OBOR, Chinese Strategy and Implications

[manjgu]

pankajS..a) u r right Pakis are being sold a lemon in terms of road revenues ( rahdari as they call it) for a road which probably will be closed to traffic atleast 4 to 5 months a year b) my issue with CPEC/OBOR is that it complicates reunifcation of POK with India. c) in case the expected projections are true ( v unlikely though) it gives Pak army so much more money in their pockets to keep up the hostilities/terrorism. d) my gripe is that India has not done enough to improve connectivity/trade with its neighbors Nepal , Bhutan, Bdesh...there is no news about the much vaunted highway to Burma, Thailand etc. which was supposed to bring in a revolution as part of our look east policy.

[Amoghvarsha]

This is all small change. Additionally, I very much doubt there will be much economic activity on this corridor. Pawkees are seeing their usual wet dreams.

I recall reading the *original* Reuters report where the *key* to this *progress* was based on some absurd maths/assumptions. At that time I didn't think much of it but now that folks are quoting numbers, here it is key passage with highlight ....
http://uk.reuters.com/article/uk-pakist ... 861GD?il=0

Nadeem Javaid, who advises Prime Minister Nawaz Sharif's government and works closely on the CPEC programme, told Reuters that such fears are misplaced as Islamabad would earn vast fees from charging vehicles moving goods from and to China.

Javaid said the Gwadar-Xinjiang corridor should be operational from June next year, and Pakistan expects up to 4 percent of global trade to pass through it by 2020.

"The kind of toll tax, rental fees that the Pakistani system will gain is roughly $6-$8 billion a year," Javaid, chief economist at the Planning Ministry, said in an interview. "By 2020, I expect we will get this much momentum."

Compare CPEC traffic projection with India's share of the total global trade, the number of ports needed to handle the same and the number of roads leading up to those ports and compare those numbers with Gwadar/CPEC stats and make your own judgement.

The Bakis apduls are being sold a lemon.

Can you expand on this?

[chanakyaa]

Letter "E" is missing in the alphabet soup OBOR, BRI, Silk Road etc. etc.

"E" for Enforcement. Giving out billions and trillions in loans and signing up leases left and right is one thing. Enforcing the return of the principal or host country honoring the contracts/leases is completely different. Especially countries not at the top of the list for honoring law/contrat to the letter. "Pakis giving up PoK or GB" line of statements are easy to make, but very broadly, how will the Chynese enforce the agreements with these countries? YooS built post-WWII institutions, for example WTO, IMF, WB etc., served well to advance YooS interests (including enforcement to ensure countries behave the way they wanted), but these institutions are tightly in the hands of YooS. In absence of such Chynese institutions, their only means to enforce such agreement is to rely on existing institutions, which means the West knows very well, that when things go bad, Chynese have no way but to rely on them.

[chola]

Letter "E" is missing in the alphabet soup OBOR, BRI, Silk Road etc. etc.

"E" for Enforcement. Giving out billions and trillions in loans and signing up leases left and right is one thing. Enforcing the return of the principal or host country honoring the contracts/leases is completely different. Especially countries not at the top of the list for honoring law/contrat to the letter. "Pakis giving up PoK or GB" line of statements are easy to make, but very broadly, how will the Chynese enforce the agreements with these countries? YooS built post-WWII institutions, for example WTO, IMF, WB etc., served well to advance YooS interests (including enforcement to ensure countries behave the way they wanted), but these institutions are tightly in the hands of YooS. In absence of such Chynese institutions, their only means to enforce such agreement is to rely on existing institutions, which means the West knows very well, that when things go bad, Chynese have no way but to rely on them.

Exactly. No bases, no war experience, no doctrine of intervention, no enforcement. This is pretty much a money gambit that depends on nations wanting to keep chini tap open.

[Singha]

If you have noted renminbi is also part of basket of intl settlement currency..usd gbp euro yen rmb

They are already inside tent of these imf wb camel shows...they will junk debt ratings of defaulters to raise cost of borrowing and punish them

[SSridhar]

Compare CPEC traffic projection with India's share of the total global trade, the number of ports needed to handle the same and the number of roads leading up to those ports and compare those numbers with Gwadar/CPEC stats and make your own judgement.

The Bakis apduls are being sold a lemon.

One of the contributors that Pakistan expects for the 'transit fee' is from the oil & gas that would reach Xinjiang from Gwadar. It expects that a significant proportion of the o&g imports by China from Iraq, Iran, West Asia and Africa would be routed through Gwadar,

[pankajs]

Compare CPEC traffic projection with India's share of the total global trade, the number of ports needed to handle the same and the number of roads leading up to those ports and compare those numbers with Gwadar/CPEC stats and make your own judgement.

