African countries are foregoing Western investment because of the number of strings attached. Chinese loans are pretty straightforward: here’s some money, here’s a (very) competitive interest rate, and here’s how the infrastructure will be kept alive even if the country runs out of tax revenue to fund it. Critically, the project’s operation isn’t hindered by financial mismanagement and can keep delivering economic benefits to the region.
China doesn’t give money to countries to build these projects. The money is given directly to Chinese State Owned Enterprises to build the projects. That can be a great way to keep costs low, but it also means there is no transfer of knowledge for building these of projects to locals.
Chinese deals are for a very long time, with some going for 100 years. China may also write the deals to trade for commodities instead of money, so there is risk that the commodity price goes up and China makes money on the deal.
Also, China makes a lot of these deals for China’s best interests. It could align with the host country’s interests, but not always. Of course, it isn’t like Western countries don’t do the same, but it is something to look out for.
I can see why countries would choose China as a partner to finance and build infrastructure, but it is important to know the fine print of the deal, or in this case, several deals.
Nobody’s forcing a country to sign a deal. Why does it matter that the project aligns with China’s best interests? The fact that the deal is signed means that both parties agree that it’s mutually beneficial… People aren’t running a charity.
And again, people assume transfer of knowledge like it happens between China and the US (two very well-educated countries)… But frankly, a lot of African countries are at the stage China was in right after the Cultural Revolution. You can’t simply transfer the knowledge of complex HSR technologies when most people don’t have the education needed to become a construction worker. There’s also the issue of experience: even the US, a country with an extremely highly-educated workforce, can’t build proper HSR (see: California HSR’s ballooning budget). It’s a difficult problem and African countries don’t have $100 billion dollars to spend on connecting Merced and Bakersfield.
The length of these deals is also not exactly the strong “gotcha” you seem to think it is. It’s a fact that a lot of African governments are rather unstable. With an outsourced maintenance scheme, the project remains viable through regime change. Plus, even stable governments like the US have shown that they have a tendency to aggressively underfund rail (see: Amtrak’s tens of billions of dollars worth of maintenance backlogs). The project is useless if it isn’t maintained, so why shouldn’t these countries sign that maintenance into effect now while they still have the power to do so?
The US has shown how to completely destroy a domestic passenger rail industry… People aren’t super keen on replicating that model with short maintenance contracts and “America First” policy.
And I never claimed that. I’m just saying that the negotiations may need to keep this in mind.
You can’t simply transfer the knowledge of complex HSR technologies when most people don’t have the education needed to become a construction worker.
I said that in direct response to someone saying it would be good to go for monumental design as it will train the workforce in construction. That is why I would recommend starting with trying to keep costs low in building out a new system.
The length of these deals is also not exactly the strong “gotcha” you seem to think it is.
A lot can change in 100 years. People who aren’t born now will be subject to that agreement. This includes China being able to project power enough to keep these farflung businesses in operation. I’m not treating to as a “gotcha”, just that it is risk.
The US has shown how to completely destroy a domestic passenger rail industry…
The USA also used to have the best rail industry in the world 100 years ago, including building some alignments that would be near high speed standards today. But even then, I never suggested that the US build the rail network described now.
I don’t disagree with all of your points, I’m just claiming that short maintenance contracts and onshoring all production might not be feasible in the volatile environments that these countries are in.
Fact is, China has a more stable government than a lot of African countries (and a decent track record of maintaining their own HSR) and there’s no reason to expect significant backtracking on China’s economic liberalization.
Other fact is, onshoring has a pretty strong record of blowing through budgets and timelines for minimal net gain (especially since Chinese companies aren’t actually making that much money off the top). Massachusetts tried to onshore subway train manufacturing and ended up with trains riddled with manufacturing defects. California tried to do HSR development and, well… Stuff happened. Britain is still struggling to get their HSR project off the ground and it’s already blown through the budget.
It might make a project in 20 years 20% cheaper, but it’ll make the current project maybe 500% more expensive. I don’t think that’s worth it.
I can’t imagine they’re actually planning to tunnel through mountains for an initial HSR network, right? That shit is insanely expensive and it would make much more sense to just run flights+a roundabout HSR route for that connection.
Indeed, and China also does a lot of loan forgiveness because they want to establish long term mutually beneficial relationships as opposed to just strip mine these countries the way the west does.
African countries are foregoing Western investment because of the number of strings attached
What strings?
here’s a (very) competitive interest rate
IMF loans are cheaper. Every person with two braincells will realize corrupt officials will take the chinese loans with higher interest rates because of the bribes.
A 90 year maintenance contract is nonsense and you cant defend it.
IMF and World Bank loans in years past have had strict rules regarding economic liberalization and cutting government spending.
IMF loans are cheaper. Every person with two braincells will realize corrupt officials will take the Chinese loans with higher interest rates because of the bribes.
Rescue loans are not the type of loans being used to build these railway networks lol. It’s pretty funny watching someone not understand the problem they’re talking about.
Also, the US fed rate is 5% right now… That means loaning money to the safest and most stable economy in the world pays 5% today. Even in your (misguided) context, 5% is a fucking bargain.
My home country has one of those loans, and I have no idea whether it’s beneficial or not since it’s classified for 30 years as is the Russian nuclear power plant contracts or the money we spend on our oligarchs.
I like how you ignored the part in which chinese companies force the governments to sign 90+ year maintenance contracts. Convenient as it isnt part of the loan, just part of the bribery.
