Just had the same thought, came back to the comments and here we are.
I couldn’t agree more.
Surely the convention—generally—is to indeed use these for before/after comparisons? Especially if you set a precedent by doing so correctly at the start.
The US has a lot of experience - both successful and unsuccessful - at nation building, actively and passively via trade and investment, over the last ~70 years or so. When you get it right, the results are spectacular.
If China can invest half a trillion dollars plus into Africa over two decades and it turns out really well, and they can help lift hundreds of millions of people out of poverty, then that will be a tremendous outcome. They'll be contributing back to the virtuous cycle that their own development over the last few decades has been part of. More and more countries become net contributors and the pace of eradicating extreme poverty quickens.
The debt trap concerns are legitimate, ignoring the propaganda side of that for a moment. That's a pretty obvious potential problem for very poor countries when taking on massive development loans etc.
Ghana for example has a $40-$50 billion GDP, and China recently agreed to lend them $15 billion to try to develop their natural resources (bauxite mining for one) for China's use. When you're borrowing that large of an amount of capital vs the size of the economy that has to repay the debt, it's obviously risky. Ghana's vice president optimistically referred to it as a Marshal plan for Ghana. The pessimistic retort by a member of their parliament:
> "How much of our natural resource are they leveraging in that agreement for the $15 billion facility? If you’ll remember, former President Kufuor did the same thing when we were constructing the Bui dam. He went to China and mortgaged our cocoa for a loan agreement. Today we ship the country’s cocoa to China to service the debt,” he said.
All of these examples come with that double sided risk/reward concern, with debt and what you put up in exchange for the development capital.
The other giant issue I rarely see these articles discuss, is practical sustainability. That's every bit as important as the debt concern. The US could hand Albania an advanced, $11 billion nuclear aircraft carrier, that doesn't mean it's a good idea matched to their level of development and what they can afford to maintain. Skyscrapers are very expensive to maintain across decades. Ethiopia has a GDP per capita of $700.
To be clear, I'm not saying what does or doesn't make sense for Ethiopia. Rather, it'd be interesting to see an analysis of what a country like Ethiopia can support economically. There's a sustainable process to economic development. You can accelerate it a bit, if you try to leap too far you run the risk of causing dramatically worse problems than the nation otherwise would have experienced had it developed more organically or at a more measured pace. If it goes south, you not only have the debt to deal with, you have expensive infrastructure you can't afford to maintain, a double blackhole. China can dump immense sums of capital into trying to leap a country like Ethiopia forward. If they get that wrong, Ethiopia is stuck with trying to upkeep that infrastructure. It makes me wonder if there are elaborate studies done by Ethiopian authorities before allowing major projects funded by China to go forward, when it comes to estimated 30-50 year type maintenance costs.
>Ghana for example has a $40-$50 billion GDP, and China recently agreed to lend them $15 billion to try to develop their natural resources (bauxite mining for one) for China's use. When you're borrowing that large of an amount of capital vs the size of the economy that has to repay the debt, it's obviously risky. Ghana's vice president optimistically referred to it as a Marshal plan for Ghana. The pessimistic retort by a member of their parliament
Bauxite mine is not a unpredictable source of future income. Much like crude oil, even if it is the end of the world tomorrow, it is really, really hard to not to make any money out of it.
Another like these are their electric station projects in Pakistan: a very populous country, but their British era grid is beyond repair. Loans given for these stations had high interest, but at the same time Chinese put in sensible conditions like force-majeure insurance, and that the project will largely be done by Chinese state companies guaranteeing that not a single Pakistani bureaucrat had opportunity to steal the funds. Given current electricity prices, there is no chance that they will ever be under water for on loan.
A lot of projects are said to be financially engineered to be self-repaying. Effectively, these are not loans, but misnamed leasing agreements. The concern should be over ones that aren't.
Saying that China just litters money around without hoping to get anything in return, is simply beyond naive.
