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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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.

U4 eee aaa's picture

So you just drop a nuke on that nuke power plant and it is BOGO

artichoke's picture

They should put a real grand piano in that room.  A 5 foot baby grand sounds about like that, the low notes are not good, not much resonance.

radbug's picture

President Xi, you can run but you cannot hide ... from a 35% consumption share (of GDP).

dark_star's picture

So, Chris at Clarmond.

1. Chinese 'tentacles' are bad but US (NATO, TTIP) are good.

2. Chinese nuclear power in Pakistan is bad but Chinese nuclear power in England is good.

3. China expanding its sphere of influence in the region bad but Therea 'the Saint' May to visit China in bid for trade deal 'The Prime Minister's tour of potential trading partners will take her to China as the UK prepares for life after the EU.' (http://news.sky.com/story/theresa-may-to-visit-china-in-bid-for-trade-de...) good.

Fuck all these people that think they're on the right side and everyone else that doesn't fit their world order view is somehow up to no good.

CRM114's picture

It would be more accurate to say that they are all up to no good.

Zero Knowledge's picture

Scandle or click-bait? Slow news day!

Ricki13th's picture

When the petrodollar start faltering watch how fast India comes crawling back to the table. 

sinbad2's picture

India is doing what India always does, scamming.

moorewasthebestbond's picture

The harvested organs and child slaves must flow!

Berspankme's picture

My piano instructor would say Vlad has very good posture for playing. Notice how straight his back. I used to get that hammered into my head daily in my youth. Meanwhile our pols play the hand organ

PrometeyBezkrilov's picture

India should have never been included in the BRCS alliance. India is the biggest British cock sucker on this planet. The latest screw job with trashing 500 & 1000 rupee notes is the best example. The dollar scheme will be trashed by either its creators or competitors-it doesn't matter. What matters is the avaredge pension or saving holder is going to lose everything around the planet. Should have spent less time watching football/hockey/soccer and more time understanding paper money scheme.

decentralisedscrutinizer's picture

 

Almost all the world’s economic and political problems revolve around the hegemony of a global corporate cartel, which is headquartered in the US because this is where their military force resides. The only way to regain our sovereignty as a constitutional republic is to severely curtail the privileges of any corporation doing business here. As a free nation, we really have to stop granting corporate charters to just any “suit” that comes along without fulfilling a defined social value in return. The "Divine Right Of Kings” should not apply to fictitious entities just because they are “Too Big To Fail”. We can't take the incorporation of private transnational banks for granted anymore. The government must be held responsible only to the electorate, not fictitious entities, if we are ever to restore sanity, much less prosperity, to the world.

 

 

 

It was a loophole in our Constitution that allowed corporate charters to be so easily obtained it created a swamp of corruption around our capital. It is a swamp that can't be drained at this point because the Constitution  doesn’t provide a drain. This 28th amendment is intended to install that drain so Congress can pull the plug ASAP. As a matter of political practicality we must rely on the Article 5 Convention for which the electorate will need consensus beforehand. Seriously; an Article 5 Constitutional Convention could solve that problem in days. This is what I think it will take to save the world; and nobody gets hurt:

 

28th Amendment

 

Corporations are not persons in any sense of the word and shall be granted only those rights and privileges that Congress deems necessary for the well-being of the People. Congress shall provide legislation defining the terms and conditions of corporate charters according to their purpose; which shall include, but are not limited to:

 

1, prohibitions against any corporation;

 

a, owning another corporation,

 

b, becoming economically indispensable or monopolistic, or

 

c, otherwise distorting the general economy;

 

2, prohibitions against any form of interference in the affairs of;

 

a, government,

 

b, education, or

 

c, news media, and

 

3, provisions for;

 

a, the auditing of standardized, current, and transparent account books, and

 

b, the establishment of a state and municipal-owned banking system

 

c, civil and criminal penalties to be suffered by corporate executives for violation of the terms of a corporate charter.

 

The Founders had to fight a bloody Revolutionary War to win our right to incorporate as a nation – the USA. But then, for whatever reason, our Founders granted the greediest businessmen among them unrestricted corporate charters with enough potential capital & power to compete with the individual States, smaller sovereign nations, and eventually to buy out the Federal government itself. Now that these fictitious entities own the USA and command its military infrastructure, by virtue of the Federal Reserve Corporation, and run it by virtue of regulatory capture, MSM propaganda, and Congressional lobbying they’ve set their sights on the creation of an all-inclusive global financial empire. The US Constitution is the “Kingpin” of the whole global Machine.

    

JoshuaChua's picture

India is the world's fastest growing economy???

Yes, fastest growing backwards!!!

onmail1's picture

lndia should realize that west is using 'Divide & Rule'
As always
Neighbors must remain together
West grows rich by selling arms to countries like lndia
which lose its hard earned money in conflicts
while west does not fight each other
America does not fight with Canada
nor euroPeons fight each other
because they rule the world
by simply printing Dollar & Euro
and they buy all goods free in this way from the rest

but alas ................

GracchusBrothers's picture

 

It seems this is the Chinese version of Japan's WWII "Greater East Asia Co-Prosperity Sphere."

sinbad2's picture

More like the Marshall plan, without the military component.

GracchusBrothers's picture

 

There is an article that reports that China plans to have 10 flat-tops in their fleet, after announcing they have a flat-top killer missile.

If their flat-top killer missile renders the US flat-tops obsolete, why are they so desirous to possess flat-tops?

Steel fist in a velvet glove...just to insure the efficacy of their "Silk Road."

sinbad2's picture

Because America doesn't have any carrier killer missiles, the Harpoon is old slow and has crappy range.

JoshuaChua's picture

Modi is a fool. He should have listened to Putin and partnered with China instead of listening to Obama. Now he has messed up the Indian economy and created 2 powerful enemies in the northeast. Russia and China had a more serious conflict in the past yet because of wise leaders on both sides, they reconciled their differences. India could have been the 3rd key pillar in the Eurasian economic bloc. Unfortunately their leaders lack wisdom.

draego's picture

>> 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.

 

Sounds like China wants its own version of the IMF. That's a money making racket if ever there was one and China wants a slice of that action.