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China Rising; A Must Listen
Topic Started: 4 Apr 2015, 06:49 AM (24,435 Views)
createdby
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http://thediplomat.com/2015/09/chinas-silk-road-initiative-is-at-risk-of-failure/

China's 'Silk Road' Initiative Is at Risk of Failure
China’s “Silk Road PR” is in full swing, but the reality on the ground is different than the rhetoric.

By Moritz Rudolf
September 24, 2015

The Silk Road Initiative is the major project for Chinese President Xi Jinping. On every state visit and within every diplomatic forum, he has promoted his idea of “One Belt, One Road” (OBOR). Beijing wants to create China-centered infrastructure networks in order to expand its own economic and political influence in Eurasia.

But the time when the country was able to make economically unprofitable investments on the basis of political motives is long gone. Beijing had intended to invest more than $900 billion in infrastructure expansion in Eurasia. However, the money is now needed to stabilize its stagnating economy and nervous financial markets. China‘s currency reserves decreased drastically in August.

Due to financing difficulties a number of infrastructure projects have come to a standstill. For example, the gas pipeline known as “Power of Siberia,” the subject of an agreement signed by Russia and China in May last year, is in danger of flopping. In addition to this, the release of funds for the construction of the Altai gas pipeline to connect western Siberia and China has been delayed indefinitely.

At a more basic level, the OBOR represents an economic step backwards: instead of placing more emphasis on domestic demand, Beijing is speculating on new export markets in unstable regions such as Pakistan. The overcapacity of Chinese state-owned enterprises are not addressed but simply exported abroad. In this way the leadership is hampering its own ability to overcome the structural crisis of the Chinese growth model.

For the time being, OBOR remains a speculative bubble. Part of the initiative is to create around 20 cross-border Special Economic Zones. Khorgos, on the border with Kazakhstan, serves as a cautionary example: two years after the go-ahead China has built a city consisting of a number of multi-story shopping centers in the desert. In one of those buildings, for example, there are roughly one hundred shops, each one of them selling exactly the same product: fur coats. By way of contrast, on the Kazak side stands only a yurt and a couple of plastic camels. Inside the yurt, where one can buy German sweets and Russian beer; there is no sign of any customers.

At the same time, there is a lack of partners for the OBOR initiative: China is virtually on its own. The Chinese leadership has until now only been able to reach a handful of vague cooperation agreements, such as those with Russia and Hungary. But none of those states (and maybe not even China itself) know what OBOR really means. Xi Jinping wants to promote the idea of a “community of common destiny”. He has, however, not been able to convey what this term signifies and he has failed to convince other states why the OBOR should be attractive for other countries.

While Xi promises win-win situations, the biggest winner would be China. This is because Beijing is at once the project’s architect, financier, and builder. The suspicion towards OBOR is also fueled by China’s increasingly aggressive foreign policy. By following a more assertive approach in the South China Sea territorial disputes or more recently, by displaying modern military hardware during the World War II commemoration military parade in Beijing, the Chinese leadership risks losing the very thing it most needs from neighboring countries to make OBOR become a reality: trust.

In addition to this is the problem of unfortunate timing, a problem which could result in the collapse of Xi’s grand plan. In the light of the crisis in Ukraine, the prospects for a joint Chinese-Russian-European project have never looked worse. Moreover, ISIS threatens to spread to the very Central Asian regions that are key to the success of OBOR.

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Despite these obstacles, the Chinese “Silk Road PR” is in full swing. Berlin and Brussels should exercise restraint and should not allow themselves to be dazzled by this PR offensive. Individual projects should only be considered if they are in the direct interest of Europe and are economically viable.

Moritz Rudolf is a Research Associate at the Mercator Institute for China Studies
Edited by createdby, 24 Sep 2015, 10:04 PM.
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createdby
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What is this? A pledge for ants?

China pledges $2bn for developing world

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createdby
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Six killed, dozens injured as Guangxi’s Liucheng county rocked by series of suspected parcel bombs

Blasts were reported in as many as 15 locations across Liucheng county including a shopping mall, prison, county government office, supermarket, vegetable market and a centre for disease control

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15 Xplozions in one day?

This is not the work of one man obviously.

Wonder which group it is and why? Anybody have a guess?





