If you owe the bank $100, that's your problem. If you owe the bank $1.1 trillion, that's the bank's problem.
this post was submitted on 07 Nov 2023
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Except this bank has an army
Which they are more then free to deploy.... at a cost.
Sadly any country is going to have to weigh the cost of war, the cost of losing that war, the cost of losing personnel/equipment in that war, and the cost of basically ruining the physical assets they are trying to collect due to sabotage, collateral damage, misfires, and "misappropriation."
Sadly by the time they are done, the market value of those assets would be purely theoretical at best, if any value at all.
So it doesn't make sense for a country like China to invade the greater portion of Africa. But they might try sting operations, or devaluing of African assets within their own market to put pressure.
The risks being that the "belt and road" initiative might fall through too whatever the choice.
doesn't make sense for a country like China to invade the greater portion of Africa
No, so they just appropriate the places they cared about with their investments from the start, such as rare earth mines.
China don't need to deploy their army. They can simply threaten to cease all trades. No countries can afford to stop trading with China since practically everything are manufactured there. Even Taiwan, China's mortal enemy, still trades with China.
You make a good point. Everyone likes to think they can just switch production to India or Vietnam but they have no idea how large the manufacturing industry is there. No other country could replace it or match their speed. All those quality items you like have components or are entirely made in China.
You can fight and win wars without ever setting foot in another country.
Except this bank has an army
And likes to claim territory that isn't theirs.
More like if you owe the mob $100 and you fail to pay, you might get a broken finger. If you owe the mob $1 million and fail to pay they will gift you cement boots.
Is this actually true. The more someone owes the less likely you are to outright kill them cause that's a 100% loss on your investment. Brutal torture or kidnappings seem more likely to me. After that organ harvesting or forfitting assets.
It's more about sending a message to everyone else.
Outside of the movies? Not really. Not actually sure of the change in death rates in owing a small amount vs a large amount but loan sharks breaking limbs borrowers' or offing was actually pretty rare from what Steven Dubner or Leavitt found (can't remember which). Although my great uncle Michael might disagree with that finding. But nobody has seen him since he did not pay back that large loan he took from the mob in the 70s.
That said, there are other ways to put pressure on a borrower that do not permanently decrease productivity. A borrower has a bigger incentive to pay things back if a loved one's life is on the line. That might explain great uncle Michael's disappearance since he was pretty much disowned by the rest of the family.
Those are expensive cement boots for both the mob and that poor dude.
Well the accusations of irresponsible lending are just American fud... that money was a diplomatic expenditure.
But China seeking to aggressively recoup it does speak of economic desperation.
I don't know whether this should be hastily dismissed as "FUD": Do you want to live in a world where all of your country's critical infrastructure is owned by Chinese state-owned corporations as soon as your government can no longer service its loans to Beijing?
... The situation is certainly not entirely comparable, but since the start of the Russian war of aggression against Ukraine, we have seen the problems Germany has had with the fact that its gas storage facilities belong to Gazprom...
Aggressively recouping your over leveraged junk loans is indication of economic health?
laughs in wells fargo
If china doesn't get its money asap they're gonna start doing abrasive, risky aerospace maneuvers over international waters and forcing uighur slave labor to produce fast fashion.
Great jokes and all, but the Belt and Road Initiative has been a pretty smart and successful tactical move to consolidate soft power in Africa and other developing regions, and ensuring that their governments are beholden to Beijing for the foreseeable future.
And they did it all without mobilizing a single troop, but rather by making people's lives better.
Not a fan of China, and it's obvious that the Belt and Road Initiative is 100% a debt trap, but I gotta give them credit for pulling it off.
This is definitely much deeper into the grey zone than the US's (or "the West" in general) past dalliances in colonialism which were far more black and white, and straight up horrific
I wasn't aware I was joking.
I hope no one pays them
Gonna see Chinese junk bonds hitting the shelves at Walmart... Lol
Hey! Thats the IMF's job :(
Yes that's why it strange that a communist county is doing it, no?
The PRC isn't a communist country at this point. Clearly. Like, by virtue of this article existing in the first place. Debt is a capitalist concept.
They're just using our own capitalism against us (by us I mean "the West").
Not really. "Transition state" stuff aside there's nothing inherently wrong with loaning resources for infrastructure programs.
