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OBOR, Chinese Strategy and Implications

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shiv
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Re: OBOR, Chinese Strategy and Implications

Postby shiv » 22 May 2017 08:42

ManSingh wrote:errr........What's a TATA truck doing at the end?

Anyways,


and of course Himachal:
http://topyaps.com/best-himachal-bus-drivers

Interestingly this video also features the main Chinese highway from Chengdu to Lhasa whose mention makes us Indians brown our pants instantly and say that China will put 10 divisions in Tibet in 30 days. Shown in my video: https://www.youtube.com/watch?v=6wUkKcSBtss

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Re: OBOR, Chinese Strategy and Implications

Postby Denis » 22 May 2017 14:51

krisna wrote:Image
kkh when searched on internet.
Just to be sure- the vehicles going thru KKH go at speeds of around 1 km/hr.


Sir, This is not KKH. This is the picture of Powari-Urni-Karcham byepass road in Himachal. I have driven on this road a few times to know for certain. In June 2015, the Powari Karcham road stretch of Hindustan-Tibet road (NH22/5) was washed away by raging Sutlej. The original road was on the left bank of Sutlej (while going up). Since this is the only road that connects this part of India with China border towards Kinnaur, Baspa and Spiti valleys, a bye-pass was opened up which made a detour through a small village called Urni. This was a narrow dirt/dust track of zillion hairpin bends and the 19 KM journey took close to 3 hours (provided there was no jam). For some time, the road was operational one way on dedicated time slots. In my many years of driving on Himalyan roads, I have no hesitation to say that this was one of the scariest road to drive on. Happy to report that the washed away section of Hindustan Tibet road along Sutlej has been laid afresh and in March 2017, I could again drive on this stretch and complete the approx. 15 KMs between Powari and Karcham in less than 15 minutes.

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Re: OBOR, Chinese Strategy and Implications

Postby SSridhar » 22 May 2017 18:34

X-Post from Managing China thread

Jaitley takes a swipe at China's approach to Africa - Vikas Dhoot, The Hindu
Finance and Defence Minister Arun Jaitley on Monday took an indirect swipe at China's approach to investments in resource-rich Africa and said that India, now one of the most important investors in the continent, doesn't believe in imposing conditions on African nations.

Stressing that India's sustained engagement with Africa, which has had a fresh impetus under the Narendra Modi government's watch, is already making an impact on the continent, Mr Jaitley said that emerging economies like India are not only proving to be a critical source of foreign direct investment (FDI) for African nations, but also a vital export market.

"Our partnership model is different... Being an emerging economy ourselves, we understand that a prescriptive model of partnership does not work. Therefore, the cornerstone of our co-operation is voluntary partnership... demand-driven and devoid of any conditionalities," Mr Jaitley said.

"We do not impose and leave it to our partners to decide what is best for them. We believe this is the most effective way of building partnerships," the finance minister said at a session on India-Africa co-operation hosted by CII here [Gandhinagar] in the run-up to the African Development Bank's (AFDB) annual meeting.

As per the Bank's Economic Outloook report for 2016, India's share in announced greenfield projects grew from 3.3% between 2003 and 2008, to 6.1% between 2009 to 2015.

"During the same time, China's share fell from 4.9% to 3.2%. India is amongst the most important emerging investors in Africa. In terms of greenfield projects, India was the fourth largest investor with 45 projects in 2015, after the US, UK and the UAE," Mr Jaitley said.

With exports to the U.S. and Europe flagging in recent years, BRICS nations and emerging economies have become more important for Africa, he said.

"In 2009, only 24% of Africa's exports went to emerging countries. In 2014, the BRICS including India, and other emerging economies accounted for half of the Africa's total exports to the world," the minister said, calling for a wide-ranging partnership with Africa as some of its strengths such as a large young workforce are similar to India.

"We need to create jobs to take advantage of this demographic dividend. The AFDB president's agenda is not very different from our own policy priorities," Mr Jaitley said.

"India is a bright spot on the world economy and Africa is not far behind. In 2015, Africa was the second fastest growing region in the world after East Asia. If we can translate the aspirations of one third of humanity into reality, it could no doubt do wonders and shape the future of the world," the finance minister said.

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Re: OBOR, Chinese Strategy and Implications

Postby krisna » 22 May 2017 22:53

^^^^regarding my post above- thanks for clarifying that the foto which i found on internet is not from KKH.

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Re: OBOR, Chinese Strategy and Implications

Postby Singha » 23 May 2017 07:12


shiv
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Re: OBOR, Chinese Strategy and Implications

Postby shiv » 23 May 2017 08:46

:D LOL This was the very seafood in Xinjiang news that I referred to earlier as the "one that got away" on the KKH

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Re: OBOR, Chinese Strategy and Implications

Postby Singha » 23 May 2017 11:24

I was thinking cheen has driven the price of solar cells to very low levels. given the amt of deserts and big sky country it has in the west, it could easily be the solar superpower of the world and supply vast amt of solar power to the east?
even TSP has the endless tracts of sindh and baluchistan with hot sun to use.

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Re: OBOR, Chinese Strategy and Implications

Postby SSridhar » 23 May 2017 11:43

Chinese companies wary of political risks on Xi Jinping’s “Belt and Road” summit - Ting Shi, Bloomberg
As the global limelight fades from President Xi Jinping’s “Belt and Road” summit, the main actors -- Chinese state-owned companies -- are warning about the political risks they face along the route.

Earlier this month Xi outlined plans to direct as much as 840 billion yuan ($122 billion) to build roads, railways, ports and pipelines across Asia and beyond, securing China’s central role in world trade. The plan has the country’s state-owned enterprises weighing investments in 65 participant nations, almost two-thirds of which have sovereign debt ratings below investment grade.

“Chinese companies’ risk awareness has grown, but they still lack the ability to discern where to invest or effectively manage overseas risks,” said Yin Yili, a vice president at a unit of China Communications Construction Co., one of the nation’s largest state-owned companies. “Over these past years, we’ve paid a great price and suffered big losses. We’ve paid a large amount in tuition fees.”

The concerns highlight a major challenge of Xi’s signature trade and foreign policy initiative: Ensuring that state companies don’t become overexposed abroad at a time when they are struggling to shed costs and slash soaring debt loads at home. State-owned companies had already insured more than $400 billion in projects in the four years before Xi’s summit.

More than 71 percent of Chinese companies said political risk topped their concerns about investing abroad, according to a survey of 300 Chinese companies published in November by the Center for China and Globalization, a Beijing-based research institution. They cited “policy changes,” “political unrest” and “government expropriation” as top worries.

Yin, who heads the industrial parks department at CCCC’s Industrial Investment Holding Co., said that almost two decades of foreign investment experience hasn’t necessarily translated into enhanced risk-control procedures for Chinese companies. Many still lack vision, negotiation skills and local knowledge, he said, adding that they sometimes assume money can solve all problems.

“A lot of times they only see a bevy of opportunities, but not pitfalls underfoot,” Yin said. “There are more than 200 countries and regions in the world, and not every place is worth investment.”

Protests, volatility

The Belt and Road route includes volatile areas like Afghanistan and Pakistan, as well as Yemen, Syria and Iraq.

In 2014, protests over China’s oil exploration in the South China Sea forced electronics maker Midea Group Co. to withdraw investment from neighbouring Vietnam, which is part of the Belt and Road Initiative.

China’s $1.5 billion Colombo Port City project in Sri Lanka has been dogged by demonstrations and briefly halted in 2015 after a new government pledged to review all deals by the previous Beijing-friendly administration.

Concerns about political risk were scarcely mentioned as Xi hosted almost 30 world leaders in Beijing on May 14-15. The president’s keynote address only referenced the need to manage broad financial risks, while the chairman of China’s State-owned Assets Supervision and Administration Commission told reporters that political and security threats were “completely controllable.”

