What immediately comes to our mind are those grand shows they put up on world stage. But, as they always say, devil is in the detail. That is, GDP growth of China has been relatively high compared to other countries, over past two decades. This may sound very good at the gist of it. Until you do a health checkup on the quality of GDP Growth. The growth on numbers, which is not necessarily good growth. For example: GDP numbers go up, basis what you manufacture. But, whether it is consumed or not matters a lot – for health of a Nation.
Investing cash surplus generated out of trade deficit with foreign nations. Well, it is not necessarily an investment. It is just a foolish method to control cash surplus by making more cash! Insane! Let me explain.
Take for instance the following pointers:
- There are close to 13 Million flats unsold per this 2016 news report of Reuters.
- There are fully built cities that are having everything – but people. Like the one in Zhengzhou.
- Sustainable growth is totally dependent when you consume what you produce. China CANNOT consume what it produces, even a significant percent of it.
- Growth in China is inversely proportional to the quality of living. This leaves Chinese people frustrated.
- Workers keep building BIG things like gigantic apartment complexes, which the Chinese middle class can’t consume. Similarly, the vast network of High-speed railway network. Hardly 10% is being used. Why was it built then?
- When not consumed within, and this high over-production leads to trade & cash surplus.
- It is a vicious cycle. If they stop production now, they would crash in a matter of days. So, best thing to keep the production machinery running. And churn out products that none consume.
- Who would then consume it? There comes “One Belt, One Road” project. Now, let’s see the devil in OBOR.
For the Chinese, there are two obligations:
- It is the obligation to keep paying the nations to keep them in check. Be it Pakistan, Sri Lanka, Bangladesh, Myanmar or African Nations. Strategy is same.
- Keep offering money to them that they can’t even think of, to be strategically with Chinese.
Both unsustainable. That’s because, “One Belt & One Road” will have it’s own set of issues. Here’s why.
- Imported Chinese workers for Chinese investments abroad have routinely run into problems with local population. This happened in Myanmar (Sittwe-Kunming Pipeline project), Sri Lanka (Hambantotta) & Bangladesh (Chittagong / Cox’s Bazar port projects). Even several African nations (Tanzania / Zimbabwe / Congo / Kenya). Pakistan is no exception. It has security related issues
- Ultimately, to keep the Chinese GDP & power to grow, we need more CPECs & debts.
- China, as a Nation will crash & disintegrate, the moment the “constructions” & “debt traps”
- stop. Within & abroad.
Source Link – One India
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