant exports and a drop in foreign remittances, resulted in a record trade deficit and current account deficit in the fiscal year just ended

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    Watch from 14:20

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    US lawmakers seek increased role for India in Afghanistan

    If the bill passes, India should take up the offer. We can't just sit out of this mess forever. If US withdraws, then the jihadi tangos will be re-directed at Kashmir.

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    For Pakistan, a grim reminder from Sri Lanka: China gives loan, then grabs land

    China has projected its One Belt One Road (OBOR) project as a global ideal that will spread economic benefits to less-developed countries. China–Pakistan Economic Corridor (CPECBSE -4.45 %) will be a significant part of OBOR, a network through South Asia, the Middle East, Africa and Europe by building land and sea links. But well before the much-touted project begins, China's hidden exploitative motives are out in the open.

    Experts have warned CPEC is China's colonial ploy to create a permanent foothold in Pakistan. A good illustration is the deal Sri Lanka has signed with China today.

    Sri Lanka has signed a $1.1 billion deal with China for control and development of the deep-sea port of Hambantota. A state-run Chinese company will have a 99-year lease on the port and about 15,000 acres for building an industrial zone.

    In the past few years, China gave Sri Lanka big loans to build infrastructure. Now, Sri Lanka is unable to repay those loans. It is leasing out land to China to repay its loans. Part of the money it gets by leasing out the Hambantota port will go into repayment of Chinese loans. This is how China sneaks into a country on the back of costly loans.

    Pakistan, too, can fall into the Chinese debt trap.

    China has provided Sri Lanka with over $5 billion between 1971 and 2012, and most of this has gone into infrastructure development, with China investing $1 billion into a deep-water port at Hambantota and billions into the Mattala Airport, a new railway and the Colombo Port City Project.

    Sri Lanka’s estimated national debt is $64.9 billion, of which $8 billion is owed to China -- this can be attributed to the high interest rate on Chinese loans. For the Hambantota port project, Sri Lanka borrowed $301 million from China with an interest rate of 6.3%, while the interest rates on soft loans from the World Bank and the Asian Development Bank are only 0.25–3%. Interest rates of India’s Line of Credit to the neighbouring countries are as low as 1%, or even less, in some cases.

    China's strategy to grab land in smaller, less-developed countries is simple: it gives them loans on high rates for infrastructural projects, gets equity into projects, and when the country is unable to repay the loan, it gets ownership of the project. The Hambantota deal is an example of this strategy.

    The huge loan of more than $50 billion for building CPEC in Pakistan could spell doom for an already faltering Pakistani economy—and can finally turn into a Sri Lanka-like situation. Unable to repay the loan, Pakistan will have to give control of its land to China.

    The huge PR exercise to sell the OBOR project as a global ideal to the world cannot hide China's exploitative approach to international business. Before OBOR could begin, small neighbouring countries are seeing consequences of dealing with China. OBOR too will come with the notorious Chinese debt trap. Ongoing projects in several small countries have already become part of the OBOR project.

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    What does this and other videos such as this portray?

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    Quote Originally Posted by Oracle View Post


    What does this and other videos such as this portray?
    The over –construction wasn’t in response to central government pursuit of overall GDP growth. It was local government’s seeking land sale revenue after the central government reworked the terms under which the two levels share revenue.

    In order to finance local government spending requirements set – but inadequately funded – by the central government, local governments put pressure on state-owned bank branches in their regions to lend to developers so that the developers could over-pay for land newly added to the city limits by local government decree.

    When there is insufficient demand for those developments, the SOE banks take the hit. And, since they are just local branches, they can pass the pain up the ladder to the central level.
    Trust me?
    I'm an economist!

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