Learning by Proxy | Chinese Imperialism

China has imperial ambitions. Their attack on Hong Kong democracy and the Indian borders are just far more naked. Their nefarious plan called OBOR is coming apart.

If a traveller were to circumnavigate the globe in 1600, here is what the traveller would have seen. Europe was suffering from the Black Plague; the US was not even sparsely populated and Indigenous people still could roam freely. India, on the other hand, was having some of the best architecture being translated into buildings. The forbidden city in China was in its glory years. Nobody would have thought it would be the other way around in 400 years.

China wants to use the western strategy all over again, but with a twist. Unlike the Westerners who came from squalor and robbed the gold; China wants to appropriate a from the poor. 

China seems to have made several poor assumptions. Much like the VCs who thought India was the next China and just sold Urban Ladder to Reliance for 1/5th the valuation claimed at the time of its last funding.

Belt Road Initiative

Vasco da Gama arrived in India on 20 May 1498. When he landed in Calicut, he requested the locals to take him to the Zamorin of Calicut so that he could negotiate trade. He took along with him some of the products that he had brought with him from Portugal. The Zamorin told him that the products, as well as the crafts that his people could produce, were far superior to what he brought from Portugal. The Zamorin refused to offer a trade agreement because Vasco da Gama had nothing worth trading. All he was able to extract was permission to buy spices from Calicut.

Wanting a preferential trade agreement, the Portuguese kept returning and spending time to understand the politics of the region. They worked to destabilise the region and went to war with Cochin in 1504. The Portuguese won and with that began the 400-year plunder of a nation we today call India. On the other coast, the French set up a port city called Pondicherry. Unable to work with the French, the British set up two ports. One north of Pondicherry called Fort Madras and another one in the delta called Calcutta. The western coast remained under the Portuguese for more than a century. In 1664, when Catherine de Braganza married Charles II of England; as a gift, he was given a swampland north of Goa called Bombaim. The Portuguese did not see it coming.

The British loot of India alone is valued at USD 45 Trillion today. For perspective, the Indian GDP was estimated at 2.7 Trillion in 2019. The Europeans made away with Hundreds of Trillions from across Asia. The western world is rich, solely because of this shameless plunder.

The Chinese are great students of history. Their modern-day equivalent of the European trade mission is called Belt Road Initiative (BRI) or as the Chinese like to call it One Belt, One Road (OBOR). Beautifully hidden in the story of the silk route, this initiative is projected as the revival of the ancient Silk Route that acted as a conduit of trade and wealth. Unveiled in 2013, the project envisages building more than a Trillion dollars worth of infrastructure. Involving 62 nations, there is a host of infrastructure that is supposed to be developed under the project including, ports, roads, railway lines and airports.

Most of the countries that have partnered with China will be making minority investments, with China providing loans to these countries to cover the cost. For the countries that refused to join, China had projected the prospect of economical ruin. Being one of the biggest manufacturers in the world, China will provide preferential trade agreements to the countries that are a part of this program.

The Europeans came looking for trade and took the land. China is playing the same game. But…

China has spent an estimated $200 billion of the estimated $1.2-1.3 trillion investment gap on infrastructure development under the BRI. The generous funding of the BRI projects has been possible due to the Chinese financial institutions which operate through four distinct channels; policy banks, state-owned banks, international financing institutions, and sovereign wealth funds including the Silk Road Fund with a market capitalization of $40 billion.

[…]

The pandemic has halted the China-Pakistan Economic Corridor (CPEC), Cambodia’s Sihanoukville Special Economic Zone, the Payra power plant in southern Bangladesh, and the Port City development project in western Sri Lanka. Even before Covid-19 wreaked havoc on supply chains and imposed travel bans on Chinese workers, many of China’s BRI projects especially in Africa were coming under scrutiny. African Countries have already called for $100 billion in bailouts and debt relief to help them cope with the devastating effects of the pandemic.

Source: Financial Express

When infrastructure is put on hold, use health. 

China has hosted a high-level virtual meeting with Pakistan, Bangladesh, Nepal and Sri Lanka to build up “political consensus” in containing the Covid-19 pandemic and boosting economic development.

The “five-parties” meeting, termed so by the Chinese foreign ministry in a late-night statement on Thursday, was an expansion of a similar meeting held in July involving Pakistan, Nepal, and Afghanistan, and hosted by the foreign minister, Wang Yi.