The Bakis apduls are being sold a lemon.

Can you expand on this?

As of 2015, Indian merchandise export is 1.62% of global trade and import is 2.34% of global trade i.e is our share of global trade is about 3.96%.

So Bakistan hopes to generate traffic, to and from China, equivalent to total Indian import/export with this one port and one 6 lane road by 2020. Now that is building hawai mahal. This is a common sense compare/contrast kind of evaluation.

Ok, lets look at some numbers from the wiki entry on Gwadar
https://en.wikipedia.org/wiki/Gwadar_Port

Phase I: 2002-2006
Phase II: 2007–present

No. of berths
Phase I: 4
Phase II: 9
Total: 13

Longer term plans
* Dredging of approach channel to depth of 20 meters
* 150 berths to be built by 2045
* Capacity to handle 400 million tons of cargo per year

If the 2045 plans fructify, they hope to handle cargo equivalent to the current Indian import/exports i.e. about 4% of the current global world trade. Assuming proportional traffic distribution, based on the current build i.e 13 berths, they should be able to handle about 40 million tons of cargo at peak output i.e 0.4 % of global trade by their own calculation. If 4% traffic would fetch them $6-8 billion, then 0.4% traffic should fetch them not more than $600-800 million by 2020.

Plus there is the question of the road network backing the traffic over karakoram mountains. If a 6 lane highway can at max support 40 million tons of cargo then they will need to build 60 lane highway to carry 400 million tons of cargo.

Note: This is based on the rather simplistic linear scaling of data from Wiki and may not be accurate but does provide ballpark estimates.

[yensoy]

OBOR isn't dying anytime soon. Xi will throw a trillion dollars at it if that is what it takes. We don't need to jump with enthusiasm, but we can be there to savour the souring of mood. Anyway this is a meaningless discussion - I think GoI will indeed attend this with a downgraded (but not in my opinion junior enough) representation.

Going to the summit means endorsing paki occupation of Gilgit-baltistan. You know Chinese think that way. That's India's main objection. Unless you can show that there is some way to credibly attend the summit, while not endorsing the occupation of Gilgit-baltistan, I don't see any way around India's objection.

By sending Kiren Rijiju as the chief delegate, for instance ; passport issued with Itanagar address.

Anyway I think the MEA response is excellent, and shows that the gloves are off. I believe there are some academic types sent for Track-II.

Not much should be read into US attending. US is a deep thinker. They might have war-gamed OBOR to its fullest, realized that it will be a huge drain with no net benefit to China, and thence decided on attending so Eleven would be emboldened to go ahead with grand plans.

One common question is "What will China export through OBOR"? The answer is that China is probably going to export/import precious little over the route, but the very fact that they will build the route and get paid for it will be the big export. This reminds me of the story of the bicycle smuggler who crossed an international border in the morning and back in the evening, carrying just his lunch. The border guards knew he was up to some mischief but couldn't pinpoint anything - till the time he retired when he owned up to them that he had been smuggling bicycles back and forth for 30 years, and was going to hang up his shoes.

[arun]

X Posted from the International Military Discussion thread.

The ballistic missile launch was perfectly timed to upstage BARF ie: Belt And Road Forum being held in the Peoples Republic of China leading one to wonder if the missile launch was not a case of North Korea thumbing their noses at their Peoples Republic of China Patrons:

North Korea blights China's One Belt, One Road party with missile launch

[pankajs]

Further on the economics of the route
http://www.chinasignpost.com/2010/12/22 ... transport/
Still a Pipedream: A Pakistan-to-China rail corridor is not a substitute for maritime transport

Then there is the security of the route which provide FIXED and therefore vulnerable targets for attack both for insurgents and during war (Read India).

[chetak]

Compare CPEC traffic projection with India's share of the total global trade, the number of ports needed to handle the same and the number of roads leading up to those ports and compare those numbers with Gwadar/CPEC stats and make your own judgement.

The Bakis apduls are being sold a lemon.

One of the contributors that Pakistan expects for the 'transit fee' is from the oil & gas that would reach Xinjiang from Gwadar. It expects that a significant proportion of the o&g imports by China from Iraq, Iran, West Asia and Africa would be routed through Gwadar,

the power plants that the hans are building in pakiland may be used mostly to electrically heat the oil pipelines so that the oil flows easily as these pipelines will run through areas that will be very cold throughout the year.

