Scandal At China's Grand Silk Road Summit As India Skips, Warns Of "Unsustainable Debt"

Tyler Durden's picture

It was supposed to be China's day of celebrating massive infrastructure spending for the sake of spending (read ghost towns, only now outside China's borders) as Xi Jinping pledged $124 billion on Sunday for his new Silk Road plan to forge "a path of peace, inclusiveness and free trade" while calling for the abandonment of old models based on rivalry and diplomatic power games. However, it did not go quite as smoothly as expected.

A celebration years in the making, Xi hosted dozens of world leaders - including a piano-playing Vladimir Putin - on Sunday for the country's biggest diplomatic showcase of the year, touting his vision of a new "Silk Road" that opens trade routes across the globe. Xi used the summit to "bolster China's global leadership ambitions" as U.S. President Donald Trump promotes "America First" and questions existing global free trade deals.

In total, leaders from 29 countries attended the forum, including some of China's close allies and partners such as Russian President Vladimir Putin, Cambodian Prime Minister Hun Sen, Kazakh President Nursultan Nazarbayev, Turkey's quasi-dictator Tayyip Erdogan, as well as the heads of the United Nations, and the CapEx leeches from the IMF and World Bank.

"We should build an open platform of cooperation and uphold and grow an open world economy," China's president Xi told the opening of the two-day gathering in Beijing.

Over the past four years, China touted what it formally calls the "One Belt, One Road" initiative as a new way to boost globalization and global development, aiming to expand links between Asia, Africa, Europe and beyond underpinned by billions of dollars in infrastructure investment. In other words, another way to boost China's GDP only this time diluted among more Asian nations, who just have to take China's word that it will ultimately be for their benefit.

Xi also said the world must create conditions that promote open development and encourage the building of systems of "fair, reasonable and transparent global trade and investment rules". China's president also pledged an anchor funding boost to the new Silk Road, including an extra 100 billion yuan ($14.50 billion) into the existing Silk Road Fund, 380 billion yuan in loans from two policy banks and 60 billion yuan in aid to developing countries and international bodies in countries along the new trade routes, according to Reuters. Some however, were concerned that this was nothing more than just Chinese grandstanding: Xi did not give a time frame for the new loans, aid and funding pledged on Sunday.

* * *

Alas, the meticulously scripted plan to showcase China's growing economic and trade dominance did not go off quite as smoothly as Xi had planned.

First, just hours before the summit opened, North Korea launched its latest ballistic missile, provoking Beijing and further testing the patience of China, its chief ally. Ironically, the United States had complained to China on Friday over the inclusion of a North Korean delegation at the event.

Then, in a sign that China's rampant, credit-fuelled growth is making some just a little uncomfortable, some Western diplomats expressed unease about both the summit and the plan as a whole, seeing it as an attempt to promote Chinese influence globally according to Reuters. They are also concerned about transparency and access for foreign firms to the scheme.

Australian Trade Minister Steven Ciobo said Canberra was receptive to exploring commercial opportunities China's new Silk Road presented, but any decisions would remain incumbent on national interest. Responding to criticism, Xi said that  "China is willing to share its development experience with all countries" and added "we will not interfere in other countries' internal affairs. We will not export our system of society and development model, and even more will not impose our views on others."

But the biggest surprise was India, the world's fastest growing nation and the second most populous in the world, which did not even bother to send an official delegation to Beijing and instead criticised China's global initiative, warning of an "unsustainable debt burden" for countries involved.

Indian foreign ministry spokesman Gopal Baglay, asked whether New Delhi was participating in the summit, said "India could not accept a project that compromised its sovereignty."

India is incensed that one of the key Belt and Road projects passes through Kashmir and Pakistan. The nuclear-armed rivals have fought two of their three wars over the disputed region, Reuters notes. "No country can accept a project that ignores its core concerns on sovereignty and territorial integrity," Baglay said.

