
China's $1T Plan to Shake Up the Economic Order - pdog
https://www.nytimes.com/2017/05/13/business/china-railway-one-belt-one-road-1-trillion-plan.html
======
njarboe
“Pursuing protectionism is just like locking oneself in a dark room,” Mr. Xi
told business leaders at the World Economic Forum in January.

I might agree with Mr. Xi, but the Great Firewall of China is a higher wall of
protectionism than anything the West has against the Chinese. Forcing foreign
companies to partner with Chinese companies and then transfer all of their
closely held technologies and industrial processes to China seems pretty
protectionist also. Maybe in Chinese culture being able to lock oneself in a
dark room is a positive?

~~~
thablackbull
Those two aren't mutually exclusive. America is an incredibly protectionist
country as well if you aren't aware.

[http://www.eulerhermes.com/economic-
research/publications/Pa...](http://www.eulerhermes.com/economic-
research/publications/Pages/protectionism-is-not-new.aspx?postID=1048)

In the past 3 years, America has introduced far more protectionist measures
than other countries.

~~~
propman
LOL nothing compared to China. China partners with startups, steals their IP
and then escapes back to the homeland and no course of legal action. They get
all the access to the West's markets and then give almost no access to their
own. Their companies are all backed by the government and it's rigged in their
favor. They cheat constantly, check out the EU scandal where they smuggle
goods into London don't pay equal taxes as the EU companies, beat out
competition who is playing fairly and then jack up prices.

Their immigration policies are one of the worst in the world. Human rights
violations insanely high. They purchase our movie studios and then force on
them Chinese propaganda and nothing negative on China ever. America is one of
the least protectionist countries in the world if not the least.

~~~
matt_wulfeck
China doesn't even allow its own citizens to read about things like the
Tiananmen square massacre. If they could censor the rest of the world they
would.

Even their citizens abroad will tow their party's line [0]

0\. [http://www.latimes.com/local/california/la-essential-
educati...](http://www.latimes.com/local/california/la-essential-education-
updates-southern-uc-davis-lands-the-dalai-lama-as-1487270569-htmlstory.html)

~~~
Kali909
Bit pedantic but it's 'toe the line' [1]

[1]
[https://en.wikipedia.org/wiki/Toe_the_line](https://en.wikipedia.org/wiki/Toe_the_line)

------
marcell
I'm struck by China's ability to attempt large, ambitious projects like this,
compared to America's inability to do, well, anything really.

The largest infrastructure project I'm aware of in the USA is California's
High Speed Rail (~$60B+), was approved a decade ago and is barely making any
progress. The federal government is in complete gridlock. The most ambitious
legislation passed in the last decade, the ACA, caused endless partisan
warfare. Meanwhile, obvious policy wins like allowing more immigration [1] are
not even discussed.

I've been following US politics for the last 2-3 presidents (going back to
George W Bush), and it makes me very pessimistic. I don't see how a country
can expected to be exceptional, or even above average, with politics that are
so dysfunctional.

Perhaps, though, I'd have a different view if I could see things from inside,
within China?

[1] [http://paulgraham.com/95.html](http://paulgraham.com/95.html)

~~~
taway_1212
Aren't the projects in China executed at complete disregard to the rights of
individual citizens? I.e. if your house is in the way, sorry, we'll give you
some laughable amount of money and send police over to brutalize you until you
leave. Under such conditions, it's easy to make lots of change quickly (in
such spirit, Stalin was even more efficient - he essentially enslaved a part
of his nation via Gulags and used the free slave labor to get done quickly
various massively ambitious projects around the country).

Another aspect is environment protection - it's much easier to build
infrastructure if you don't mind wrecking the natural environment around it.

~~~
jon_richards
I haven't looked it up, but I've heard from a local that if you are displaced
by a government project you will "be rich". In his eyes it was similar to
winning the lottery, if less extreme.

~~~
cheapsteak
It does depend on the area

I remember coming across a few blocks of old densely packed single-family
brick buildings in Shanghai that were about to be torn down. Each building had
a large hand written banner above their entrance, half of them praising the
communist party for its compassion or saying long live Chairman Mao (my
interpretation was that they were hoping for mercy for being such loyal party
members), the other half cussing out the party and local officials

~~~
pcr0
I think the idea was that hanging pictures of Chairman Mao all over their
building would make the government look bad if they knocked it down.

------
Animats
The "Belt and Road" scheme is well known. The first container freight train
from Yiwu, China to Barking, England, arrived January 15, 2017. Coast to coast
travel time: two weeks.[1] Conveniently, China uses a 4' 8.5" track gauge,
unlike Russian metric gauge, so they can move freight cars all the way without
a gauge change.

