Soviet Collapse Echoes in China’s Belt and Road

https://www.bloomberg.com/view/articles/2018-08-12/soviet-collapse-echoes-in-china-s-belt-and-road-investment

by smacktoward • 8 years ago

198 180 8 years ago

andrew_• 8 years ago

Anyone else learn a new meaning to the word "founder"? Thought it was a typo for "flounder" only to learn that it can also mean "to give way, collapse." Stay weird, English.

toadworrier• 8 years ago

I think of it as "The ship foundered on the rocks".

Of course I suppose if a fish did the same thing we might have a foundering flounder.

AnimalMuppet3• 8 years ago

dictionary.com says that flounder may have come from a combination of flounce and founder (back around 1570 or 1580).

jessaustin• 8 years ago

"founder" is a fairly gruesome injury to horses' hooves. For most of my life this was the meaning that would have first come to mind. HN has fixed that...

adrianratnapala2• 8 years ago

For me the first meaning that comes to mind is a leader of the American Revolutionary War. Wig and all. And I'm not even American.

TheSpiceIsLife• 8 years ago

I didn't know this either. Amusing.

Many founders do founder.

verb (used without object)

(of a ship, boat, etc.) to fill with water and sink.

to fall or sink down, as buildings, ground, etc.:

Built on a former lake bed, the building has foundered nearly ten feet.

to become wrecked; fail utterly:

The project foundered because public support was lacking.

to stumble, break down, or go lame, as a horse:

to become ill from overeating.

Veterinary Pathology. (of a horse) to suffer from laminitis.

dannyobrien• 8 years ago

See also the double meaning of “career”.

monocasa2• 8 years ago

Come on, building and rebuilding other country's economies is a boon to the local economy, particularly when that other country is footing the bill. That's literally why the US was on top starting at the end of WWII. Not everything the Soviets were doing in the 70s is the reason for their downfall.

forapurpose2• 8 years ago

building and rebuilding other country's economies is a boon to the local economy, particularly when that other country is footing the bill. That's literally why the US was on top starting at the end of WWII.

I'm sure it helped, but the U.S. was already by far the dominant power before that economic activity.

At the end of WWII, the U.S. produced half of the world's GDP, a staggering number. It was the only advanced country which was physically untouched by the war, it had troops stationed throughout Europe and the Pacific, and it was the only country with nuclear weapons.

It says a lot, IMHO, that the U.S. didn't pursue a global empire at that point.

baud147258• 8 years ago

It says a lot, IMHO, that the U.S. didn't pursue a global empire at that point.

I think that, politically, it would have never been accepted by the population or the (conscription-based) army. Also they ended with big not-quite empire with NATO soon after.

monocasa2• 8 years ago

It says a lot, IMHO, that the U.S. didn't pursue a global empire at that point.

I mean, there's a lot of practical reasons for post colonialism that don't have to do with any altruism on the part of the United States.

awad• 8 years ago

It's not clear what the advantages of pure imperialism would have been at the time vs taking advantage of all of those exact pros you mentioned without outright taking over of nations. Global hegemony shifted from pure colonialism to neocolonialism over the few decades and it's still to be determined what the next wave will be.

baybal2• 8 years ago

The key quote:

"It’s worth considering all this misdirected spending in the context of the Soviet Union’s decline. Around the middle decades of the 20th century, Moscow presided over a China-style economic miracle that caused many in the West to fear they would be overtaken."

AnimalMuppet3• 8 years ago

The key question may be to what degree China's economy resembles Russia's. If China's is some free-market lipstick on a planned-economy pig, they are likely to suffer Russia's fate. To the extent that the free-market reforms are real, they have a better chance of escaping it.

My personal opinion is that China's free market is real, but the state intervention is still fairly heavy for a "free market economy". What does that translate into in terms of China's chance to avoid collapse? I don't know.

nickserv3• 8 years ago

There's also the fact that the Soviets over-extended themselves militarily at the same time, Afghanistan comes readily to mind.

China has a large, powerful and I would assume expensive militarily, but has not deployed significant number of troops in the past few decades (since Korea?), and in any case has never occupied a foreign country.

