What if China is becoming an economy that defies the Western paradigm?


closeupSilkRoadScreenshot
Illustration by:

http://www.silkroutes.net/

If my readers recall, Uzbekistan evicted USA warfighters from its land, and then announced neutrality:

https://www.rt.com/politics/uzbekistan-military-base-ban-956/

The Uzbekistan parliament approved a bill on Thursday that declares neutrality for the former Soviet republic, and bans its participation in any military blocs.

“Uzbekistan will have no foreign military bases and facilities on its territory,” Uzbek Foreign Minister Abdulaziz Kamilov said presenting the bill to the Senate. “The more so, there will be no operational tracking teams,” he added, as cited by Itar-Tass.

Under the document that outlines Uzbekistan’s new foreign policy, the republic has the right to form alliances, join associations and other interstate organizations. At the same time, it is entitled to quit any such organization in case it is transformed into a military bloc.

In addition, the republic’s Army will not take part in peacekeeping operations abroad since its primary mission is to provide security and territorial integrity for Uzbekistan, Kamilov underlined.

“An Uzbek soldier will never fight abroad,” he stressed.

The concept, initiated by President Islam Karimov, also states that Uzbekistan will take political, economic and other measures to stay away from conflicts in neighboring countries.

The bill underlines that Uzbekistan remains committed to its open, well-intentioned and pragmatic policy toward its closest neighbors and wants solutions to all political, economic and environmental problems facing the region today to be governed by mutual respect for interests, constructive dialogue and international law.

I haven’t heard of any moves. Certainly Uzbekistan is unlikely to shun trade with Russia and China, because it is still a member of the SCO.

Uzbekistan provides China with a rail route to Iran that doesn’t cross Afghanistan. That means the USA can continue to bomb Afghanistan and Chinese trains can roll right past all of that. And China needs new customers, because the USA isn’t buying enough:

Intel is cutting 11% of its workforce, Goldman Sachs just reported a 56% drop in profits, Morgan Stanley had a 50% drop in profits, Netflix missed subscriber growth estimates etc… yet, the Dow just hit a 9-Month high, and the S&P500 is now above 2100.

If the Chinese are serious about building a new Silk Road, they should do everything in their power to develop Uzbek and Iranian customers for Chinese products. In the short run, it looks like they are succeeding.

China has built their infrastructure to overcapacity. They have more steel mills than they have customers for steel.

And yet … they are selling more steel!

steelchina

http://www.bloomberg.com/news/articles/2016-04-18/-iron-rooster-construction-boom-set-to-drive-china-steel-rally

China has several tricks up its sleeves for keeping their industrial dominance. I am frankly amazed that they have kept it together this long. How many years is China going to be the Energizer Bunny of industry?

The environmental consequences might be catastrophic, eventually. In the short run, I don’t think the bigwigs will slack off enough to allow major publicity problems. Thus, while the Chinese might sell cheap nuclear power plants to any country, for the first few years, they will probably be very serious about avoiding nuclear accidents. The bad publicity would be very bad. (After the first ten or twenty years, I think the nuclear technicians start to make mistakes, in any country. Even Japan, which I normally consider to be full of highly reliable technicians, wasn’t reliable enough to prevent Fukushima.)

Westerners often complain about Uzbekistan, which has no interest in Western ideas of term limits. The president of Uzbekistan has been in office since 29 December 1991, and shows no signs of relinquishing his post.

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

Uzbekistan has little tolerance for radical Islam, which may be related to the fact that the USA and Israel often use Muslim patsies to stir up chaos and to obscure professional spook operations.

Robert Berke wrote:
In a new report from HSBC, “On the New Silk Road IV,” which looks at the continued globalization of China’s capital. “We believe the economic case for the continued globalization of China’s capital is intact despite (or because of) the slowdown in its domestic economy,” the report concludes. “China is looking to invest in assets that will make long-term returns.”

