Why OBOR failing?

OBOR: A Chinese Over Burden- Over remodel, A linear investment without any business acumen of developing and developed market the China fast investment to take globe by storm with marketing strategy is actual debt trap for its investment with lots of gestation period and debts ratio could be cumulative in accelerate pace making the OBOR project to slow or no return with banks debt mounting each day.The reports of various projects are here as follows in public domain.

China influence with OBOR cannot flourish  unless her policies accommodate and abide International  law and conventions followed in true spirit. Her crescendo call need not making rhetoric to be bossy.

China, Xi Jinping chose the Kazakh capital of Astana to announce his grand plan for a “new Silk Road” in September 2013. But nearly five years later, the investment push — now known as the Belt and Road Initiative — has not resulted in much new business for the central Asian nation.

Kazakh government says the two countries have drafted 51 projects worth a total of $27 billion in the energy, mining, infrastructure and other sectors to be carried out by Chinese investors in Kazakhstan between 2016 and 2022. Some of these projects call for companies to move from China to Kazakhstan, but few details have been released.

“The BRI’s impact on the Kazakh economy is limited at the moment because there has not yet been significant investment in specific projects. It has only been intention in the form of memoranda signed,” said Kassymkhan Kapparov, director of the Almaty-based Bureau for Economic Research. “The investment supposed to come from the newly established Asian Infrastructure Investment Bank has not materialized yet, and we don’t see new production facilities appearing in Kazakhstan.”

Kazakh officials hope the country will become part of China’s global production chain, but so far there is no evidence this will happen, said Luca Anceschi, a lecturer in Central Asian studies at the University of Glasgow.
“The government, insisting with its rhetoric of presenting Kazakhstan as a bridge between East and West, has merely reduced Kazakh territory to a conduit for goods produced elsewhere and bound for other markets,” Anceschi said.
Nation next in Line is Poland is seen by investors “as a gateway to the EU — as a window for exporters,” said Krzysztof Senger, executive vice president at the Polish Investment and Trade Agency.
Poland might not be the first country that comes to mind in the context of the BRI. But not only is central and eastern Europe’s largest economy a member of China’s Asian Infrastructure Investment Bank, Poland also holds potential for infrastructure investments — especially in the country’s poorly connected east.
Poland’s Strategy for Responsible Development highlights one area for potential Chinese investment. According to the plan, the country seeks to invest more than 1.5 trillion zloty ($442 billion) from public funds and about 600 billion zloty from private sources in infrastructure and industry projects by 2020s. Yet when the plan was first presented, nearly half of the investments were expected to come from EU funds.
These funds are expected to decrease with the new EU budget, leaving the door open for potential investment from China.
“The EU single market comprises 500 million people, but at the same time, we can finance most [of our projects] on our own or through operational programs backed by EU funds,” Senger said. “The Chinese model of investing in Africa and central Asia is not suited for central and eastern Europe, but we invite Chinese companies and investors to look at the different tenders” in Poland.

 Chinese investors is a proposal to create a transportation hub combining several forms of transport such as air, rail and road. This hub is to be built around a new airport, which might be located in Stanislawow, 40km from Warsaw.

The government further seeks to reconstruct several seaports in its quest to turn Poland into a key European logistics center. A second multibillion-dollar project, which the government will seek to finance, is the construction of the country’s first nuclear power plant, according to Zielinski.

CSIS Reconnecting Asia Project, which has compiled a list of key BRI project data across the globe, lists one Polish project as being part of China’s initiative: Wroblew Wind Farm, which Luxembourg-registered private equity fund China-CEE Fund acquired in November 2014 and exited in January 2015.

China’s three largest banks by Tier 1 capital — Industrial and Commercial Bank of China, China Construction Bankand Bank of China — have all opened offices in Warsaw to serve Chinese companies and Polish-Chinese trade. Poland is running a large trade deficit with China, which the government is hoping to reduce in the future.

“Chinese investors take their time and I appreciate that — if you want to build a strong country you have to plan for generations,” said Beata Daszynska-Muzyczka, president of the management board at Bank Gospodarstwa Krajowego, Poland’s development bank. “I strongly believe that we have a number of areas for cooperation, but we may need some time to build our approach to working together.”