Source: The Hindustan Times

Of all the countries on that list, Sri Lanka should know better. They have already been forced to gift a port away to China. A port which was built in a place where little would arrive in the form of trade. The entire story by the New York Times is incredible. [link above]

Of all the countries, the one, of greatest strategic importance to China has been Pakistan. After 9/11, the Bush administration funded the country heavily; this allowed American to use the country as a condom during their penetration of Afghanistan, ostensibly to hunt out Osama Bin Laden; who happened to be sitting right under their noses. Nevertheless, the defence contractors got to make a lot of money blowing holes in a country that was already quite dilapidated. As the Bush-era came to an end, China started supporting Pakistan as a counterweight to India. This also meant building infrastructure across Pakistan and especially along the Iranian border in a region called Balochistan. Balochistan is Pakistan's Jammu and Kashmir.

To build highways and the port’s infrastructure, the land has been expropriated without the rightful owners receiving a penny of compensation. Furthermore, the promised jobs have, in Balochistan’s case, gone to workers ‘imported’ from other provinces of Pakistan instead of to the local people. In the province alone, 15,000 soldiers have been deployed to ‘protect’ the Chinese workers and the investment. The Baloch maintain, however, that CPEC is not or not only an economic project but a military project too. In Hyrbyair Marri’s words, ‘Pakistanis and Chinese have been calling it an economic project to hide its military and strategic aspects. Because of Balochistan’s socio-political conditions, CPEC is not an economically viable project, which is well understood even by Pakistan’s military and political elite. NCDA and CPEC-authority are attempts by Pakistan’s military to directly control coastal areas of Balochistan where millions of Punjabi and Han Chinese people will be settled to secure their military bases and permanently colonise the areas by implementing demographic changes where secretly underground submarine bases and naval bases are being built.

Source: The Print

China has Pakistan right where it needs it. Much like the East India Company, it was trading first (actually weapons), then infrastructure to make that trade feasible, then army to protect that infrastructure and soon they will take everything.

Moreover, recently, Mir Hasil Khan Bizenjo, previously the Minister of Maritime Affairs, revealed to the senate that Pakistan will get only nine per cent of total revenues from Gwadar Port. The remaining 91 per cent will go to China over the next 40 years, as per the agreement signed between the two countries. senators raised their concerns over this substantial imbalance of sharing assets, with China getting the most out of it, but as we all know by now, civilian institutions in Pakistan count for very little.

Source: The Print

The development of the Gwadar port was started not because of the potential for trade. It was meant as a strategic port to undo any advantage India might be able to gain out of the port that it is co-developing with Iran in Chabahar. Now, Pakistan will end up losing Balochistan to China.

Pakistan is an incredibly mismanaged state. They have kept the state alive only because of the alms that they keep receiving from different countries. China has its agenda, maybe they will swallow Pakistan whole. But till then they have to maintain a facade. 

At the sixth meeting of the financing committee on ML-1 project, which includes dualisation and upgrading of the 1,872 km railway track from Peshawar to Karachi, decided that Pakistan would initially request China to sanction the only USD 2.73 billion in loan out of the total estimated Chinese financing of about USD 6.1 billion.

This development comes even as Pakistan's economy has been teetering on the verge of bankruptcy for some time and the COVID-19 pandemic has made the situation even worse.

Source: Wion News

This is a deal with the devil. Pakistan does not need the money for railway tracks, it needs it to keep the government alive. Chinese don’t like Muslims all that much. If anybody has doubts, they need to look only as far as Xinjiang province and what the Chinese have done to the Uighur Muslims. When the Chinese come for Pakistan, it is not going to be pretty.

India did not agree to join the OBOR initiative, partly because China has been building a lot of infrastructure along its border and India did not want to provide China with further excuse to build more military assets. Instead, India borrows from Japan to fund our infrastructure. The rate at which the Japanese population is shrinking, by the time the loans comes due, there will probably be nobody in Japan left to collect it!

China has also been making its economy look good through a tremendous amount of government spending. The fact that consumption is not back to normal is shown by the fact that corporates are struggling. China made a liquor company buy a state-owned highway company to save it from defaulting. But this cannot be the standard solution for all struggling companies.

A Chinese mining firm that defaulted on its debts this week held an emergency creditors’ meeting on Friday to address potentially “huge credit risks”, as a series of defaults by top-rated state-owned enterprises (SOEs) sent shockwaves through China’s corporate bond market.