The pakis will end up paying a major part of this operational cost to the sly hans

[Singha]

Cpec is perfectly targeted to the paki elite mindset...the idea of not having to work hard to produce or sell anything..but use strategic location to collect rent and play off renters against each other.

Its the mindset of a real estate shark

[Aditya_V]

X Posted from the International Military Discussion thread.

The ballistic missile launch was perfectly timed to upstage BARF ie: Belt And Road Forum being held in the Peoples Republic of China leading one to wonder if the missile launch was not a case of North Korea thumbing their noses at their Peoples Republic of China Patrons:

North Korea blights China's One Belt, One Road party with missile launch

Rather China showing the can get away with anything. N Korea is nothing without China , from TEL chips, almost all thier equipment comes from China. To state this in Public would be a real H&D loss for US and western politicians as they have to admit they can do nothing as China has broken every international law and they can do nothing about it.

[Singha]

I guess a additional slap in face apart from paying tribute to the dragon throne this week.

[arun]

X Posted from the International Military Discussion thread.

The ballistic missile launch was perfectly timed to upstage BARF ie: Belt And Road Forum being held in the Peoples Republic of China leading one to wonder if the missile launch was not a case of North Korea thumbing their noses at their Peoples Republic of China Patrons:

North Korea blights China's One Belt, One Road party with missile launch

Rather China showing the can get away with anything. N Korea is nothing without China , from TEL chips, almost all thier equipment comes from China. To state this in Public would be a real H&D loss for US and western politicians as they have to admit they can do nothing as China has broken every international law and they can do nothing about it.

The below article posted by me on May 9 would suggest the opposite and that is why I said what I did in my earlier post. The North Koreans are most pissed with the PRC notwithstanding the role of patron played by the PRC which I had also mentioned in my previous post.

X Posted.

North Korea seems to be mighty pissed off with the friend Peoples Republic of China for two articles that appeared in PRC Communists Party and Government controlled mouthpieces, Peoples Daily and Global Times.

Article datelined May 4, Juche 106, in Rodong Sinmun which is described as the official organ of the Central Committee of the Workers’ Party of Korea.

May. 5, Juche 106 (2017) Friday

Reckless Remarks Undermining DPRK-China Relations Should Be Stopped

A string of absurd and reckless remarks are now heard from big neighboring countries, perhaps frightened at the U.S. blackmail and war racket, every day only to render the acute situation of the Korean peninsula more strained.

The People's Daily and the Global Times, widely known as media speaking for the official stand of the Chinese party and government, have recently carried commentaries asserting that the DPRK's access to nukes poses a threat to the national interests of China. They shifted the blame for the deteriorated relations between the DPRK and China onto the DPRK and raised lame excuses for the base acts of dancing to the tune of the U.S.

Those commentaries claimed that the DPRK poses a threat to "the security in the northeastern region of China" by conducting nuclear tests less than 100 km away from its border with China. They even talked rubbish that the DPRK strains the situation in Northeast Asia and "offers the U.S. excuses for deploying more strategic assets" in the region.

Not content with such paradox, the commentaries asserted that to remain averse to the DPRK's access to nukes is to preserve interests common to the U.S. and China, calling for slapping harsher sanctions against the DPRK in order to avert a war which would bring danger to China.

The newspapers, even claiming China holds the initiative in handling the DPRK-China relations, made no scruple of letting out a string of provocative remarks urging the DPRK to choose one among such options if it doesn't want military confrontation with China--"whether to face protracted isolation or to preserve national security by making a U-turn" and whether to break Sino-DPRK friendship or to dismantle its nukes.

This is just a wanton violation of the independent and legitimate rights, dignity and supreme interests of the DPRK and, furthermore, constitutes an undisguised threat to an honest-minded neighboring country which has a long history and tradition of friendship.

China is hyping up "damage caused by the DPRK's nuclear tests" in its three northeastern provinces. This only reveals the ulterior purpose sought by it, being displeased with the DPRK's rapid development of nukes.

As far as "violation of national interests" oft-repeated by politicians and media persons of China is concerned, it is just the issue that the DPRK should rather talk much about.

It is just the DPRK whose strategic interests have been repeatedly violated due to insincerity and betrayal on the part of its partner, not China at all.

Some theorists of China are spouting a load of nonsense that the DPRK's access to nukes strains the situation in Northeast Asia and offers the U.S. an excuse for beefing up its strategic assets in the region. But the U.S. had activated its strategy for dominating Asia-Pacific long before the DPRK had access to nukes, and its primary target is just China.