I can admit, Chinese officials are inept at it. Lots of bureaucrats working on those projects do look for making a name for themselves over having the project succeed. Their competence is being questioned.
Every time I'm seeing a watercooler talks of officials during industry events, it always comes to "facepalm manoeuvre" when their talks cross over "a yet another multi-gigabuck loan to another god forsaken country."
I assure you, even within the party itself, these projects, at least, make people scratch their heads.
The US, France and other Western countries have used debt as a leash on poorer countries for a century. If “we” reduced this strategy in the last few years, it’s mostly for our own benefit (there is less money to spare, and debt-aid has become an internal political issue).
Resenting China for following in our footstep is a bit disingenuous. I think the onus, now, is on the receiving countries, that hopefully have learnt how these faustian pacts work.
The problem is not China financing poorer countries for its own benefit, but rather Western inability or unwillingness to give them a better deal. We bribed quite a few governments during the Cold War, but recently the only thing we seem to be doing is “violent peacekeeping”, if you catch my drift.
> Skyscrapers are very expensive to maintain across decades. Ethiopia has a GDP per capita of $700.
I assume that part of the expectation is that that will rise rapidly (as it did in China). Whether that actually happens remains to be seen, obviously...
>The US has a lot of experience - both successful and unsuccessful - at nation building, actively and passively via trade and investment, over the last ~70 years or so
And also with government toppling, banana republics, sponsoring friendly lackeys into power, arming oppositional forces, courting dictators, and so on...
But look what the US left behind when it withdrew from those nations. Independent, stable, wealthy, democratic, growing, peaceful countries which now rank high on most development indices.
Nation-building is the best term in these two cases, regardless of the circumstances of "entry"
Regarding Vietnam, there's a version 2.0 of that going on currently, and it's going very well.
Trade with the US represents not quite 1/4 of the Vietnamese economy. $46b in imports from Vietnam last year, with their GDP being near $200b. That's a 10x increase in imports from Vietnam since 2003 (their economy has increased in size by about 5x in that time, non-inflation adjusted). In the coming two decades, trade with the US will probably turn Vietnam into one of the world's 25 largest economies.
The US appears to be intentionally trying to build up Vietnam to help offset the rising hegemony of China in the region. We're running a vast trade deficit with them (5 to 1 ratio), and hardly a word is being said about it. The recent military interactions bolster that notion.
Colombia is an example of successful nation building (more like guiding/assisting, frankly) in South America. Certainly if we're listing failures in S.America, that's one of the successes. Their GDP increased from $40b in 1990, to $380b by 2013. It's a dramatically improved nation compared to 30 years ago, in just about all regards. The US has been aggressively intertwined (some would say too much) with Colombia the whole way.
Besides importing goods from those countries, did US help build any infrastructure projects in these countries? I believe that's the big difference between China and western countries, especially US: no governing or military interactions, but help to improve the citizens' living with concrete infrastructure projects, like train, highway, subway, telecommunication etc.
>Lina Benebdallah, assistant professor of politics and international affairs at Wake Forest University, North Carolina, however, cautions that the China-Africa relationship is "asymmetric." In 2016, for example, China exported $88 billion in goods to Africa, but only imported $40 billion from the continent.
And what is the problem with that? If China wants to subsidize African development or consumption, what is the problem with that? If China loans more to African nations than they can repay, it is a loss for China, not for the African nations.
The real problem, it seems, is that China has an excess of USD that it does not know what to do with. It is afraid to let Yuan appreciate and let the Chinese people enjoy increased consumption, as while the economy is shifting from export to internal consumption there would be a period of instability - the status quo bias.
It is also afraid of buying assets in the US and Europe as it cannot guarantee that these assets will not be seized if need be for political reasons. Furthermore, it does not want to do anything that would reduce the value of the remaining dollars it holds. Trying to establish a resource base in Africa where they can build relationships, influence, enforce their property rights and protect trade routes, seems like a reasonable choice.