There is no China debt trap. That’s just concern trolling western trolls invented
African countries are foregoing Western investment because of the number of strings attached. Chinese loans are pretty straightforward: here’s some money, here’s a (very) competitive interest rate, and here’s how the infrastructure will be kept alive even if the country runs out of tax revenue to fund it. Critically, the project’s operation isn’t hindered by financial mismanagement and can keep delivering economic benefits to the region.
It isn’t quite like that.
China doesn’t give money to countries to build these projects. The money is given directly to Chinese State Owned Enterprises to build the projects. That can be a great way to keep costs low, but it also means there is no transfer of knowledge for building these of projects to locals.
Chinese deals are for a very long time, with some going for 100 years. China may also write the deals to trade for commodities instead of money, so there is risk that the commodity price goes up and China makes money on the deal.
Also, China makes a lot of these deals for China’s best interests. It could align with the host country’s interests, but not always. Of course, it isn’t like Western countries don’t do the same, but it is something to look out for.
I can see why countries would choose China as a partner to finance and build infrastructure, but it is important to know the fine print of the deal, or in this case, several deals.
Nobody’s forcing a country to sign a deal. Why does it matter that the project aligns with China’s best interests? The fact that the deal is signed means that both parties agree that it’s mutually beneficial… People aren’t running a charity.
And again, people assume transfer of knowledge like it happens between China and the US (two very well-educated countries)… But frankly, a lot of African countries are at the stage China was in right after the Cultural Revolution. You can’t simply transfer the knowledge of complex HSR technologies when most people don’t have the education needed to become a construction worker. There’s also the issue of experience: even the US, a country with an extremely highly-educated workforce, can’t build proper HSR (see: California HSR’s ballooning budget). It’s a difficult problem and African countries don’t have $100 billion dollars to spend on connecting Merced and Bakersfield.
The length of these deals is also not exactly the strong “gotcha” you seem to think it is. It’s a fact that a lot of African governments are rather unstable. With an outsourced maintenance scheme, the project remains viable through regime change. Plus, even stable governments like the US have shown that they have a tendency to aggressively underfund rail (see: Amtrak’s tens of billions of dollars worth of maintenance backlogs). The project is useless if it isn’t maintained, so why shouldn’t these countries sign that maintenance into effect now while they still have the power to do so?
The US has shown how to completely destroy a domestic passenger rail industry… People aren’t super keen on replicating that model with short maintenance contracts and “America First” policy.
And I never claimed that. I’m just saying that the negotiations may need to keep this in mind.
I said that in direct response to someone saying it would be good to go for monumental design as it will train the workforce in construction. That is why I would recommend starting with trying to keep costs low in building out a new system.
A lot can change in 100 years. People who aren’t born now will be subject to that agreement. This includes China being able to project power enough to keep these farflung businesses in operation. I’m not treating to as a “gotcha”, just that it is risk.
The USA also used to have the best rail industry in the world 100 years ago, including building some alignments that would be near high speed standards today. But even then, I never suggested that the US build the rail network described now.
I don’t disagree with all of your points, I’m just claiming that short maintenance contracts and onshoring all production might not be feasible in the volatile environments that these countries are in.
Fact is, China has a more stable government than a lot of African countries (and a decent track record of maintaining their own HSR) and there’s no reason to expect significant backtracking on China’s economic liberalization.
Other fact is, onshoring has a pretty strong record of blowing through budgets and timelines for minimal net gain (especially since Chinese companies aren’t actually making that much money off the top). Massachusetts tried to onshore subway train manufacturing and ended up with trains riddled with manufacturing defects. California tried to do HSR development and, well… Stuff happened. Britain is still struggling to get their HSR project off the ground and it’s already blown through the budget.
It might make a project in 20 years 20% cheaper, but it’ll make the current project maybe 500% more expensive. I don’t think that’s worth it.
I can’t imagine they’re actually planning to tunnel through mountains for an initial HSR network, right? That shit is insanely expensive and it would make much more sense to just run flights+a roundabout HSR route for that connection.
Indeed, and China also does a lot of loan forgiveness because they want to establish long term mutually beneficial relationships as opposed to just strip mine these countries the way the west does.
What strings?
IMF loans are cheaper. Every person with two braincells will realize corrupt officials will take the chinese loans with higher interest rates because of the bribes. A 90 year maintenance contract is nonsense and you cant defend it.
IMF and World Bank loans in years past have had strict rules regarding economic liberalization and cutting government spending.
[citation needed]
I like how you wont comment on the maintenance contracts.
So… No citation, right?
https://time.com/6266658/china-emerges-major-global-lender/#:~:text=China typically offers rescue loans,the IMF%2C the study said.
First result in Google. You cant even Google so im pretty sure you dont know what the hell you are talking about lol.
Rescue loans are not the type of loans being used to build these railway networks lol. It’s pretty funny watching someone not understand the problem they’re talking about.
Also, the US fed rate is 5% right now… That means loaning money to the safest and most stable economy in the world pays 5% today. Even in your (misguided) context, 5% is a fucking bargain.
Do you even know how IMF rescue loans work? Did you try Google buddy?
I wont even entertain your dumbass ramble about different countries because we arent talking about that.
My home country has one of those loans, and I have no idea whether it’s beneficial or not since it’s classified for 30 years as is the Russian nuclear power plant contracts or the money we spend on our oligarchs.
https://www.youtube.com/watch?v=8fGcf3GODKE
Here is an alternative Piped link(s): https://piped.video/watch?v=8fGcf3GODKE
Piped is a privacy-respecting open-source alternative frontend to YouTube.
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I like how you ignored the part in which chinese companies force the governments to sign 90+ year maintenance contracts. Convenient as it isnt part of the loan, just part of the bribery.