China should acknowledge in an honest manner that the DPRK has just contributed to protecting peace and security of China, foiling the U.S. scheme for aggression by waging a hard fight in the frontline of the showdown with the U.S. for more than seven decades, and thank the DPRK for it.

Some ignorant politicians and media persons of China daringly assert that the traditional relations of the DPRK-China friendship were in line with the interests of each county in the past. They are advised to clearly understand the essence of history before opening their mouth.

Their call for not only slapping stricter sanctions but also not ruling out a military intervention if the DPRK refuses to abandon its nuclear program is no more than an extremely ego-driven theory based on big-power chauvinism that not only the strategic interests but also the dignity and vital rights of the DPRK should be sacrificed for the interests of China.

One must clearly understand that the DPRK's line of access to nukes for the existence and development of the country can neither be changed nor shaken and that the DPRK will never beg for the maintenance of friendship with China, risking its nuclear program which is as precious as its own life, no matter how valuable the friendship is.

The DPRK, which has already become one of the most powerful nuclear weapons state, does not feel the need to think over how many options it has now.

China should no longer try to test the limits of the DPRK's patience but make proper strategic option, facing up to the situation.

China had better ponder over the grave consequences to be entailed by its reckless act of chopping down the pillar of the DPRK-China relations.

Kim Chol

From here:

Rodong Sinmun

[KL Dubey]

"Here is a toast to my Obscene Orifice (OBOR) and Chinese Pecker (CPEC)."

[Karthik S]

Why is India suddenly under pressure to send our representatives to OBOR meet after US decided to send its.

[Hari Seldon]

I hope we hold our ground and boycott the dammit/ summit.

Des has always taken Qs of territorial integrity very seriously, regardless of govt in power. I expect modi sarkar to take the issue at least as seriously.

[Peregrine]

Cheers

[Prem]

[Prem]

https://www.youtube.com/watch?v=JqFwtu-dYqc
https://www.youtube.com/watch?v=a-wzM23rpCs
https://www.youtube.com/watch?v=Kkj540ScP_4
ON OBOR

[A_Gupta]

One of the contributors that Pakistan expects for the 'transit fee' is from the oil & gas that would reach Xinjiang from Gwadar. It expects that a significant proportion of the o&g imports by China from Iraq, Iran, West Asia and Africa would be routed through Gwadar,

Am curious about that.
E.g.,
http://www.powermag.com/energy-industry ... tions-web/

Total reserves of natural gas, coal, and other fossil resources in Xinjiang account for more than 20% of China’s energy reserves, placing it in first place for fossil fuel reserves. Xinjiang’s wind power and solar energy resources are ranked second, while its theoretical hydropower reserves rank fourth in the country.

Oil reserves in Xinjiang total 23.4 billion t, and gas resources are roughly 13 trillion m3, accounting for 23.3% of the entire onshore gas resources in China (Table 1). Among them, the Tarim, Junggar and Turpan-Hami basins contain 20.9 billion t of oil and 10.9 trillion m3 of gas, respectively, accounting for 25.5% and 27.9% of the total onshore oil and gas resources in China. Xinjiang is considered by geologists to have the most potential of all provinces for oil and gas exploration in China.

At 7.14 barrels per ton, 23.4 billion tons = 167 billion barrels, which is more than the oil reserves of Iraq (143 billion barrels).

Even if the above article is exaggerating about the oil reserves, I think Xinjiang will be, under the ideal Chinese scenario, a net energy exporter, not an energy importer.

Which direction will these imports go? IMO, to the energy-hungry east. How? The two routes are: either by pipeline to the east, or else through pipeline to Gwadar and then ship to the east via the Arabian Sea, Bay of Bengal, Straits of Malacca, etc. It is only the latter route that gives Pakistan some revenue; and it is the latter route that is, IMO, quite hare-brained.

Will Xinjiang export to the rest of the world via Gwadar? It might. I sort of doubt it.

The only other possibility for Pakistan is that China suddenly becomes environmentally conscious and bans oil drilling in Xinjiang.

What say you all?

PS: possibly the really viable market for Xinjiang oil is to use it to supply West Punjab, East Punjab and the extremely population-dense North India. That requires Pakistan and China to shed their hostility to India. Pakistan will get some benefit from oil transit from Xinjiang to India. But notice - the benefit to Pakistan from trade with India if there are friendly relations will likely far outweigh any oil transit fees (assuming Pakistan resumes friendly relations and trade with India before it becomes another Somalia).