Soon, of course, heavier rails, longer trains, faster trains, more trains,
better gradients, more electrification, alternate routes... China is funding
high speed rail from Belgrade to Budapest. Now that's an infrastructure
scheme.

[1]
[http://www.bbc.com/news/business-38654176](http://www.bbc.com/news/business-38654176)

~~~
petra
With that timetable,compared to sea shipping we're talking about 3-5x faster
time, but the cost will be about double - $8K-10K/container. But of course
that saves money in warehousing and financing. So financially, today it makes
sense for the more expensive goods, at $1.5M per container. And it's best
because there's not a lot of capacity vs sea routes.

But i wonder: could those prices, with more/better trains etc, become close to
sea shipping, such that aliexpress, which is extremely cheap but uses very
slow sea shipping, start using rail ?

Because at those timelines, even if using a local fulfillment center, the
storage period is very short, so the cost becomes quite low, and without lots
of trouble, suddenly aliexpress can offer much cheaper goods than Amazon, all
across Europe, with fast shipping. Heck, they may not even need to build
warehouses, using uber like warehouse model(i.e. flexe).

~~~
jon_richards
Container ships are about 2.5 times as fuel efficient as trains. I'm not sure
what percentage of total cost that is, but I imagine it is significant.

~~~
panzer_wyrm
Trains can also run on electricity. Ships are far away from that.

~~~
jon_richards
Ships are also incredibly unregulated on the type of fuel they use and their
emissions, which, while bad for the environment, lowers the cost
significantly.

------
giis
With 60+ countries agreed to attend the event, Its interesting to note: India
refused to take part on this OBOR project. China's arch rival Japan sent a
official team, but India refused to attend the submit.

China repeatedly blocked India's move to Ban terrorist Azad[1], blocked their
NSG bid and their flip-flop on Arunachal. so India prefers to stay away from
China-led project.

Russia is watchful about rising Chinese influence in their regions. Once they
used to be major partner and China played minor role. Now the trend
reversed.Russia knows that too.

[1] [http://indianexpress.com/article/india/china-united-
nations-...](http://indianexpress.com/article/india/china-united-nations-
masood-azhar-jem-terrorist-india-4451956/)
[2][http://timesofindia.indiatimes.com/india/outlier-china-
preve...](http://timesofindia.indiatimes.com/india/outlier-china-preventing-
indias-entry-into-nuclear-suppliers-group-says-us/articleshow/56559841.cms)

And Chinese media, says: India and Russia tipped to be the big winners from
China’s massive ‘Belt and Road' investment:
[http://www.scmp.com/business/article/2094224/india-and-
russi...](http://www.scmp.com/business/article/2094224/india-and-russia-
tipped-be-big-winners-chinas-massive-belt-and-road)

~~~
throwaway053
the event isn't that impressive

"The Chinese government had hoped to assemble a weightier guest list to Mr
Xi’s premier international forum. But many heads of state and government,
especially from G7 and OECD nations, were reluctant to participate in what
they thought might be little more than a propaganda coup for China’s ruling
Communist party.

Only seven EU heads of state or government, most from smaller eastern European
countries, accepted Mr Xi’s invitation"

[https://www.ft.com/content/f89060ac-36c7-11e7-bce4-9023f8c0f...](https://www.ft.com/content/f89060ac-36c7-11e7-bce4-9023f8c0fd2e)

------
holydude
The scary part is china's protectionism. Small nations and businesses have so
little possibilities to operate in china without getting robbed of IP or being
outcompeted by state supported domestic ventures.

I fear the future of China being stronger superpower than the USA.

~~~
BurningFrog
Protectionism has never made a country strong.

~~~
hn_throwaway_99
This is demonstrably false, and actually the opposite of most countries that
have successfully developed. I was searching for "South Korea protectionism
history" to find articles for a great example (as SK practiced heavily
protectionist policies in the immediate post-war decades), and this came up:
[https://www.theguardian.com/commentisfree/2008/sep/09/eu.glo...](https://www.theguardian.com/commentisfree/2008/sep/09/eu.globaleconomy)

Protectionism can be very successful for countries with underdeveloped
economies.

~~~
awkwardtortoise
Hell the icon of "free trade and capitalism" developed under protectionism.

[https://en.wikipedia.org/wiki/Protectionism_in_the_United_St...](https://en.wikipedia.org/wiki/Protectionism_in_the_United_States)

Every nation needs protectionism to help its industries. It's only when you
have strong stable industries/companies that you become anti-protectionism
because you want your native companies to have access to foreign markets.

------
nostromo
The "China vs America" narrative is unnecessary.

