China Laos fact of the day

Laos will be the recipient of a high-speed railway expected to cost about $7bn — or more than half the impoverished Southeast Asian country’s gross domestic product.

China, by the way has lent $65 billion to Venezuela.  Here is the FT article, interesting throughout, mostly on One Belt, One Road.  Also on the China front, the nation is spending $4.8 billion this year in “football transfer fees” [huh?], non-gated article on the Chinese soccer boom here, and:

International use of the renminbi dropped sharply in 2016 as capital controls and dollar strength reduced the attractiveness of China’s currency, according to new payments data released on Thursday. The Society for Worldwide Interbank Financial Telecommunication (Swift) said the value of international renminbi payments fell 29.5 per cent compared with 2015.

Link here, FT again.


China is willing to spend big in order to achieve what they think is important - the economic domination of their neighbors. They are Marxists after all.

But this smacks to me of Japan buying up American real estate in the 1980s. Or Thailand spending big on airports and freeways just before the Asian currency crisis. My theory is that you can do a lot of stupid things with other people's money as long as you do them far away from five star hotels in mosquito ridden rice paddies. No international banker will go there, so no one will notice what you are doing. But if you buy Madison Square Garden, or ask the IMF to fly through an empty Cathedral-sized airport, even the slowest banker will notice.

The Chinese should ask themselves how many merchant bankers, currency traders and the like are soccer fans.

I think the myth of Chinese subtlety and long range vision may be tested in the next 5-10 years.

yup, just like the great myth of the powerhouse Soviet Union economy in the 1970's

the underlying Chinese political system will eventually cripple its economy, just like the Soviets

Comparing this to Japan buying private real estate completely misses the mark. Japan was pissing off Americans back then, remember? These investments by China are received (mostly) as goodwill. It's a form of power and influence.

But the point is, is it economically wise?

Well, it seems to me that the soft power of these investments has better return than the USA approach of military intervention. Time will tell, but I suspect these are good investments.

Russia has loaned Bangladesh $11.4 billion at Libor +1.75% to build the 2.4 gigawatt Rooppur nuclear power plant. With a current estimated cost of $12.65 billion it comes to over $5 a watt before the cost of finance is included.

" comes to over $5 a watt before the cost of finance is included."

Sounds economically marginal and probably negative.

Giving the literally millions of people in Bangladesh using off-grid solar I would have thought they would be able to scale up and install utility scale solar at a cost per watt roughly approaching that in India, but that does not seem to be the case. I have been told that when it comes to getting things done efficiently, Bangladesh makes India look like Switzerland.

Maybe we can get China to finance our great wall.

Now that's thinking outside the box, so to speak.

Aren't the Chinese paying for it already? As Mitt Romney said, before spending money, the president must decide if it is worth to borrow Chinese money for it. Without Chinese money, the American regime couldn't last a week. Sad.

We don't use Chinese money.

We essentially exchange sovereign debt for Chinese goods.

If no other country desired to hold our debt, we might figure out how to create the money without the debt for special needs.

No, you exchange sovereign debt for Chinese money and, subsequently, you exchange Chinese money (now in America's possession) for Chinese goods , Southeast Asian trinkets, welfare and the biggest war machine mankind has ever seen. Make no mistke, you can not pay for all that without Chinese largesse.

We use USD to buy Chinese goods.

So far not much in Chinese currency goes out to the world.

It still is the Chinese money because they gave it to you.

China gets USD for their stuff that they sell to us. They can hold the USD or buy our debt. Their choice. We don't use their Yuan to any significant extent. They give us stuff, not money.

I guess Ray must be eating dinner right now. We'll hear from him after dessert.

That high speed rail will run from Kunming through Laos and Thailand down to Malaysia and Singapore. Rumor is that the rail line will be called the Tyler Cowen China-Singapore Connector. But it's only a rumor. In the meantime, America is devoting its scarce resources to building the Donald Trump Wall of Shame between the US and Mexico. Priorities have to be established.