[A_Gupta]

Here is a 771 km pipeline through Myanmar to China, that can carry 22 million tons of crude per year:
https://www.bloomberg.com/news/articles ... ude-faster

What are those fees? Reportedly:
http://www.mmtimes.com/index.php/nation ... ement.html

Myanmar will directly obtain a road right fee of US$13.81 million from both gas and oil pipeline projects annually, plus a transit fee of $1 per ton of crude oil under a 30-year concession agreement.

There is a separate gas pipeline, but assigning all the revenue to the oil pipeline, the oil pipeline generates roughly $36 million per year for Myanmar.

Pakistan imports $46 billion per year (2016) and $36 million would pay for 7 hours worth of Pakistani imports. Believe me, Pakistan is not going to become rich on oil and gas transit fees.

[chola]

Whatever happens to OBOR, the US will get its cut and so will Japan, the EU and S. Korea I'll wager.

If you look at those nations and Cheen, it is business first and rivalry second. Without this f.cking pragmatic ideology-be-damned kind of business attitude, Cheen would never have the money to even suggest something like the OBOR in the first place.

https://mobile.nytimes.com/2017/05/14/b ... anies.html

In 2014, Chinese construction and engineering companies ordered just $400 million worth of equipment from G.E. to install overseas, overwhelmingly in the region that encompasses the effort, known as “One Belt, One Road.” Last year, those orders totaled $2.3 billion, and G.E. plans to bid for an additional $7 billion in orders for natural-gas turbines and other power equipment in roughly the next 18 months.

“We have a laser focus on winning these,” said Rachel Duan, the chief executive of General Electric China.

If enacted as planned, the initiative could lead to a global building spree; China has promised more than $1 trillion of investment over the long term.

Western companies are angling aggressively for a piece of the action. Citibank won a contract from Bank of China to handle a complex $3 billion bond offering last month to raise money for opening branches across Asia, Eastern Europe and East Africa.

[Prem]

http://www.zerohedge.com/news/2017-05-1 ... nable-debt
Scandal At China's Grand Silk Road Summit As India Skips, Warns Of "Unsustainable Debt"

It was supposed to be China's day of celebrating massive infrastructure spending for the sake of spending (read ghost towns, only now outside China's borders) as Xi Jinping pledged $124 billion on Sunday for his new Silk Road plan to forge "a path of peace, inclusiveness and free trade" while calling for the abandonment of old models based on rivalry and diplomatic power games. However, it did not go quite as smoothly as expected.First, just hours before the summit opened, North Korea launched its latest ballistic missile, provoking Beijing and further testing the patience of China, its chief ally. Ironically, the United States had complained to China on Friday over the inclusion of a North Korean delegation at the event.Then, in a sign that China's rampant, credit-fuelled growth is making some just a little uncomfortable, some Western diplomats expressed unease about both the summit and the plan as a whole, seeing it as an attempt to promote Chinese influence globally according to Reuters. They are also concerned about transparency and access for foreign firms to the scheme.Australian Trade Minister Steven Ciobo said Canberra was receptive to exploring commercial opportunities China's new Silk Road presented, but any decisions would remain incumbent on national interest. Responding to criticism, Xi said that "China is willing to share its development experience with all countries" and added "we will not interfere in other countries' internal affairs. We will not export our system of society and development model, and even more will not impose our views on others."
But the biggest surprise was India, the world's fastest growing nation and the second most populous in the world, which did not even bother to send an official delegation to Beijing and instead criticised China's global initiative, warning of an "unsustainable debt burden" for countries involved.
Indian foreign ministry spokesman Gopal Baglay, asked whether New Delhi was participating in the summit, said "India could not accept a project that compromised its sovereignty."India is incensed that one of the key Belt and Road projects passes through Kashmir and Pakistan. The nuclear-armed rivals have fought two of their three wars over the disputed region, Reuters notes. "No country can accept a project that ignores its core concerns on sovereignty and territorial integrity," Baglay said.Furthermore, he also warned of the danger of debt. One of the criticisms of the Silk Road plan is that host countries may struggle to pay back loans for huge infrastructure projects being carried out and funded by Chinese companies and banks. "Connectivity initiatives must follow principles of financial responsibility to avoid projects that would create unsustainable debt burden for communities," Baglay said.Finally, in what may be perhaps the best summary of the regional sentiment - and antagonism - over the Silk Road, is this fictional postcard, written by Chris Andrew over at Clarmond.

[Prem]

[KL Dubey]

A $100 million/yr investment from India in helping freedom movements in Balochistan, Gilgit, Balawaristan, Baltistan etc will be much smarter than any of the cock-and-bull Chinese/Pawkee schemes being discussed in this thread.