That's a huge amount of resources available to spend on infrastructure and "soft" power. The Chinese approach seems much more likely to succeed than the Soviet one.

mrep• 8 years ago

To me, the free market is best represented through market competition. Can anyone comment on how competitive the chinese markets actually are because I have heard that it is still very government/single company dominate focused.

notveryrational• 8 years ago

China's situation is entirely different.

1: The Asia Pacific is "hitting the knee on the curve" and modernizing its economy. Also, it's the most populous region on earth. It's why economic forecasters call the 2000-2100 period the Asian Century: https://en.wikipedia.org/wiki/Asian_Century

2: The Silk and Road Project ranges far outside "economically stagnant" areas. It's adjusted investments according to projected future growth, and also hedged into already modernized economies. It's as much about supply chain and trade routes as it is about direct economic investment. It connects China to Europe.

kiliantics• 8 years ago

Were the West Indies productive before the ports and sugar plantations? Was India productive before its railways were built?

Something smells of anti-China propaganda in this highly speculative piece.

senthil_rajasek• 8 years ago

"Was India productive before its railways were built?"

Yes.

https://en.m.wikipedia.org/wiki/Economic_history_of_India

Colonization is a terrible thing.

logicx24• 8 years ago

India had the world's largest GDP under the Mughals and had continued positive growth, but by the end of the British Raj, was facing stagnant population growth and actually reduced agricultural productivity. So contrary to everything you're saying, India was not only productive before the British, it was actually worsened by Britain's exploitation.

rfinney• 8 years ago

There are other views on the economics of India under British rule: https://en.wikipedia.org/wiki/Economy_of_India_under_the_Bri...

example: * British increased the area of irrigated land by a factor of eight, contrasting with 5% under the Mughals.

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bogomipz3• 8 years ago

"India had the world's largest GDP under the Mughals and had continued positive growth."

Do you have a citation for this? For the entire 300 years of the Mughal Empire? How accurate would that information even have been in say the early part of 16th century?

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sswaner2• 8 years ago

Worsened because of wealth extraction by the British. Many gains in productivity were not reinvested, hence the decline relative to the Mughal era.

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Jagat2• 8 years ago

Indian railway was built with Indian taxpayer's money to transport raw goods for exporting to British factories.

India had a highly developed set of kingdoms even before the British invasion, and in an alternate history where British had never invaded India, they'd have built the railway and industrialized anyway.

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Leary• 8 years ago

Whether China will come up ahead with Belt and Road is uncertain. What is certain is there's a tremendous infrastructure gap, particularly in Asia. This is a great way to turn the overcapacity in Chinese steel and cement into something useful for the world.

https://blogs.worldbank.org/ppps/forecasting-infrastructure-...

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walrus01• 8 years ago

One interesting project is the mostly Chinese-funded port of Gwadar, in Balochistan, Pakistan. They're trying to develop it as a deep water port as an alternative to Karachi. So far not with very much success, because of political instability and difficulty of attracting other foreign investors to the region.

https://www.google.com/search?q=gwadar+port+china&ie=utf-8&o...

Now this part is just my opinion, but the really, really hard part is the proposed road or high-speed rail cargo link from Gwadar to Western China. The Karakorum highway is no joke. It's narrow, twisty, carved into steep rocky mountain passes. I've driven from Islamabad via Gilgit to the Chinese border. It will take many, many billions of dollars of tunneling and road construction to bring it up to the standard of a highway that can take a large volume of 20/40ft cargo container traffic. Right now trucks spend a great deal of time in 1st gear crawling along at 15km/h.

https://www.google.com/search?q=karakoram+highway&ie=utf-8&o...

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Anarch157a• 8 years ago

Great powers are the nations that best harness their economic potential to build up military strength. When they become overextended, the splurge of spending to sustain a strategic edge leaves more productive parts of the economy starved of capital, leading to inevitable decline.

This describes the US better than China. The US spends 7.8% of it's GDP on the military, while China spends only 1.9%. If any country is over-exerting itself and "starving the economy of capital", that's America.

