Thursday, August 02, 2018

Soft Power ...

The New Silk Road, China's 1+ trillion dollar venture, promises to link a myriad of countries together via high speed rail and roads, is an endeavor that promises, if it succeeds, to transform China into a super power of enormous proportions. With this being said, there are caveats to this grand enterprise according to an excellent Bloomberg article titled China’s Empire of Money is Reshaping Global World Trade Money.
To whit.

What emerges is a picture of mostly poor nations—laggards during the past half-century of global growth—that jumped at the promise of Chinese-financed projects they hoped would help them catch up. And yet as some high-profile ones falter and the cost of their Chinese funding rises, would-be beneficiaries from Hambantota, Sri Lanka, to Piraeus, Greece, are questioning the long-term price. In Malaysia, one of the biggest recipients of Chinese investment in Southeast Asia, newly installed Prime Minister Mahathir Mohamad is pushing back. Expressing concerns about loan conditions and the use of Chinese labor that limit benefits to the local economy, he’s put billions of dollars of Chinese-­funded rail and pipeline projects on hold.

Xi intends a century-long enterprise. China has already outspent the post-World War II U.S. Marshall Plan, measured in today’s dollars. Within a decade, according to Morgan Stanley estimates, China and its local partners will spend as much as $1.3 trillion on railways, roads, ports, and power grids. “Economic clout is diplomacy by other means,” says Nad├Ęge Rolland, Washington-based senior fellow for political and security affairs at the National Bureau of Asian Research. “It’s not for today. It’s for mid-21st century China.”

Latin America, venture No. 2.

The percentage of Latin America’s imports from the United States fell from 50 percent of the region’s total imports in 2000 to 33 percent in 2016, while China’s share rose from 3 percent to 18 percent in the same period, according to Inter-American Development Bank (IADB) figures. Latin Americans are increasingly buying more China-made laptops and cars that used to be imported from the United States.

If the United States were to regain the market share in Latin American imports that it had in 2000, it could be exporting around $788 billion a year to the region and would be creating about 1 million additional U.S. jobs, the IADB says.

But while Chinese President Xi Jinping visited Latin America a week after Trump’s inauguration in what was his third visit there in three years, Trump has shown very little interest in the region.

Trump has not only failed to visit Latin America, but has vowed to build a wall on the U.S. southern border and is threatening to withdraw from the North American Free Trade Agreement with Canada and Mexico.

Building a wall is a really good idea, right?

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