POTHOLES IN THE NEW SILK ROAD PROJECT

So far, it has seemed like China's New Silk Road initiative has been progressing more or less uniformly. The first freight trains between London and China have already run (an eleven day journey), and all seems good.

Except...

...some potholes are beginning to emerge, and they are probably only going to get bigger. Mr. B.G. shared this story, plus his own high octane speculation which I'm going to pass along, and add to it my own:

Malaysia's Mahathir cancels China-backed rail, pipeline projects

You read that correctly, Malaysia has unilaterally cancelled its part of the Silk Road railroad pipeline project. And it's instructive to note why:

Malaysian Prime Minister Mahathir Mohamad said on Tuesday that the Chinese-funded $20 billion East Coast Rail Link (ECRL) project and a natural gas pipeline project in Sabah will be canceled for now, according to media reports.

Mahathir made the comments while addressing the media in Beijing during his five-day trip to China. He said the projects, would be canceled until such time as Malaysia can afford it.

The Prime Minister's office confirmed the comments Mahathir made to reporters in Beijing.

Prior to his China visit, Mahathir had vowed repeatedly to discuss what he called "unfair" Chinese infrastructure deals authorized by his predecessor Najib Razak, whose near-decade long rule ended in electoral defeat in May amid a massive financial scandal. (Emphasis added)

In other words, Malaysia wants a "better deal", and this comes in the wake of similar behavior from Pakistan, and I suspect there's a simple reason why, and that can be summed up in three words: "Donald Trump", and "tariffs". With America wanting to "level the playing field" with China, it was only a matter of time until others would as well. Whether or not this is a thought-out strategy against the Silk Road project or not matters little, for the result is the same: as more nations abandon their original deals with China, and re-negotiate them under better terms, this puts even more economic pressure on China as this will put a dent into the liquidity and investment capital that China can offer. In effect, the potholes are driving up the realization and maintenance costs, so to speak. This was the essence of Mr. B.G.'s speculation to me when he sent me this article, and I strongly suspect he is correct.

But we might extend that scenario a bit and assume that so many nations renegotiate their terms with China that extreme pressure is put on it. Does that mean the end of the Silk Road? Not necessarily, for Russia will continue its own version. Theoretically, even before China came along, it was already possible to travel from London all the way across Asia to Vladivostok via Russia's massive trans-Siberian railway. Mr. Putin will not abandon that aspect of the Silk Road, and has already signaled that he intends to expand the trans-Siberian lines and trunk lines in order to serve the expansion of Russian agriculture. Take China out of the Silk Road equation, and one is left with Russia. But how will Russia expand (and upgrade) existing lines without an influx of Chinese capital?

Three words: "Shinzo Abe", and "sanctions." Inevitably, Russia would have to turn to the West, and in particular the European powers, and Japan, for capital. One may predict that the former would only expand their capital investments and lift the sanctions in return for Russia capitulating to the West's, that is to say, to Washington's, demands, unless the unthinkable happens, and Europe grows a pair and and removes the whole sanctions regime from the table to begin with. Mr. Putin shows no signs of "capitulation" nor does Europe show any signs of entering puberty any time soon.

But then there's Mr. Abe, who has already shown a certain "independence" from the West with the deals he has already concluded with Mr. Putin. It may seem counter-intuitive, but it is a fact that Mr. Abe's Japan had quietly wished for a more vigorous American response to Mr. Putin's re-occupation of the Crimea in the wake of the referendum in that province to return to Russia. America's response was perceived as weak in Japan, and was met with more Japanese defense spending, and the extension of diplomatic feelers to Russia. The logic is simple: if the USA would not stand up to Mr. Putin in the Crimea, how could Japan rely on it in case of a conflict with China? Those deals already inked between Tokyo and Moscow run into the billions, and one can expect more of the same.

The lesson of all of this is that China's glorious project is showing more and more signs of potholes, and with it, the geopolitical order predicted as a result of the Silk Road project just a decade ago is changing already. And the key emerging player is Japan...

See you on the flip side...

12 thoughts on “POTHOLES IN THE NEW SILK ROAD PROJECT”

  1. the 20,000 pound gorilla that has escaped it’s cage is Fukushima. Tokyo should have been evacuated 7 years ago, but Japan decided to play possum with the truth.
    so the New Tokyo in Siberia like Stalin’s Israel plan?
    oh, Russia does not accept other’s nuclear waste, or nuclear wasted people.
    I wonder how earthlings would handle teleporting. Much like Douglas Adam’s Hitchiker’s Guide to the Galaxy and the goldfish in your ear that gives people telepathy, perfect communication , no secrets, and giving rise to more and bloodier wars than ever before.
    Maybe Mahathir knows that there is a huge zio tribe influence in China , and not just those Illuminati tribal etchnic chinese Lee’s/Li’s.