>Lina Benebdallah, assistant professor of politics and international affairs at Wake Forest University, North Carolina, however, cautions that the China-Africa relationship is "asymmetric." In 2016, for example, China exported $88 billion in goods to Africa, but only imported $40 billion from the continent.
88 : 40 = 2.2. At the ratio of 2.2, Africa does better on trade balance with China than most of Western nations...
>It is also afraid of buying assets in the US and Europe as it cannot guarantee that these assets will not be seized if need be for political reasons. Furthermore, it does not want to do anything that would reduce the value of the remaining dollars it holds. Trying to establish a resource base in Africa where they can build relationships, influence, enforce their property rights and protect trade routes, seems like a reasonable choice.
Careful with this comparison, Africa is still mostly a continent of primary resources and factories, so it would more natural that their trade balance be positive.
No, it is far from being positive, yet compare it to Saudi Arabia.
On resource exports:
The logic that resource economies must have positive trade balances as a rule did not stand reality check.
One may think that the amount of imports a resource economy can afford is not elastic in relation to their main export because they don't have any industry to produce basic living necessities.
In reality, what happens is the opposite: once few rich run away with what little hard currency the country had, the remaining people can't even buy those basic living necessities with debt, as their debt is worthless. Example: Venizuela
And reverse, when rich in those countries bathe in cash from resource exports, they spare no money for dumb excesses like gold plated Rolls Royces, and vaporize their trade surpluses very fast. You had to see Moscow in the time when oil was hitting $130...
And... quite a few African countries without any resource exports do have neutral trade balances with China, despite China being their biggest trade partner
>Yes, I should have been more clear that this is just my opinions/speculation.
I'd said it's unexpectedly insightful for a talk on an internet forum. That's a very subtle line that I think only one out of 50 academicians around picked up.
One fact that can be made for sure is that China been preparing for a scenario as bad as North Korean trade isolation for decades. Not puny tarrifs that they are under now.
The whole arrangement of political alliances, preferred classes of assets abroad, currency swaps, infrastructure planning confirms that.
>And what is the problem with that? If China wants to subsidize African development or consumption, what is the problem with that? If China loans more to African nations than they can repay, it is a loss for China, not for the African nations.
Only Western powers are allowed to do that!
After all Africa is their playground. How dare anyone else meddle with it?
That's not how it actually works, the parent is flat out wrong. Defaulting on loans from China doesn't happen in a vacuum.
If the African nation in question defaults on big loans to China, their economy is going down. Millions of people will be severely harmed, possibly for decades. It's not just China that loses some money. To say nothing of the fact that China often requires repayment in physical assets of the country (such as taking physical ownership of a port for their own use, or oil, or cocoa), they don't just walk away if they're not getting cash repayments.
First the country straps itself trying to repay China. That means they start missing payments on other smaller debts, they start squeezing the funding of their welfare systems and basic government functions. Everyone begins to suffer.
Redirected government funding - which they can't afford to redirect - begins to harm the economy. Their credit rating gets downgraded, nobody will lend to them at this point. Only China is left, and they want harsher terms now, more of the national resources (see: the Venezuela model). Their currency tanks, inflation skyrockets, the people suffer immensely. The economy goes into perma recession, no foreign capital trusts the situation, investment plunges.
Cycle and repeat the downward spiral, until you reach a point of social catastrophy.
I don't think they do. I think they're looking to make deals with nations that have resources they want, nothing more or less. I attribute zero ill spirit to that equation.
Banks typically don't want to see you go out of business when you borrow their money, such that they have to take your collateralized assets or similar. They'd prefer you fulfill the terms of the original loan. Regardless, it still happens routinely that debtors default; sometimes the creditor also lends more good money after bad, hoping the situation turns around. Ethiopia would be considered a risky or subprime debtor, as are most of the very newly developing countries like that which China is lending large sums to. They're not lending money to borrowers like Germany or Canada, with many decades of consistently sound economic operation and stability. Those types of economies don't much need China's capital. The nations that have weak access to global capital markets, or generally weak foreign investment, are drawn to China's money for obvious reasons. China is frequently a lender of only resort (particularly at the scale they're willing to deal).