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rgbrenner3• 8 years ago

I was with you on the first sentence.. but where did you get 7.8%? We only spend 3.5%. [Edit: World bank puts it at 3.1: https://data.worldbank.org/indicator/MS.MIL.XPND.GD.ZS?locat...]

And according to the military, most of this higher than average spending is due to the military being voluntary, and needing to compete on wages in one of the highest earning countries in the world. Whether you agree with the military's assessment or not, it's true that a significant portion of US military spending is spent on wages/compensation. A lot (not all though) of the difference between the US and russia/china is due to the later having much cheaper labor.

Also the last sentence certainly isn't true... there are many countries that spend far more a percent of GDP on their military: Russia, Saudi Arabia, and the typical example of military excess: north korea.

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ilikehurdles• 8 years ago

Yep, you have to employ a lot of people to maintain military occupations in an ever-growing list of countries. Clearly we should cut benefits.

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spacehome5• 8 years ago

It's really hard to get a precise number of how much money we spend on military. The budget for the military is snuck into other line items and obscures the true cost. For instance the VA is not included, even though we only need the VA due to having veterans. And the costs for nuclear weapons and nuclear power plants are included in the Department of Energy's budget.

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taobility5• 8 years ago

according this link: https://en.wikipedia.org/wiki/Financial_cost_of_the_Iraq_War, the direct spending of DoD on Iraq war is about $757.8 billion, do you think most of that spending on the labor?

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kyrieeschaton• 8 years ago

Meanwhile, the USA will dump 1 trillion dollars at a time on things like the Obama stimulus to apparently no effect, a decade of massive subsidies to an insolvent financial sector, billions of dollars on failed school districts... China might overpay, eventually, if they actually invest their claimed amount of money (doubtful), but they do appear to at least get a road when they pay for a road.

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seanmcdirmid11• 8 years ago

the USA will dump 1 trillion dollars at a time on things like the Obama stimulus to apparently no effect

What? The economy recovered, it could have gotten much more worse if Obama did nothing. Even Bush realized that, whatever became Obama's stimulus was planned before Obama took office, and passed with bipartisan support. It only became a whipping boy later because the Republicans saw and took the political opportunity.

but they do appear to at least get a road when they pay for a road.

Yes, but the villages who live on the road probably can't pay the high tolls to use it.

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sct202• 8 years ago

Yeah, people keep saying China is a house of cards, but they're spending their money on things you can see and use. The train I take to work is 40 years old, and the tracks are over a 100. I'm envious of all the new things they're building with all their 'fake' growth.

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seanmcdirmid11• 8 years ago

Yeah, people keep saying China is a house of cards

No they don't, that is completely a red herring.

I'm envious of all the new things they're building with all their 'fake' growth.

We could have HSR also if we were willing to pay for it...if we thought it made sense to our economic growth. And the Chinese have taken out a lot of debt to pay for it, it wasn't free, and the only profitable line ATM is the one between Beijing and Shanghai. HSR might work out in the future, HSR might lead to economic growth, but these are bets like anything else.

I've taken HSR between Beijing and almost Guangzhou (my wife's hometown doesn't have an airport but has an HSR station). It was fairly empty much of the way during the 6 hour or so trip.

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sandworm101• 8 years ago

Stopped reading when it started talking about pipelines in military terms. This isnt 1942. A fixed pipeline is a vulnerable asset of little use in any substantial conflict.

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nabla93• 8 years ago

When you compare the cost of Belt and Road to wars that cost trillions of dollars, the money spent is peanuts.

The belt and road is already working. China-Finland train link connects Nordic countries with China in 10-12 days. They carry heavy and expensive machinery and machine parts between China and EU. Too heavy for air-travel economically and needs to arrive relatively fast.

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robocat• 8 years ago

I don't think your example shows that, and the article disagrees with you:

"The value of freight between Europe and Yiwu, a much-touted overland rail hub near Shanghai, came to 2.27 billion yuan ($330 million) in the first four months of this year [snip] China’s top four ports alone process about the same value of cargo every three hours."

Also see this graph from the article: https://www.bloomberg.com/toaster/v2/charts/e6c45ea06db24277...

