China's Mercantilistic Boondoggle: The Belt and Road Initiative
I am astounded at the cheerleading we read in Western media about the "Belt & Road Initiative." It reveals that the Western literati's preference is for big government, not freedom.
To understand the BRI, you must first understand that it is a government project. It is designed to increase employment. It is like Amtrak, but much larger.
Here is my brief analysis.
The map is here. It is part of an article. It begins with this breathless prose.
China’s Belt and Road Initiative (BRI) is the biggest infrastructure project in human history. This overarching program – which includes overland routes through Central Asia in the Silk Road Economic Belt, plus a seaborne component called the Maritime Silk Road that skirts the southern rim of Asia on the Indian Ocean route to the Middle East and Europe – is central to China’s ambition of becoming the preeminent world power.Its completion, planned for the 100th anniversary of the founding of the Chinese People’s Republic in 2049, will cement Beijing’s influence over the huge Eurasian continent and parts of Africa, containing some 65 countries and more than 4 billon people.
This is a Chinese boondoggle on a massive scale. There is no detailed plan. It is supposed to be completed in 2049, which is 30 years from now. The world's economy in 30 years is not going to look like today's economy. We can guess that present trends will produce this: international trade based on digits primarily and ocean shipping secondarily. Low-value, high-volume goods will be produced locally. They will be produced in relatively small factory settings. The production will be based on 3-D technology, not gigantic factories.
Gigantic factories will be built close to ocean shipping, or else they will be built close to rails that move goods straight to port cities.
I am going to quote from an article that is typical of the cheerleading for this gigantic mercantilist boondoggle. Out of courtesy, I'm not going to tell you where this was posted. I had never heard of the author.
The BRI is a gigantic project that will continue to expand in the years to come and at the rate the current technology allows, while of course remaining cognizant of the needs of the countries involved in the Chinese project. The numbers of participants at Beijing’s BRI event are astonishing, with more than 5,000 delegates, 37 heads of state (including that of G7 member Italy), and 10 of the most important members of ASEAN. A hundred and twenty-five countries have signed intentions to cooperate grand project, and 30 organizations have ratified 170 agreements that total a projected investment by the People’s Bank of China of over 1.3 trillion dollars from 2013 to 2027. This is what Robin Xing, Morgan Stanley’s Chief China Economist said:“China’s investment in B&R countries will increase by 14% annually over the next two years, and the total investment amount could double to $1.2-1.3 trillion by 2027.”
It is a revolutionary project that will characterize the next few decades if not centuries. . . .
The project tends to improve people’s living standards through the huge loans extended to improve such basic infrastructure as railways, schools, roads, aqueducts, bridges, ports, internet connectivity and hospitals. Beijing aims to create a sustainable system whereby dozens of countries cooperate with each other for the collective benefit of their people.
What is the consistent pattern of these projects: railways, schools, roads, aqueducts, bridges, ports, internet connectivity, and hospitals? They are all government-funded projects. They are all mercantilist projects. They are all part of centrally planned Keynesianism. What this article is saying is that mercantilism, meaning Keynesianism, is win-win for the masses. No, it is win-win for government politicians and especially bureaucrats who want to run other people's lives. It is the same old nonsense that Adam Smith refuted in 1776. Like dogs returning to their vomit, Keynesians always go back to government boondoggles as the source of wealth.
Are privately owned companies rushing to build rails and bullet trains between Turbanistan and poverty-stricken central Chinese villages? Of course not. Why not? Because there isn't any money in it. Nobody wants the output of China's villages and Turbanistan villages.
The steps to make China's villages richer per capita are simple. First, let the people move to the coastal cities. This is where they've been moving for the past 30 years anyway. Village agricultural production in China is based on techniques that were in operation 1000 years ago. They can't compete with American agriculture. And when I say American, I mean Canada, too. American agriculture output is produced by about 2% of the population. Second, if China's central village economy is going to come into the 21st century, it must turn to high-tech productivity and production desired by people in cities with the wealth to produce the output of China's villages.
The Communists who run the Chinese economy are mercantilists. They want power. They believe in confiscating wealth from the masses and using this wealth to create government boondoggles that increase the power of local governments, regional governments, and especially the central government. This is not a win-win for the people. This is a win-win for the bureaucrats until the day that the Chinese economy implodes because of its mountain of debt.