 

Similarly Gwadar port after so much investment  the port has not been able to give any considerable momentum to trade between central asian countries and rest of  world. Nations needs to have global outlook and trade must flourish with sense of unity to enjoy each other culture along with richness of hospitality respect love for all and broader brotherhood in their thinking. Gwadar’s potential went unrealized for decades, but it is now at the heart of a hugely ambitious plan known as the China-Pakistan Economic Corridor, or CPEC. China has pledged to spend $63 billion to bolster Pakistan’s power plants, ports, airports, expressways and other infrastructure under the initiative, which Beijing positions as one of the pillars of its $1 trillion global Belt and Road Initiative championed by Chinese President Xi Jinping.   The gains for China in all of this development are perhaps less visible, but potentially far more significant. A major goal for China is to link its landlocked western region to the port at Gwadar. This would allow ships carrying oil and other goods from the Persian Gulf to avoid the “choke point” of the Strait of Malacca, shaving thousands of kilometers off existing routes frequently patrolled by foreign navies.

Pakistan’s trade deficit with China has been rising, and there are concerns about what happens if it is unable to repay its debt. As with other countries that have benefited recently from Beijing’s largesse, some in Pakistan worry that the price of such investment could be a huge debt burden.

The China-Pakistan corridor “will no doubt be a game changer for Pakistan, but we need to be careful,” said Ehsan Malik, the CEO of Pakistan Business Council, a business policy advocacy forum. “Ten years’ tax concessions, 90-year leases for Chinese companies and cheap imports will impact the competitiveness of existing domestic industries.”

“Gwadar port will be a hub to link Afghanistan and Central Asia, but it is not just a trade and logistics center,” said Dostain Khan Jamaldini, chairman of Gwadar Port Authority. “We will set up an industrial estate with export manufacturing zones, and invite the motorcycle and electronics industries.”

“Gwadar port is not given to China only,” Jamaldini said, stressing the authority’s willingness to welcome U.S., European and Asian companies.

The chairman denied speculation that China could try to make Gwadar a military port in the future. “Gwadar is 100% commercial. If China [has military] needs, we have Ormara naval base near here,” he said. “We have nothing to hide.”

Sri Lanka handed over its southern port of Hambantota to China in December 2017, many saw it as a cautionary tale for other nations that are eagerly accepting Chinese help to build grand infrastructure projects.

The country granted a 99-year lease on the port to China Merchants Port Holdings in hopes of cutting its debt, which is among the highest of the emerging economies. For its part, China gained an important beachhead for its attempt to expand its military influence in the Indian Ocean.

Construction of the $1.5 billion Hambantota Port started in 2008 under former President Mahinda Rajapaksa. The first phase of the project, which ended in 2010, cost $361 million. While details of the second phase are unknown, Export-Import Bank of China financed 85% of the first phase of work.

But as the port’s losses began to mount, the government in Colombo found itself unable to repay its debts. The country had an external debt of $48.3 billion at the end of 2017, and its annual external financing needs are $11 billion —  roughly the same as its annual tax revenue. Sri Lanka’s debt to China totals $8 billion and is said to carry an interest rate of 6%.

“We had to take a decision to get out of this debt trap,” said Mahinda Samarasinghe, Sri Lanka’s ports and shipping minister, of the reasoning behind the 99-year lease.

Government critics have said Sri Lanka’s sovereignty has been compromised by the port episode, which came only two months before the former president of neighboring Maldives warned that its debts to Beijing could force the country to cede territory to China as early as next year.

Sri Lanka is located at a strategic point for the BRI. The port of Hambantota is indispensable for China’s energy security because the country imports two-thirds of its oil through shipping lanes south of the port.

Rajapaksa kicked off the construction of Sri Lanka’s second international airport in Mattala, an inland town 20km from the port, in 2009. Of the $209 million construction cost, Exim Bank of China put up $190 million with a concessionary loan. Mattala Rajapaksa International Airport is now called “the world’s emptiest international airport” because it has only four regular flights arriving and departing per week. The Sri Lankan government plans to sell the airport, too.

India is afraid that if the airport is purchased by China, it will become a Chinese air force base. A delegation from India visited the airport last year to discuss taking it over, but an airport official said, “I heard that it was not going well due to a mismatch in conditions from both sides.”

China is also involved in a $15 billion project to build “Port City Colombo” on reclaimed land in the capital. The $1.4 billion first phase of the project is being undertaken by a subsidiary of China Communications & Construction Co., which is shouldering the total cost of reclaiming 269 hectares of land.

Sri Lanka’s debt equals 81.6% of its gross domestic product, which the International Monetary Fund says is the third-highest ratio among emerging economies.