Furthermore, he also warned of the danger of debt. One of the criticisms of the Silk Road plan is that host countries may struggle to pay back loans for huge infrastructure projects being carried out and funded by Chinese companies and banks. "Connectivity initiatives must follow principles of financial responsibility to avoid projects that would create unsustainable debt burden for communities," Baglay said.

As well as the corridor through Pakistan, India is worried more broadly about China's economic and diplomatic expansion through Asia, and in particular across countries and waterways that it considers to be its sphere of influence.

As China proceeds to flex its economic and geopolitical muscles further in the coming years, we expect many more such similar antagonisms between China and India in the near future.

Finally, in what may be perhaps the best summary of the regional sentiment - and antagonism - over the Silk Road, is this fictional postcard, written by Chris Andrew over at Clarmond.

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besnook's picture

like turkey is the key to russia's mideast plans and is playing two sides against the middle strategy with the usa india is the key to asian dominance for china and they are using the usa to get wht they want from china.

china should offer to build and maintain public toilets and showers for india as a public service. that would be a great bargaining chip.

BarkingCat's picture

They should build those for their own people first.

TheGardener's picture

Who would have an interest to cleanse any such trade ? US play`s dirty by design and since inception and to this day reeks of dirty colored

mongrels cumilating in a nation of dirty deals with stolen patterns enforced against fellow white inventors encourauging nonetheless

all those yellow fellows doing just that.

Koba the Dread's picture

Why should China build public toilets in India? Who would use them? As to showers, I've seen Indian people line up fifty deep in the middle of winter at five a.m. to have a morining wash.

land_of_the_few's picture

Cellphone users? Perhaps they are nostalgic.

earleflorida's picture

turkey's erdogan is scheduled to meet trump stateside tuesday '16th'

should be interesting ???

Yars Revenge's picture

India won't "compromise its sovereignty" but has no qualms whoring themselves out to the international banking cartel.

To Hell In A Handbasket's picture

India is a nation littered with traitors, who would give their right arm and children to be Caucasian. India will be the fly in the Chinese ointment, at the behest of the UK and USSA and willingly so. I've witnessed 2 different Indians in my work experience, give up another colleague. This was not even to save himself, but as we Brits have term, "To curry favour" and this term was invented to explain the psychology of Indians. This is a trait.

Consuelo's picture

 

 

Funny, that 'curry favour' reference.

From a spice whose original purpose was to mask tainted meat...

ogretown's picture

Sigh.  India is pouting or posturing - take your pick. All I know is that when the Yellow Prick Road is up and running, India will be there with lard in their hair. 

I Write Code's picture

>"India could not accept a project that compromised its sovereignty."

LOL.  Hey, we can lend India one slightly used Barack Obama, he'll show them how it's done.

shovelhead's picture

Ordinary hearing with a sense of pitch is all you need. A good bit of patience helps too. Just the same as tuning a guitar...14.66 times. that's where the patience comes in.

Putin's grade school playing made a tuned piano unnecessary. He ain't no Alexander Scriabin.

I wonder if Trump can play '3 Blind Mice'?

BreadnH2O's picture

Been told no on the '3 Blind Mice', but that he does pull off  a mean rendition of 'Yankee Doodle Dandy' on the Kazoo.

me or you's picture

India is not a nation you can trust.

 

Stinky dirty bastards.

shovelhead's picture

India is worried that Chinese loans would be worse than IMF "hitman" loans?

sekhars's picture

that is correct. India doesn't want another dictator telling them what to do.

gespiri's picture

India, with its attempt to move to a cashless financial system (thanks to the UK-EU-US banks) in order to force EVERYONE to open up a bank account and rid of its cash, shows that it is still under control by the old guards in order to disrupt the Silk Road project.  The same is true coming from Australia which is onc of the "Five Eyes." 

This project EXCLUDES the deep state actors for now and expect more "disruptions" as it comes into full fruition.