‘Unstable governments’

“China needs to not only worry about walking into political traps leading to investment loss, but also worry about security of staff and assets,” said Raffaello Pantucci, director of international security studies at the Royal United Services Institute. “You are looking at parts of the world where you have politically risky and unstable governments, a variety of security threats, and a government in Beijing which has little clear skill or experience in managing these problems.”

Risks were building long before Xi first outlined in 2013 the plan to recreate ancient Silk Road trading routes between Asia and Europe by land and sea. Beijing has been encouraging state companies to “go out” since the late 1990s, with much of that investment going toward oil and other raw materials in countries such as Venezuela, where slumping commodity prices have helped weaken the Beijing-friendly government.

More than $250 billion in China’s overseas investments failed between 2005 and 2015, according to the China Global Investment Tracker, a database maintained by the American Enterprise Institute and the Heritage Foundation. The Center for China and Globalization, which separately analyzed 120 unsuccessful investments, found that political factors accounted for a quarter of all cases.

Risk Insurance

Such overseas investments are insured by the state-owned China Export & Credit Insurance Corp., or Sinosure, which covers government seizures, nationalisation, political violence, contract breaches and payment delays because of political events. In an article published on the company’s website this month, Chairman Wang Yi described Sinosure as the Belt and Road Initiative’s “chief brake.”

Since 2013, Sinosure insured $440 billion of exports and investments in Belt and Road countries and paid out $1.7 billion in claims, Wang wrote. Projects insured included a 1,800 kilometer (1,100 mile) pipeline to Turkmenistan, a $1.6 billion power plant in Jordan and an $800 million dam in Cambodia.

Yuan Li, chairman of China Civil Engineering Construction Corp., which has more than 50 projects in Africa, said Sinosure’s insurance covers “extreme circumstances” like coups and war, but not normal political reversals.

“There is a change of government almost every month,” Yuan said by phone. “There is no insurance on the earth catering to that. Our policy is to make friends as widely as possible, and not to get closer to any one party than the others.”

Political concerns have led China’s state companies to steer clear of some markets. Gordon Li, the overseas business director for China Merchants Group’s international business department, said the company hasn’t considered adding India to the 48 port projects it’s financing in 18 Belt and Road countries.

“For us, the No. 1 consideration is political risk,” Li said. “It’s extremely important whether the destination countries have good relations with China or not.”

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Re: OBOR, Chinese Strategy and Implications

Postby panduranghari » 23 May 2017 12:51

ONE BELT-ONE ROAD

So the Chinese government just had a huge party in Beijing, attended by 100 or so heads of government, where they announced the launching of the One Belt One Road initiative. They even had cute videos in English like this




But still, nobody has any idea what this is all about. And the reason is that Chinese public PR is utterly retarded. It just doesn’t work. China’s government has absolutely no way of reaching the hearts and minds of white people.

Part of it is racial hostility. Yellow men just aren’t cool. I hate saying this, I’ve lived half my life among them, and personally I like them very much. But I gotta say the truth. They just aren’t cool. Not even physically. They’re not small, the average Chinese is probably taller than the average Italian by now. But they’re skinny and awkward and just not very alpha. You just can’t fight average T levels. There’s plenty of cool guys in the right edge of the distribution, but alas. China will never be cool. Not even Japan is cool. Look at Cool Japan and other government initiatives. Only Anime and other stuff geared to 13 year olds is cool, because the Japanese never grow out of that age, as McArthur famously said. And the Koreans are basically prostituting their teenage girls all across the world for cheap (Korean dramas and K-pop shows are sold really cheap to get access) just in order to spite Japan getting more Western attention.

So now that I’ve established my impartiality by shitting on all of East Asia at the same time: what is the One Belt One Road thing? Well I don’t really know; but what I know is why it sounds so weird. You see, Chinese has this thing where ideally any word or language unit must be 4 syllables long, in order to sounds good and be memorable. As it happens Chinese characters are all 1 syllable long, so it’s also 4 characters, 4 words. It just has to. It just sounds good. It fits. It has been like that for 3,000 years. Even Confucius spoke in 4-word units. Mandarin today is about 30% 4-word idioms, some classical idioms going back thousands of years, some neologisms made by ad agencies, some political slogans made by the Communist Party Propaganda Department. That’s how Chinese works. And it’s beautiful once you get used to it.

So One Belt One Road is exactly 一带一路 yidai yilu, 4 words. Other famous slogans would be Mao Zedong’s 造反有理 zaofan youli, “rebellion is justified”, Deng Xiaoping’s 改革开放 gaige kaifang “reform and opening”, or Jiang Zemin’s 三个代表 sange daibiao “the three represents”, which incidentally means the Communist party represents the peasants, the workers and the capitalists whether they like it or not.

So anyway, everything has to fit in 4 words, so 一带一路 it was. They couldn’t just say “Land and Sea overseas infrastructure investment plan”. That would be more than 4 words. So you get this weird “belt” and “road” thing, where the belt stands for land route and road stands for sea route, for the only reason that it sounds right. Apparently the Koran doesn’t make any sense at all when read in translation but the Arabic just sounds so incredibly good, with rhyming and stuff that it became incredibly popular. Although it really doesn’t make any sense at all. Well, welcome to humanity.

So anyway, a friend of mine just told me he’d been to a conference on One Belt One Road and that it was the most boring official speech he’d ever listen in his damn life, and that’s saying something in China. Another friend though just sent me this chain-mail sort of stuff which kinda cheers on the whole thing. I assume it was made by the government, but I’ll translate it here so you can also have the Chinese side. Or better put, what China’s government says internally. Because remember, 90% of what the mainstream western press says is also, exactly, government made propaganda, we just don’t call it that.

A lot of people can’t quite get what One Belt One Road means. In fact it’s quite easy if you make a simple metaphor: say infrastructure to a country is like a person who goes buy a house. For the vast majority of people, they do need a house, but they don’t have the money on hand. Well, China here is like a developer, a construction company and a bank all put together. China has money it doesn’t know what to do with, it has empty houses, and the construction companies have no orders either. So we have both demand and supply sides here with nothing to do. What can we do?

Easy, we make a mortgage. China lends money to all these countries, and then these countries use this very money to ask Chinese companies to build them infrastructure, paying back the money to China in installments in the next decades.

By doing this China can use it’s foreign currency reserves in a smart way. We can avoid buying US treasury bonds like we’re stupid; those give almost no yield. By lending out the money for interest, the yield is much higher. With this plan China can also put to use its industrial overcapacity, we get orders which reactivate our manufacturing base. And all these countries which would use China’s money and rely on China to build infrastructure; their economies will grow eventually, they’ll use money to pay us back, and they will also buy Chinese products.

So everybody wins, that’s what One Belt One Road is all about. [This sentences rhymes in the original]

Also through this infrastructure we can achieve two roads to Europe, one by land and one by sea. If there is any war with the US, the US won’t be able to encircle us. At the same time this would accelerate the speed of transport from China to Europe, lowering transport costs and increasing China’s competitiveness.

All these countries would use Chinese products as the standard of their infrastructure. This means that in the future they would need to use Chinese products to service the infrastructure. This would exclude other countries’ products, giving our manufacturers an advantage when competing with foreign manufacturers.

Of course inside all this there will be some loans which go bad. It’s like a bank, there’s always someone who can’t pay back their mortgage or their car loan. But banks don’t care about that, why? Because they make enough profit to compensate for it. And with China’s One Belt One Road, China would profit twice. One through the interest on the given loans, way higher than the yield of US debt. And then again when these countries buy Chinese products, giving money to Chinese private businesses. In business terms this is a very lucrative process, if we can manage well the level of bad debt, we are sure to make a net profit.