If China wants to spend a trillion dollars on infrastructure to develop their
region that's a great thing for America too.

Counterintuitively, it could even be better for the US than China. Eventually
the demand for low-margin, subsidized, Chinese steel will flatten, while the
demand for high-margin American technology and cultural products will grow.

~~~
hemantv
without IP these high margin American technology is copyable, which China has
already shown they can do that.

~~~
nostromo
American technology companies don't rely on IP restrictions as much as they
used to. You couldn't copy Facebook, Google, Apple, or Amazon's products and
services effectively on a global scale even if they had no IP restrictions.

And China is the second largest market for American movies, which absolutely
require IP law to function. So I think this concern is overstated.

~~~
kcanini
China has shown that they are very adept at copying American high-tech
innovation.

* Facebook: WeChat/Weibo

* Google: Baidu

* Apple: already being made in China, clones everywhere

* Amazon: Alibaba

~~~
zht
re: Facebook

On the contrary, WeChat is leaps and bounds ahead of Facebook Messenger (which
is a more direct comparison). If you've watched Facebook Messenger over time,
it's actually Facebook Messenger that's aspiring to be the WeChat of the west.

~~~
prodmerc
I was intrigued by Tencent's offer of 1TB of storage, installed the app and it
immediately started uploading all of my phone's content to their cloud. Haha,
great fucking service, just amazing.

------
chvid
Bravo China. Instead of overspending on military conquer the world thru trade
and investment.

~~~
mythrwy
I also applaud that idea.

But I do wonder if it's possible to protect/expand trade without military
activity. Historically it seems military expansion is the tip of the spear for
trade expansion.

~~~
greglindahl
There are plenty of examples in the late 20th century where military activity
wasn't a help: Taiwan and South Korea have succeeded despite their military
challenges -- and spend basically nothing militarily protecting their trade.

~~~
aaron-lebo
They can only do that because someone else is subsidizing a large part of
their defense (the US). Without that they would have been conquered by NK and
China long ago.

Ironically, it is the US overspending in military which is part of what is
driving his economic push for China instead of trying to compete militarily.

------
Kholo
I found this talk with Niall Ferguson and Samantha Power pretty fascinating
about the US - China power balance changing.
[https://m.youtube.com/watch?v=8yghOc-
lMIM](https://m.youtube.com/watch?v=8yghOc-lMIM)

Just one mindblowing fact from the talk - China has poured more concrete in
the last two years than the US in the last hundred.

~~~
agumonkey
China is a hot mass, people look at it as valuable energy, but it seems it
lacks structure to be able to handle itself without risk of collapse. I don't
wish them to fail, I just wish things to evolve smoothly and peacefully.

~~~
thablackbull
> it seems it lacks structure to be able to handle itself without risk of
> collapse.

Could you clarify? China was stable for like a millennium while Europe was
fighting each other to no end.

~~~
agumonkey
I meant as internal structure, not international stability.

~~~
ori_b
I don't know what that means.

------
contingencies
From about 2005-2008 I used to live and own a house on the Laos and Burma
borders of far south-western China and still often travel in the area. Laos is
simply poor, being a landlocked mountainous country with minimal
infrastructure or education surrounded by larger and more powerful neighbors.
In the last 16 years, Laos has begun to get some better roads (largely with
foreign investment), mobile telecommunications, a larger tourist industry,
some dams and a great deal more rubber plantations. Otherwise, it is still a
sleepy, mountainous, jungled backwater.

China has committed to building infrastructure to connect Laos and Thailand to
Chinese rail and road networks. Relatively tiny Vietnam apparently made an
expensive and partly abortive attempt to sponsor a road from Dien Bien Phu to
Udomxai in the north, perhaps in a bid to counter growing Chinese influence,
but China ran rings around them and the strategic significance or benefit of
such a road is now negligible.

From an economic rationalist perspective, I think China just wants more
markets. If you were a massive manufacturer with 14(?) land borders and
awesome infrastructure expertise, you'd be building infrastructure to connect
new markets too. I don't think there's any kind of evil Beijing geostrategic
scheme at play here ... there's very little to gain by controlling Laos (which
economically China already does in the north of the country) ... it just makes
sense.

