41 thoughts on “Open Thread”

  1. I am very interested to hear about the Chinese debt trap thing. I keep reading how Sri Lanka is forced to mortgage ‘ghoti-bati’ to keep the Chinese placated while Pakistan’s financial position is precarious. I would love to hear what people have to say about this. Particularly, what people in Sri Lanka, Pakistan are talking about this.

    1. I believe the best way to think about BRI and Chinese loans is to consider them as ways to prop up the domestic Chinese economy. It might even be true that the terms for Chinese debt are no more onerous and sometimes might even be more generous compared to Western lenders. But its still very exploitative. Let me explain.

      The Chinese loans are always dollar-denominated. So the recipient country has to pay it back with dollars. And the terms always include a substantial fraction of the work being carried out by Chinese companies, Chinese employees and using Chinese materials that are paid for using Yuan (I believe this is some 70% for most projects in Pakistan). And these imports and payments are entirely tax exempt in the recipient country. This is the crucial aspect imo. The BRI is used by China as a way to utilize the vast excess capacity in its industrial sector (you can look this up, there is excess unutilized capacity in every industry in China). The purpose of BRI being to buy steel, cement, heavy machinery and all the rest using *yuan* and getting paid back for it with dollars (when the debt is paid back). So essentially *exporting* all of these goods in addition to *exporting* the services of the laborers, engineers and so on.
      China needs BRI to sustain its domestic economy- To maintain lights at all these excess factories and provide jobs for its people. Especially since in the last few years, chinese trade surpluses have come under increasing pressure. This happened even before trump. Its even possible China had a trade deficit with the rest of the world in 2015-2016 due to large capital outflows from the country. And it’s only going to get worse.

      Now, getting profit from these loans is a rather trivial matter. The work contracts will always be priced 2 or 3 times the actual cost (see the Chinese built railways in africa as an example) and will include all the bribes for local officials. And since the construction companies and many of the factories are all state-owned partially or wholly (and entirely state controlled, no matter the ownership), the profits of one can be shifted around as and when necessary to any balance sheet. So even if Chinese lenders have to take a haircut in case of default, it can be managed.

      Summing up, BRI is another way countries are paying for duty-free Chinese imports with their current account surpluses (i.e dollars). As simple as that.

      1. One more thing. Chinese have no qualms in bribing political/military or any other bosses to get the contract. Those ‘incidental’ expenses are also rolled over into the cost of the projects. These bribes end up in Swiss or Panama banks , depriving the local economy of capital.

        There is a complete lack of transparency in these BRI contracts. In Pakistan , the terms of contract are military secrets since it is the military who negotiate and steer the project, both the aims and payoffs.

        1. China thinks it is in a sweet spot with these loans, tails you lose, heads I win.. A country like Pakistan is definitely going to default on interest/loan repayment. So either the IMF /WB will bail it out or Chinese can take off the sovereignty. So the exorbitant costs can be passed onto the rest of the world.

      2. But Pakistan and other countries don’t have current account surpluses, do they? Even Bangladesh, the supposed good news country of the last decade, has been posting huge CA deficits. So countries like Pakistan, Sri Lanka does not really have the dollars they are spending on Chinese infrastructure imports.

        1. You are right. Any other country who has taken a look at the economic merits of BRI consider it nothing short of suicidal. See https://m.economictimes.com/news/politics-and-nation/it-will-be-suicidal-to-match-china-port-for-port-in-the-region-mea/articleshow/65586759.cms for example, though more in the sense of a joke. For a more serious effort, consider that the US counter to BRI was a couple of hundred million dollars in total. Contrast that with the hundreds of billion (or one trillion) that is being touted by China, its no surprise the US initiative was widely mocked.

          The thing is only China can do BRI because only China has the need for it. US doesn’t have large excess capacities in its industries except arguably in defence (the economic logic of so many generous loans US gives for purchasing arms). US doesn’t have a lot of engineers or labourers willing to work in dangerous countries and most importantly its trade deficit with the rest of the world is far less troublesome than that of China because it can print dollars to pay for it.

          Another crucial aspect in all of this that needs repeated emphasis is the financial wizadry/jugglery that is required to pull this off which isn’t possible anywhere else except China. Again, only a minority share of the loans to the BRI countries are in actual dollars. The rest are in Yuan as work contracts for Chinese industry. So it doesn’t matter if Pakistan takes 10 or 30 years to pay it back because China will be “dollar positive” (gets more dollars than it spends) from the transaction far earlier.

          1. Chinese construction industry and infrastructure industry is a mega animal with vast appetite for customers. Within China they have built cities and vast shopping malls which are empty. Chinese industrial policies are driven by a different calculus than what normal cost-benefits analysis would say. For countries like Pakistan with low capital base, cost benefit analysis is very important for every Rs of capital spent, that seems to be missing and have tied themselves to the wheels of Chinese juggernaut.

            Chinese industry is riding on tiger’s back of unlimited debts. They can’t get out of it. Sooner or later reality will kick in with consequences for the world economy

          2. you guys should follow writings of Minxing Pei, he is one of the most famous China scholrs who has been consistently bearish on China. His particular speciality is analysis of Chinese SOEs and party corruption but he has generally wide ranging takes. I have many disagreements with him (not from expertise but from gut feeling of general trends) but I think he is always worth hearing. his latest short article on China.


      1. if simple heuristics can do most of the job, its good enough. And in social science, as i said earlier, there isnt any science. So, heuristics should be good enough as it allows for accountability. Which I think is the best way to hold use of excessive theorizing in check.

          1. And you should come up with more heuristics, it will make you look better everytime a prediction comes true, for a while ofcourse. My aim is to make monotheism accountable, i cant see how but this approach.

  2. And you should come up with more heuristics, it will make you look better everytime a prediction comes true, for a while ofcourse. My aim is to make monotheism accountable, i cant see how but this approach.

    i post predictions all the time. you should familiarize yourself with my ouvre before you lecture me.

    1. not lecture, more an attempt to convince you to a position of valuing heuristics over theorizing for sake of accountability. I will try to read your blog.

  3. There are thousands of Serbian toponyms in India and SA. The following are toponyms taken from the book and map of Swedish General Bjorns (Bjornstern) – British Empire in India (1843). There are several other old maps made by British colonial officers who recorded original names of places, rivers, peninsulas and bays. The names (from the previous mentioned map) are presented in original Serbian phonetic version, written in Latin alphabet. Many of these toponyms have their counterparts in Serbia:

    Ozen, Vabir, Pitin, Dabir, Varna, Kac peninsula Roka(ruka), Budj, Bodjan, Zagore, Turija, Kota, Budin, Vedjova, Vali, Sivonja, Sanda, Cednja, Pali, Siradina, Mokran, Buna (river), Minagora, Tanka, Sekanda, Seja, Bare, Rasol, Srba, Barka, Kotar, Kotra, Nagor, Gora, Gore, Bjelera, Baleri, Sindrac, Mora, Kotor, Karaca, Mijani, Tata, Trikala, Matori, Lakat, Micani, Rati, Sarbackot, Nosera, Mirbor, Mare, Gora r: Mirgora, Runic, Ladjani, Manjal, Raba r: Uc, Racan, Rezan, Nana, Norani, Dalj, Srbalj, Goran, Lija, Trima, Canjun, Lagor, Ramnagora, Kasub, Sirbaca, Homolj r: Homolje place, Zoba r: Sangor, Borje, Srba, Surbkob, r: Suan r: Rata, Baric, Bjela, Mocna, Bjelur, Bozur, Nahoda, Kunor, Cinjani, Saran, