Will China’s Silk Road Damage the US Economy?

By www.ProfitableTradingTips.com
Will China’s Silk Road Damage the
US Economy?

http://profitabletradingtips.com/profitable-trading-tips/will-chinas-silk-road-damage-the-us-
economy
The Chinese Silk Road forum is over
and we wonder if anything will come
of all the hype?

economy
the washington post writes that the
forum demonstrated China’s power
and influence and the power of its
propaganda.

economy
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economy
it’s easy to laugh at the sheer
cheesiness of the promotional
campaign for the “belt and road forum”
in beijing.

economy
in one video released in the run-up to
the meeting, a father reads his rapt
daughter a bedtime story about
president xi jinping’s infrastructure
plan.

economy
in another, a group of children express
“gratitude” for the $900 billion
initiative:

economy
“the future’s coming now/the belt and
road is how,” they sing.

economy
the belt and road forum is a projection
of chinese power, yes, but it is also a
vivid display of the power of chinese
propaganda

economy
a lesson in what happens when truths,
half-truths and state-sanctioned
talking points, mixed and repeated,
begin to pass as fact.

economy
All of this refers to an infrastructure
and development plan for trade routes
by land and sea from Chinese
manufacturers to buyers across Asia
and Europe.

economy
The natural routes are still those used
in the caravan days when silk traveled
from China to Europe.

economy
Today China is pledging hundreds of
billions of dollars to build railroads,
airports, ports and power plants along
this route, as well in every corner of
the globe.

economy
Who is worried? India and the USA
are concerned.

economy
America First or America
Last?

economy
Donald Trump gained the US
presidency promising to make
America First but his route to this goal
is isolationism.

economy
This leaves China as the global leader
in advancing trade deals and helping
develop infrastructure nearly
everywhere.

economy
While America is hunkering down
behind a tariff wall China could end up
developing infrastructure from Beijing
to Vienna.

economy
The way in which this could damage
the US economy is by making it shrink
while China’s grows. Does this jive
with reality?

economy
Not All As It Seems

economy
Despite glowing Chinese propaganda
not all is well with the Silk Road plans.

economy
First of all it is a Chinese enterprise
meant to benefit China.

economy
All will be well advised to keep that
fact in mind.

economy
reuters writes of the Silk Road
and cheap funds, heavy debt and
growing risk.

economy
behind china’s trillion-dollar effort to
build a modern silk road is a lending
program of unprecedented breadth,
one that will help build ports, roads
and rail links, but could also leave
some banks and many countries with
quite a hangover.

economy
at the heart of that splurge are china’s
two policy lenders, china development
bank (cdb) and export-import bank of
china (exim), which have between
them already provided $200 billion in
loans throughout asia, the middle east
and even africa.

economy
they are due to extend at least $55
billion more.

economy
Even Chinese bankers admit that if
they lend too much to countries that
cannot pay the loans will be
unsustainable.

economy
china’s central bank governor zhou
xiaochuan is among those to warn
that this reliance on cheap loans
raises “risks and problems”, starting
with moral hazard and
unsustainability.

economy
china has been caught out before; it is
owed $65 billion by venezuela, now
torn by crisis.

economy
The problem for nations like Pakistan
is that they will borrow from China to
pay for projects completed by Chinese
companies and largely by Chinese
workers.

economy
Where is the money going to come
from to pay off these loans?

economy
And remember that China is not
growing like it used to, has mounting
national and personal debt
issues and risks landing in a trade
war with its largest customer, the
USA.

economy
It remains to be seen if China’s
activities in Asia and toward Europe
make any difference to the US
economy.

Will China’s Silk Road Damage the US Economy?

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