[Peregrine]

As China opens its One Belt One Road summit, anti-CPEC protests erupt in PoK

GILGIT: As China opened one of its biggest foreign policy initiatives since 1949 — the One Belt One Road (OBOR) summit in Beijing, which is being attended by heads of state and government of over 23 nations, including Pakistan, protests broke out in Gilgit-Baltistan against the ongoing construction of the China-Pakistan Economic Corridor (CPEC) project under the Belt and Road initiative.

Various students and political organisations including Karakoram Students Organisation, Balawaristan National Students Organisation, Gilgit Baltistan United Movement and Balawaristan National Front have been protesting against OBOR in Gilgit, Hunza, Skardu and Ghizer.

They described the project as an illegal attempt to grab Gilgit and see it as a "Road of Gulami or Slavery for Gilgit-Baltistan". Protestors across Gilgit see the CPEC and OBOR as a ploy by China to take over their territory.

Carrying placards and banners stating "Stop Chinese Imperialism" protestors have been calling on the world community to stop the Chinese transgression on Gilgit's soil which remains disputed since 1948-49.

They claimed that China has entered Gilgit-Baltistan illegally with the help of Pakistan, adding that a well conceived two-pronged strategy has been put in place to facilitate continued Chinese military presence in Pakistan and to counter the US through CPEC.

The $51.5 billion multi-layered infrastructure project aims to connect Kashgar in China's western Xinjiang province with Gwadar Port in Balochistan.

China is reportedly establishing some military bases in Gilgit-Baltistan, a territory whose sovereignty is disputed, said the founder of the Gilgit-Baltistan Thinkers Forum, Wajahat Khan.

Both China and Pakistan have crushed the legitimate concerns of the people of the region, violating their human rights to achieve CPEC objectives. Various political and human rights organisations have expressed their concerns.

Cheers

[KLNMurthy]

Cpec is perfectly targeted to the paki elite mindset...the idea of not having to work hard to produce or sell anything..but use strategic location to collect rent and play off renters against each other.

Its the mindset of a real estate shark

Or a highway bandit.

[shiv]

Last night for timepass I spent 30 minutes following, on Google earth a crucial part of the CPEC - that is the mountain segment of the highway via Khunjerab pass. I marked 6 avalanches where the road had either been completely covered or the road had collapsed from underneath. I will post images one by one along with date of image on Twitter and cross post on BRF.

I was earlier surprised to learn that the highways from China to Tibet were not all weather highways and that there are treacherous areas that suffer from blockages and it takes 10 days to traverse. This is no good for a military. That was the logic behind the railway to Lhasa. But railway to Lhasa running along those same mountains proved to be an endeavour that would be too expensive in terms of tunnels and bridges because railways need relatively straight runs and cannot zig-zag like road.

Coming back to the Xinjiang-Pakistan highway - the quality of road seems excellent - the same as seen in China/Tibet. There are even several sloping "roof like structures" placed in avalanche prone areas so the avalanche does not block the road and these look like Chinese engineering - exactly the same as in Eastern China and Tibet. But yet - at any given time the road is blocked by an avalanche somewhere or the other. The road is such an insane zig-zag in some areas that building a railway is not going to happen.

So what we are going to see is fantastic roads via Shitistan up to the mountains and after that it will be same-ol'.

On the Chinese side the terrain is flatter and there are no blockages. Funnily there are at least 3 Chinese military camps close to the Pakistan border exactly like the ones near the Indian border - complete with defensive trenches to protect against attacks

I will soon inform you folks whether there are Chinese army camps in Gilgit. At least larger camps are easily recognizable - they have a characteristic design.

CPEC looks more line C-coughcough-PEC to me

[shiv]

Xi Jinping’s Silk Road is under threat from one-way traffic

ft.com
Xi Jinping’s Silk Road is under threat from one-way traffic
May 9, 2017 by: Jörg Wuttke

The old Silk Road underpinned China’s golden age more than a thousand years ago, when the Tang Dynasty’s territorial expansion, cultural supremacy and economic power — with 58 per cent of global gross domestic product — were at their zenith.

Sample the FT’s top stories for a week

You select the topic, we deliver the news.

This month, Beijing hosts a lavish international conference to showcase President Xi Jinping’s One Belt and One Road initiative, an ambitious project intended to recreate the Silk Road.

But five or 10 years from now, will this month’s event be remembered as a step in the next stage of globalising China’s economy, or as a huge white elephant that left an enormous amount of wasted resources strewn along its path?