I'd say keep on truckin' ahead and leave all doubters behind.  If they're not part of the solution, they're part of the problem.

. . . _ _ _ . . .'s picture

India OWNS more gold than USA. A gold-backed Yuan is all they would need to follow suit and dump US dollars, like Russia and China are about to do.

sinbad2's picture

The Indian PEOPLE own more gold than the US, but that isn't that big a deal, as the US has fuck all gold, and has to import from Switzerland.

India is sucking American cock, because the US is building a gas pipeline through Pakistan to India.

The US blocked the Iranian pipeline to India, and that has stopped India from developing to its full potential. So they will blow the US and say whatever Uncle Sham tells them to say, to get the gas.

. . . _ _ _ . . .'s picture

Not if China supplies it instead.

sinbad2's picture

And where would China get the gas from, Russia?

India was negotiating with Russia for gas, that's how they got the US to force Pakistan to start building the gas pipeline to India.

Now all the US has to do, is get the pipeline across Afghanistan.

If the US had just paid the transit fees to Afghanistan, instead of invading, the gas would have been flowing years ago.

sekhars's picture

India is not cashless. Amount of cash now avialable is same as before demonetization. This propaganda that India is becoming cashless is western fear of their own and seeing that in India they feel threatened, Indian will never abandon cash and gold. Modi utilized demonetization to stop Pakistani interference is fake Pakistani notes and to reduce black money.  Cash remains the king in India again 

CRM114's picture

plausable...got any evidence for the Pakistani fake notes?

Or for that matter that cash remains king?

East Indian's picture

"Amount of cash now avialable is same as before demonetization."

Then why the hell he killed more than 100 people? What for? If the above statement is true, then nothing is achieved.

 

"Modi utilized demonetization to stop Pakistani interference is fake Pakistani notes and to reduce black money"

This has been proved to be hasish dream; Pakistani fake notes were far fewer than the estimated 10% Ask Modi to release how many fake notes were caught. The fact is that the banks received and accepted fake notes also during the exchange period. Now they have all become legitimate.

East Indian's picture

"Amount of cash now avialable is same as before demonetization."

Then why the hell he killed more than 100 people? What for? If the above statement is true, then nothing is achieved.

 

"Modi utilized demonetization to stop Pakistani interference is fake Pakistani notes and to reduce black money"

This has been proved to be hasish dream; Pakistani fake notes were far fewer than the estimated 10% Ask Modi to release how many fake notes were caught. The fact is that the banks received and accepted fake notes also during the exchange period. Now they have all become legitimate.

East Indian's picture

"Amount of cash now avialable is same as before demonetization."

Then why the hell he killed more than 100 people? What for? If the above statement is true, then nothing is achieved.

 

"Modi utilized demonetization to stop Pakistani interference is fake Pakistani notes and to reduce black money"

This has been proved to be hasish dream; Pakistani fake notes were far fewer than the estimated 10% Ask Modi to release how many fake notes were caught. The fact is that the banks received and accepted fake notes also during the exchange period. Now they have all become legitimate.

Hongcha's picture

It's China that will succeed 1st in going cashless.  Xinping can wave his wand when the software is in place and 500,000,000 completely brainwashed Millenial Chinese will fall into lockstep.  Overnight.  Mark this post.  They have been raised with computers under their noses and have never known freedom and would not know what it was.  They would regard it as an enemy force.  Contemplate that a moment.  Dissdents will get locked up or just be allowed to starve.

sinbad2's picture

China is going gold, not cashless.

Cashless is for countries that have no money, and China has lots of money.

Whilst America can't afford to fix its roads, China is building roads and rail from Paris to Vladivostok.

Consuelo's picture

 

 

"...some Western diplomats expressed unease about both the summit and the plan as a whole, seeing it as an attempt to promote Chinese influence globally"

 

Well damned the temerity of those Chinese from trying to promote influence...   I mean, the nerve...!!!  