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igravious• 8 years ago

So what? The trade route only just opened up. The numbers started at zero and started only recently, so of course they are small. By how much the trade is going to increase and at what rate is what everyone is arguing about. People underestimate how large Eurasia is along its east-west axis and how underdeveloped it is in parts. I predict the naysayers and doomsayers will be eating their hats.

In nominal terms the US is the world's largest economy. Let's put it at ~$20tn gdp nominal with moderate growth. EU is about ~$17tn with less than moderate growth say and China is about ~$13tn and growing fast. Problem is that EU and China are at opposite ends of the Eurasian landmass. Anything that reduces trade times and cost between the poles of this massive continent and interconnects a combined ~$30tn economy is going to have an enormous impact.

But even so the article contradicts itself.

“The overwhelming majority of China's trade with Europe is by sea and air. Overland routes don't cut it”

What the detailed stats show is that by value rail is 2% and road is 6% of total trade. (Air is 28%). Take into account that,

“Just 10 years ago, regular direct freight services from China to Europe did not exist. Today, they connect roughly 35 Chinese cities with 34 European cities.”[1]

And that,

“Rail services are considerably cheaper than air and faster than sea”[2]

So 2% of trade captured in 10 years. So if people stop thinking in terms of years and start thinking in terms of decades it is obvious that improvements in land logistics will far surpass those of sea and air. By the middle of the century it is anybody's guess what fraction of total trade will be capture by road and rail but it could be very significant. From my reading most analyses put Khazakstan as one of the major bottlenecks, an upgrade there could have huge knock on effects. (And that's not even taking into consideration different sized rail gauges.)

[1] https://www.csis.org/analysis/rise-china-europe-railways

[2] https://csis-prod.s3.amazonaws.com/s3fs-public/180228_fig1.p...

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nabla93• 8 years ago

Major logistical routes are build gradually. Currently it's only one train a week with 40 containers. Similar train goes from Chinese east coast to Spain.

When logistics starts to trust the route, the volumes and the cost or railway freight will increase. Railway freight is currently just 20-30% more expensive than ocean freight but takes only 10-15 days. Ocean freight takes two months.

Air freight for items above 500 kg is rarely cost effective. Rail freight opens up new possibilities for faster deliveries.

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Barrin924• 8 years ago

I don't see any justification for the Soviet analogy other than wanting to conjure up the image of the impending collapse of China. This sounds like the infrastructure version of the 'financial bubble' prediction that crops up every other year.

If one wanted to pick a positive story there would be the example of the American progressive era, the creation of the interstate system, the railway system during the 19th century, and so forth. Not every large infrastructure project is indicative of corruption, someone needs to build infrastructure, after all, I don't think we've somehow transcended the need for transportation.

That there's military or geopolitical motivation, especially as far as the land component of the belt and road initiative is concerned seems accurate, but doesn't strike me as particularly bad. From a Chinese perspective it obviously makes sense to invest into continental infrastructure because it does not control the sea.

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lainga• 8 years ago

From 3rd paragraph TFA, and unlike 1910-1950s USA,

Like the Soviet Union in the 1970s, China is coming to the end of a long labor-force boom, and hoping that an orgy of investment will keep the old magic going while stabilizing its fraying frontiers.

Cornelius Vanderbilt wasn't trying to overcome a graying America or shore up the Monroe Doctrine by building railroads in Latin America and Africa. If anything, I fail to see any justification for your comparisons between China and the progressive-era US.

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Barrin924• 8 years ago

I wasn't trying to create any definite story, I'm just saying that it is easy to make a historical analogy depending on what you wantto take away from it. China is not the Soviet Union any more than it is the United States. Doing away with the belt and road initiative by painting it as a Soviet vanity project seems too simple, the country is communist only in name.

For me, this narrative seems to be very typical of our European/American mindset. All great infrastructure plans are grandiose planning, we're done growing, we're 2 years away from the next crisis and so forth and projecting it onto China, which seems to have shaken off that very prediction over and over. China's current mode of development does not comply with our 'End of History' like narrative about how countries ought to develop, so we're stuck in a constant loop of shallow pessimistic analogies.

