We have a very similar situation here in North Macedonia with Chinese built highways and a loan covered by the Chinese Export Import Bank in the amount of ~640 million euros. (Later the cost of the projects increased by ~180 million euros more.)
Corrupted state officials took a 25 million euros cut for giving the contract to the Chinese construction firm Sinohydro. (This was confirmed in tapped phone conversations that were leaked to the public.)
Then prime minister Nikola Gruevski that was involved in the scandal and who negotiated the "cut" is on the run in Hungary, he was granted political asylum by prime minister Viktor Orban. Gruevski was indicted for other shady deals as well and faced a prison sentence here in North Macedonia.
Nearly 10 years after the projects started most of the highway corridors are not completed and they are nowhere near completion.
It is also well known that a lot of the construction workers are Chinese prisoners that were brought in here to work on the highways. I am not sure if their stay in the country is somehow regulated or if they are compensated somehow.
What collateral is held by the lenders? I mean at some point you it seems correct to just declare the entire deal off, but that only works if you can tell the lenders to pound sand. If they were okay pissing off China, they could come out okay, but I guess it depends on what other pressures exist.
edit: Missed this comment which essentially answers my question:
Corruption maybe, the prisoners allegation is most likely to be false. I know some people working in similar projects through photography hobby (a group of amateur photographers, I am mostly interested in landscapes). There are benefits working abroad, such as tax breaks, allowances and so on, it makes no economy sense to have prisoners. And I don't question their compensation as well, most of them work to support their families, that's the only reason they work.
If the state or employer is required or expected to supply additional benefits to people working abroad, the benefit to the state or employer in substituting workers with less ability (legally or otherwise) to claim or obtain those benefits is even larger than it might be in-country. (I'm ignoring the obvious issue of it potentially being less legally or politically easy to handle here as the parent comment does not mention these at all).
It sounds like you have an anecdote about some people you know working on these projects, but the details that seem intended to imply that it's unlikely that _any_ people working these projects are Chinese prisoners actually imply the opposite.
I really wanted to see if someone else mentions these allegations and with just a quick google search I found these 2 articles mentioning the exact same thing:
Economic imperialism is how much of the western world has built empires and influence without military action. Those wishing to control, and who have the economic means to do so, offer the other party something that looks to be of mutual benefit - a new road, a Venezuelan oil refinery, a new port, etc in return for loan repayments and project sovereignty. So, the big econony offers the finance, runs the projects, goes out to tender, uses one of their own big employers so that taxes come back to them, and build something for the smaller economy that saddles them with debt that is barely able to be repayed. A failure to repay the debt will tank that countries ability to secure finance on the global market. You can offer them reduced repayments, demand extra investment opportunities, or take cuts of other income streams as a method of payment.
The US has been doing this for a long time. Its one of the reasons why many South American and African nations have issues with the US. Chinas Belt and Road initiative is no different. Its economic imperialism dressed up with lipstick. The question is, what will they eventually demand in return? I suspect the most likely answer is "land".
Thays the equivalent of defaulting on an international monetary loan. So either:
Contractual penalty clauses are activated
Credit rating is dinged and the country cannot secure international finance
Trade sanctions among financiers allies
Reputation damage
I’m sorry but I don’t think that’s true. While the US has used military pressure/invasion there are little to no loans with such predatory terms. In fact the US gives a significant amount of aid to countries with few conditions.
Confession of an Economic Hitman is an older, slightly conspiratorial semi autobiography that presents quite a few cases that have since played out due to the age of the text and projects, and many of the claims and examples have been corroborated.
Its a fun read, if you can make it past the slight BS at the start of the book. Once the author gets in to how the projects are set up and work, and you reflect on the bigger points, it becomes fairly clear that what is being suggested has played out as described.
Most loans are secured with collateral. 'Right to seize land' sounds pretty alarmist. Any one of Russia, the EU or NATO would have stepped in to to broker a deal without China, if the alternative was a CCP bank scooping up swathes of territory just outside their borders.