 

 

sekhars's picture

India has no benefts with Silk Road. India has biggest demographic mandate even better than China which has aging labor force now above 40 years old as 1 child policy has destroyed them. Once Infrastructure improves in India and red tape of it's British burocratic mess clears up India will give run to China for manifacturing.  Modi has done few good thing where there is now uniform GST and many reforms on the plate to ease business investment in India where cheap demographic power can be utilized. China is not a democracy. It is a military state run by polit bbureu. India is also worried about China's inteference in Pakistan Occupied Kashmir.  85 percent of India's economy is internal and is not affected by an external force. There are 50 percent of economy is under control of very small businesses. So Silk road is a threat to them. India will sustain 7 percent growth for next 15  years and Indian economy can't be affected much by international debt bubble thretaening China and US/EU

. . . _ _ _ . . .'s picture

"Once Infrastructure improves in India and red tape of it's British burocratic mess clears up India will give run to China for manifacturing."

India will be to China as China has been to the USA. I doubt, however, they will get their turn at the very top. Location, location, location!

gdpetti's picture

Yes, CHina is practicing BIsmarkian economic diplomacy... tie them in and then control them discretely, unlike our Western imperialist model of Economic Hitman/Jackal operations with little to no benefit for the overwhelming majority of people in their country.... it's an inside game for the local oligarchs to play with the global oligarchs.

You can't blame China for this policy of replacing the West in this manner, it's much more peaceful and of benefit to their own people, thus good for continued campaign successes, real ones, not our fake elections to go with everything else fake in our 'civilization' based in rule by psychopaths and their kinfolk... controlled by the SG of course. India is a mess, as planned by the Brits in their everpresent Great Game dynamics that we inherited from them.... creating fake enemies to go with our fake revolutions, fake markets et al.

China is using this Silk Road in a much better manner than our Marshall Plan, which was inserted to colonize Japan and Europe through Gladio style ops... same as during the Korea war to colonize that country... always done with local/national oligarchs... for the veneer of 'democracy'. China isn't pretending with their One Party politics... so realpolitic is actually their gameplan, which goes with their historical traditions of leading by example... sort of... though we have taught them over the last few centuries that they need to militarize if they want to avoid more of our imperial bloodlusting....Opium War style politics... .not much different today with our Afghanistan drug production op.

Posa's picture

Brilliant post... Great insights.. Thanks.

Dominus Ludificatio's picture

The only thing they have in common is their large populations. India will never even come close to China in any other aspect. You can get cheap labour anywhere and with India all you get is poor quality.The Chinese miracle is not that easy to replicate.

. . . _ _ _ . . .'s picture

Indian quality is much better than that which China had at the same stage of its development, but the problem India faces is geography. They are isolated.

Ross123's picture

If they haven't got rid of the British bureaucratic red tape in its systems after all this time it will never be removed ( unless there is revolution). It is ingrained in several generations of Government workers , regulations and laws.

Clowns on Acid's picture

How does one say "Just Print" in Mandarin ?

AustrianJim's picture

India...where money dies.

Ross123's picture

If pouting by India thinks it will stop this project succeeding then they would have to be the most deluded country out there.

They should be welcoming it and taking whatever advantage they can to benefit India and it's citizens. It's going to happen with or without them. 

But I suspect India is just postering on behalf of the USA & European globalists/elite, who see their perceived power threatened.

Centerist's picture

India is and has been more closely aligned with Russia than with the US and Europe.

They seek economic cooperation with the US and Europe, though, because we can make them more money than the Russians.

As far as staying away from China's Silk Road project goes, the Indians don't exactly have any reason to love a country that has nibbled away pieces of its territory and plans to build a road through contested regions.  India has every reason to be incredulous.

Ross123's picture

The most interesting thing about India going on about it, is how long it has taken for them to wake up ( if they genuinely think it is some sort of threat). This project has been planned for years and started several years ago. Why has it taken so long for them to question it ?