>Cycle and repeat the downward spiral, until you reach a point of social catastrophy.
Well, we had that here in Europe too, but through EU/IMF loans. They enjoyed pushing countries to a "social catastrophe". So it happens in the best of "families" too.
Sure; but, assuming you had good government in Ethiopia, having this supply of funds/capital/goods available is still a good thing. The question is what they do with it. If they essentially just consume the loans, it is their own fault. In case of a bad outcome, I would have a much bigger issue with Ethiopian government than with the Chinese. Unless there is some arm-twisting going on behind the scenes that we are not aware of.
If Ethiopia cannot repay the loans, by definition the Chinese are losing out in economic terms, even if they get control of physical assets etc. If the assets were worth more than the loans, someone else would be willing to bid more for them than the Chinese. If they are worth less, the Chinese would have been better off just buying them outright.
> If China wants to subsidize African development or consumption, what is the problem with that?
They're following the West's playbook of buying influence at the UN, etc. It's Chinese "soft power".
> If China loans more to African nations than they can repay, it is a loss for China, not for the African nations.
Yeah tell that to the African countries that have struggled to repay debts on loans from the West for years. You might want to read "Confessions of an Economic Hitman" or Chomsky's "Hegomony or Survival".
> It is also afraid of buying assets in the US and Europe as it cannot guarantee that these assets will not be seized if need be for political reasons.
Chinese firms own commercial properties, ports, highways, and bridges across Europe and the United States. A common, although wildly exaggerated, meme is that Chinese interests buying up property in cities such as Vancouver and San Francisco drive house prices up to extreme levels.
You see, there are not many "golden statue" boondoggles, though no denial there were a few of them...
You see three prominent areas: 1. pay-per-use infrastructure (public transit for example, those train lines in Africa will be paying a lion share of profit to for loan repayments for decades,) 2. factories - that's self explanatory, 3. cultural facilities - for propaganda value.
I think we all know what to be called investment. Building highway, high speed train, subway, are all investments, which are called win-win, for local people, they got the better public transit, and for Chinese developers, they got the profit.
Well the incentive for China is simple since it uses all Chinese sources so the costs get higher than necessary but it's a foreign government flipping the bill so they don't care plus there is no competition.
The risks in Africa are great but when China has got your back as a company the math is different.
Not to mention we're talking Chinese concrete here that building will be turning to dust in less than 5 years they do the same in China after all and that's why it's not smart to buy property long term there although it's culturally necessary to be able to have a family there.
They may be building grand buildings but they use sub par materials so they are no build to last so I predict the debt will last longer than what they offered for it.
I works in China because the handle the supply and demand internally but it's a different story when they start exporting that.
One piece missing from the story is that Ethiopia is politically structured very much like China: an overbearing, notionally Communist [1] state that operates basically as a dictatorship and is mortally afraid of losing power. It's no surprise that they're turning to China for help.
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[ 3.7 ms ] story [ 79.7 ms ] threadI couldn’t agree more.
Surely the convention—generally—is to indeed use these for before/after comparisons? Especially if you set a precedent by doing so correctly at the start.
"Cities with more than 1m people in China and Ethiopia" on the other hand... .
If China can invest half a trillion dollars plus into Africa over two decades and it turns out really well, and they can help lift hundreds of millions of people out of poverty, then that will be a tremendous outcome. They'll be contributing back to the virtuous cycle that their own development over the last few decades has been part of. More and more countries become net contributors and the pace of eradicating extreme poverty quickens.