Edited by createdby, 30 Sep 2015, 11:40 PM.
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Gossamer
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China Manufacturing PMI Holds At Six-Year Low - Caixin
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APF idiot list
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newjez
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Gossamer
1 Oct 2015, 02:15 PM
Thought they would be going great guns before Christmas? Have we reached cheap tat saturation point?
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newjez
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I had to chuckle. I do like this guy.

http://davidstockmanscontracorner.com/jim-chanos-chinas-emperor-down-to-his-underwear/
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Chinese Cash Flow Shocker:
More Than Half Of Commodity Companies Can't Pay The Interest On Their Debt


Earlier today, Macquarie released a must-read report titled "Further deterioration in China’s corporate debt coverage", in which the Australian bank looks at the Chinese corporate debt bubble (a topic familiar to our readers since 2012) however not in terms of net leverage, or debt/free cash flow, but bottom-up, in terms of corporate interest coverage, or rather the inverse: the ratio of interest expense to operating profit. With good reason, Macquarie focuses on the number of companies with "uncovered debt", or those which can't even cover a full year of interest expense with profit.

The report's centerprice chart is impressive. It looks at the bond prospectuses of 780 companies and finds that there is about CNY5 trillion in total debt, mostly spread among Mining, Smelting & Material and Infrastructure companies, which belongs to companies that have a Interest/EBIT ratio > 100%, or as western credit analysts would write it, have an EBIT/Interest < 1.0x.

As Macquarie notes, looking at the entire universe of CNY22 trillion in corporate debt, the "percentage of EBIT-uncovered debt went up from 19.9% in 2013 to 23.6% last year, and the percentage of EBITDA-uncovered debt up from 5.3% to 7%. Therefore, there has been a further deterioration in financial soundness among our sample."

http://www.zerohedge.com/news/2015-10-01/chinese-cash-flow-shocker-more-half-commodity-companies-cant-pay-interest-their-debt
"Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works." John Stuart Mill
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newjez
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The Whole Truth
2 Oct 2015, 01:50 PM
Chinese Cash Flow Shocker:
More Than Half Of Commodity Companies Can't Pay The Interest On Their Debt


Earlier today, Macquarie released a must-read report titled "Further deterioration in China’s corporate debt coverage", in which the Australian bank looks at the Chinese corporate debt bubble (a topic familiar to our readers since 2012) however not in terms of net leverage, or debt/free cash flow, but bottom-up, in terms of corporate interest coverage, or rather the inverse: the ratio of interest expense to operating profit. With good reason, Macquarie focuses on the number of companies with "uncovered debt", or those which can't even cover a full year of interest expense with profit.

The report's centerprice chart is impressive. It looks at the bond prospectuses of 780 companies and finds that there is about CNY5 trillion in total debt, mostly spread among Mining, Smelting & Material and Infrastructure companies, which belongs to companies that have a Interest/EBIT ratio > 100%, or as western credit analysts would write it, have an EBIT/Interest < 1.0x.

As Macquarie notes, looking at the entire universe of CNY22 trillion in corporate debt, the "percentage of EBIT-uncovered debt went up from 19.9% in 2013 to 23.6% last year, and the percentage of EBITDA-uncovered debt up from 5.3% to 7%. Therefore, there has been a further deterioration in financial soundness among our sample."

http://www.zerohedge.com/news/2015-10-01/chinese-cash-flow-shocker-more-half-commodity-companies-cant-pay-interest-their-debt
I assume that is why they keep rolling it over. They are just mini versions of Greece.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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createdby
15 Sep 2015, 10:06 PM
Fucking naïve to think you can turn $2 a day factory workers into a nation of the consumers overnight.

Consumerism needs billions in investment in advertising to tap into the inner insecurities of people and make them buy shit. You need research, focus groups, airtime, print, media, a whole fucking industry that can't be created overnight, no less run by central government bureaucrats. Creative people need to run this
:lol That's it in a nutshell. Most of the workers there are dirt poor and will save every cent then can, they will invest in productive ventures etc but they won't be rushing out to buy any of the crap they flog to us.
"Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works." John Stuart Mill
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China’s Ambitious Rail Projects Crash Into Harsh Realities in Latin America
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