The Biden administration has announced plans to borrow billions of dollars, presumably from China, to finance a green rival to the Chinese Belt and Road initiative, to counter China’s global debt trap diplomacy.
Biden says he suggested to UK’s Johnson a plan to rival China’s Belt and Road
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NEW CASTLE, Del. (Reuters) – U.S. President Joe Biden said he suggested to British Prime Minister Boris Johnson in a phone call on Friday that democratic countries should have an infrastructure plan to rival China’s Belt and Road initiative.
“I suggested we should have, essentially, a similar initiative, pulling from the democratic states, helping those communities around the world that, in fact, need help,” Biden told reporters.
The project would significantly expand China’s economic and political influence, raising concerns in the United States and elsewhere.
Biden’s remarks came after he said on Thursday he would prevent China from passing the United States to become the most powerful country in the world, vowing to invest heavily to ensure America prevails in the ever-growing rivalry between the world’s two largest economies.
…Read more: https://www.reuters.com/article/usa-britain-biden-china/update-2-biden-says-he-suggested-to-uks-johnson-a-plan-to-rival-chinas-belt-and-road-idUSL1N2LO2NZ
Why am I suggesting this is a green initiative? Apart from the fact Biden and Boris are both hardline greens, the following is from 2 weeks ago;
Biden’s focus on climate change could turn up the pressure on China’s mega infrastructure program
- China’s massive Belt and Road Initiative has been criticized for financing and building infrastructure projects that harm the environment.
- Beijing has said it would focus more on cleaner projects under the Belt and Road Initiative — but it has little concrete results to show so far, said analysts.
- U.S. President-elect Joe Biden’s focus on fighting climate change could make it harder for China to “greenwash” its mega program, said Jonathan Hillman, a senior fellow at American think tank Center for Strategic and International Studies.
While campaigning for the U.S. presidency, Biden criticized China for financing dirty fossil fuel projects around the world through the Belt and Road Initiative — and essentially “outsourcing” Chinese carbon pollution to other countries.
Since winning the election, Biden has not announced specific plans to tackle environmental concerns surrounding the BRI. But analysts said the Biden administration could work with partners and allies to offer countries participating in BRI an alternative source of financing for cleaner projects.
“The US approach is likely to continue involve a combination of sticks and carrots,” said Jonathan Wood, director and lead U.S. analyst at consultancy Control Risks.
He told CNBC in an email that the U.S. would use its own financing program — the U.S. International Development Finance Corporation — to focus on green investments to rival China’s initiative. The U.S. could also pressure partners participating in the BRI to raise environmental standards for their projects, added Wood.
The interesting thing is China’s Belt and Road could be about to implode without US or UK help.
Credit stress hurts new money going into China’s massive infrastructure project, says Moody’s
- In the first half of 2020, the value of Chinese-led new contracts and investments into countries participating in the Belt and Road Initiative totaled $23.5 billion, Moody’s said in a report.
- That suggests that full-year volumes will fall “well short” of last year’s $104.7 billion, the agency added.
- The coronavirus pandemic has caused financial strains in many small economies participating in China’s Belt and Road Initiative, it explained.
SINGAPORE — Investments in China’s massive infrastructure project in 2020could fall “well short” of last year’s level as the coronavirus pandemic caused financial strains in participating countries, according to Moody’s Investors Service.
In the first half of 2020, the value of Chinese-led new contracts and investments in BRI countries totaled $23.5 billion, the credit ratings agency said in a Monday report. That suggests that full-year volumes will fall short of last year’s $104.7 billion, it added.
Such a decline is attributed to greater economic and financial pressure faced by participating countries, many of which are small economies with diminished abilities to take on new debt financing, said Michael Taylor, managing director and chief credit officer for Asia-Pacific at Moody’s.
Australia has also done its bit to weaken Belt and Road, by helping Papua New Guinea walk away from their debt to China.
Debt-trap policy of China in Papua New Guinea backfires gloriously. Looks like Morrison has played his cards well
The Australian hand in China’s fresh loss
Timothy Masiu, who handles the Communications as well as the Information Technology ministry in the island country, accused China of deliberately building a faulty data centre. “If you buy something from a shop and it does not work, you return it and get your money back,” Mr Masiu told The Australian Financial Review, the premier Business daily of Australia. “We are struggling to repay our other debts, why should we repay this loan?” he added.
Previously, in an investigation ordered by the Papua New Guinea government in 2019, it was revealed that the data centre built by Huawei has major cybersecurity flaws. “It is assessed with high confidence that data flows could be easily intercepted,” the 2019 report said. “Remote access would not be detected by security settings.”
…Read more: https://tfipost.com/2020/08/debt-trap-policy-of-china-in-papua-new-guinea-backfires-gloriously-looks-like-morrison-has-played-his-cards-well/
The fatal flaw in China’s debt diplomacy is China went beyond simply lending the money, they insisted on using their own people to build the belt and road infrastructure projects. So if there are any problems, like the security back door in Chinese built communications infrastructure allegedly discovered by Papua New Guinea, countries have an excuse to do what Papua New Guinea did, and claim that China did not deliver on their promises.
There are other examples of Chinese debts countries could refuse to repay because of the flawed process, such as the disgustingly corrupt Revantador volcano dam in Ecuador. Everyone right up to a former deputy Prime Minister in Ecuador is in jail over the corrupt signing of that deal, and the crumbling, silt filled dam, sited on the geologically unstable foothills of the Revantador Volcano, was clearly never going to be a success.
Even countries which are trying to play China’s game are struggling. For example, the Pacific island nation Vanuatu borrowed big from China to finance shipping port upgrades and a new conference centre which nobody wants. After Vanuatu struggled to repay the debt, China took control of some of Vanuatu’s tourism assets. Given the ongoing Covid tourism slump, I wonder how that is working out for China?
If everyone walks out on their Belt and Road debts, or China cannot recover their outlay, even if they seize control of the Belt and Road infrastructure, what happens next? That really depends on how China financed Belt and Road.
In late 2020 the Chinese Government announced they would be taking control of private sector savings, so they could use people’s savings to finance infrastructure projects. In my opinion they have likely been exercising defacto control for years, but they finally decided to make that defacto control a formal article of Chinese law.
Why would Chinese authorities need such control over private savings? My guess is the CCP needed the cash, to conceal their financial problems; I believe it is possible the CCP simply seized money from private savings banks, to plug holes in their failing Belt and Road programme, and to prop up failing state enterprises, whose treasuries were likely emptied years ago to pay for President Xi Jinping’s vanity projects like Belt and Road.
The evidence :- in 2020 major Chinese state companies also started defaulting on their debts. But now they seem able to meet their obligations. Where did the money come from, if not from looted private savings? What will the CCP do, when they run out of other people’s money?
If I am right, and that is a big if, all the USA and Britain have to do is stand back and wait for the house of cards to collapse. No need to dive in and copy China’s geopolitical mistakes, by launching a Western version of Belt and Road.