I thought everyone knew this why was China seems to randomly invest in other countries infrastructure? It's not random, they hope countries can't pay for it so they get to slowly take over a country bit by bit.
For now. China is building its navy and aim to have maritime supremacy in 2050, with parity with the US by 2030.
With more countries having China as their biggest trading partner than the US, Chinas ability to use embargoes as a political tool solidifies each day. China can wreck some countries economy if they stop trading with them, imagine forcing others to follow suit, it would break that country for good.
Now pair embargoes with superior naval forces and China will be able to use their military freely while twisting the arms of any country that tries to voice opposition to it. Much like the US did in the past century, to be fair.
All these flavours and you guys choose to be salty. :) When Greece couldn't keep up with the payments years ago Germany said "give us your islands then". Nobody bat an eyelid, but as soon as we owe money to someone who isn't a Western country then everything is wrong with the world. How about Montenegro default on an American loan instead of a Chinese loan? Would that make it better? :)
cant montenegro just kick them out and not pay? I mean, what's china going to do, invade them? It seems the most they could do is cut them off trade or something.
They can. It happens more frequently than you would think, particularly where a recession hits and construction can't be completed because creditors called in loans and the workers can't be paid.
They will figure out some kind of concession behind the scenes. They might offer up access to their ports or something like that.
Easier conditions means privatization of something and gift wrap it to the Chinese. It’s the same loan shark tactics the IMF uses to privatize things like water:
Readit News
Corrupted state officials took a 25 million euros cut for giving the contract to the Chinese construction firm Sinohydro. (This was confirmed in tapped phone conversations that were leaked to the public.)
Then prime minister Nikola Gruevski that was involved in the scandal and who negotiated the "cut" is on the run in Hungary, he was granted political asylum by prime minister Viktor Orban. Gruevski was indicted for other shady deals as well and faced a prison sentence here in North Macedonia.
Nearly 10 years after the projects started most of the highway corridors are not completed and they are nowhere near completion.
It is also well known that a lot of the construction workers are Chinese prisoners that were brought in here to work on the highways. I am not sure if their stay in the country is somehow regulated or if they are compensated somehow.
You can read more here: https://chinaobservers.eu/exporting-corruption-the-case-of-a...
edit: Missed this comment which essentially answers my question:
https://news.ycombinator.com/item?id=27688719
It sounds like you have an anecdote about some people you know working on these projects, but the details that seem intended to imply that it's unlikely that _any_ people working these projects are Chinese prisoners actually imply the opposite.
http://www.asianews.it/news-en/Chinese-prisoners-used-as-lab...
https://www.moroccoworldnews.com/2013/11/111829/morocco-chin...
The US has been doing this for a long time. Its one of the reasons why many South American and African nations have issues with the US. Chinas Belt and Road initiative is no different. Its economic imperialism dressed up with lipstick. The question is, what will they eventually demand in return? I suspect the most likely answer is "land".
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https://en.m.wikipedia.org/wiki/Confessions_of_an_Economic_H...
Its a fun read, if you can make it past the slight BS at the start of the book. Once the author gets in to how the projects are set up and work, and you reflect on the bigger points, it becomes fairly clear that what is being suggested has played out as described.
China's about to sprout the first of its European colonies.
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Dead Comment
Dead Comment
With more countries having China as their biggest trading partner than the US, Chinas ability to use embargoes as a political tool solidifies each day. China can wreck some countries economy if they stop trading with them, imagine forcing others to follow suit, it would break that country for good.
Now pair embargoes with superior naval forces and China will be able to use their military freely while twisting the arms of any country that tries to voice opposition to it. Much like the US did in the past century, to be fair.
I'm asking seriously.
They will figure out some kind of concession behind the scenes. They might offer up access to their ports or something like that.
They can almost certainly renegotiate for easier conditions:
Yanis Varoufakis on China vs EU conditions:
https://m.youtube.com/watch?v=9tJatdtv4jQ&t=24s
https://amp.theguardian.com/business/2007/aug/16/imf.interna...
https://en.wikipedia.org/wiki/Fallacy_of_composition