  2. It seems that the world has tired of the US’ economic hitmen and the rapacious methods of vulture capitalism over the past 60 years. The model involved lending “third world” countries money for massive infrastructure projects on terrible terms (for them), then basically taking ownership of the country via loan defaults.

    China attempted to emulate that model, albeit slightly les voracious, with the Silk Road. With the world swinging quickly back to the nationalist view, and with Trump showing the chinks in China’s armor, it seems that the nations on the Silk Road want new deals that don’t sacrifice sovereignty, nor leave the nations in hopeless debt servitude to China.

    How desperate is Xi Jinping to realize his global dreams? We shall soon find out, methinks. The 400-pound gorilla in the room is whether China, like the US in the past, would use its military strength to enforce its trade policies.

  3. I see two aspects to the ‘real world’ building of the Silk Road:

    The first aspect is internal to the Chinese leadership. It actually is a Consciousness issue. If the Chinese leadership is sufficiently evolved, they will realize the benefit of treating others as they would want to be treated. (Or, ‘we are all in this together.’) This will lead to fair terms on any negotiation, and lack of subsequent ‘blowback’. Otherwise, various nations will smell something wrong, and react accordingly. Ironically, for the Silk Road to work, China has to behave as if it were enlightened…

    The second aspect has to do with the Western deep state. Again, this has to do with Win-Win versus Win-Lose. Does the Western deep state have the Consciousness to try to benefit the Entire Planet with their actions? (Stop laughing… *grin*) Assuming they go the negative route, there are many ways to put financial & economic pressures on the governments of the countries that the Silk Road passes through. Plus, if those fail, ‘accidents’ can happen (think MH370).

    So, I would put the success/failure of the Silk Road as a test of Consciousness of the parties involved…

  4. This has the stench of the British Empire Great Game shenanigans to derail the Silk Road. Vikings steal trading is Greek to them chaos is their playground and they have allies in western Asia who are more the willing to stir up mischief throughout the World.

  5. I think that Germany is beginning to “grow a pair.”

    https://www.rt.com/business/436505-germany-eu-swift-us-iran/

    “It is indispensable that we strengthen European autonomy by creating payment channels that are independent of the United States, a European Monetary Fund and an independent SWIFT system,” Maas wrote in the Handelsblatt business daily.

    Me thinks that the US in its current economic state has been beating its war drums loud and clear (Syria and Iran come to mind), with no one willing to step up to the plate. Traditionally a country in such poor and insolvent standings, could use a good war to bolster and revive a stagnant economy. China and Russia in my opinion, seem to have signaled to the other emerging economies to deny America of her much needed war. I see signs of an emerging isolation of America from these nations. A SWIFT alternative in the EU and throughout the BRICs+ nations, would remove one of Americas biggest trump cards. Compound this with what appears to be a real drive back towards sound money and away from the fiat USD, are indeed BIG signals towards a changing of the guard.

    No doubt the Silk Road has hit a bump or two, but I don’t see China slowing down their push. At the very least, its safe to say that the dollar hegemony is in deep trouble.

    1. I believe that Germany has been turning towards Russia for years now. In my previous [professional] live, I remember hearing rumors that this was a primary motivation for the prior administration to tap Merkel’s phone ?.

      The good Doctor has often blogged about a sort of “Cold War” between Germany and the US, I think this may be a reason as to why…

  6. Robert Barricklow

    My initial first reaction is what’s wrong.
    I’ve had dealings in selling to an Afghan and never had a deal too so long[weeks on end] and I made next to nothing. A cultural business as normal?

    Zhongguo zhi zao
    Made in China wisely.

    China has taken the opposite approach from the U.S., focusing public money on infrastructure/technologies.
    This is a strategy that is building a national solid foundation in both business and a political
    social economy. It is balanced. Hard to knock off balance.

  7. anakephalaiosis

    My social credit score is lower than Robin Hood’s, so I guess, I will continue to live in the forest.

    Being socially deplatformed down to earthly existence, I will have to settle for the green grass.

    Life in Hobbit Shire is country simple. Never heard of puberty. Is that Alex Jones’ vitality pill?

  8. While a few million in Chinese investments may be an offer that many African countries won’t refuse, the deal is different in places like Pak and Malaysia. Not to mention Japan and Russia.

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