I would want to see an in-depth analysis of the project really looking at the consequences with an eye on the long-term effects rather than just stories about some harbor in Africa falling short of expectations. This is not illuminating.

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sonnyblarney9• 8 years ago

The comparison to Soviet Union is problematic but definitely more relevant than US investment scenarios that you highlighted.

The US scenario you highlighted would be more comparable to Chinese investment in the last 25 years, no?

The clear difference between Soviet Union and China is that China has a growing and robust economy, with a firm grip on the situation whereas the Soviet Union was aching away on so many lies.

Chinese fabricated financials can be papered over with any kind of magic the state wants to apply to it - so long as the economy continues to move forward the numbers will say anything they want them to say.

The articles comparison may be overblown but it's not without reason.

I believe that the China boom has mostly been had, and we're going to see lower growth from here on in; that said, it'll be consistent and positive and they aren't going to disappear as a superpower.

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seanmcdirmid11• 8 years ago

There are more booms to be found in China, for sure. But corrections/recessions/crashes are needed to wash out the bad elements so the better ones can thrive.

The party has stated they can do this on their own, but given that their families' control of large parts of the economy has become a huge part of the problem they are unwilling to manage (which would have been hard anyways).

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Gibbon1• 8 years ago

Chinese fabricated financials can be papered over with any kind of magic the state wants to apply to it - so long as the economy continues to move forward the numbers will say anything they want them to say.

My feeling is business people and economists are upset that China utterly refuses to follow neoliberal economic polices. Preferring instead to follow old school Keynesian policies. Policy makers thus view China as economically in a state of sin.

Typically countries that try to follow Keynesian economic policies get hammered by western central banks and monetary institutions. However China is way both too large to be 'punished' like that and has iron fisted control of it's own currency. That leaves western and in particular US monetary authorities powerless to do anything.

Hence the constant butthurt blather for the last 30 years that that Chinese expansion only has 5 more years left before it collapses.

Notable: In 2008 the US and Europe followed neoliberal austerity policies to make sure that the banks and paper wealth were made whole. Resulting in a very slow recovery and increasing poverty and political blow back. China responded by building the worlds largest high speed rail network.

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sswaner2• 8 years ago

Perhaps a better comparison is a slightly older one - the economic consequences of the Russian investment in the Trans-Siberian Railway. The significant [struggling to find a citation with numbers] investment as a percentage of GDP between 1891 and 1916 starved other capital investments that would have yielded greater return in the more populated west. In addition, the infrastructure investment brought the Russian Empire into stronger contact with previously distant empires (China and Japan). By 1914 and the start of World War 1, the railway was valuable in bringing resources from Siberia to the west. But, if that capital had been invested in the western provinces, even improved railway network in Ukraine, Poland and Belorussia, would war outcomes have been different. And, would capital investments more directly visible and related to population centers created a dynamic that would have been less sympathetic to Bolshevik ideology?

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duxup4• 8 years ago

I think the main point was that the Chinese investment seems to at times fly in the face of where trade really is / is going.

The us interstate system was where there was trade already and not many alternate routes / better systems.

China's strategic concers are obvious and make sense...and yet if push came to shove and they were cut off from the sea, are they really trading via rail with Europe or others in that scenario anyway? / is incurring the costs of whole backup systems making sense?

Personally I don't have a clue how any of this plays out, just speaking to what the article is indicating.

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fspeech2• 8 years ago

No it doesn't make sense to expect rail to replace sea, however the article failed to note that the Yiwu-Europe rail link is over existing rails and there was very little infrastructure investment other than inland port facilities. The major drive was on the software side -- making trains going through multiple countries less cumbersome. Whatever happens to the BRI the Yiwu-European rail certainly is not to going to be the one to break the bank.

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jeffreybezos2• 8 years ago

Do you have a reference for the US interstate system being built where there was trade already?

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factsaresacred2• 8 years ago

it obviously makes sense to invest into continental infrastructure because it does not control the sea.