Where it goes sticky is the interest rates and defaults.
People have largely assumed China was just doing the same neo-colonialism the West was, because they just can't fathom the idea of not exploiting the vulnerable.
Now we will see if they're right. And even then it's perfectly Marxist...
Remembering that Marxism explicitly allows conquest as "liberation of the proletariat," which can easily include American-style permanently leased foreign ports.
What happens if countries just default? Do non-Chinese lenders care? Does it trash bond ratings across the board?
I think in many cases China takes control of the infrastructure they built since the countries miss payments.
This was widely predicted to be the Chinese strategy: make loans to countries they knew could not pay with favorable terms for China when the country defaults.
That would involve these nations honoring their business dealings, which they don't seem willing to do.
Is China going to invade and occupy nations who don't comply?
I guess we'll see. Might not be a bad result for the nations, honestly. Supporting Chinese military bases might stimulate their economies.
Lmao the delusions. You can't not commerce with China if you are a developing country. Not honoring the contracts would mean an absolute destroy of any of the developing countries economies. Don't give opinions on shit you don't know about.
Calm down. Your argument looks weaker when you fill it with insults.
Gonna block you now. Learn to conduct yourself in a respectful manner.
If you aren't capable of understanding the context of different words thats on you buddy. Good luck creating your own little eco-chamber.
It's obviously been a debt trap from the start. Is anyone really naive enough to think China was building up Africa's infrastructure out of the kindness of their hearts?
It happened in Sri Lanka a while ago. China financed the construction of a new deep water port. The port is finished, but Sri Lanka can't service the debt so the new port is now under China's control (99 years lease agreement).
Oof. I wonder how that will work in the case of infrastructure like roads and bridges--long term tolls? At some point it has to eat away at whatever good will the Chinese were trying to buy.
If you let them build military bases and run dubious assorted operations they are actually quite reasonable with repayment plans.
Source: am Australian
China now has a Hong Kong in Sri Lanka? Weird
Is there a list with the amount these developing countries owe to China? edit: found it https://docs.aiddata.org/reports/how-china-lends.html#appendix
Tell China to come try it
Better then borrowing from the IMF
This is the part where the liberals assure me China's evil plan of checks notes helping build infrastructure in the areas of the world ruined by colonialism while using a more generous lending scheme than the competition leads to them annexing half of Africa, somehow.
There is bad imperialism :C
And good imperialism :D
Lemmy knows which one to defend ;D
When the US builds an oil export terminal in Nigeria, the location is fully privatized and administered by western nationals. There's no path from the dockyard to the manager's office. There's no state interest in the facilities, save some meager tax revenue that's shaved to the bone by accounting tricks. There's no Nigerian retirees who get to profit off the dockyard's operations through pensions or 401ks. The ports are export-oriented, with the intention of taking Nigerian natural resources out.
When a Chinese state enterprise builds a dockyard in Kenya, there's shared ownership out of the gate. Kenyans share managerial roles. Kenyans share equity. The Kenyan state government gets a huge boost in revenues. And the ports are bidirectional, with Kenyan locals getting to benefit from cheap Chinese imports - particularly high tech imports like electronics and motor vehicles - as Chinese firms export Kenyan minerals.
Bi-directional trade is how the old English colonies worked, too. And that trade made English colonial enclaves incredibly prosperous both for the old world mercantilists and the new world plantation bosses. Its a lucrative model for everyone on the inside track.
The worst thing you can say about China is that they're simply doing imperialism better than the Americans.
Wait until I tell you that the US is indebted to Japan for that same amount ($1.1T) and to China for nearly that amount ($0.9T). Sure it's a bigger portion of the available funds in the developing world, but on the scale of superpowers, it's not so much.
The difference is leverage. Having $0.9T of US treasury bonds does not give China much leverage over the US because those would likely be absorbed by other countries fairly easily. Yeah, the dollar's value would likely dip a tiny bit but nothing catastrophic. That is much different than China having a large chunk of a developing nation's debt. Developing nations constantly have issues getting decent terms on their loans so if China up and says they will not roll the loans over into a new one, the country likely has to try to finance the debt at a much higher interest rate or have lots of strings attached. China has much more leverage in these cases.