Though the new Silk Road initiative was announced nearly four years ago, and is President Xi’s pet foreign policy project, it is still not clear what it actually amounts to. Beijing says it will involve major investments in infrastructure in Asia and beyond — expanding trade and investment along a new land route extending as far as Europe and through a maritime route all the way to the Middle East and the Mediterranean.

On the face of it this is inspiring. Asia’s infrastructure funding needs are vast. Forging closer links across the region can promote faster growth and economic integration. Beijing is keen to fend off terrorism in some neighbouring Islamic countries, hoping that increased trade and investment will create jobs and stability.

However, to date, it is unfortunately less of a practical plan for investment than a broad political vision. In the face of downward pressure on the renminbi, the initiative has been hijacked by Chinese companies, which have used it as an excuse to evade capital controls, smuggling money out of the country by disguising it as international investments and partnerships. And as well as backing worthwhile projects such as Pakistani ports and Central Asian railway stations, the initiative has provided cover for the acquisition of less productive and often trophy assets, such as European football clubs — Chinese tycoons have acquired about 100 of these to date.

Some Chinese officials argue that the new Silk Road can mop up chronic overcapacity in many of the country’s industries by creating new opportunities to export their output. This is misguided.

Overcapacity in industries such as steel is far too big for neighbouring markets to absorb more than a fraction of it; products such as cement and glass cannot be economically exported over any great distance; and in unstable, high-risk markets such as Pakistan and the Central Asian republics, there is a danger that loans will turn sour and projects will fail.

The planned rail link between central China and Europe, which is undergoing trials, highlights the challenges: five trains full of cargo leave Chongqing for Germany every week, but only one full train returns. Yet trade must flow in both directions to make the new trading routes both economically viable and politically acceptable to the foreign countries through which it will pass.

European business would like to see One Belt and One Road create more opportunities to do business in China. This is highlighted by the EU Chamber of Commerce in China’s latest annual survey of members, which finds that regulatory barriers and limits to market access continue to be the top restraints that they experience.

Europe is open, buying €1bn worth of goods from China every day. China, however, only buys half that amount from Europe. In 2016 China invested four times more in Europe than EU companies invested in China. Investments in China by EU companies also sank by 23 per cent to only €8bn last year.

This is not because European businesses do not invest abroad — last year, they invested about €200bn in the US, for example. It is because, as a destination for foreign investment, China is punching far below its weight.

The grand political vision contained in the plans for the new Silk Road is
no substitute for addressing the many day-to-day problems and obstacles
that European businesses face in China. As the country aims to move up the technological value chain in a range of industries, these basic challenges hurt both China and European business alike.

So while European business supports the One Belt and One Road vision, companies are worried that in the next decade the initiative will instead be remembered as “One Belt and One Trap”: a waste of resources that depends too heavily on lumbering and inefficient state-owned enterprises, when nimble Chinese entrepreneurs and EU private capital would do a far better job.

It is to be hoped that things won’t turn out that way. In order to ensure they do not, the initiative should be reconsidered during this month’s conference.

But when political diktats rather than market forces drive business decisions, the risks of disappointment are always high.

The writer is president of the EU Chamber of Commerce in China

[SSridhar]

Cpec is perfectly targeted to the paki elite mindset...the idea of not having to work hard to produce or sell anything..but use strategic location to collect rent and play off renters against each other.

Its the mindset of a real estate shark

If we remember, that was the idea pursued vigorously by Musharraf as early as c. 2001 when he said that Pakistan, because of its strategic location, would be a trading nation and also collect transit fees through pipelines criss-crossing the country going to India. At that time, he was speaking in terms of IPI pipeline and the one from Turkmenistan. China was not in the picture and it was India alone. This 'transit' idea goes back to the British who felt that Pakistan was the ideal transit point for flights from the UK to Australia.

[yensoy]

Cpec is perfectly targeted to the paki elite mindset...the idea of not having to work hard to produce or sell anything..but use strategic location to collect rent and play off renters against each other.

Its the mindset of a real estate shark

You have to look at it from the vestigial Mughal mindset. Land is to captured/confiscated from the non-believers who are then to be used as servants/slaves. Land is to be given to Jagirdars whose divine purpose it is to lord over acres, extract rent from non-believers tending to the land, and extract tolls from passerbys. This is how things were and this is the Paki mindset.

What these fools don't realize is that we banias have done our math. They can't expect to extract more rent than the savings offered by their route (and the savings itself is doubtful). And there is the billion renminbi question of whether they will actually be paid, or accruals written off against cost of developing infrastructure. A lot has been written about the quantum of oil and container flows needed to make even a dent into shipping and the emergence of much better routes to Europe such as the new trans-Siberian goods lines.