Easier and cheaper to pursue a Blue Water Navy than pump money into questionable projects in corrupt States -- projects who's success is anything but assured (See Malaysia PM planning to cancel all Chinese projects and the mess in Pakistan as recorded by WSJ recently).

someone needs to build infrastructure, after all, I don't think we've somehow transcended the need for transportation.

It's more about the opportunity cost and ROI than the need, right?

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oblio2• 8 years ago

The money also buys you influence and good will from the locals (usually), which I imagine China also probably wants.

And when did a Blue Water Navy become cheap? It's one of the most expensive military investments, especially if your plan is to break a potential US blockade.

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DanielGee• 8 years ago

This sounds like the infrastructure version of the 'financial bubble' prediction that crops up every other year.

My favorite is the yearly "end of china" report by gordon chang. I remember the guy talking about china's collapse in the 90s and he's been wrong since.

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nopinsight4• 8 years ago

"The bulk of major Belt and Road projects are in Malaysia, South Asia and Indochina" -- subheading of the 2nd chart

Malaysia and Indonesia control the Strait of Malacca, one of the world's busiest shipping lanes which doubled in traffic over the past decade [1]. The strait connects manufacturers in China to fast-growing large population centers in South Asia, including India, Pakistan and Bangladesh with over 1.5 billion people in total.

Most of the projects facilitate trades between South Asia, Southeast Asia, and China. About half of the world's population live in these regions [2].

The projects to connect China to Russia and Europe serve two major purposes:

1) Energy security: Over 40% of the oil China imports comes from the Middle East [3], where it does not have much influence. Even imports from elsewhere are largely shipped over the seas which China does not control.

2) Geopolitical influence through trade and investment

[1] http://www.seatrade-maritime.com/news/asia/exclusive-malacca...

Also: https://www.shipmap.org/

[2] More People Live Inside This Circle Than Outside Of It https://brilliantmaps.com/population-circle/

[3] http://www.worldstopexports.com/top-15-crude-oil-suppliers-t...

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nopinsight4• 8 years ago

More info on the Strait of Malacca (emphases mine):

"The strait is the main shipping channel between the Indian Ocean and the Pacific Ocean, linking major Asian economies such as India, Indonesia, Malaysia, Singapore, China, Japan, Taiwan, and South Korea. Over 94,000 vessels pass through the strait each year (2008) making it the busiest strait in the world, carrying about 25% of the world's traded goods, including oil, Chinese manufactured products, coal, palm oil and Indonesian coffee. About a quarter of all oil carried by sea passes through the Strait, mainly from Persian Gulf suppliers to Asian markets. In 2007, an estimated 13.7 million barrels per day were transported through the strait, increasing to an estimated 15.2 million barrels per day in 2011."

https://en.wikipedia.org/wiki/Strait_of_Malacca

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duxup4• 8 years ago

In the 1950s, the Soviet economy grew faster than that of any other major country barring Japan.

I'd like to read more about what was happening then, was it largely military investment?

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yostrovs2• 8 years ago

So much destruction post 1940s coupled with slave labor (local political prisoners and German prisoners of war) leads to roads and steel plants being built quickly. The population though lived on near nothing till the 60s.

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duxup4• 8 years ago

Yeah, also I wonder how you compare something purely state run like Russia with something more along market lines in the short term .... they operate so differently. State run can often create a pretty big economic short term bump if they wish... not sure that means much.

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gspetr2• 8 years ago

A not well-researched viewpoint. In USSR since late 20s, a significant portion of workforce was compensated on a "per unit of goods produced" basis, not "per hour worked", which was the standard in contemporary capitalist countries.

Slave labor in the post-renaissance era cannot compete with other types of labor.

If it could then the South would have fared much better in the US Civil War and everyone and their grandmother would have industrialized economies in Africa by now. Or at the very least Ethiopia should have, which was never a colony of anyone for any meaningful period of time.

Not to mention, the North Korean Famine of 1994-1998, in which 3% of population died, would not have been a thing.

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beerlord• 8 years ago

Plus a lot of technology, scientists and engineers taken from Germany. For example the AK-series of rifles were in 'production hell' until the Russians put the captured Germans responsible for producing the STG-44 onto the task.

