What the World’s Emptiest International Airport Says About China’s Influence
nytimes.com
nytimes.com
The reason for these factory-compounds is because China has challenging export quotas to places like the US and EU. But concentration of manufacturing know-how remains in China. The only way for these businesses to keep selling to high-value markets is to move manufacturing to another country where there is available quota. Although the goods are 100% made by Chinese, they are 0% made in China.
The Chinese government encourages business in this area because it is good employment for the Chinese. In turn, these businesses need better infrastructure in the countries they operate in. The infrastructural investment in these other countries is a wonderful side-effect that the government is happily playing up as part of its diplomatic strategy. When the textiles and the shoes and the fabrication factories are no longer making money, hopefully the ports, the trains, the roads, the power grid will continue generating interest income for the Chinese banks. And the recipient countries of these gifts, as it were, may extract benefit from this arrangement, eventually.
Which, when you think about it, makes the best managerial sense - What the hell is a chinese person going to do coming to australia and farming - they don't know the conditions, they don't know the land - that's a quick way to destroy all the value they hope to create. Local know-how is essential in agriculture. + they wouldn't be able to get enough on 457's to come in and run it even if they wanted to import all their workers.
Source: Australian, from a farm, neighbouring farms have been purchased by chinese buyers
Also, Shepparton has a substantial Punjabi farming population and I can tell you from experience that the farmers do take inputs from Tatura Agricultural institute but the management to production to packing is all Punjabis. Your comment is significantly false information. Shepparton is filled with people who don't have local know-how, but have developed it.
They have a reputation as good workers in agri businesses. See this article about how they invigorated Italy's cheese business: http://www.nytimes.com/2011/09/08/world/europe/08iht-italy08...
(The article references most workers as being Sikhs. Sikhs are adherents of the religion of Sikhism, but I believe nearly all of them are ethnically Punjabis)
Met 2 Chinese guys from China in a hostel in Melbourne who could speak little, they said there going to work on a farm somewhere in rural Aus and lot of other other people from their village where working there.
I didnt ask if they were working legally or not.
Somewhere between 5-10% of NZ farmland and forestry is owned by foreign interests. That's not just China, but all other countries, of which Australia is a large investor in NZ. A large amount of this land is owned by super funds.
Fonterra has an 84% market share in the dairy sector, Fonterra is a collective, owned by the individual farms.
Now, the Chinese are building milk powder factories exclusively for export to China, and owned by Chinese companies. But they are employing local people, and constructed by locals, they aren't staffed by Chinese, because the hassle of trying to get a factory worth of workers immigrating to New Zealand isn't worth it, when you could just as easily pay locals. At the end of the day, you can't pay Chinese workers less, because there is a minimum wage.
The suppliers to these factories are independent dairy farmers, there's little vertical integration here.
In the end, these plants grow the economy and create jobs. Sure, in an ideal world, it would all be NZ owned, but nobody wants to cough up the cash here to build more plants.
New Zealand is a small country, it has always relied heavily on foreign investment and ownership, and always will. The population and economy is too small to do it any other way, NZ has to turn to globalism in order to have a healthy, functioning economy.
In the US we have huge migrant groups that are responsible for a large amount of the harvesting in this country, and most are paid well under minimum wage. Not saying it's right... just how it is.
> But concentration of manufacturing know-how remains in China.
The US and EU had a monopoly on manufacturing know how for all sort of things until some executives voluntarily transferred that to the (then) third world in order to maximize short term profits. Their successors have spent the last decade shifting semiconductor production from China to lower cost countries like Vietnam, Malaysia, and Thailand.
They gave China their secret sauce (well, actually, China demanded it as a prerequisite) in return for access to one billion new customers.
China then cloned the tech and under-priced the foreign competition. See: High-speed rail, wind-turbines etc.
Can't say if it was the 'right' thing to do for Western companies. But it was brilliant for China, who are now, in turn, buying up Western manufacturing companies.
The Chinese market started becoming a thing a decade or two after Made in China became a thing.