This is the best article I've read on the development   http://www.strategic-culture.org/news/2016/10/11/eurasian-century-now-un...   ( originally posted on ZH in Oct 2016).

The Chinese , in my view, are just developing in order the give themselves as much independence as possible --whether that be for energy, food , transport etc. They want to have several options on the supply of key resourses so they don't become beholden to any other country.

The key driver for the Chinese Govt. is to keep the Chinese population happy. The last thing they want is another "uprising"

 

Centerist's picture

The Chinese have put forth significant efforts to gain access to resources and trade in previously untapped markets in the developing world.  Those ventures are a lot riskier than what most private parties would want to take on such a grand scale, at one time.  I think that that is a major part of why no one else is doing this.

If it works out, then more power to 'em.  I wouldn't characterize the project as the author did in the October 2016 article though:

The Eurasian Century today is inevitable and unstoppable. Built on different principles of cooperation rather than domination, it just might offer a model for the bankrupt United States and the soon-bankrupt European Union, to build up true prosperity not based on looting and debt slavery.

The entire project is being financed--heavily.  And the products that move through those corridors will rely upon debt-based purchasing.  The author of that article places too much emphasis on the idea that this project will be a utopian endeavor with some new era of cooperation and unity arising.

What has happened in The West will happen in The East.  Letting the fiat currency genie out of the bottle pre-ordained this outcome.

As far as India goes, they have pretty significant market penetration around the world.  I've seen Tata and Mahindra products on the roads all over the Mid East and even in some African states.  Infrastructure is not an issue for their trade growth, and that seems to be the OBOR approach.  Trade agreements are what they need.  If some token paticipation in OBOR opens up those agreements, then participation makes sense.  If agreements don't come from it, then participation might not be worth the effort.

Posa's picture

The Silk Road infrastructure will open up huge growth and development in the real economy... new cities to house growing populations will come along with it. It's only the case in leveraged, speculative financing of paper assets that blows up and becomes debt slavery. The West doesn't understand this. By design.

Centerist's picture

Infrastructure is not bad for any developing country.  India just might be taking the cautious approach.

squid's picture

I think you are right and wrong at the same time.

 

The Squid is of course using India to its advantage as it's not really interested in anything it does not directly control and this silk Road affair is definitely that. However; India does have lilegit concerns. It's fine for China to fund highways and rail, but then use local construction companies and materies....but they don't do that. They bring EVERYTHING from China. India has its own internal manufacturing base. It's not up to china's standards by any means and the Indians are well aware of that, but they do have it. And they are not going to sacrifice what they have for the benefit of Chinese manufacturing. You think India has not watched to see what has happened to the USA over the last 30 years?

 

You can be both right and wrong as the same time.

 

The Squid doesn't care, so long as America keeps spending on whatever because the Squid's number one priority is to maintain its debt-slave base in the West to finance itself. That means, above all, KEEP SPENDING....mso long as you borrow the money that does not exist from the Squid itself.

 

Squid

squid's picture

I think you are right and wrong at the same time.

 

The Squid is of course using India to its advantage as it's not really interested in anything it does not directly control and this silk Road affair is definitely that. However; India does have lilegit concerns. It's fine for China to fund highways and rail, but then use local construction companies and materies....but they don't do that. They bring EVERYTHING from China. India has its own internal manufacturing base. It's not up to china's standards by any means and the Indians are well aware of that, but they do have it. And they are not going to sacrifice what they have for the benefit of Chinese manufacturing. You think India has not watched to see what has happened to the USA over the last 30 years?

 

You can be both right and wrong as the same time.

 

The Squid doesn't care, so long as America keeps spending on whatever because the Squid's number one priority is to maintain its debt-slave base in the West to finance itself. That means, above all, KEEP SPENDING....mso long as you borrow the money that does not exist from the Squid itself.

 

Squid

Posa's picture

India has 1 billion consumers... if teir products are worth a damn they have nothing to worry about... there's also something called the protective tariff... US IT.