Also if China gets to develop these countries’ infrastructure, naturally these countries will become more friendly towards China. All these countries will be our friends. And as everybody knows, it is always good to have many friends. This applies to people and to states.

During this process, you may notice that China outright gives aid to some countries, without expecting payback. Some people don’t understand this, how can we give stuff away for free? It’s very easy. When you get some business from someone, you gotta give them some advantage. When shopping in a store, many shops give regular discounts, they’d give you coupons if you buy a lot, or even free products. Countries do the same. You’re making money out of someone, if you don’t give them something in exchange, well the business won’t go anywhere. All these aid packages are in fact discount coupons of a sort. Because besides us there’s also Japan or Germany giving loans, helping others build infrastructure. We have competition.

This kind of plan was in fact invented by the Americans. When the US wanted to open up foreign markets, they didn’t do like other countries and use military force to conquer colonies and their markets. What the US did was use what they called “open-door policy”, they used loans, the Marshall plan, etc. They gave loans to other countries, and these countries then used the money to buy American products. By doing so the US occupied these countries’ markets without shedding blood, which helped America become wealthy, and the US dollar become the world’s reserve currency. Thus the US became the world’s factory and ultimately the boss of the world. China is actually learning from America’s path to greatness, growing through peace, and not force.

So, you see, One Belt One Road is a very farseeing policy, it is precisely the path for China’s rising. If you have any friends who still don’t get it, send this piece their way. Let everyone get it. The Great Renewal of the Chinese Nation is just around the corner!

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Re: OBOR, Chinese Strategy and Implications

Postby SSridhar » 24 May 2017 07:10

FTA will be high on Modi-Merkel agenda - Suhasini Haidar, The Hindu
Shared concerns over China’s Belt and Road initiative should push India and the European Union closer to resume stalled talks over a Free Trade Agreement, said German Envoy to India Martin Ney, indicating the issue of the FTA will be high on the agenda when Prime Minister Narendra Modi meets with German Chancellor Angela Merkel in Berlin next week.

Referring to the Belt and Road Forum that India boycotted earlier this month in Beijing, Mr. Ney said that while Germany and other European countries had joined the China’s infrastructure and connectivity project, they had refused to sign a trade document at the summit due to a lack of transparency in the negotiations.

“Our hesitation has been that there have been no consultations [by China]. While connectivity is not a bad thing, trade must follow free trade policies,” explained Mr. Ney.

“Since we have some common questions [about the Belt and Road project] in India and in Germany, this is a good reason why we should be able to sit down and discuss how we should do trade.”

Mr. Modi will travel to Germany for the fourth round of the annual Inter-Governmental Commission on May 29-30, and is expected to announce a number of agreements after his meeting with Ms. Merkel.

The meeting will be followed by a lunch to meet business leaders at the Indo-German business forum, where officials say, concerns by German tycoons over the lack of a negotiated FTA are expected to be highlighted.

Mr. Ney’s comments are significant, as they not only suggest Germany would like to work with India to counter certain parts of the Belt and Road, which India has refused to join over sovereignty concerns, Germany is also making a strong pitch to India over completing the EU-BTIA (called the Bilateral Trade and Investment Agreement) that has been deadlocked since 2013, despite 16 rounds of negotiations.

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Re: OBOR, Chinese Strategy and Implications

Postby Singha » 24 May 2017 09:41

OBOR has two other side plays
- develop a collection of truly global cheen cos who can operate in any market - like unilever, nestle or ford - it takes time to build such institutions
- develop a cadre of globally exposed chinese managers to run these operations around the world.

america started doing this around turn of 20th century ... the initial crop of american and british expat managers were no different from the young ambitious chinese struggling in some mining camp in africa or swamp in brazil. count the graves in british cemeteries in india those who died of tropical illness...it also took a toll on the memsahibs and kids but they pushed ahead in the lakhs into tropical regions in the service of corporation and empire.

on the flip side I have personally heard a desi parent in SV hesitating to admit his son in univ of purdue as "there will be a lot of snow" :lol:
#pathetic

our desi traders and seafarers need to spread out again and engage with everywhere in the world.

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Re: OBOR, Chinese Strategy and Implications

Postby Atmavik » 24 May 2017 09:48

Desi's have also gone far and wide but lack institutional support. i know a few who r leaving a good job in massa to start a business in Zambia.

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Re: OBOR, Chinese Strategy and Implications

Postby yensoy » 24 May 2017 09:54

The key difference between OBOR and Marshall plan is that Marshall plan opened the American markets to the Europeans. There are two parts to this (i) markets are open de-jure, by minimal regulatory restrictions, low taxes and no indirect impediments to access and (ii) markets are open de-facto, by the fact that American consumers want European products, and European countries have products of value to export to Americans.

With OBOR, Chinese markets will still not be open to the rest of the world. (i) De-jure, China is highly protectionist - even if an area is open to import, there will be other impediments - see for instance the ridiculous restriction on the number of foreign movies allowed to be screened, capped at roughly 30 something per year, or the restrictions on pharma due the fact that the "formulation is not authorized for use by Chinese medical authorities". (ii) De-facto, China and Chinese people are rather insular in outlook - they look up to Japan, Korea and the West for cultural and culinary inputs, and pretty much have no use for the rest of the world (except seafood and beaches). On the flip side, much of the OBOR region has little of value - other than raw materials, crops, minerals - to export to China, and Chinese aren't interested in whatever else they have.

OBOR is no Marshall Plan, make no mistake about it.

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OBOR, Chinese Strategy and Implications

Postby Peregrine » 24 May 2017 13:26

X Posted on STFUP Thread

US revives two infrastructure projects in Asia to counter China's OBOR

WASHINGTON: The US has revived two major infrastructure projects in south and southeast Asia in which India would be a vital player, a move that could potentially act as a counter to China's ambitious Belt and Road initiative.

The Trump administration has resuscitated the 'New Silk Road' initiative, first announced by then Secretary of State Hillary Clinton in July 2011 in a speech in Chennai, and the Indo-Pacific Economic Corridor linking south and southeast Asia.

A brief outline of the two projects was made available in the administration's maiden annual budget on Tuesday, which indicated that the 'New Silk Road' project would be a public- private initiative in which India would be an important player.

The state department said the budgetary request of its south and central Asia will support the two initiatives: the New Silk Road (NSR) focused on Afghanistan and its neighbours, and the Indo-Pacific Economic Corridor linking South Asia with Southeast Asia.

This request will be leveraged through side-by-side collaboration with regional countries, other bilateral donors, multilateral development banks, and the private sector.

It said "the importance of...the NSR grows" as the transition in Afghanistan continues and the US "strives to help the Afghan people succeed and stand on their own."

The state department said it will deepen support for the objectives through "far-reaching" public diplomacy programmes.

According to James McBride of the Council on Foreign Relations, the NSR refers to a suite of joint investment projects and regional trade blocs that have the potential to bring economic growth and stability to Central Asia.

"Following the surge of 30,000 additional troops into Afghanistan in 2009, which President Barack Obama's administration had hoped would lay the groundwork for complete withdrawal a few years later, Washington began to lay out a strategy for supporting these initiatives through diplomatic means," McBride said.

Announcing her vision for a New Silk Road, Clinton had said in Chennai: "Turkmen gas fields could help meet both Pakistan's and India's growing energy needs and provide significant transit revenues for both Afghanistan and Pakistan. Tajik cotton could be turned into Indian linens. Furniture and fruit from Afghanistan could find its way to the markets of Astana or Mumbai and beyond."