Minding your borders has been a high priority of nations for thousands of years. Why is this different?

Seems like a more immediately useful way to defend the territory of the US than the majority of our defense budget.

China has not spent $4.8bn on transfer fees this year, that is the global total, China accounts for only $450m of that. Chinese clubs are spending silly money on players (£2m on Ryan McGowan?) but a law restricting teams to only three foreign players (similar to what is already in effect in other nations) might be on its way in soon.

For those not sure what a football transfer fee is (is that what the [huh?] was implying?) it's simply money one club pays another to release a player from his contract so he can move to the other club. If a player is out of contract then they can of course move to another team without a fee having to be paid, so the fee for a player reflects both his value to the club and the amount of time left on his contract.

I suspect the [huh?] is there to remind us that Americans have no notion of free competition in sports: they prefer the socialised system used in the NFL.

What "free competition"? At best, 6 teams (Man U, Man City, Liverpool, Arsenal, Chelsea, Tottenham) can hope to win the Premier League (Europe's top soccer league) every year. That is out of 20 teams. For the rest of the teams, hard luck, I guess. Last year's win by Leicester City was the exception that proves the rule...this year, they are 15th right now.

The situation in other soccer leagues around Europe is arguably worse. In some countries such as Germany and Italy, the winner has been the same club for the past 5 years.

In the NFL, 24 out of 32 teams have won a Super Bowl (all in the last 50 years since it started only in 1967). 28 out of 32 teams have at least made it to one Super Bowl. You call it a "socialized system", but we tend to think of it as a fair one. Why bother to play a sport unless you have the hope of winning it all?

One can only imagine how depressing it must be to be a fan of a middling club in the PL like West Bromwich Albion or Stoke City. No hope at all, year after year!

You think "socialised" is fair. Do you apply that to all walks of life?

Of course the Premier League has free competition. Of course that favours the rich clubs. Just like ordinary companies, ordinary people, and so on. Only a socialist would define "fair" in terms of outcomes rather than procedures.

I am all for free markets, but I think there should be ceilings, it is not fair the Brazil is the biggest producer of soccer stars and tet the Spaniards, the Chinese the and the Slav Mafiosi buy them all.

Europe's top soccer league is not the Premier League, though it may be the most popular national league. Americans value defeating everyone else more than people in Stoke or West Bromwich who like to support their team for the fun of it and, at a stretch, beat their local rivals Wolves.

" Why bother to play a sport unless you have the hope of winning it all?"

The Lombardi theory: "Winning isn't everything, it's the only thing."

It's a lot more depressing that my local baseball team, The Jacksonville Jumbo Shrimp, can never be in the first division. If there were promotion/relegation, I'd be vastly more interested even if the possibility of ever winning the World Series was infinitesimal.

Transfer fees are fees paid to transfer the players registration from one team to another. The fact that players are centrally registered, and that pretty much all soccer clubs in the world observe player registrations with other clubs means that soccer has not worked along the lines of a free market since about 1890. Almost all sports leagues in the world are cartels of one form or another.

Court cases have wittled down restrictions on players associated with player registration over the years, but it is still nothing to do with a free market.

It is a high speed link, but it will also be the only link.

"Although Chinese contractors have been building and operating railways in many parts of the world for more than four decades, the line to Laos is the first such railway linking directly to the CRC network across the Chinese border. The single track electrified mixed-traffic line is to be built to China’s GB Grade 1 standards, suitable for 160 km/h passenger and 120 km/h freight trains. The mountainous terrain will require 258·5 km of bridges and tunnels. The cost is estimated at 37·4bn yuan, and construction is expected to take five years."

London already has a freight train link with China:

A high-speed rail line for only $7B?

Fine print: "Trains not included. Definition of high-speed may depending on long-standing local traditions."

Past performance is no guarantee of future performance.

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