Investors have traditionally seen bonds issued by state-owned firms as less risky due to their perceived government backing. But the recent delinquencies triggered a selloff in debt issued by state firms in impoverished provinces, raising fears of a brewing credit crisis.

Source: AlJazeera

This is bound to hit banks and insurers in China and hurt them. There is a lot of pain that is hidden. This may be part of the reason the Ant Group IPO may have been stalled. Having a gigantic financials company go public has the potential to make a lot of these things very transparent. 

China’s $45 trillion banking industry has suffered its worst profit slump in more than 10 years after being put on the front-line in helping millions of struggling businesses hurt by the pandemic.

As part of the response, China has allowed many borrowers to delay interest and principal payments to March next year, which is hiding the true sense of the bad debt bulge.

The industry’s non-performing loans climbed to a record 2.84 trillion yuan ($429bn) as of September 30, according to China’s banking regulator.

Source: AlJazeera

To make matters worse, China owns about a trillion dollars in US government bonds; with the US squeezing them on policy, they are stuck between a rock and a hard place. If they retaliate, the value of their bonds suffer; if they don’t, they suffer. They have been trying to reduce their holdings since Trump came to power. Also, many of their OBOR partner countries are also on the verge of bankruptcy and their own companies in China seem plenty stressed.

Hence attempting a more low-cost strategy, China started down the path of setting up a trading block. A new trade deal called Regional Comprehensive Economic Partnership includes over a dozen countries across South-East Asia.

The world’s biggest trading bloc is taking concrete shape in Asia and it doesn’t include the US—pointing to a significant challenge ahead for president-elect Joe Biden.

Yesterday (Nov. 15), 15 countries signed a trade deal which covers 10 Southeast Asian countries, including the region’s biggest economies, Indonesia and Thailand, as well as China, Japan, South Korea, Australia, and New Zealand. In other words, as President Donald Trump turned his back on trade negotiations in the region led by the US under former President Barack Obama, countries in Asia didn’t standstill.

Source: Quartz

When East India company started the conquest of India, between 1650 and 1850, the company almost went bankrupt a few times. The monarchy and the English government stepped in several times to save the company before finally nationalising the East India Company in 1857. The Chinese imperial expansion has not been undertaken through a shadow entity. They are USD 200 Billion down and not really in a place to reap the rewards yet. 

Have they bitten far more than they can chew? Would the trade deal allow them the same leverage that putting infrastructure in place does? Only time will tell.

Not an Iota of hope

The last storm to visit central America was Eta which skirted past Cancun. This time Iota tore right through the countries. Amongst them, Nicaragua - the worst-hit, El Salvador, Guatemala, Honduras and Belize were some of the countries to deal with the category 5 hurricane.

Iota is now considered the strongest storm to hit Nicaragua in the country's history and has killed six people, according to the Nicaraguan government.

Four adults and two minors are dead, according to Nicaraguan Vice President Rosario Murillo.

More than 400,000 people in Nicaragua were affected by the storm as it made landfall near Haulover, Tuesday as a Category 4 storm with maximum sustained winds near 155 mph, according to the NHC.

Over 62,000 people in the Central American nation have been moved into 683 government shelters following the storm, the country's government said on national television Tuesday.

Source: CNN

This will affect crops and the ability of the people of the country to make a living. In the next 6 months expect a caravan of immigrants to arrive at the US border hoping to just stay alive. This is what climate migration looks like. While it is painted as an immigrant crisis due to unstable governments, the reality is that it is manmade. 

The growth of the west was financed by pollution. They took as much as they could from the environment. During the 20th century, they pushed the boundaries of productivity, till such time that it became unsustainable and then they outsourced it to China and blamed China for climate change. 

Equatorial countries will pay the price for these excesses and the people who live there will struggle to stay alive as this crisis worsens. 

European Right - Wrong

America is not alone in having put fools at the helm. There are countries, that are part of the European Union who are equally foolish and now, this is representing a challenge when it comes to working out a bailout for the continent.

But that unity was shattered on Monday when Hungary and Poland blocked the stimulus plan and the broader budget, cracking open one of the bloc’s most persistent, existential divisions over what a European Union democracy looks like.

The two eastern European countries said they would veto the spending bill because the funding was made conditional on upholding rule-of-law standards, such as an independent judiciary, which the two governments have weakened as they defiantly tear down the separation of powers at home.

Source: New York Times

This is going to be much like the stimulus stand-off in America where the Republicans and Democrats have not been able to reach agreement on the stimulus. There will be compromises made to overcome this problem.