But the NSR strategy took a backseat during Obama's second term when John Kerry occupied the Foggy Bottom headquarters of the state department.

Simon Denyer, the China bureau chief of The Washington Post, recently wrote that Clinton's idea never really got off the ground, and the Obama administration was criticised by experts for responding negatively to China-backed The New Development Bank.

Through the B&R initiative, China aims to link itself with markets in Europe and Africa through Asian countries and the Indian Ocean. India opposes one of the projects under the initiative as it runs through Gilgit and Baltistan in Pakistan-occupied Kashmir.

The $46 billion China-Pakistan Economic Corridor links China's restive Xinjiang region to the southern Pakistani port Gwadar, built with Chinese funding. The port could potentially be used as a naval outpost for the Chinese military.

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Re: OBOR, Chinese Strategy and Implications

Postby Singha » 24 May 2017 14:36

yeah but doesnt TSP stand from benefit from this as well? they will be happy to take more rent.

from our POV going via Iran is ok
from US pov , Iran is a pariah and tsp the munna

its never going to converge. making a enemy of iran must count as the dumb move of the decade for the US. all for israel which has enough nukes to wipe iran 10x :)

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OBOR, Chinese Strategy and Implications

Postby Peregrine » 24 May 2017 15:12

Singha wrote:yeah but doesnt TSP stand from benefit from this as well? they will be happy to take more rent.

from our POV going via Iran is ok
from US pov , Iran is a pariah and tsp the munna

its never going to converge. making a enemy of iran must count as the dumb move of the decade for the US. all for israel which has enough nukes to wipe iran 10x :)
Singha Ji:
Sir Ji, Clapistan does not allow India Land Transit to Afghanistan and C A Republics. In addition Goods From and To these Countries - via Pakistan - will get the same treatment as NATO Containers, Oil Tankers etc. i.e. "Looted by the Terrorists Created and Sponsored by the TSPA.

Thus India WILL REFUSE TRANSIT OF GOODS TO AND FROM CLAPISTAN to Bhutan, Nepal, Bangladesh, Myanmar, China and of course the other South East Asian Nations. Voilà!

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Re: OBOR, Chinese Strategy and Implications

Postby SSridhar » 24 May 2017 17:36

Joining up openly with Sunni despots, Trump & Co will expectedly put pressure on Chahbahar and Indian road/rail projects to link up with CAR through Iran. India had on earlier occasions allowed Indian interests to be subsumed by the American diktats. We shouldn't allow that to happen anymore.

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Re: OBOR, Chinese Strategy and Implications

Postby SSridhar » 25 May 2017 04:50

Nepal will carefully weigh use of funds from China: Nepal envoy - Sachin Parashar, ToI
As concerns abound in India over Nepal's decision to join China's One Belt, One Road (OBOR), Nepal has come out strongly to underscore the significance of its ties with India, saying no country can change its geography.

While fears have been expressed about another South Asian nation walking into a debt trap, Nepal has assured India that the agreement it signed to officially join OBOR is still at a "premature stage" and that it will carefully weigh terms and conditions for utilisation of funds from China.

"What we have is only a framework agreement (on OBOR) with China and the modalities of terms and conditions for fund utilisation will be worked out later. All such considerations will be made on merit and in keeping with our national interest,'' Nepal's ambassador Deep Kumar Upadhyay told TOI.

This is significant in the context of Sri Lanka which, faced with a debt crisis that emanated from Chinese loans
, has again turned to Beijing for help. China is seeking to improve connectivity with Nepal, including by building a cross-border railway line, but Upadhyay said such projects would take years.

"Even China acknowledges that we can't change geography. We need 365 days of continuous supplies. We have joined OBOR but we have also made it clear to the Chinese that by joining OBOR we don't want to, or mean to, undermine the relationship with India which we are proud of,'' Upadhyay said.

To underline the significance of Nepal's ties with India, Upadhyay said cooperation with India in the power sector had resulted in practically no power cuts across the country since Diwali last year.

"This has been made possible by not just our own internal management but also because India supplied us an additional 151MW of power last year. This additional power was made possible through the double circuit transmission line between Muzaffarpur and Dhalkebar which was inaugurated by PM Narendra Modi and his then counterpart K P Sharma Oli,'' the envoy said.

Nepal has just concluded its first round of local body elections which are being held in the country after a gap of 19 years. While elections have been held in the hilly region, the crucial Terai region will go to polls next month. As part of the power sharing agreement arrived at last year, PM P K Dahal 'Prachanda' resigned on Wednesday, paving the way for Nepali Congress leader Sher Bahadur Deuba to take over as prime minister.

"It was high time the local elections were held and the entire country hopes the government at the local level will start to function soon,'' said Upadhyay, describing the polls as a positive development.

According to the envoy, too much was being read into Nepal's ties with China at a time when India itself was working actively to further promote connectivity with Nepal.

"India and Nepal could have done more together but better late than never. Indian Railways is within a distance of a few km from the border at 12 points now. The two governments are working together to promote road connectivity too by building six-lane highways close to the border on both sides,'' Upadhyay said.

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Re: OBOR, Chinese Strategy and Implications

Postby BharataTalwar » 25 May 2017 05:37

Peregrine wrote:
Singha wrote:yeah but doesnt TSP stand from benefit from this as well? they will be happy to take more rent.

Thus India WILL REFUSE TRANSIT OF GOODS TO AND FROM CLAPISTAN to Bhutan, Nepal, Bangladesh, Myanmar, China and of course the other South East Asian Nations. Voilà!

Cheers Image


TSP has easy access to Bhutan, Nepal, Myanmar and S.E Asia either through China or the sea. The only significant place we could block/delay them is Bangladesh. I highly doubt they would trade this in return for transit to Central Asia.

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Re: OBOR, Chinese Strategy and Implications

Postby shiv » 25 May 2017 06:50

With China being a huge manufacturing hub I would like to know exactly what goods would need to reach Bhutan, Nepal and Burma via Pakistan when all 3 have borders with China and a Chinese highway extends into Nepal. Pakistan could possibly send rice mixt with mice schidt. The second point is the size of the market and economy to buy goods in Nepal, Bhutan and Burma - which is miniscule. Pakistan is completely irrelevant to supply anything other than counterfeit notes to these nations.

That aside - that bloody road from Shitistan to Xinjiang isn't going anywhere anytime soon. There is a lot of propagandu that covers up this fact. Neither Pak nor China have any incentive to admit that the Pak-Xinjiang highway is kaput

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Re: OBOR, Chinese Strategy and Implications

Postby Prem » 25 May 2017 09:39

SSridhar wrote:Joining up openly with Sunni despots, Trump & Co will expectedly put pressure on Chahbahar and Indian road/rail projects to link up with CAR through Iran. India had on earlier occasions allowed Indian interests to be subsumed by the American diktats. We shouldn't allow that to happen anymore.


This calls for getting both Paki and Irani occupied Balochsitan areas to become one state under the benign supervision of India.

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Re: OBOR, Chinese Strategy and Implications

Postby pankajs » 25 May 2017 10:09

Bakistan has easy access to Bangladesh and Myanmar via the sea. Hell ... Bakis have access to all these countries via the air no.

So even with access to Nepal and Butan via China, what goods are the Bakis going to supply? Can they compete with India in these countries on prices? Especially considering the transportation cost? Are the bikharis going to subsidize their goods to compete with India?

Not considering *grand* gestures, Connectivity means nothing without looking at the economics. Folks often forget to ask the most important question.

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Re: OBOR, Chinese Strategy and Implications

Postby KL Dubey » 25 May 2017 10:21

Looks like folks are still droppin' by to take a "poke" at Comrade Xi's Ob Or and C-Pec. You should start charging, Comrade Xi...this might be your only revenue from the whole affair.

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Re: OBOR, Chinese Strategy and Implications

Postby SSridhar » 25 May 2017 10:27

An Abe-Modi plan for Africa - Vikas Dhoot, The Hindu
India and Japan on Wednesday unveiled a vision document for the Asia Africa Growth Corridor, proposed by the Prime Ministers of the two countries last November.

More details are likely to be firmed up by September in time for Japanese Prime Minister Shinzo Abe’s visit to New Delhi.

Unlike China’s One Belt One Road (OBOR) project, about which India has raised several concerns, the Asia Africa Growth Corridor is conceived as a more open and inclusive programme that will be based on more consultations and keep people as the centre piece rather than just trade and economic ties, said officials who worked on the vision document.

Four key elements


The document presented to the board of the African Development Bank’s governors at their annual meeting here, proposes four key elements that leverage the strengths of India and Japan.

They are enhancing capacity and skills; building quality infrastructure and connecting institutions; development and cooperation projects in health, farming, manufacturing and disaster management; and people-to-people partnerships.


Important partners

“Today, the intermediate report of the Asia Africa Growth Corridor was announced … This will facilitate greater trilateral or triangular cooperation among Japan, India and Africa as a win-win-win,” said Japan’s ambassador to India Kenji Hiramatsu.

“As African countries continue to grow against the background of their abundant resources and growing population, they are becoming important partners of Japan and India with deeper relationships, politically and economically. We expect greater synergy to emerge between Japan’s technology and capital and India’s strong network and experiences in Africa,” he said.


The Ambassador also called for greater cooperation between Indian and Japanese firms in furthering Africa’s development and urged Indian investors to participate in the new economic zone coming up around Kenya’s Mombasa port with Japan’s assistance.

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Re: OBOR, Chinese Strategy and Implications

Postby arun » 25 May 2017 10:51

X Posted from the CPEC thread.

The Peoples Republic of China attempt to do propoganda for OBOR,BRI,CPEC by getting the UN ESCAP to write a favorable report embarrasingly blows up and results in the PRC pressuring the UN ESCAP to dissapper the report which I will addresse in my next post.

UN ESCAP report punctures PRC boast that this endevour is the greatest thing since the invention of sliced bread by saying:

"The dispute over Kashmir is also of concern, since the crossing of the CPEC in the region might create geo-political tension with India and ignite further political instability,"


"Afghanistan's political instability could also limit the potential benefits of transit corridors to population centres near Kabul or Kandahar, as those routes traverse southern and eastern Afghanistan where the Taliban are most active,"


"However, social and environmental safeguards are a concern. The CPEC could lead to widespread displacement of local communities. In Balochistan, there are concerns that migrants from other regions of Pakistan will render ethnic Baloch a minority in the province"


"In addition, Hazaras are another minority of concern. If the benefits of the proposed CPEC are reaped by large conglomerates, linked to Chinese or purely Punjabi interests, the identity and culture of the local population could be further marginalised,"


"Marginalisation of local population groups could reignite separatist movements and toughen military response from the government"


And goes on to subtly point out that presently it is NOT founded on principles such as trust, confidence and sharing benefits among participating states :

"In order for the full potential of the BRI to be realised there are several prerequisites. It should be founded on principles such as trust, confidence and sharing benefits among participating states."


Above from Times of India:

CPEC may ignite more India-Pakistan tensions: UN report
Meanwhile press from the Mohammadden Terrorism Fomenting Islamic Republic of Pakista, ARY News reported thus on the UN ESCAP Report:

CPEC might create geo-political tension between India and Pakistan: UN report

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Re: OBOR, Chinese Strategy and Implications

Postby arun » 25 May 2017 10:58

Looks like under pressure of the Peoples Republic of China the UN ESCAP report on BRI/OBOR/CPEC that was done at the specific request of PRC has been removed from website of UNESCAP. The PRC it appears has been unable to stomach criticism. My search of UN ESCAP website came up with only a dead 404 link.

Reference however remains on Google.

Search on Google for the phrase “If the benefits of the proposed CPEC are reaped by large conglomerates, linked to Chinese or purely Punjabi interests, the identity and culture of the local population could be further marginalised” shows up it was posted at some time.”

See the entry headed “Download - United Nations ESCAP”, 4 down from the top at the time of my search.

Google Search

Meanwhile the UNESCAP report that was critical of BRI/OBOR/CPEC was apparently posted at the below link but vanished now presumably because China was unable to stomach the slap and pressured UN ESCAP to disappear the report:

http://www.unescap.org/sites/default/fi ... edited.pdf

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Re: OBOR, Chinese Strategy and Implications

Postby Philip » 25 May 2017 12:38

WE should not reduce our strat. cooperation with Iran whatsoever.It is vital to our strat. interests,Shiite,inimical to the Saudi-led Sunni mil alliance ,hoping to be the Sunni NATO,which will deal with Shiite Iran. The Chahbahar port project should receive max investment and completed before time.With Japan also involved,and Russia /Central Asia the main beneficiaries,there should not be any problem Trump,etc., notwithstanding. Iran has elected again a moderate reformist leader,is free of most sanctions and it will be v.hard to corral Iran again after it has the full backing of Russia for mil aid,not to mention China too! China too cannot whinge about CB as Iran is a key friend,vital oil-producing Gulf nation,buyer of its mil eqpt. The CB route could also technically link up at some point in time with OBOR widening the network. Therefore,Chinese opposition to CB will be muted.

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OBOR, Chinese Strategy and Implications

Postby Peregrine » 25 May 2017 15:38

BharataTalwar wrote:TSP has easy access to Bhutan, Nepal, Myanmar and S.E Asia either through China or the sea. The only significant place we could block/delay them is Bangladesh. I highly doubt they would trade this in return for transit to Central Asia.
BharataTalwar Ji :

With the Port of Chabahar and the upcoming North-South Corridor as well as the miniscule Trade wih the CARS - possibly a few US$ Billion - why do you want India to put its neck in the chopper and use Transit through Clapistan. You seem to be forgetting the Hijacking and Destruction of NATO Containers and Tankers bound for Afghanistan. NATO and the USA could do "Diddly Squat" to Clapistan for all the Hijackings and Destruction especially setting fuel Tankers on Fire. PLEASE FORGET TRANSIT THROUGH CLAPISTAN.
You will - at least - obviate ONE CHANNEL FOR CLAPISTANI TERRORISTS Running amuck in India.
Cheers Image

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Re: OBOR, Chinese Strategy and Implications

Postby SSridhar » 25 May 2017 18:33

UN warns about financial risks in China’s One Belt One Road project - Dipanjan Roy Chaudhury, Economic Times
The United Nations, close on the heels of OBOR Summit between May 14-16, has raised a red flag over economic, financial, social and environmental risks of China's Belt & Road Initiative (BRI) across a number of countries that are part of the mega connectivity project.

A recently concluded UN Economic and Social Commission for Asia and the Pacific Study (UNESCAP) has warned of financial risks in countries in south and central Asia where China's announced investment value under BRI is high compared to the relative size of the economy of the recipient country.

The $15 billion China-Uzbekistan investment deal signed in late 2013 is roughly equivalent to a quarter of Uzbekistan's GDP. Similarly, the $37 billion China-Kazakhstan cooperation agreement signed in late 2014 and early 2015 and the $46 billion China-Pakistan agreement in April 2015 each represent over a fifth of GDP level in Kazakhstan and Pakistan, according to the UN study.

China's commitment to Pakistan has now reached $ 62 billion. Similarly, the $24 billion China-Bangladesh agreement in October 2016 is equivalent to almost 20% of Bangladesh's GDP.

"External account indicators for some of these economies are relatively weak. In Kazakhstan, the current account deficit amounted to about 6% of GDP in 2016, while external debt stood at over 80% of GDP in 2015. In Pakistan, foreign external reserves are rather small at about 4 months of imports in early 2017," said the report.

"Relatively easy access to large foreign loans for infrastructure projects, even if most of them tend to be on a concessional basis, can lead to risks through a slight deterioration in trade balance, undermining macroeconomic and balance of payments stability in small economies with underdeveloped financial markets and less effective debt management," the study said regarding the nature of the Chinese loans.

It is no secret that Sri Lanka has run into a huge debt trap by welcoming Chinese funded projects. Sri Lankan debt exceeds $60 billion, more than 10 percent of that is owed to the Chinese. To resolve its debt crisis, the Sri Lankan government agreed to convert its debt into equity. This may lead to Chinese ownership of the projects finally.

The financing for BRI or OBOR related infrastructure projects will require large scale capital investments. An estimate by the Chinese government suggests total investment by China would amount to about $4 trillion. The McKinsey Global Institute (2016) and the Asian Development Bank (2017) estimated that infrastructure development needs in Asia are about $1.6 to $1.7 trillion per year on average in the years to 2030, according to UNESCAP study.

"On the social front, displacement and marginalization of local communities and indigenous groups is possible as a result of land grabbing and changing communities. Similarly, workers in industries that will no longer be competitive after opening up of markets could be marginalized. Poor working conditions, especially for migrant workers and construction workers in remote areas, are also a concern...More broadly, social unrest and ethnic conflicts could escalate in societies and areas where management of BRI projects is viewed as unfair and lacking a people-centred approach. Finally, despite notable economic benefits, it is not clear whether such gains will be inclusive," the study underlined.

On the environmental front, construction and operation of large-scale infrastructure projects under BRI is likely to result in land use changes and poorer air and water quality. In addition to the direct environmental impacts, new infrastructure, particularly transport infrastructure, may also cause indirect environmental impacts by facilitating access to areas previously reserved for environmental purposes, such as protected forest, the UN study said.

"Simply channelling exorbitant amounts of money into other countries is not going to be enough for realising the New Silk Route. The implementation of the initiative calls for something more — understanding and adapting to the internal processes of BRI participants...Like a chain, the Belt and Road is as strong as its weakest link and public perceptions toward China can become an existential issue for Beijing's ambitious initiative," said Daniel Balazs, a graduate from China's Tongji University, Shanghai, while writing a piece for Australia-based East Asia Forum.

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Re: OBOR, Chinese Strategy and Implications

Postby chola » 25 May 2017 19:03

Hopefully the chinis will ignore that UN report and waste their trillion on a swath of muzzie hellholes.

Far better having them use $1,000,000,000,000 there than on CVNs and 50000 nooks (which can also bankrupt them, see USSR, but far more menacing.)

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Re: OBOR, Chinese Strategy and Implications

Postby chanakyaa » 26 May 2017 03:32

SriJoy wrote:..India joins CPEC..

Can you please provide 3-4 bullet points of what the combination of above three words mean to you. In other words, what are the 3-4 things if done by India, means India has "joined" CPEC?

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Re: OBOR, Chinese Strategy and Implications

Postby Singha » 26 May 2017 04:51

Will you nri arrange h1 visas for all the wokers in the manufacturing sector ?
Sounds like a vision born out off too much sangeet sandhya with old monk tabla and harmonium

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Re: OBOR, Chinese Strategy and Implications

Postby shiv » 26 May 2017 07:26

SriJoy wrote:My friend concluded that since we are not a manufacturing-based economy, Chinese overpowering of our manufacturing sector will be debilitating but not crippling and for a short/to intermediate term (i.e., 5-20 years?). But in exchange, we get
a) The border issues with China solved
b) long term strategic gain from permanently becoming part of UNSC and NSG.

Is such a deal worth it for us ? If so, will China accept such a deal ?


With respect to your friend, I see his viewpoint as Nehruvian naivete - in seeing the world as a group of basically honourable countries who will give and take - that is, give a concession in exchange for an advantage. This kind of "reasonableness" in international relations was something that the British used to portray although they were greedy grabbing murderers. But Nehru believed them and believed a whole lot of associated crap and those beliefs - in the "comity of nations" spread down from Nehru's generation to my parents' generation to mine and down to today's generation. Bullshit like "PanchsheeL" - "pissful coexistence" was a delusion wrought of this belief - trusting "the reasonableness of nations." The Non Aligned Movement was another international act onanism "breathtaking in its scope and scale like OBOR" where Nehru dreamt of nations large and small living together like brothers in a huge joint family.

It is as stupid to give the Chinese a concession and expect something in return as it is to deal with Pakistan in that manner. I am also not a little irritated with your friend's dhoti shivering views an that is the belief that China is unbeatable in manufacture. The idea that India should accept that and cop out is particularly obnoxious to me and I mention it only to spit on it (again metaphorically, with due respect to your friend)

Finally the absurdity of the idea should be evident to anyone who extrapolates it a little. India gives up industrial development in exchange for border peace (a double dhoti-shiver "DDS") where we cop out regarding industry and pray that our borders are safe due to Chinese respect for signature on a paper). If then after a few years - when our industry is zero, our children are unemployed - the Chinese decide to take over territory we will have no choice other than to stick our fingers in our musharrafs and sing "Ishwar Allah tere naam"

Balls. Bad idea. We must fight, compete and grow. Not cop out

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Re: OBOR, Chinese Strategy and Implications

Postby chanakyaa » 26 May 2017 07:34

SriJoy, "joining CPEC" (or whatever he11 even means) and FTA with China are completely two different things. And, you are assuming that outside of CPEC/OBOR etc. there is no trade between India and China. In fact, China runs a trade surplus with India. Unfortunately, the argument of exchanging revokable contractual agreements for permanent physical benefits is a theoretical classroom exercise at this point. If I were you, I would stay away from from such DDS-friend, let alone listen to his conclusions :D

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Re: OBOR, Chinese Strategy and Implications

Postby SSridhar » 26 May 2017 07:35

SriJoy, China has a law that anybody who conceded Chinese territory to a foreign country is to be executed, like Blasphemy having death as the only punishment. Therefore, no Chinese leader in his senses can accept for trading Tawang/Aksai Chin etc for something else especially after having claimed these unambiguously as Chinese territories. I am posting separately on the boundary issue (something I have posted here before but worth a recall now that your friend has raised the McCartney-McDonald Line)

Secondly, China wants hegemony. It is not interested in the lofty 'Vasudeiva Khutumbakam' etc. It has determined that India is its competitor and spoilsport in Asia. It wants to constrain, emaciate & shackle us. It believes that by keeping India under pressure (at China border, Pakistan, world fora, and by denying India its due etc), it would make India sweat it out thereby dissipating its energies and not concentrating into growing its economy. It feels that it has been successfully doing this. It also feels that the cost borne by it for its India-effort is insignificant because of its huge political & economic clout. The enormous extent to which China has gone against India over the years even putting its reputation at stake means that there cannot be a turnaround at all. Why should it agree to a deal that would allow India to prosper?

Thirdly, assuming that we would forever be only be a service-oriented economy and not a manufacturing one and committing on that would be an enormous blunder of the Gandhi/Nehru proportions. We never know what future has in store for us.