On the other hand, Unkil has actually paid these bandits a lot in the past decades and kept them from going insolvent. If they think China will be as generous, they are living in a fool's paradise.

[Kashi]

On the other hand, Unkil has actually paid these bandits a lot in the past decades and kept them from going insolvent. If they think China will be as generous, they are living in a fool's paradise.

They know nothing else, are incapable of anything else. This mindset was enshrined as one of the corner stones of their state policy when Jinnah in his first interview after partition, spoke about "strategic location" and how "Russia was not very far away" to extract concessions from the West. the West obliged and now they want use the same template with the Chinese- " a weaker Pakistan means a stronger India.." to get the money.

[SSridhar]

One of the contributors that Pakistan expects for the 'transit fee' is from the oil & gas that would reach Xinjiang from Gwadar. It expects that a significant proportion of the o&g imports by China from Iraq, Iran, West Asia and Africa would be routed through Gwadar,

Am curious about that.

What are those fees? Reportedly:
http://www.mmtimes.com/index.php/nation ... ement.html

Myanmar will directly obtain a road right fee of US$13.81 million from both gas and oil pipeline projects annually, plus a transit fee of $1 per ton of crude oil under a 30-year concession agreement.

There is a separate gas pipeline, but assigning all the revenue to the oil pipeline, the oil pipeline generates roughly $36 million per year for Myanmar.

Pakistan imports $46 billion per year (2016) and $36 million would pay for 7 hours worth of Pakistani imports. Believe me, Pakistan is not going to become rich on oil and gas transit fees.

Absolutely.

The other way of looking at the revenues for Pakistan (based on your links above) would be:

Right of way fees annually for oil & gas pipelines (length of 2000 Kms within Pakistan): ~ 40 M USD

Transit Fees for oil pipeline @ USD 1 per ton
The CPEC oil pipeline is 1 M barrels per day (which is 140K metric tons, roughly one-tenth of China's imports per day by the time construction would be over and assuming 320 days per year of uninterrupted operations) which will earn for Pakistan USD140000 X 320 = 45 M USD

So, total revenue for Pakistan from CPEC's o&g pipelines would be less than USD 100M.

Besides right-of-way and transit fees, the PA would charge something for 'protecting' the pipelines.

However, there are many imponderables in this scenario. A new Attabad lake should not form ! A steady stream of ships must discharge oil & gas at Gwadar. The pipelines must not be blasted as the Sui gas pipelines used to end up.

[Kashi]

Right of way fees annually for oil & gas pipelines (length of 2000 Kms within Pakistan): ~ 40 M USD

Transit Fees for oil pipeline @ USD 1 per ton
The CPEC oil pipeline is 1 M barrels per day (which is 140K metric tons, roughly one-tenth of China's imports per day by the time construction would be over and assuming 320 days per yera of uninterrupted operations) which will earn for Pakistan USD140000 X 320 = 45 M USD

So, total revenue for Pakistan from CPEC's o&g pipelines would be less than USD 100M.

That would be far less that Musharraf was claiming that Pakis would earn in transit from an IPI pipeline..

[shiv]

2016 images from Google earth - Avalanches blocking the CPEC route within 100 km of Khunjerab

[Singha]

I am not an expert on shipping but i believe the deep water ports on cheen coast use ships carrying 9000 x 40ft containers...these ships are so big the island has moved to middle from the back to give some view over the bow. They sail at between 12 to 18 knots.

A long freight train may perhaps have 150 containers..lets extend to 300 using double stacking. It will need 30 trains to match 1 ship. Thats the reason ships are the bulk of international trade over long distance.

Pearl river delta alone has 9 such ports last i checked.

[shiv]

If you take the trouble to follow the road Xinjiang-Shitistan road via Khunjerab pass - the much vaunted CPEC about which someone assured me that Chinese engineering will overcome all obstacles - you find that apart from many avalanches - the road is practically empty. I saw only 1 truck in 50 km. When there is a fresh avalanche - a line of traffic will build up behind. I found 6-7 avalanches and no traffic at all. That road is hardly transporting anything - other than the news that Xinjiang people got fresh fish from shitland. Looks like on truck got through. The one that got away.

[yensoy]

Xinjiang people aren't into fish. Han people are, they will travel to any corner of the world for seafood. Of course the fish is destined for the dinner plate of Hans in Xinjiang - probably a govt subsidized bonus to keep them happy and less homesick. Fish can also be (relatively easily & cheaply) flown into Xinjiang - entire airlines have been built around the fish trade (e.g. Icelandair).