The debt trap concerns are legitimate, ignoring the propaganda side of that for a moment. That's a pretty obvious potential problem for very poor countries when taking on massive development loans etc.
Ghana for example has a $40-$50 billion GDP, and China recently agreed to lend them $15 billion to try to develop their natural resources (bauxite mining for one) for China's use. When you're borrowing that large of an amount of capital vs the size of the economy that has to repay the debt, it's obviously risky. Ghana's vice president optimistically referred to it as a Marshal plan for Ghana. The pessimistic retort by a member of their parliament:
> "How much of our natural resource are they leveraging in that agreement for the $15 billion facility? If you’ll remember, former President Kufuor did the same thing when we were constructing the Bui dam. He went to China and mortgaged our cocoa for a loan agreement. Today we ship the country’s cocoa to China to service the debt,” he said.
All of these examples come with that double sided risk/reward concern, with debt and what you put up in exchange for the development capital.
The other giant issue I rarely see these articles discuss, is practical sustainability. That's every bit as important as the debt concern. The US could hand Albania an advanced, $11 billion nuclear aircraft carrier, that doesn't mean it's a good idea matched to their level of development and what they can afford to maintain. Skyscrapers are very expensive to maintain across decades. Ethiopia has a GDP per capita of $700.
To be clear, I'm not saying what does or doesn't make sense for Ethiopia. Rather, it'd be interesting to see an analysis of what a country like Ethiopia can support economically. There's a sustainable process to economic development. You can accelerate it a bit, if you try to leap too far you run the risk of causing dramatically worse problems than the nation otherwise would have experienced had it developed more organically or at a more measured pace. If it goes south, you not only have the debt to deal with, you have expensive infrastructure you can't afford to maintain, a double blackhole. China can dump immense sums of capital into trying to leap a country like Ethiopia forward. If they get that wrong, Ethiopia is stuck with trying to upkeep that infrastructure. It makes me wonder if there are elaborate studies done by Ethiopian authorities before allowing major projects funded by China to go forward, when it comes to estimated 30-50 year type maintenance costs.
Bauxite mine is not a unpredictable source of future income. Much like crude oil, even if it is the end of the world tomorrow, it is really, really hard to not to make any money out of it.
Another like these are their electric station projects in Pakistan: a very populous country, but their British era grid is beyond repair. Loans given for these stations had high interest, but at the same time Chinese put in sensible conditions like force-majeure insurance, and that the project will largely be done by Chinese state companies guaranteeing that not a single Pakistani bureaucrat had opportunity to steal the funds. Given current electricity prices, there is no chance that they will ever be under water for on loan.
A lot of projects are said to be financially engineered to be self-repaying. Effectively, these are not loans, but misnamed leasing agreements. The concern should be over ones that aren't.
Saying that China just litters money around without hoping to get anything in return, is simply beyond naive.
I can admit, Chinese officials are inept at it. Lots of bureaucrats working on those projects do look for making a name for themselves over having the project succeed. Their competence is being questioned.
Every time I'm seeing a watercooler talks of officials during industry events, it always comes to "facepalm manoeuvre" when their talks cross over "a yet another multi-gigabuck loan to another god forsaken country."
I assure you, even within the party itself, these projects, at least, make people scratch their heads.
Resenting China for following in our footstep is a bit disingenuous. I think the onus, now, is on the receiving countries, that hopefully have learnt how these faustian pacts work.
The problem is not China financing poorer countries for its own benefit, but rather Western inability or unwillingness to give them a better deal. We bribed quite a few governments during the Cold War, but recently the only thing we seem to be doing is “violent peacekeeping”, if you catch my drift.
I assume that part of the expectation is that that will rise rapidly (as it did in China). Whether that actually happens remains to be seen, obviously...
And also with government toppling, banana republics, sponsoring friendly lackeys into power, arming oppositional forces, courting dictators, and so on...
But look what the US left behind when it withdrew from those nations. Independent, stable, wealthy, democratic, growing, peaceful countries which now rank high on most development indices.