As I said in another comment in this thread, in the EU (e.g. Prato in Italy) there are examples of this strategy that date back to the 80's, so I wouldn't be so sure about the willingness of the EU regulators to shut them down.
Some background info here: http://www.nytimes.com/2010/09/13/world/europe/13prato.html
Prato is a case on its own, there is no "large company" or "compound".
The Chinese have come on an individual basis, after the first few came (which dates much before, in the 80's) they brought families, friends, etc., and replaced - little by little - the native artisans (largely in the textile sector).
But even before they arrived, Prato's economy was different from any other Italian textile district, there have been traditionaly very few large factories (there were some, but not like - say -northern Italy), besides the workers in the factories everyone worked in small laboratories or at home, often involving all the family members in the production. (and it was not at all uncommon that factory workers had anyway a couple looms at home that they worked on the evenings or night, while their wives operated them during the day, while doing the normal household chores).
The Chinese simply replaced the natives, adopting the exact same "individual" approach.
It's more about keeping the value-add than creating jobs for Chinese. We can argue that it's bad for locals, but unlike western colonialism, this happens under the rules the local governments have set them self. As the article points out - this might change if the Chinese government feels it needs to protect it's interests abroad - which could happen if a populist anti-chinese movement appears.
Certainly I don't see this happening in any of the African countries. What China can do is what most Western countries do today to get debtor countries in line: refuse access to credit, or increase the interest rates on future loans.
I'm interested to see if China plays regime-changing games that the US and (then) Soviet Union did when its interests were under threat. So far, it doesn't seem to be employing that strategy, but I wonder if they will...
The scale of construction here is staggering - I wrote a little about it [1]. It is not only roads - it's dams, deep water ports, high-rise buildings, etc. Basically anything that requires a high degree of competency in engineering.
Western governments are now held to account when they make deals with African countries - the country must have fair votes, human rights, free speech etc. As you might guess, many African countries are not so hot on this.
China? They couldn't care less, and have no such requirements, so African governments are much happier to deal with them.
China is stripping these countries bare, and the money goes straight into the pockets of the corrupt ruling class. It is staggering to see the countries with the multi-hundreds-of-billions in resources have the poorest citizens.
Oh actually, if they're employing only Chinese citizens for manufacturing, then I agree with your assessment.
Even if Chinese money does end up in a rush of trade and business, without strong political systems, its debatable whether wealth will make it into the hands of people who will subsequently push for human rights.
Remember also that China is simultaneously creating a blueprint with its own country showing developing nations how to create economic transformations and a level of freedom and opportunity in society without political reform. It's quite likely that even if the push creates wealth and prosperity in a host nation that doesn't have strong democratic institutions, they might start adopting Chinese political norms and techniques.
* as a side note, the western aid model has huge drawbacks too and carries similar if/but criticisms. I think it's just too simplistic for the Chinese side to say "well, everything will be fine once we create wealth!"
On the other hand, the Spanish empire doesn't seem to have been so beneficial.
India doesn't agree with your thesis.
I had a long discussion with a few Indian coworkers. And the main problem they mention is politicians will promise irresponsible amount of free stuff to the poorest untouchable that end up being terrible policies
Nothing against the country, but take a look at the GDP of India vs China. They started out both at the bottom of world development, and 2 decades later...
This gives companies ability to get the coveted "Made in USA" label on their products, but they're built by Chinese nationals in a Chinese-owned factory in a Chinese-only compound to Chinese quality standards.
https://www.instagram.com/p/BXvqis0htxH/?taken-at=277450644
https://www.instagram.com/explore/locations/277450644/naypyi...
The city was built as a showcase capital for Myanmar's military government, and has crazy sights like a 20 lane highway (with almost no cars):
https://www.go-myanmar.com/sites/go-myanmar.com/files/upload...
More pictures:
http://www.dailymail.co.uk/travel/travel_news/article-304350...
The craziest part of the city to me was the amusement park. It was open, but only half complete. Ride operators would follow us around to turn on the rides we wanted to ride. One of the rides didn't have the female side of the seat belt buckle, so I just had to tie the straps together.
Very sad how much money was spent on this city, especially considering how poor the country is.
The what? Are rides segregated or is there some kind of female buckle I have not heard of?
EDIT: "By surface area, it was the largest airport in the world that had ever been envisioned, with a planned area of 39,660 hectares (396.6 km2; 98,000 acres)"
[1] https://en.wikipedia.org/wiki/Yasser_Arafat_International_Ai...
When Top Gear went they stopped to have a game of football in the middle of the road https://www.youtube.com/watch?v=8uwTnP8ioiU
https://www.forbes.com/sites/wadeshepard/2017/06/30/ordos-ch...
I'd first heard of that a couple years ago and shook my head at all the wasteful misallocation of capital. Ordos recently appeared in the news again, but instead of an empty ghost town - it's apparently a thriving metropolis, center of the worldwide Bitcoin mining industry.
Capitalism is remarkably effective at redirecting misallocated capital into productive uses. The original builders go bankrupt, and it sucks for them, but usually an enterprising firm picks up the assets at fire-sale prices and does something interesting with them.
I also wonder if your point about assets is not necessarily always true and that you're only thinking examples that became interesting. By definition the bar is pretty low for such assets regardless of who scraps up the remains.
It works great in theory and even in practice to a degree, but there are endless chronically impoverished neighborhoods, cities, regions, and nations where it didn't work out that way. The wealthy locales tend to stay wealthy, and the poor ones poor.
As an Indian, China's influence scares me a bit. They've got us surrounded
“Can China be a global power? I don’t think so. It can gain an advantage, that’s true. But it doesn’t have soul. It doesn’t have heart. It doesn’t trust its own people. So it has no self-identity in the sense that it has never accepted human rights as common values. No freedom of speech, no independent judicial system. If those don’t exist, how can you have creativity? How can you be a country? So forget about China. China is an illusion. It’s there, it’s large. But nobody can tell you what it is.”
https://www.theguardian.com/film/2017/sep/17/ai-weiwei-witho...
Edit: sensing lots of incoming downvotes. Point is that democracy may not be the only way to global power.
I would argue that many of the world's billionaires are not particularly nice people, but that doesn't stop them being immensely rich and powerful.
I see no reason the same can't be true for a country. If it has an immense amount of wealth, it will be powerful, irrelevant of human rights, etc.
> It can evaporate in a moment.
Are the motivations that precipitated the Tienanmen Square protests still present in the minds of the people? I think so.
The USSR didn't meet them, and before the 20th century no global power was a democracy.
He's questioning what the meaning of that is without a real Chinese identity expressed via the people. It's more like the power a business exercises which ultimately may be broken up, bought or which is assimilated into the culture it seeks to alter. Chinese power in this concept would be a superstructure over the world, not a force within it.
By contrast, American influence over time (love it or loathe it) has been culturally formidable because it has a very powerful grassroots (for want of a better word) identity. It is something which has taken possession of the world from the ground up.
I think its disingenuous to dismiss the very real progress that China has made in industry and military as inessential just because they haven't had the same cultural impact as the US. Prosperity, strong and healthy middle class and political stability are what is necessary for the development of a strong, lasting culture.
There is also the often overlooked fact that the US, being an English speaking country, got to ride the cultural train for free since the British Empire had already established English as the lingua franca of the world. I'm sure there is a lot of stuff going on in Chinese culture which we aren't aware of since its mostly in Chinese.
I think a big issue regarding China and culture is that, with their need for "great firewalls" and the like, they've effectively removed a huge channel for people to communicate their ideas and culture outside the nation. I'm sure there is a lot of stuff going on in Chinese culture that we don't know about; the problem is, with many Western social media channels blocked inside the country, it is probably much more difficult for Chinese to obtain a non-Chinese audience online even if they wanted to.
