One belt, one noose.

A long term bear on China, Anantha Nageswaran wrote,"China is not collapsing." The economic picture is not good with "stocks in decline, bond yields rising, defaults picking up and overnight interest rates up". To stop rampant outflows of capital China has instituted draconian capital controls. Axiom Capital estimates that its foreign currency reserves are, not $3 trillion, but only $1.7 trillion, well below the estimated safety threshold of $2.6 trillion. Donald Trump came to office promising 45% tax on Chinese imports, but has chickened out, and speculators are afraid to test the renminbi in a concerted attack, because,"If China went under so would many of them." Indeed, the renminbi was admitted to the basket of currencies which make up the Special Drawing Rights of the International Monetary Fund just last year, which means that it should be freely tradable. "China bears will have to wait for hubris-driven political and power over-reach, resulting in disastrous decisions that topple the applecart." So what is China doing to stop the rot? It is to host a meeting of 30 world leaders this Sunday to unveil its One Belt, One Road, or OBOR, plan, wherein it will invest up to $500 billion in building infrastructure connecting China to some 62 countries. China is selling OBOR as a win-win for all participants but many people are suspicious. The plan is deadly for India because China is our avowed enemy and seeks to encircle India and eventually occupy large tracts of land. The $50 billion dollar China Pakistan Economic Corridor, or CPEC, is a part of the OBOR project and passes through Pakistan Occupied Kashmir, which India claims as its own territory. The generals who control Pakistan must be thinking that once the corridor is built India will never dare to attack because India does not have the courage or the capability to take on China. Fortunately for India there are many in Pakistan who see this as a Chinese land grab and an attempt to control Pakistan by making it indebted to China. China is not gifting all this money. It will be given as debt which make the countries subservient to Chinese interests. Sri Lanka is running up huge losses because of the high interest charged on building a deep water port at Hambantota, an airport and Colombo Port City Project. Several European MPs have expressed alarm over the project. Africa has already suffered from Chinese 'investments' in the past and so should be wary. What is China's gain? China has destroyed steel industry in many countries by dumping it below cost price. It is also accused of dumping aluminium. It plans to use all its excess products in building the promised infrastructure with its own workers and make recipient countries pay for it. Ingenious. On the one hand China is controlling foreign currency outflow, so that it has stopped businesses from overseas acquisitions and on the other it wants to loan vast sums of money to other countries. Maybe, this will be straw that breaks its economy. The Belt may yet turn out to be a noose for China.