There’s little indication that China is stopping or even slowing its Silk Road plans. Instead, the project continues to move forward at an astonishing pace, not only as a part of China’s major growth plan, but also a major component of its defense.
In Europe, which has a thousand year trading history across the Silk Road, the plan is viewed far more optimistically. Practically every European nation has plans or signed agreements to become a Silk Road partner, with hopes that the Road may also provide some relief to Europe’s continuing economic doldrums.
Growth of the Maritime Silk Road
A look at recent developments of the Maritime Silk Road (i.e., sea route) gives ample evidence of the projects continuing growth. Last week brought news of the $400+ million purchase of the Greece’s largest port in Piraeus by China’s Cosco, the world’s fourth largest container shipper. Also announced, another new China take-over of a port in Djibouti, on the Horn of Africa, adding another node on the Maritime Silk Road.
Other reports include development of logistic centers by Alibaba in Bulgaria’s second largest port city of Burges, on the Black Sea, “which will be connected to the Chinese city of Zhengzhou by a cargo train line…” Cosco is also developing another major port in Singapore, as its main container trans-shipping center in Southeast Asia, while China Communications Construction Co. (CCC) has reported a $1.4 billion deal with Sri Lanka’s Colombo to build a major port on the Indian Ocean. Another major ongoing project is the ongoing Chinese development of the port of Gwadar, Pakistan on the Arabian Sea.
In March, the European countries seeking to join the Road were Italy, Spain, Austria, Czechoslovakia, Hungary, Romania and Bulgaria. In February, it was Middle Eastern countries, vying to become prime energy suppliers and partners with China.
 
In Asia, most nations in the region are lining up to join the venture. One example, where the first-ever cargo train from China to Iran pulled into Tehran, reducing the time of the journey to just 14 days from the usual sea born route of one month.
The Western consensus is that China is going through a slowing, but much needed transformation from a manufacturing led economy to a consumer led economy. But what if the consensus is wrong? What if China is moving towards a totally new trajectory, creating not only a new export market for its products and services but also for its finance, engineering, construction, and labor, along the entire length of the New Silk Road?
It’s not only increased trade that we’re talking about here, but also bringing modern technology to large parts of the developing world. The alluring high-tech product that China is selling is the promise of economic development, and its proving irresistible to many developing nations in the region.

Lighting the Earth
One of the most intriguing part of the Silk Road project is China as ‘power source builder,’ across the Silk Road. As reported here, China is already a surplus power producer, having invested heavily since 2004 in hydro, coal fired plants, nuclear, and renewables. China has also mastered ultra-high voltage technology, enabling it to transmit power across large distances from its eastern plants to its far west.
Power, in every sense, is key to the Chinese plan, with a focus on nuclear plants that it hopes to develop for export to clients along the Silk Road. China, currently the largest growth market for nuclear power plants, has aspirations to build some 300 of the projected 400 nuclear plants that are expected to be contracted over the next decade.
As it has done with several other key Silk Road-related industries, China has recently consolidated most of it giant nuclear development companies, merging China Power Investing with general contractor State Nuclear Power.
The new company is in partnership with Westinghouse, the former U.S. company, now part of Toshiba, with agreements to build plants in Turkey, while also pursuing an agreement with South Africa.
The plan envisions building nuclear plants, developed by China National Nuclear Corp (CNNC) at an estimated cost of $2.5 billion apiece, far below the costs of western plants that often exceed $10 billion.
As stated here, the goal is no less than development of an Asian super-grid that connects a super-continent that holds almost half the world’s population, and the focus of many market experts as the place where most economic growth will occur.
China also has also been busy acquiring foreign power companies in a growing portfolio of power assets, as a base to build upon. These include companies in Brazil, Italy, Australia, and the Philippines.
China’s plan to develop renewable energy as part of the Road is no less ambitious, featuring plans that its critics would undoubtedly see as utopian. These include drawing electricity from windmills at the North Pole and giant solar arrays in the African deserts.

Advertisements
This entry was posted in political economy. Bookmark the permalink.