Especially in Srilanka, apart from economic activities; they funded & trained Srilankan army to conduct one of the worst genocide on their ethnic tamil population in 4th elam war. Sadly neither the international community nor the Indian government did nothing to prevent it from happening on the contrary they even helped the then Srilankan government with their war along with China in a rare display of cooperation for worst crimes against humanity.
And surely, that's got to have India thinking a little bit - it means that the PLAAF/PLAN now have a potential forward operating base literally in their backyard.
And if China can continue to assert leverage on Sri Lanka, then they might even be able to forward base onto Sri Lanka itself without official argument from Sri Lanka.
I mean, I doubt it, but it seems like a viable play.
Shouldn't this be some insulation from Chinese influence?
It will be interesting to see what happens should a country attempt to seize Chinese assets en masse. The PRC is not known for its lack of ability in the Great Game. We are still decades away from the circumstances that allowed for decolonisation movements in the mid-20th century to be successful.
[1] https://en.wikipedia.org/wiki/Government_of_India_Act_1858
By comparison, another famous white elephant airport, Ciudad Real in Spain, was built for 10m and currently serves precisely zero.
I can't even imagine any situation where an airport serving a million people outside of Colombo would even be remotely feasible.
Now I'm sure it made no sense to build the airport at Sri Lanka's current stage of development, but as the country gets richer, it's almost certainly going to become useful sooner or later.
This is a good point to make, but sadly one that isn't being made by the US atm.
It's pretty clear what's going to happen with this airport: To relieve its debt crisis, Sri Lanka has put its white elephants up for sale. In late July, the government agreed to give China control of the deepwater port — a 70 percent equity stake over 99 years — in exchange for writing off $1.1 billion of the island’s debt
Just imagine what China will give for an Indian-ocean airbase in Sri Lanka to go with the base they have in Djibouti[1]. Sri Lanka will keep trying to play China, India and the US off against each other[2], but it's pretty clear to everyone that the "string of pearls" strategy is working well for China at the moment.
[1] https://warontherocks.com/2017/08/chinas-military-base-in-dj...
[2] https://warontherocks.com/2017/03/sri-lanka-is-not-chinas-pe...
When Chinese submarines were allowed to dock twice in Srilankan port that was the last straw. Indian secret service RAW allegedly played an important role in toppling the oppressive, corrupt and Chinese leaning Rajapakse government[1]. I guess that is one serious warning to ignore.
[1] https://www.wsws.org/en/articles/2015/01/21/sril-j21.html
But things change. China spends a lot of money and it isn't clear how this will play out.
Five years ago people thought it was impossible they would control the South China Sea. Now the it's close to the de-facto position, and the US only conducts an occasional freedom of navigation operation to pretend otherwise.
US's game so far has been to sell overpriced white elephants to countries in the Middle East, East Asia and South America. This has benefited in the process, a few "bent" middle men, resulted in a massive transfer of wealth from the US Fed to a few select infrastructure/defense firms in the US, all while indebting generations of impoverished people to the whims of the American retainers in WTO/IMF etc.
Inevitably, these countries become the hubs for slave labor under US based corporations, which reap massive profits while paying pennies on the dollar.
... and they say slavery is dead.
It's a pity that China appears determined to follow a similar policy. I find it amusing that the article almost seems to gloat "China is following the Great Britain model. These outdated chinks have no idea how to run an empire in the modern era!".
The world is a very depressing place. Welcome to the Borg.
http://www.livemint.com/Opinion/21P46wlPXj00K8VUKMu9oN/China...
Buying favor that way for China will cost trillions of dollars over time and gain them little. China will realize that if they don't already and will switch to the US system of military partnerships and distribution (it's cheaper, it builds up your nation's global military capabilities, you turn around and sell military hardware to the nations you're dealing with, and your partners become over-dependent on you for their security which completes the lock-in). You can already see some early efforts in that direction from China. Going forward, most of their foreign capital adventurism will likely redirect back toward practical investments, eg in natural resources.
China has strong and influential alliances all over Africa and the Pacific, partly because of their aid and loans program. There's a reason they sell the Asian Development Bank as an alternative to the US dominated World Bank. It's also instructive how quickly close US allies (including the UK and Australia) expressed interest in working with China on it.