Nation-building is the best term in these two cases, regardless of the circumstances of "entry"
Successful: Japan, S. Korea, Germany, Grenada, Panama
Unsuccessful: Iraq, Afghanistan, maybe a lot of S./Central America depending on how you define nation building, Vietnam, Cambodia (sort of)
Trade with the US represents not quite 1/4 of the Vietnamese economy. $46b in imports from Vietnam last year, with their GDP being near $200b. That's a 10x increase in imports from Vietnam since 2003 (their economy has increased in size by about 5x in that time, non-inflation adjusted). In the coming two decades, trade with the US will probably turn Vietnam into one of the world's 25 largest economies.
The US appears to be intentionally trying to build up Vietnam to help offset the rising hegemony of China in the region. We're running a vast trade deficit with them (5 to 1 ratio), and hardly a word is being said about it. The recent military interactions bolster that notion.
Colombia is an example of successful nation building (more like guiding/assisting, frankly) in South America. Certainly if we're listing failures in S.America, that's one of the successes. Their GDP increased from $40b in 1990, to $380b by 2013. It's a dramatically improved nation compared to 30 years ago, in just about all regards. The US has been aggressively intertwined (some would say too much) with Colombia the whole way.
And what is the problem with that? If China wants to subsidize African development or consumption, what is the problem with that? If China loans more to African nations than they can repay, it is a loss for China, not for the African nations.
The real problem, it seems, is that China has an excess of USD that it does not know what to do with. It is afraid to let Yuan appreciate and let the Chinese people enjoy increased consumption, as while the economy is shifting from export to internal consumption there would be a period of instability - the status quo bias.
It is also afraid of buying assets in the US and Europe as it cannot guarantee that these assets will not be seized if need be for political reasons. Furthermore, it does not want to do anything that would reduce the value of the remaining dollars it holds. Trying to establish a resource base in Africa where they can build relationships, influence, enforce their property rights and protect trade routes, seems like a reasonable choice.
88 : 40 = 2.2. At the ratio of 2.2, Africa does better on trade balance with China than most of Western nations...
>It is also afraid of buying assets in the US and Europe as it cannot guarantee that these assets will not be seized if need be for political reasons. Furthermore, it does not want to do anything that would reduce the value of the remaining dollars it holds. Trying to establish a resource base in Africa where they can build relationships, influence, enforce their property rights and protect trade routes, seems like a reasonable choice.
Have you come to that conclusion yourself?
On resource exports:
The logic that resource economies must have positive trade balances as a rule did not stand reality check.
One may think that the amount of imports a resource economy can afford is not elastic in relation to their main export because they don't have any industry to produce basic living necessities.
In reality, what happens is the opposite: once few rich run away with what little hard currency the country had, the remaining people can't even buy those basic living necessities with debt, as their debt is worthless. Example: Venizuela
And reverse, when rich in those countries bathe in cash from resource exports, they spare no money for dumb excesses like gold plated Rolls Royces, and vaporize their trade surpluses very fast. You had to see Moscow in the time when oil was hitting $130...
And... quite a few African countries without any resource exports do have neutral trade balances with China, despite China being their biggest trade partner
Yes, I should have been more clear that this is just my opinions/speculation.
I'd said it's unexpectedly insightful for a talk on an internet forum. That's a very subtle line that I think only one out of 50 academicians around picked up.
One fact that can be made for sure is that China been preparing for a scenario as bad as North Korean trade isolation for decades. Not puny tarrifs that they are under now.
The whole arrangement of political alliances, preferred classes of assets abroad, currency swaps, infrastructure planning confirms that.
May I know, what is your day job?
Only Western powers are allowed to do that!
After all Africa is their playground. How dare anyone else meddle with it?