China's opposition to our joining UNSC & NSG has the basic Chinese angle of protecting its own interests. This is unalterable unlike its opposition to Masood Azhar which is more to pander to Pakistan and make India expend a lot of diplomatic effort and keep it off-balance. Therefore, China would never agree to our joining UNSC (NSG, being a private group may eventually happen, but China wants to delay this as much as possible). Therefore, do not expect China to relent at all on the UNSC issue. It went to the extent of open deceit in this issue which I want to recall below
In mid-September 2015, the UN General Assembly (UNGA) passed a historic resolution to continue further discussions on the expansion of the UNSC in the Intergovernmental Negotiation Group (ING) on the basis of a ‘framework document’ that has been arrived at over a long period of time. China tried to trip it by stealthily trying to introduce in the UNGA Resolution a paragraph on un-necessary technicalities in order to delay the process by several more years. India saw through the game and reversed it by even launching a protest at UNGA president, Sam Kutesa's residence over the weekend. China contacted several nations to force the issue but India’s strength prevailed upon in the end and China had to beat a retreat. Then China began working on the Jamaican government to remove its UN representative, Courtney Rattray, who drafted the text based on which future negotiations would take place so that a new incumbent would be unaware of the intricate and lengthy process behind drafting the text and China can leverage him/her to have its way. In fact, the arrest of former president of the UN General Assembly, John Ashe, on charges of bribery by the Chinese has vindicated India's suspicion that key top level officials in the UN system were being paid off to delay or scuttle the Security Council reform process. In early October 2015, John Ashe, former envoy from Antigua & Barbuda was charged by US attorney Preet Bharara for accepting a bribe of $1.3 million from Chinese businessmen and officials for support for a multi-billion dollar "south south" UN-sponsored conference centre in casino capital Macau. Bharara's complaint also stated that other Chinese nationals paid Ashe hundreds of thousands of dollars to facilitate their businesses in Antigua. While only some of the details of the bribery processes have been made public, they are enough to provide a clue to the methods China uses to influence UN processes. A part of this, they believe, has to do with influencing the progress of UN Security Council reform which China has steadfastly opposed. As president of UNGA between 2013-2014, Ashe started out by setting up an advisory body which drafted a 'non-paper' on the negotiations for UNSC reform. This, Indian officials say, was a simplified version of the 300-page draft negotiation document that was agreed to later in September 2015. India was an enthusiastic supporter of the 'non-paper' which they hoped would later become the draft text, because the advisory body was representative of the major world groups. However, mysteriously for Indians, Ashe backed out from making this the text at the last moment. This came as a blow to India's hopes, and it took a couple more years before the text was adopted. In a reprise, the last UNGA president Sam Kutesa, also wavered at the last moment, inserting paragraphs (inspired by China, say Indian officials) that would have dealt a big blow to the UN process. But this time the G4 and other countries prevailed on Kutesa, and the text went through.

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Re: OBOR, Chinese Strategy and Implications

Postby shiv » 26 May 2017 07:37

SriJoy wrote:So i take it 'FTA with China in exchange for 80% of Aksai Chin, recognition of AP as Indian state, permanent seat at UNSC and NSG' is not 'worth it' in your opinion ?

There are so many areas where this statement is ignorant that I should ignore it but because people come to BRF and read and might start thinking that this is a good idea simply because BRF has a reputation I will do what I can to demolish this delusion.

China can give us 80% of Aksai Chin today - but they can take it back in a jiffy because it is difficult to hold militarily. And an India that has given up industrial competition to China will be an international weakling who will not be able to stand up to 2 days of war. That aside China will never give up the access that the G219 highway through Aksai Chin gives them

Finally I must express my extreme irritation and frustration at the seeming repetition here of a very Indian (and BRF) viewpoint that imagines that UNSC seat is club membership that gives us bragging rights. UN or no UN a nation breaks into the top echelons of world power by being an economic and military giant. Not by giving concessions to China. licking ass, making ourselves weaker and wagging our tails like eager puppies that "We will get UNSC seat"

Sorry if I sound harsh. But the idea has pissed me off. I speak my mind. That aside. WRONG THREAD
Last edited by shiv on 26 May 2017 10:48, edited 1 time in total.

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Re: OBOR, Chinese Strategy and Implications

Postby chetak » 26 May 2017 07:45

Whatever Beijing May Say, But A Credit Downgrade Right After The OBOR Jamboree Is Embarrassing









Whatever Beijing May Say, But A Credit Downgrade Right After The OBOR Jamboree Is Embarrassing


V Anantha Nageswaran

- May 25, 2017,

Whatever Beijing May Say, But A Credit Downgrade Right After The OBOR Jamboree Is Embarrassing

SNAPSHOT
Moody’s downgrade of China’s sovereign debt might not be a surprise but its timing was unexpected. If anything, the surprise is that it took so long for them to act.


Moody’s downgraded China’s sovereign credit rating from Aa3 to A1 and upgraded its outlook for the rating to ‘stable’ from ‘negative’. That is, it does not expect to downgrade China again anytime soon.

As soon as it happened, many dismissed it. The Chinese government does not borrow in foreign currency and hence, a credit rating action by an international agency does not really matter. Well, not so fast. Even Indian sovereign does not borrow in foreign currency. Yet, its credit rating is just above junk bond rating and is often cited in many commentaries on India’s fiscal health. So, let us not be too nonchalant about it, on behalf of China. Certainly, the Chinese government won’t be.

The fact is that this is the first China rating change by Moody’s in nearly thirty years. It does make people sit up and take notice. Second, China has just come off the One Belt One Road conference where it assembled many foreign leaders. It was almost an emperor’s durbar with the little chieftains in attendance. Hence, to have this happen within a week of that jamboree is a bit of an embarrassment that China could have done without.

For China, ‘face’ matters a lot and hence, a foreign credit rating agency from a country that is, in its view, fast losing its pre-eminence is a reminder to China that the world order had not changed yet. That would be quite annoying.

For India, it would be a bit of a Schadenfreude because India had raised questions about the debt burden it would create for the countries involved. Moody’s downgrade vindicates India in a way.

Second, Arvind Subramanian, the Chief Economic Advisor to the Government of India had been fiercely critical of the credit rating agencies for their lopsided credit rating of India and, say, China. He called the chasm between the sovereign credit ratings of both countries indefensible. India was just above junk bond rating and China’s credit rating was Aa3. He might be somewhat mollified or feeling vindicated although he was batting for an upgrade for India and not so much downgrade for China.

As for China’s economic fundamentals, they had justified more than a one-notch downgrade long time ago. In its Article IV report last year, the International Monetary Fund had pointed out that China’s ‘augmented fiscal deficit’ was slightly above 10 per cent of GDP in 2016 (p.43). Its public debt ratio too is correspondingly much larger and rising. Even then, no one has the faintest idea of how much debt China’s local governments have taken on and how much of it would devolve on Beijing.

Further, China’s banks are swimming in a sea of bad debts to local government funding vehicles, to State-owned enterprises and, further, on their part, have sold these debts as Wealth Management Products to their private clients, looking for a higher yield with no risk. Their official non-performing asset ratio is less than two per cent. But, private estimates range from 5 to 25 per cent. Fitchratings, another credit rating agency, puts it at 15 per cent. Therefore, objective fundamentals warranted a lower credit rating for China.

A colleague had a legitimate question as to why this downgrade did not come earlier, when China’s fundamentals were dodgy as in, say, at the beginning of 2016 or in August last year, etc. The answer is simple. It is that the credit rating agencies did not want to pour oil into the fire and turn China’s turbulence into a self-fulfilling rout. It is better to do it when times are quieter.

Second, the scale of the estimates being touted for the ‘One Belt One Road’ initiative might have influenced Moody’s. It is our guess. The number is variously estimated at 900 billion to 1 trillion US dollar.

Hence, this downgrade could be a pre-emptive warning.

The downgrade, while being meaningfully negative for those borrowers that rely on the sovereign rating to price their own debt, may also make the Chinese government think a bit harder about the next round of debt-funded reflation once it gets bored or frightened of the current round of de-leveraging that it is supposedly pursuing.