China should be deterred by the prospect of following the footsteps of the most powerful empire in history?
One of my oldest friends went to China to study medicine. He's now a doctor in Shanghai. I visited him a while back and spent a lot of time with his Chinese colleagues.
The overwhelming sense I got was that China believes it is their destiny to be the supreme power in the world, that western dominance is an aberration of history, and that it is China's right to that status.
If you want to place blame, place it on the bankers who tanked the economy in 2008. We've never really recovered.
When you attack people's livelihoods, they get desperate. And in desperation, they choose despots who promise them their livelihoods, and more.
90% of Sri Lanka's revenues goes to servicing Chinese debt? I find this hard to believe. Any references?
https://news.ycombinator.com/item?id=11797585
https://www.forbes.com/sites/wadeshepard/2016/05/28/the-stor...
The Forbes article has a few photos of the airport inline.
For the first two years airport was unused - the only airline that signet contract got bankrupt. Currently it has another airline operating and serves 10k passengers per year.
That's what happens when EU starts giving away money.
I'm unconvinced how bad this actually is.
An organisation with a ~150 billion euro budget in going to inevitably have some abuse/waste of it's resources but equally I can think of dozens of projects that have positive outcomes. Sure, it's still not okay for the ones like the airport to exist but I think focusing on them undermines the good that can be done by having a source of cash that can be used to improve the world.
So far as I can tell this is incorrect[1].
[1] https://infacts.org/mythbusts/auditors-havent-refused-sign-o...
PS: How can land investment in africa make sense? They are often not enforceable and do not outlast populist government turnover?
That's a comical extreme exaggeration. China has a minuscule share of and influence on the US real-estate market overall, including all of its metros. They have a several hundred billion dollar position in a hundred trillion dollar total market. They've only begun to have big influence in one city - Seattle (Amazon by itself has several times the real-estate influence that China does on Seattle). Much like Vancouver's real-estate market didn't collapse once the Chinese money stopped flowing in so easily, nor would Seattle's market. Further, most of China's real-estate influence is on a small segment of the higher end part of the market, from the capital flight of wealthier Chinese.
All of that Chinese capital flight has already slowed dramatically due to capital controls. And yet, US real-estate isn't having a problem at all (quite the opposite).
Japan had a dramatically greater position in US real-estate in the late 1980s. Guess what didn't happen when Japan started pulling its capital out of US real-estate? You guessed it, US real-estate didn't collapse at all. In fact, it did just fine from 1992 to 2000. The huge problems Japan's economy had, resulted in a small twitch in the US real-estate market, which is exactly what would happen with China.
If you don't remember, Japan tanking coincided with the S&L crisis, SF and LA real estate took almost a decade to recover.
This constant MSM need to connect everything on earth back to Trump is getting so fucking tedious. Construction of the airport this article concerns was finished (edit: begun) in 2009. It's almost as if China has been executing a long-term plan to build a web of neocolonial economic interests around the world for a pittance of the money the USA spent wrecking the Middle East & Afghanistan and killing hundreds of thousands of random people over the last 16 years; except framing the story that way wouldn't reaffirm NYT readers existing biases.
The US liked to throw it's weight around and act like an asshole at times and China is now trying to provide another option to get nation's on their side
2009 was when the civil war finished. The airport was completed in 2013[1] (although I don't think that is material to your point).
The issue isn't specifically the construction of the airport, it was more the leasing of the Hambantota port to China. That occurred in July this year and didn't seem to have any comment form the US State Department (as far as I can see) despite the US "Pivot to Asia" and the aggressive Chinese building in the South China Sea.
[1] https://en.wikipedia.org/wiki/Mattala_Rajapaksa_Internationa...
[2] https://www.forbes.com/sites/wadeshepard/2017/07/27/china-bu...
Before there was real customers coming in, this was likely just a very good deal or a new product launch with no demand, I think the writer is oversimplifying the situation a bit. There are more reasons than maybe economic neocolonialism.