Much of the productive capital assets in Germany were simply lifted up and taken into the Soviet Union.

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consumer4514• 8 years ago

The USSR also had many satellite nations, like the Eastern European block. Moscow was known to drain those countries' resources, with little local investment in return outside of military bases.

I only have personal anecdotes to back that up having grown up in one of those satellite countries.

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doombolt5• 8 years ago

Actually, all of those states had higher standards of living than core USSR and also access to this huge Soviet market. Didn't do much good since communism is so bad, but still.

After the collapse of the Bloc most of those countries lost their industrial capacity, some have not yet recovered, some only recovered on outsource.

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jabl• 8 years ago

Back then, the USSR was largely a rural backwater. After WWII, there was rapid industrialization, mechanization of agriculture etc.

Of course, during the entire cold war the USSR "overspent" on the military compared to the Western economies. But, during the WWII the economy was understandably 100% focused on the war. So even if the kept "overspending" on the military after the war, there was still a lot of industrial capacity left over that could be used for rebuilding and industrialization.

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socrates1998• 8 years ago

Some interesting points in here that I had not considered in a while. Definitely one of the big advantages of the western economies is the cutthroat nature in which they think about ROI.

If something won't return a profit to a high probability, then it's not built.

Japan has seen problems with the same Soviet top-down style, where there are a lot of excess infrastructure projects throughout Japan, particularly in rural areas.

Japan avoided the Soviet implosion, but it has still gone through a large period of flat growth since the early 90's.

Deflation has been a major problem since 1991 and still is.

China could be the exception to this top-down style and find a way to high growth despite it's inefficiencies, but I am betting that it all catches up to them suddenly. Maybe not for a few years, but it will most definitely happen like it has happened to every country that has adopted the top-down Japanese style modernization.

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taobility5• 8 years ago

I don't agree that's the big advantage of western economies, especially for infrastructure project. Actually that's the big disadvantage, and short term of capital economy, as everything is about ROI, in short term. Think about high speed trail in California, the project at that scale, no private company can do that, in additional, it may take several decades to make any profit. Only the government can make such plan and invest on this project, but every four years election make it also impossible.

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User239• 8 years ago

A good read describing China's motivations behind this: https://theconservativetreehouse.com/2017/08/30/chinas-inher...

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nopinsight4• 8 years ago

China is located among countries with large populations. Border disputes and historical warfares with neighbors are among its handicaps.

Looking at the world as a grand chess board, the Belt and Road Initiative is a move which China turns this disadvantage into an edge. By promoting trades with neighbors, it gains geopolitical influence, potential integration into the local economies, and friendships with the political classes.

To match this, the US needs to further strengthen its ties with the countries in question. Several of which are projected to become some of the largest economies in the world by 2050 [1]. Regardless of the extent that the projection comes true, the regions from East Asia to South Asia, where about half of the world's population live in, clearly have great long-term strategic importance.

[1] https://www.pwc.com/gx/en/issues/economy/the-world-in-2050.h...

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zeusk• 8 years ago

It isn't as much about sincere trade as much it is about making those countries dependent on China.

Just take a look at the projects completed so far, every single time they brought in their own people and companies to build oversized unnecessary infrastructure that remains mostly unused.

When countries default on those loans, things aren't quite bright.

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nopinsight4• 8 years ago

I do not condone all of their tactics, some of which look questionable. I only tried to analyze the thinking behind their plans and strategy from a detached point of view. Their overall strategy appears quite sound.

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PeterStuer• 8 years ago

When "keep the old magic going" is in essence a locust-like exploit and collapse on a planetary scale, "magic" isn't the most choice word.

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trhway• 8 years ago

While the collapse was unavoidable, Soviet Union collapsed when it collapsed, ie. in the 198x instead of say 10 years later or 10 years earlier, because of confluence of 2 factors - cold weather of 198x resulting in bad harvests and low price of oil which didn't allow for enough import to cover the food shortage. Food is the key in support [or lack of it] of a regime by its populace. We have just again observed the same thing of food issues leading to great political upheaval - Arab Spring. Wrt. China - so far there is no food (or any other basic quality of life) issues on the horizon.