“I had to tell her that if this regulation drafted by the European parliament and the German presidency were to be accepted -- it requires two-thirds majority so we cannot block this -- then we have made Soviet Union out of the EU,” Orban told state radio.

He said the criteria would amount to “blackmail on an ideological basis without objective criteria”.

“This is not what we wanted ... we did not create the EU for having a second Soviet Union,” Orban added, stopping short of threatening to veto the entire EU budget process.

Source: Reuters

Statements like this would not help in arriving at a compromise. Would EU rupture further? Can a landlocked country like Hungary afford to do this?

Making a mess

Trump has been throwing a tantrum ever since the elections concluded. He has been trying all legal measures, without success. He has tried pressuring state officials - Republicans - with death threats even; did not work. He has finally fired the person responsible for the integrity of the elections because he did not agree with Trump.

Raffensperger told the FOX 5 I-Team the hand ballot recount is mostly matching the computer count and mistakes they have found have not significantly changed the vote total.  

Senior I-Team reporter Dale Russell said Raffensperger commented after discussing death threats and scathing political attacks he has received from members of his own party. 

Source: Fox5

The last-ditch effort seems to be to try and get the electors to vote for him against the will of the masses. I don’t know if that will work or not, but if it does - this is how a civil war begins. In the meantime, he fired the Secretary of Defence and a whole host of Pentagon officials. And the announcement was made that he was going to draw down troops from Afghanistan and Iraq. Both countries are a mess that George Bush (another Republican) created; thankfully his investment in Halliburton soared. 

The troop withdrawals are to be completed 5 days before the inauguration on 15 Jan 2021.

Acting Secretary of Defense Christopher Miller announced Tuesday that the US will withdraw thousands more US troops from Afghanistan and Iraq by January 15, 2021 -- just days before President-elect Joe Biden takes office, confirming plans first reported by CNN on Monday.

Miller said the withdrawal, which will leave approximately 2,500 troops in Afghanistan and roughly the same number in Iraq, "does not equate change" to US policies or objectives but provided no details about the plan and refused to answer questions following Tuesday's appearance in the Pentagon briefing room.

Source: CNN

Trump is also exploring the possibility of launching an attack on Iran. Biden wants to reopen the negotiation with Iran which Obama had undertaken. Attacking them would make it impossible to pick up those conversations.

Before he goes, he wants to create an international policy mess so grave that COVID looks like a walk in the park. 

How to concede

In the middle of the global pandemic, Azerbaijan and Armenia went to war with one another over a disputed region which had been occupied by Armenia. In the quest for peace, Russia brokered it by ensuring that the region was conceded to Azerbaijan and the Armenians move out of the region. Much like the American Presidency, the Armenians want to ensure that what they handover is a mess.

In a bitter farewell to his home of 21 years, Garo Dadevusyan wrenched off its metal roof and prepared to set the stone house on fire. Thick smoke poured from houses that his neighbours had already torched before fleeing this ethnic Armenian village about to come under Azerbaijani control.

The village is to be turned over to Azerbaijan on Sunday as part of territorial concessions in an agreement to end six weeks of intense fighting with Armenian forces. The move gripped its 600 people with fear and anger so deep that they destroyed the homes they once loved.

Source: AP News

This is the Standard Operating Procedure for all concessions in 2020 by the looks of it.

Refund

The travel industry has been slaughtered by COVID. The stoppage of international travel at a scale never witnessed before. Cancellations of events have caused a deep decline in demand. Airbnb has been affected by this just as much as any other company.

In its S-1 regulatory filing, the home-rental giant revealed that it has issued more than $1 billion in refunds during the pandemic, under its policy for extenuating circumstances.

“While this helped our guests, it created problems for our hosts—half of whom depend on their Airbnb income to pay their rent or mortgage,” the filing notes. (According to the San Francisco-based company, more than 55% of Airbnb hosts are women, and the average annual Airbnb earnings per host with at least one check-in was $7,900 in the 12 months ended Sept. 30.)

Source: Quartz

Often the question of why Airbnb gets valued the way it does, comes up? I do not suppose any hotel chain would have refunded a Billion dollars in bookings. None. It is a raw reflection of how strong their business is. 

Also

Did you know bears are also dogs?

Have you used hand fertiliser?

While Facebook is spreading lies in the US, in the Solomon Islands the government wants to ban it because it is spreading the truth about the government


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