China's Belt and Road initiative begins to crumble

as most client states begin to default on their loan repayment requirements. A guest speaker this week at the 3rd Belt and Road (B&R) Initiative is the wanted war criminal Vladimir Putin. The B&R customer countries are mostly countries with large amounts of natural resources, rather than poor countries with not much of anything that would have greatly benefited from any improvements.. Most of the investment money is used to develop energy & mineral resources China hoped to someday export (aka pillage) and profit off as a partial repayment of the loan money due to China in return for the improvements on that countries roads and infrastructure. Sadly, like happened inside China's cities, many of the Chinese companies contracted by China to do the work in those places where the B&R was happening took out loans to start the constructions, started the constructions, then (under Chinese banks liberal loan policies) took out more loans to begin other projects, which they began before the first project was even half done, then repeated and repeated until the collapsing Chinese economy forced a halt to the easy loan policies. The projects not completed and their own cash on hand shrinking the countries can not repay, the energy and mineral infrastructures not built China can't export the resources of the host country, and of course the Chinese construction companies can't repay their loans to the Chinese banks or finish the projects they began. China is now faced with the choices of complete all projects and not see any financial benefit for decades, or simply walking away from many B&R projects in many countries

China's financial exposure to date on the B&R is over 600 Billion dollars in loan promises from the host countries. This is in addition to another 600 Billion dollars of B&R investment loans to develop oil resources in Russia. The investment rating risk of the projects is currently at B- which is only a step away from being a total loss. Chinese investments into Russia ceased in 2022, but Russia has not repaid it's debts to China and many projects there are not completed. The largest recent recipient of Chinese investment money is Iraq (10.5 Billion dollars of signed loan contracts) for the development of Iraq's oil resources. The total current debt exposure of China is about 1.3 Trillion dollars of which about 60% is in default.

The current 3rd forum in China is as more about the country leaders meeting with a debt collector and offering their excuses as it is about anything else.

The below YT video provides more detail, history, figures, etc. .






wave
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Comments (11)

A further explanation by YT;s Economics Explained about how China got so deep into the money pit and why it's economic future is grim. As a point of interest Goldman Sachs puts the local Chinese debt at being around 23 Trillion US dollars and growing. That's a lot of debt to pay off and does not include the indebtedness resulting from the B&R venture. The combined debt load is over twice the China's annual GDP.

Not sure about your figures, as China has never released who owes what or who has defaulted.

If possible, can you post where you found these debt amounts?

So while many countries are defaulting or requesting a renegotiation regarding the loan terms, mostly due to repercussions created by Covid 19, there has been little to no information regarding the actual amounts owed.
Right there in those two videos. I would imagine the way those economists determined the amounts I quote from those videos has more to do with what the countries borrowing the money from China have released to their people and press reporters. Economists issue bond ratings such as the ones in the video based on verifiable figures, not speculation.
I'm sure this is just an economic game that's played between the 2 major economies of the world Ken, word is that China really doesn't want the world reserve currency after seeing what mess the US has made of it in less than 100 years;;; and in the most tech advanced time we have ever experienced..

The Yuan will almost also be below the value of the US dollar until the fall from grace that the US doller will experience in the near future, but no need to worry i'm sure the Chinese won't let the US people suffer as much as other countries have under a US dominated system..
China will build impossible projects in other countries, projects that could not happen otherwise. Don't they have a similar plan for nuclear power plants. They will provide finance and carry out the complete construction works. They will receive ongoing repayments on the loans. The loans are structured in a way that ties them to securities (resources) which is part of the overall plan. The plan is for the client to default. Chinese companies get the contracts, use their own labour and materials, and China end up owning these foreign structures and a share of the foreign country’s resources.
It's a win win situation (for China). The only problem at present is default in China itself which wasn't foreseen (unless the government planned to take possession of those companies). We will see how that affects things.
You can see how Russia has already taken possession of foreign companies in Russia. Putin has been doing this kind of thing since 2000. China has been doing it's thing for decades.
China and Russia are together in this (which is why China doesn't speak up about Ukraine.
China's economy is strong (up to 2022). Exports exceed imports. Foreign debt is well within reason (US probably owes China more) and the budget is balanced.
This is their way of doing business. Can the extreme capitalists of the west condemn them?
you (plural) seem to be putting 1B1R all down to financial self interest. That is a mistaken and simplistic view, and ignores the dimensions of diplomacy and influence. Diplomacy and international influence are strong factors and motives both for the Chinese and for America in particular in opposition. The opposition is a driving force too in the Western media rumour mills which assert 'crumbling'
Competition by the US takes on a whole new meaning Farg's, they stand on anything to get the best end of any deal for themselves..
The worlds seen it far to many times and the worlds feed up with it now, it plain to see that countries are dumping the dollar for international trade..
Ken, darling,
Let me break it to you.
You are on the wrong side of the world. wave
Well the guys in the videos are economists with more finger on the pulse than I have for sure. They both seem to feel China is in financial trouble based on the information they see. However there are many variables to come. Rumors in other arenas indicate things didn't go that well for Russia at the recent summit. As someone else wrote on more public media not long ago, Russia becomes more of a vassal to China every day that passes. Russia has borrowed literally hundreds of Billions of dollars from China secure in the false belief that oil revenues would compensate. They didn't and Russia is not in default on those B&R loans. New terms were negotiated, but not publicly revealed beyond the fact some new arrangements are being made. If he doesn't get a total victory in Ujraine soon (unlikely) Putin may have to concede some things to China. Would China benefit economically from that? Of course.

A joker in the deck is of course the Mid East. If things go bad there it would have economic effect on everyone. Because Russia can't deliver enough China had begun buying oil from Saudi Arabia. Suddenly losing that oil flow due to a Mid East crisis would be bad for China. If all nations lost that oil flow it would be bad for almost everyone. Etc, etc.
BRICS is expected to be joined by 40 more countries.
Including European ones, as the Europe union membership doesn't prevent them from joining other economic unions.
Whoever wants to find problems with China's or Russia's economy is simply delusional. Or express very strong wishful thinking.
Everyone knows that Russia is selling even more petrol and gas products now, even to those who imposed the sanctions.
But these are not the only desireble products which sales are blooming right now.
And right now on the radio I'm listening how more and more countries are stopping the weapon supply to Ukraine.
That speaks louder than "experts" .
wave
Are you joking? Look at the report released by Russia's own Ministry of Finance. Russia oil and gas revenues have plummeted almost 70%, Russia has no way of transporting it's gas. It has only one LNG transformation plant. There are only 2 way to ship gas. Via pipeline, or as LNG. Russia never bothered to build gas storage facilities as it imagined Nordstream and Nordstream II would be forever things, and they weren't. The pipelines are gone and Russia has been forced to begin shutting down the gas wells.

Similar with oil. You can easily track how much oil is sold by the number of oil tankers going to Russian terminals and by the capacity of their few remaining pipeline. Russian oil sales are way, way down by volume. China has begun to stop buying oil from Russia and now buys a fair amount from Saudi Arabia and other mid-Eastern facilities, simply because the transport costs are much cheaper from the Mid East than from Russia.

The end rusult is since ol and gas revenues were the main export product of Russia, Russia's income is way, way down and their own publicly published budget shows it. What have you been smoking?
.
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ken_20

ken_20

Shenandoah Valley, Virginia, USA

Reasonable looking guy. A little nerdy and good with tools . Fond of buying old broken things and fixing them for resale or use. Everything from microwaves and farm tractors to AK type rifles. Sometimes controversial and well known to many. Not scare [read more]