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kbart• 8 years ago

Heh, again China 'collapses', such articles keep coming for ~20 years now, yet it's only getting stronger. If I had to bet my money, I would bet that China will outlast any current major power and USA is in much more dangerous position stabbing long time allies in the backs, isolating itself and monkey for a president.

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ddebernardy• 8 years ago

FWIW, if some reports are anything to go by (see e.g. [1]), and indeed China itself (see e.g. [2]), China has an enormous (and growing) pile of bad debt. If true, things could get very ugly when the bubble pops.

[1] http://carnegieendowment.org/chinafinancialmarkets/75355

[2] https://www.caixinglobal.com/2017-10-20/china-must-guard-aga...

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phobosdeimos3• 8 years ago

China has been around for what? Three thousand years? Its not going anywhere. Even at its lowest point under Mao it still exerted enough influence to counter the Soviet and US political domination of Asia.

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xiaq• 8 years ago

If I try to connect the facts presented in this article, I don't get to quite the same conclusions. Let me walk through the article:

The article presents a chart of top investments. The top 3 are all in Malaysia, costing from $8.4B to $14.1B. OK, China is spending a lot of money in this Belt & Road thing.

The article details how the China-Myanmar gas and oil pipelines (a $2.5B investment) are under-utilized. Now we see that some of that money could have been spent more wisely.

The article points out that the majority of China's trade with Europe is by sea and the Malacca Strait is a choking point. The article doesn't say, but it seems to validate that the both investments above are good ideas:

* This validates that the vast investment in Malaysia is a really good idea. By having Malaysia's economy integrated with, or even reliant on China's economy, China secures the trade route by sea.

* This also validates that the China-Myanmar pipelines may also be a good idea, even if they are under-utilized now. It hedges the risk of the Malaysia investment, and gives China more leverage when it comes to issues in the Malacca Strait. Even at peace time, Malaysia, Indonesia, or the US could threaten to deny Chinese ships passage of the Strait and apply a lot of leverage to China. That leverage is gone with the Myanmar pipelines. It is under-utilized now and will probably remain under-utilized because it's a strategic tool.

The article then shows how the Soviet economy went down due to investments in Siberia. I strongly feel it is the wrong comparison: not only because Malaysia and Myanmar are very different places from Siberia, but also because Siberia is part of Russia while Malaysia and Myanmar are not part of China. I am not implying that foreign investments are automatically better than domestic investments, but the analogy is a poor one here.

The article also shows how China's domestic investment is shifting from the east coast to the west inland areas, apparently trying to draw a better analogy with Russia's decline. That looks like a more valid point to me, but why the sudden shift to domestic investments near the end? Probably it is because the author wants to conclude the article with the following sentence:

China’s rise this century was driven by its embrace of world trade and the coastal provinces most exposed to it. In this retreat inland, it’s sowing the seeds of decline.

But if the reader still remembers the earlier parts of the article, they should see that China is doing several things:

* Foreign investments along the traditional maritime trade routes -- most notably Malaysia

* Foreign investments along the new land trade routes -- I understand this to hedge the risk of maritime trade routes being blockaded

* Domestic investments to less-developed areas

This is hardly a "retreat inland", it is diversification of investments. Sounds good to me.

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phobosdeimos3• 8 years ago

China has been a regional superpower in Asia for millennia. Its sheer size alone ensures this. That has nothing to do with the USSR.

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noetic_techy• 8 years ago

Maybe its time to retaliate with our own continental super highways. A combination of these two would be interesting:

https://www.cnn.com/travel/article/trans-siberian-road/index...

https://en.wikipedia.org/wiki/Pan-American_Highway

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exploringBabel• 8 years ago

While I think there's a certain romance and grandeur about enormous and lasting infrastructural projects, it's a little frightening how quickly we can forget our mistakes.

Even though so very much has changed in China since the Great Leap Forward in the 50s and 60s, I wonder how carefully the consequences of poor planning, overstretching one's resources, shifting economic conditions and miscalculation were taken into account.

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Soviet Collapse Echoes in China’s Belt and Road

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