If the African nation in question defaults on big loans to China, their economy is going down. Millions of people will be severely harmed, possibly for decades. It's not just China that loses some money. To say nothing of the fact that China often requires repayment in physical assets of the country (such as taking physical ownership of a port for their own use, or oil, or cocoa), they don't just walk away if they're not getting cash repayments.
First the country straps itself trying to repay China. That means they start missing payments on other smaller debts, they start squeezing the funding of their welfare systems and basic government functions. Everyone begins to suffer.
Redirected government funding - which they can't afford to redirect - begins to harm the economy. Their credit rating gets downgraded, nobody will lend to them at this point. Only China is left, and they want harsher terms now, more of the national resources (see: the Venezuela model). Their currency tanks, inflation skyrockets, the people suffer immensely. The economy goes into perma recession, no foreign capital trusts the situation, investment plunges.
Cycle and repeat the downward spiral, until you reach a point of social catastrophy.
Banks typically don't want to see you go out of business when you borrow their money, such that they have to take your collateralized assets or similar. They'd prefer you fulfill the terms of the original loan. Regardless, it still happens routinely that debtors default; sometimes the creditor also lends more good money after bad, hoping the situation turns around. Ethiopia would be considered a risky or subprime debtor, as are most of the very newly developing countries like that which China is lending large sums to. They're not lending money to borrowers like Germany or Canada, with many decades of consistently sound economic operation and stability. Those types of economies don't much need China's capital. The nations that have weak access to global capital markets, or generally weak foreign investment, are drawn to China's money for obvious reasons. China is frequently a lender of only resort (particularly at the scale they're willing to deal).
Well, we had that here in Europe too, but through EU/IMF loans. They enjoyed pushing countries to a "social catastrophe". So it happens in the best of "families" too.
https://www.independent.co.uk/news/world/europe/greek-debt-c...
https://www.nytimes.com/2015/07/12/world/europe/greece-debt-...
https://www.theguardian.com/business/2013/jun/05/imf-underes...
If Ethiopia cannot repay the loans, by definition the Chinese are losing out in economic terms, even if they get control of physical assets etc. If the assets were worth more than the loans, someone else would be willing to bid more for them than the Chinese. If they are worth less, the Chinese would have been better off just buying them outright.
They're following the West's playbook of buying influence at the UN, etc. It's Chinese "soft power".
> If China loans more to African nations than they can repay, it is a loss for China, not for the African nations.
Yeah tell that to the African countries that have struggled to repay debts on loans from the West for years. You might want to read "Confessions of an Economic Hitman" or Chomsky's "Hegomony or Survival".
Wait, increased relative to what?
Their ppp has increased like 4x in recent memory, as have a lot of obvious visual indications of consumption.
Chinese firms own commercial properties, ports, highways, and bridges across Europe and the United States. A common, although wildly exaggerated, meme is that Chinese interests buying up property in cities such as Vancouver and San Francisco drive house prices up to extreme levels.
https://www.youtube.com/watch?v=k42eqzZWg5A
https://www.youtube.com/watch?v=9A9HEVkXoJ4
You see, there are not many "golden statue" boondoggles, though no denial there were a few of them...
You see three prominent areas: 1. pay-per-use infrastructure (public transit for example, those train lines in Africa will be paying a lion share of profit to for loan repayments for decades,) 2. factories - that's self explanatory, 3. cultural facilities - for propaganda value.
The risks in Africa are great but when China has got your back as a company the math is different.
Not to mention we're talking Chinese concrete here that building will be turning to dust in less than 5 years they do the same in China after all and that's why it's not smart to buy property long term there although it's culturally necessary to be able to have a family there.
They may be building grand buildings but they use sub par materials so they are no build to last so I predict the debt will last longer than what they offered for it.
I works in China because the handle the supply and demand internally but it's a different story when they start exporting that.
[1] https://en.wikipedia.org/wiki/Ethiopian_People%27s_Revolutio...
https://www.brookings.edu/blog/africa-in-focus/2016/07/05/po...