
China’s Built a Railroad to Nowhere in Kenya - RickJWagner
https://www.bloomberg.com/news/features/2019-07-19/china-s-belt-and-road-leaves-kenya-with-a-railroad-to-nowhere
======
kccqzy
> with concerns rising globally that Belt and Road was loading poorer nations
> with unsustainable debt

So the reason the railroad wasn't completed was because the Chinese discovered
that the debt was unsustainable. Seems like a rational business move. I wonder
why they didn't discover this before they started building the railroad.

~~~
AmericanChopper
> I wonder why they didn't discover this before they started building the
> railroad.

Because it doesn’t matter to China in any case. The debt these nations take on
goes directly back to Chinese firms. If they struggle to pay the money back,
even better for China, because that lets them flex more muscle over all of
these developing countries they’re investing in.

It seems this is more a response to external pressure than it is to some new
revelation that the projects are infeasible.

~~~
baybal2
> It seems this is more a response to external pressure than it is to some new
> revelation that the projects are infeasible.

I'd say no. I've been personally involved with now 4 companies that were
directly or indirectly involved in all that OBOR kerfuffle.

It was certainly a genuine miscalculation on Chinese side, and a very grave
one.

An average Chinese bureaucrat knows no more of the outside world than a
lifelong gated community dweller knows of "the hood." And add to that the
natural incompetence of China's "aristocrat-bureaucrat" class.

In talks with many members of political establishment, I heard very much the
same sentiment: many genuinely expected OBOR to be "a walk in the park." To a
lot of them, their first first hand experience working outside of China is a
complete eye opener.

The common line they thought was that "if Kenya's GDP is zillion times smaller
than ours, then we can put zillion times less money on an equivalent project,
and still get the same result."

Another one after that is "if it is so much cheaper than in China, it must be
very easy."

Some times they get messed up with analogies beyond silly, like in the case of
one OBOR official who was estimating costs of road projects in Africa by
trying to find physically similar roads in China, and copypasting their
costing.

A lot of things in China are done with presumption: "if it's abroad, it can't
be worse than in China." That presumption is just so wrong.

~~~
AmericanChopper
I’ve worked with a number of companies in SEA who deal with these kinds of
infrastructure projects, and there is quite widespread concern that China’s
intention is just to set up a series of debt-traps that it can leverage to
achieve further strategic goals. The terms China tends to seek in these deals
are also quite predatory. There’s little doubt who’s benefitting the most out
of them, especially considering the ways China aggressively minimises their
own downsides. This is a topic that has been written on quite extensively, and
is likely the primary reason that Japan is outperforming China in SEA
infrastructure investments.

If any of these countries do start to struggle paying back this debt, I’m sure
there will be some bureaucrat stressing over it in his office in Beijing. That
tends to be how the accountability model works in central planning committees.
But China is acting a lot like a loan shark in most of these deals, and any
default just means they get to exert their influence in other strategically
meaningful ways.

It’s also very easy to see how all of this makes perfect sense to China. A lot
of their internal mega-projects are starting to flop. Deals like this keep
parts of their constructing industry busy, while transferring all the risk to
ill-prepared developing nations.

------
baybal2
I did a project in Kazakhstan on turnstiles for the light rail. It was a very
weird experience. A nominally 6 months project, which I managed to complete in
just 2 months. Nevertheless, they extended my stay for 2 more months during
which I did nothing, and was compensated for living and office expenses.

Prior to that, I also been to UAE, Kenya and Angola, with a UAV company,
trying to sell drones to their respective border services.

To my surprise, I saw DJI sales reps also contending for same orders in both
Kenya and UAE. Neither they, nor us got any contracts. In all cases, the
tender victors were no name companies, registered few weeks before the start
of tenders.

~~~
datway
Is it possible to get in touch with you about this? I'd love to learn more
about those customers.

~~~
baybal2
what for?

------
diego
That is a clickbait title. The reality is that it hasn't yet finished building
a railroad to somewhere.

~~~
dragandj
...and, since the funding dried, the work is currently finished (it ends at
Nowhere), but it may not be continued for a long time... So quite a good title
IMO.

------
cosmodisk
I'm suprised Bloomberg is only covering this now,while a much more detailed
article was published in the Economist quite some time ago. Tbh I'm quite
surprised Chinese were letting run these projects so loosely. I can only
imagine how many locals became millionaires off these infrastructure
initiatives.

------
martinald
I don't really see how a railway between two of the biggest cities in Kenya,
with approaching 10million people between them can hardly be considered
nowhere...

------
GauntletWizard
Between the two largest cities in Kenya, one the capital and one it's primary
port, hardly seems like "Nowhere". Stopped in the middle of what was planned,
certainly. And shutting down financing after that turned out unprofitable (or,
as the article implies - The debt-load makes it unprofitable) is hardly
something that you can blame China for.

I don't know what this article is trying to say. It dances around calling the
initial plan a scam, yet it also implies that their backing off is somehow
worse. Much as I hate to say it, it sounds like a "Damned if you do, damned if
you don't" situation for China. And perhaps that's the real message that this
article is trying to convey, but lacking any evidence to actually support
such. Had they gone through it would have been a terrible sunk cost. Had they
never oversold the infrastructure, it would have been fine - The line is
replacing colonial-era lines, not adding routes that weren't viable before.
But instead, they're let off the hook for setting up a hangman's noose and
encouraging Kenya to put their head here.

~~~
reaperducer
What you're missing is the context. This isn't the only Belt and Road project
that's not everything China promised. It's one of a number that have come up
recently.

This article mentions at least four others, and I've seen others in other
publications (a failed power station in Kazakstan most recently).

Considering the amount of money involved in Belt and Road it makes sense for a
financial publication like Bloomberg to publish this article.

------
rayiner
California built a railroad to nowhere in Fresno. Same central planning
mentality.

~~~
redis_mlc
> Same central planning mentality.

The high-speed rail project was never viable to build in 2019.

California already has a successful high-speed transit project - it's called
Southwest Airlines.

However, the high-speed rail problem is the exact opposite of a central
planning issue.

If the state government had enough power, it could fund and eminent domain all
the property needed.

Instead, private contractors are in charge of the project, and money comes
(and goes) at the whim of the Trump (federal) government.

From a political standpoint, transit projects are just pension rewards for
supporters. That a member of the public could actually get from Point A to
Point B is irrelevant.

------
jorblumesea
The title and the content of the article are completely disconnected. The
title implies China is funding false investment, but the content then goes on
to explain that China is witholding funding due to concerns about debt of
sovereign nations. China is concerned about being seen as acting Neo-
colonialist. Which they are, but, they are smart in understanding the
perception game they are playing when it's clear the these African nations
cannot ever pay back the money they borrow.