Some images of the northern Laos road to Dien Bien Phu in 2012 (dunno if this
new non-Picasa Google Photo link works) @
[https://get.google.com/albumarchive/106883718971909092529/al...](https://get.google.com/albumarchive/106883718971909092529/album/AF1QipOJtgKiJZdgruRyZhNTUk2bWY6_fXjzFYLosft7)
or
[https://photos.google.com/album/AF1QipOJtgKiJZdgruRyZhNTUk2b...](https://photos.google.com/album/AF1QipOJtgKiJZdgruRyZhNTUk2bWY6_fXjzFYLosft7)

~~~
noisy_boy
There are repercussions of China's aggressive market hunting. Taking an
example of Northern Laos, the Chinese have been buying farmlands and
converting them into Banana farms. Lots of farmers have sold their land for
good money. If you don't sell you land, you'll be a fool because a) the size
of land isn't that big so you are dependent on your neighbours good will for
letting the water flow into your patch b) the neighbours already sold their's
to the Chinese. The Chinese also very cleverly opened a casino. So, now you
have villages full of farmers who go to the casino and gamble the money back
to the same people (because as the saying goes, the house always wins) who
bought their lands. Lao women who used to work in their farms now work in
these casinos. Drug abuse has always been a problem in Laos but with this
inflow of cash, it has been exacerbated.

One might say, the Lao government is equally responsible - which is not
entirely false. If a chinese company tried to buy an Indian farmer's land,
there would be outrage but Laos is a tiny country so no real comparison.
Anyway, the net result is a social impact that is far from the carrot of
"economic growth".

~~~
contingencies
{{citation-needed}} but perhaps. In my observation land has predominantly been
used for rubber plantations rather than bananas. However, the rubber price
crashed in recent years so a lot of the profits never materialized, maybe they
are switching. Also, there are vast tracts (literally mountain after mountain
as far as the eye can see of monoculture) of bananas inside of China
(particularly in Wenshan prefecture, close to Vietnam), so on the fact of it
it makes little sense to import them over bad roads from bad infrastructure
regions in Laos.

------
grewergrfefg
I recently heard Charles Hess from InferFocus talk about the changes coming
from China. The United States is about to be passed up in a big way due to
Xi's "China Dream"

[https://twitter.com/cervinventures/status/860307819030958080](https://twitter.com/cervinventures/status/860307819030958080)

~~~
bmiranda
What should the US do than? Spend our tax dollars on foreign handouts?

If US companies want to invest in SE Asia there is nothing stopping them.

~~~
grewergrfefg
I don't have an answer for you. But, I'd rather spend tax dollars building
railroads in SE Asia than blowing up the Middle East. #Iraq2Trillion
#neverforget

~~~
the-dude
Dude, it is not 2 trillion by a long shot.

It is 268k ( [https://www.iraqbodycount.org/](https://www.iraqbodycount.org/)
)

~~~
knowaveragejoe
Did you really think he was talking about the body count?(Have 2 trillion
people even ever lived...?) He's clearly talking about the projected cost of
that war.

~~~
the-dude
#neverforget

------
sandGorgon
There has been a lot of debate on India's refusal (for political reasons
around disputed territory) to join the OBOR. Such debates are tempered by math
that show that the trains are actually less efficient than shipping in lots of
cases [1].

I wonder if the pure economic value , minus the investment leverage, still
makes sense.

[1] [https://m.rediff.com/news/column/india-doesnt-want-to-
join-c...](https://m.rediff.com/news/column/india-doesnt-want-to-join-chinas-
obor-but/20170513.htm)

------
thedevil
It's interesting to note that China and India were the global economic
juggernauts until only very recently:

(first google result to demonstrate the point) [https://infogr.am/Share-of-
world-GDP-throughout-history](https://infogr.am/Share-of-world-GDP-throughout-
history)

------
tunesmith
Isn't this what the failed TPP trade deal was supposed to serve as a counter
to?