Yet even after the debt problems at Hambantota were clear, China last year proposed to Sri Lanka two joint construction projects around the port: a $3 billion oil refinery and a $125 million cement factory.

To the Sri Lankan government, “there is no country or institution with ready cash other than China,” a senior economic official said.

Bandung, Indonesia’s third-largest city, sits the future site of one of the four stations on the country’s first high-speed railway.

The railway is one of two ongoing projects under the BRI in Indonesia. Launched in January 2016, the planned 142km railway that will connect Jakarta and Bandung was supposed to illustrate China’s expanding economic power and influence. But as of late February, local officials said only 10% of the work had been completed, making it impossible for operations to start next year as scheduled. A funding crunch is also starting to raise concerns over the financial health of Indonesian companies involved.

“After the project launch, there was almost no activity besides the land being cleared,” said local villager Asep as he looked over the construction site at the Walini tea plantation. “No rail tracks. Nothing. Work only restarted around three months ago, for the underground tunnel.”

Paperwork and permit problems halted the project in its first several months, after which land acquisition proved to be a major headache. Only half of total land needed has been secured. Rising land prices during the delays is partially responsible for the project’s growing price tag — from $5.5 billion when it was announced to $6 billion.

Sluggish land acquisition has had other consequences: China Development Bank, which agreed to cover 75% of the cost with loans, has repeatedly delayed disbursement, further hampering progress.

Bangladesh’s experience has been similar. Its BRI projects were given a huge boost by Chinese President Xi’s momentous 2016 state visit — the first by a Chinese head of state in 30 years.

With an initial spike in activity, construction has slowed. “It started off pretty well, but while it’s a bilateral initiative, it’s not really just bilateral. There are other geopolitical issues which can play a part in actual execution. We see a bit of a slowdown,” said Naser Ezaz Bijoy, CEO at Standard Chartered Bangladesh.

The CSIS Reconnecting Asia Project has identified three key BRI projects in Bangladesh: the Dhaka-Jessore rail line, the Payra power plant and the Karnaphuli Tunnel — the country’s first-ever underwater tunnel. Chinese development banks dominate the projects’ financing, while Chinese contractors often take over the construction process.

Construction has already started for the $1.65 billion coal-fired power plant by the port of Payra. The plant is a joint venture involving Chinese power company CMC and Bangladesh’s state-owned North-West Power Generation Co. While the equity will be split in half, the project’s financing is fully provided by China. The plant is scheduled to be operational by December 2019.

$4.4 billion Dhaka-Jessore rail line is still in its preparatory phase. Announced in 2016, the line is expected to launch in 2022. State-owned China Railway Construction is the project’s contractor.

The construction stage for the Karnaphuli Tunnel is less clear. State-owned China Communications Construction Co.signed a $705 million contract with the Bangladesh Bridge Authority back in 2015. But in November 2017, Bangladeshi newspaper Financial Express reported that construction work had not started because the BBA was waiting for the Exim Bank of China to release funds for the project.

Whatever the delay, Bijoy notes that the two countries are a good fit. “China has overcapacity onshore and it’s not growing as fast as it did in the past, so it would require external demand to support its production. Countries like Bangladesh growing at 7% will have that demand.”

A BRI rail project in Laos is further along. Construction of a 414km railway linking Vientiane, the capital, to the China-Laos border is scheduled to be completed in December 2021.

Laos, China has for many years had a strategy to use its railway system to drive into Southeast Asia to bind these countries to China,” said James Stent, who served for 13 years on the boards of China Minsheng Bank and China Everbright Bank in Beijing.

There are complaints among Laotians that the labor on the rail line is predominantly Chinese, detracting from any knock-on benefits to the economy. Development banks worry that the $6 billion rail project will exacerbate Laos’ already precarious debt levels, which reached 68% of GDP in 2016, increasing the debt distress level from “moderate” to “high” in the recent World Bank/IMF Debt Sustainability Analysis. Laos’ budget deficit in 2017 was 4.8% of GDP, compared with 4.6% in 2016.

China need to work first with her fourteen border, neighboring states with policy of friendship not inimical relation or statement but to sort out and fix border differences and then can  start trading in environment of equal status.

Secondly language is big barrier with Chinese not singularly spoken but multiple local diction therefore at International lanuage comes as big bottleneck to chase trading terms.

Naturally nation need cooperating at all level of people to people contact with human behaviour index to its best to reap fruits of trading by OBOR or silk route as name suggest Quality of products to be as in ancient times the quality of silk, best in world.

 

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