In all, Moody’s downgrade of China’s sovereign debt might not be a surprise but its timing was unexpected, surely. If anything, the surprise is that it took so long for them to act and the question is why only one notch down.

This article in the Wall Street Journal comparing China and Japan is a good read. Moody’s rates both countries alike now.

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Re: OBOR, Chinese Strategy and Implications

Postby SSridhar » 26 May 2017 07:58

On the McCartney-McDonald and other similar boundary lines . . .

Geographically, three mountain ranges are important in understanding the dispute. The Himalayas (the Westernmost), the Karakoram (in the middle) and the Kun Lun (the Easternmost). They all meet at the Pamir Knot at the Wakhan Corridor. The Pamir Ranges then extend westwards first into Hindu Raj Ranges and afterwards, the Hindu Kush Ranges. Tibet lies enclosed among the Himalayas, Karakorams and the Kun Lun. The Karakoram is bounded on the northeast by the edge of the Tibetan Plateau, and on the north by the Wakhan Corridor and the Pamir Mountains.The southern boundary of the Karakoram is formed by the Gilgit, Indus, and Shyok Rivers, which separate the range from the north western end of the Himalaya range proper. The Karakoram runs right across the Aksai Chin and bisects it. The first Boundary Commission set up by the British in c. 1846 determined that the Karakoram range formed the eastern limits of J&K Princely State. The KunLun Mountain range is on the eastern extremity of Aksai Chin. The Tibet-Sinkiang Highway (built by China in 1957) passes right between the Karakoram & the KunLun ranges in Aksai Chin.

The border story starts in the year 1865 when British Surveyor W.H.Johnson surveyed the land extent of the State of Jammu & Kashmir. The Kashmir Maharaja’s outpost at Shahidullah (now renamed as Xaidulla by the Chinese) made Johnson include the Kun Lun watershed (further east of the Karakoram) as part of J&K. Pangong Lake (Pangong Tso in Tibet) is the southern end of the Johnson Line and is about five hours drive from Leh through the third highest motorable pass, Chang La. The Pangong Tso is south of the great bend of the Shyok River around Siachen just before the Nubra River joins it. Thus, Shaidullah (further north of the Karakoram Pass) made the eastern end of Johnson’s survey while Pongong Tso made the southern end of the survey for Ladakh. There existed therefore a gap in the boundary between Pongong Tso and Shahidullah through the Karakoram Pass (the Karakoram pass was never in dispute and which was already accepted as forming the border between Ladakh and Tibet). The Johnson Line thus confirmed Aksai Chin as part of J&K. By 1878, China had conquered Eastern Turkistan (later known as Sinkiang and now Xinjiang) and had erected boundary markers at the Karakoram Pass.

In c. 1897, Sir John Ardagh proposed a boundary line along the crest of the Kun Lun north of the Yarkand River (The Yarkand River orginates in the Karakoram very near Siachen Glacier. One tributary of the Yarkand is the Shaksgam River. It is the Shaksgam valley that Pakistan conceded to China in c. 1963 as part of the Border Agreement with China). This proposal fixed the gap between Pongong Tso and Shahidullah through the Karakoram Pass. These lines together became known as the Johnson-Ardagh Boundary Line.

In c. 1899, Britain re-drew the boundary as China and Britain became friends and the boundary was re-fixed along the Karakoram rather than Kun Lun further east as the Johnson-Ardagh line did. This new line was known as McCartney-McDonald Line. The Chinese never replied to the British proposal. Britain used both boundaries according to the exigencies of circumstances.

India, since its independence, has recognized only the Johnson-Ardagh Line in Ladakh which gives the entire Aksai Chin to India.

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Re: OBOR, Chinese Strategy and Implications

Postby sudarshan » 26 May 2017 08:29

SriJoy, one does not put non-negotiable items on the bargaining table. Period. Arunachal Pradesh, Aksai Chin, Ladakh, POK are non-negotiable. Regardless of whether or not China accepts that. Getting China to "accept India's claim" on any of these, or even to accept that these items are non-negotiable, is not a victory. Getting China to (on its own) understand the futility of even trying to get India to make any kind of concession on these non-negotiable items, is a desirable outcome (not a victory). There is no victory in non-negotiable items, but there can be resounding defeats, born of exactly the kind of thinking your friend is advocating.

The Bhagavad Gita says - every organism has the right to defend itself against external aggression. This is non-negotiable. Getting some other organism to accept your right to self defense is not a victory. If the question even arises, of getting somebody else to accept your non-negotiable claims, that is rank stupidity.

The question of even bringing these issues to any kind of bargaining table, simply does not arise under any circumstance. FULL STOP. This, BTW, is China's stance on Tibet or Taiwan or the One-China policy.

"What is mine, is mine. What is yours, is negotiable."

Edit: So in that spirit, let me propose a better bargain with China. In return for their support for our entry into the UNSC, the NSG, the XYZE, the UPeeOnMee etc. etc., and in return for their immediate and permanent cessation of all incursions into sovereign Indian territory and for maintaining a permanent 200 mile demilitarized zone on their side of the border, India will agree to temporarily drop all claims on Inner Mongolia and Manchuria (for 50 or a 100 years), and will also pardon the amounts owed by China to India for mooching off of our IP, in the form of Buddhism, Kalaripayattu (which became Karate), culture, language, assorted scientific inventions, calendars, and literature. Sound like a good bargain?

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Re: OBOR, Chinese Strategy and Implications

Postby SSridhar » 26 May 2017 12:20

India quietly boosts Asean ties as OBOR looms large - Aradhana Takhtani, Economic Times
While just a week ago, several countries in Asia and South East Asia re gion were swept into the massive One Belt One Road (OBOR) initiative of China, India, in a quiet and unobtrusive manner, reached out to the $2.6 trillion regional economy of ASEAN, under its Act East policy. Participating in the 25th year celebrations of India-ASEAN partnership, a delegation of innovators and start-ups to the ASEAN-India Biztech Expo and Conference, organised by AIBC (ASEAN-India Business Council), with the belief that the leap to the next growth phase will ride on the huge potential for SMEs and private sectors.

Didar Singh, FICCI secretary general, is clear India has a definite and different approach to push trade between the two steadily growing economies despite China's aggressive forays in infrastructure involving all SE Asian countries. He said, “India and ASEAN both have similar development scenarios and challenges, whether it is Indonesia or Thailand, besides having physical and historical linkages. Moreover, India is quickly moving its start-up ecosystem from disruption to innovation and this is where I think the return on investment will be huge. Private partnerships will be main driver.“

On the other hand, China's government-driven, huge investments seems an attractive reality for countries like Malaysia, as was evident from the view of Datuk J Jayasiri, secretary general of international trade and industry ministry (MITI). Expressing excitement at the OBOR initiative, he said, “This harks back to the time when Melaka port was the most significant trade post and now this route will bring prosperity again.“

But he quickly pointed out that India and ASEAN, and particularly Malaysia have an immense potential for economic engagement through private sector.

This also found resonance with other experts and speakers present at the two-day conference, where parleys on the Regional Comprehensive Economic Partnership (RCEP) was being touted as resolving soon what with TPP failing to come through. India is actively involved in the RCEP negotiations which when established will have a combined GDP of US$23 trillion with a 32% share of the world goods exports. T S Tirumurti, Indian high commissioner to Malaysia, who has been actively involved with promoting bilateral ties with ASEAN , said, “With Make in India, Startup India and Digital India, it is important that we become part of the regional supply chain feeding into the global supply chain. The natural propeller in India-ASEAN trade is the `centrality' of ASEAN that India adheres to. This epitomises strength in their oneness and this principle also acknowledges the criticality of the role ASEAN plays in the region.“


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