~~~
mark_l_watson
I think that about 20% of TPP did, as you said, deal with real trade, but 80%
dealt with treaties that would override individual nations' laws and use
private 'courts' for disputes.

~~~
yohui
In terms of public perception, perhaps. In reality? The parent comment is
correct: we let ourselves pick out the parts we didn't like, with a dash of
knee-jerk opposition to "secrecy" on top, and completely ignored the broader
context (trade, security, and international politics).

The good news is, against all odds, it looks like the other TPP members might
forge ahead anyway even without the US (for now):
[https://www.google.com/amp/asia.nikkei.com/amp/Politics-
Econ...](https://www.google.com/amp/asia.nikkei.com/amp/Politics-
Economy/International-Relations/Japan-to-push-for-TPP-11-by-year-end)

It wasn't concern for little countries or even anti-IP sentiment that killed
the TPP in the US, though that provided useful cover, but nativism as embodied
by Trump.

New Zealand, one of those little countries, just ratified the TPP a few days
ago to "send a message" in support of free trade despite the US
withdrawal:[http://www.radionz.co.nz/news/political/330574/nz-govt-
ratif...](http://www.radionz.co.nz/news/political/330574/nz-govt-ratifies-tpp-
despite-us-rejection)

------
rodionos
Somewhat hypocritical considering China's established track record of creating
walled gardens around its own economy.

------
mrb
" _a difficult three-hour drive over potholed roles from the capital_ "

s/roles/roads/

Incidentally I have done this three-hour drive. Horrible indeed. The potholes
limit your speed to 20-30 mph. I kept thinking on the way "what would really
be the cost to repave a ~100-mile 2-lane road?" And "how high on this
country's priority list would this be?"

------
awinter-py
Calling this a new marshall plan is a powerful analogy.

Not sure I agree or disagree. The marshall plan was focused on gaining allies,
so in theory it was more economically selfless than this. But even if not
perfect the comparison makes you zoom out and take the long view.

------
tiatia
Well, they build roads and trains. Something that they know. The Question:
Will it be enough? Some people claim that there are no more reasonable
investment opportunities left in China.

"The power plants in Pakistan, as well as upgrades to a major highway and a $1
billion port expansion, are a political bulwark. By prompting growth in
Pakistan, China wants to blunt the spread of Pakistan’s terrorists across the
border into the Xinjiang region, where a restive Muslim population of Uighurs
resides."

Well, yes. But there may be other ways to do this. China just wants to have
Pakistan as a close ally. If India is an ally of the US, it is a good idea to
have an ally that can counter India.

~~~
manquer
Pakistan is closer ally than india for the US . Pakistan receives much more
military aid alone every year than the Chinese investment

~~~
pknerd
US is ally of Pakistan while China is rather a friend.

------
pnathan
Certainly more forwardlooking than Trump.

But I don't think Official China's shadow is a moral one, even if it allows
trade to flourish. I certainly hope that the citizens force their government
to be more moral and have a better focus on human rights.

------
cammil
You cannot control Asia until the end game.

~~~
bognition
Unlike Risk this game NEVER ends. It will be played millennia to come

~~~
goatlover
More like Axes & Allies?

------
throwaway053
Oh yes, China, with the authoritarian government lead by a dictator, and has
proven to engage in unfair trade policies and dumping of goods, and supports
an evil regime in north korea, is going to help the region grow! /s.

Seriously, only third world countries welcomes Chinese loans that will never
be be repaid. The 'Belt and road' scheme has been shown to be a failure thus
far. No smart nation wants to have its economy/community/jobs/manufacturing
destroyed by an evil government, just for cheap, shoddily made goods

Besides, China has no trillions to spend. It's massively in debt, suffers from
capital outflow and rich fleeing the country. It has middle income problem and
demographics issues. It's heyday was 2007.

~~~
thablackbull
> destroyed by an evil government, just for cheap, shoddily made goods

This attitude is why China managed to get itself out of poverty while other
countries don't seem to get anywhere. While you may think phones made in China
are cheap, shoddily made goods, guess what, there are billions of people in
this world who don't have the financial resources of the 300M Americans to
afford an iPhone.

The American model is to have a company create an amazing product at a very
high cost (iPhone, Tesla) and have it "trickle down". What ends up happening
are these companies monopolize the market, force everyone onto their
ecosystem, and extract as much money as possible. Things do progress, but
everyone gets locked into a system, and the company lacks incentive to keep
innovating.

In China, they create cheap products, but in a few years, every single person
has a smartphone. The technology is democratized and because of that, new
technology can be built off that initial platform - now they are by far way
ahead in things like fintech. Who cares if the product was initially cheap and
shoddily made when the people there are upgrading their devices every year.
The "cheap" device maker Xiaomi dropped to fourth place in China because
consumers demanded more and more high end products. Within the space of a few
years, the Chinese phone makers are making quality phones.

------
free652
Its more like China vs Europe, USA would only benefit. USA can also use the
same road to ship goods from West Coast to Europe.

~~~
Godel_unicode
You might want to look at a globe, the Pacific ocean is much larger than you
appear to think.

~~~
vorg
The US and Russia have been talking on-again off-again since the 1990's about
a sea tunnel from Alaska to Siberia.

------
aswanson
It's interesting that a country of China's size works without any history of
widespread religious belief.

~~~
vorg
Isn't the period from the end of the Three Kingdoms (~280AD) to the beginning
of the Sui/Tang (~580AD) when Mahayana Buddhism evangelized China?

~~~
aswanson
Isn't Buddhism a philosophy/approach to living rather than a religion?

~~~
vorg
You're thinking more of Theravada Buddhism which spread to Sri Lanka and
Thailand, and the more recent Tibetan variety. The Mahayana version which took
over China features statues of many different gods, often taken directly from
Taoism.

