Does Trade War Slow PRC Global Ambitions?

♠ Posted by Emmanuel in ,, at 7/05/2018 08:39:00 PM
How much should Indonesia and others the Chinese are providing infrastructure to fear its ambitions in this trade war era?
Here's a thoughtful rejoinder to a previous post in which it was opined that the Chinese are lending to various infrastructure projects worldwide--with less regard to their borrowers' financial conditions or the viability of these projects--for as long as the PRC can ultimately benefit. So what if the borrowers can't repay? They might be able to obtain prime infrastructure on favorable terms in strategic locations when the fools default.

Or, is that cynical viewpoint not really how the Chinese go about things? Certainly they'd want to rebut such characterizations. Apropos for the times we find ourselves in, the eve of global trade war--US tariffs kick in on $34B worth of Chinese goods on Friday, July 6--may mean the Chinese need to scale back grand ambitions. Delusions of grandeur forestalled and all that...
The value of the deals that Chinese companies are striking under the country’s big global plan — called the Belt and Road Initiative — is smaller than a year ago, according to new data. Chinese officials themselves are sounding a cautious note, voicing worries that Chinese institutions need to be careful how much they lend under the program — and make sure their international borrowers can pay it back.

“Current international conditions are very uncertain, with lots of economic risks and large fluctuations for interest rates in newly emerged markets,” said Hu Xiaolian, the chairwoman of the Export-Import Bank of China, a state-controlled lender that plays a big role in financing the projects, at a forum this month in Shanghai. “Our enterprises and Belt and Road Initiative countries will face financing difficulties.”

China has begun a broad, interagency review of how many deals have already been done, on what financial terms and with which countries, say people close to Chinese economic policymaking, who asked to speak on the condition of anonymity because the effort has not been made public.
The gist of the argument here contains the following: (a) foreign expansionism may be curbed by difficulties at home brought on by Trump's global trade war; and (b) foreign partners do not have infinite patience with being exploited for China's gain:
Under the initiative, Chinese government-controlled lenders offer big chunks of money — usually through loans or financial guarantees — to other countries to build big infrastructure projects like highways, rail lines and power plants. That money often comes with the requirement that Chinese companies be heavily involved in the planning and construction, throwing them a lot of business.

But even with its financial firepower, China has its limits. Its economy is showing signs of slowing, and it is in the middle of a trade war with the United States. Beijing is struggling to tame domestic debt problems — problems an international lending spree certainly hasn’t helped. Too much overseas activity risks creating wasteful white elephants that can drag down Chinese companies and local partners alike.
Which version of events is correct, of the PRC as the new imperialists or that of co-suffering developing countries on the eve of trade war? As with most things, reality probably lies somewhere in between. However, I veer more toward the version described above in that the PRC needs to maintain the trust of other countries as it seeks to build up its international relations, and failed projects cannot always be redeemed by the Chinese if their foreign partners fold.