What Is the One Belt, One Road Really About? Making China Great Again

China is selling 一带一路 to its own people with nationalism.

One Belt One Road

A lot of people can’t quite get what One Belt One Road means. In fact it’s quite easy if you make a simple metaphor: say infrastructure to a country is like a person who goes buy a house. For the vast majority of country, they needed it, but they don’t have the money on hand. Well, China here is like a developer, a construction company and a bank all put together. China has money it doesn’t know what to do with, it has empty houses, and the construction companies have no orders either. So we have both demand and supply sides here with nothing to do. What can we do?

Easy, we make a mortgage. China lends money to all these countries, and then these countries use this very money to ask Chinese companies to build them infrastructure, paying back the money to China in installments in the next decades.

By doing this China can use it’s foreign currency reserves in a smart way. We can avoid buying US treasury bonds like we’re stupid; those give almost no yield. By lending out the money for interest, the yield is much higher. With this plan China can also put to use its industrial overcapacity, we get orders which reactivate our manufacturing base. And all these countries which would use China’s money and rely on China to build infrastructure; their economies will grow eventually, they’ll use money to pay us back, and they will also buy Chinese products.

So everybody wins, that’s what One Belt One Road is all about. [This sentences rhymes in the original]

Also through this infrastructure we can achieve two roads to Europe, one by land and one by sea. If there is any war with the US, the US won’t be able to encircle us. At the same time this would accelerate the speed of transport from China to Europe, lowering transport costs and increasing China’s competitiveness.

All these countries would use Chinese products as the standard of their infrastructure. This means that in the future they would need to use Chinese products to service the infrastructure. This would exclude other countries’ products, giving our manufacturers an advantage when competing with foreign manufacturers.

Of course inside all this there will be some loans which go bad. It’s like a bank, there’s always someone who can’t pay back their mortgage or their car loan. But banks don’t care about that, why? Because they make enough profit to compensate for it. And with China’s One Belt One Road, China would profit twice. One through the interest on the given loans, way higher than the yield of US debt. And then again when these countries buy Chinese products, giving money to Chinese private businesses. In business terms this is a very lucrative process, if we can manage well the level of bad debt, we are sure to make a net profit.

Also if China gets to develop these countries’ infrastructure, naturally these countries will become more friendly towards China. All these countries will be our friends. And as everybody knows, it is always good to have many friends. This applies to people and to states.

During this process, you may notice that China outright gives aid to some countries, without expecting payback. Some people don’t understand this, how can we give stuff away for free? It’s very easy. When you get some business from someone, you gotta give them some advantage. When shopping in a store, many shops give regular discounts, they’d give you coupons if you buy a lot, or even free products. Countries do the same. You’re making money out of someone, if you don’t give them something in exchange, well the business won’t go anywhere. All these aid packages are in fact discount coupons of a sort. Because besides us there’s also Japan or Germany giving loans, helping others build infrastructure. We have competition.

This kind of plan was in fact invented by the Americans. When the US wanted to open up foreign markets, they didn’t do like other countries and use military force to conquer colonies and their markets. What the US did was use what they called “open-door policy”, they used loans, the Marshall plan, etc. They gave loans to other countries, and these countries then used the money to buy American products. By doing so the US occupied these countries’ markets without shedding blood, which helped America become wealthy, and the US dollar become the world’s reserve currency. Thus the US became the world’s factory and ultimately the boss of the world. China is actually learning from America’s path to greatness, growing through peace, and not force.

So, you see, One Belt One Road is a very farseeing policy, it is precisely the path for China’s rising. If you have any friends who still don’t get it, send this piece their way. Let everyone get it. The Great Renewal of the Chinese Nation is just around the corner!

It’s back to 1945 for China and America, but they have swapped places.

Author: 罗臻 http://www.investinginchinesestocks.blogspot.com

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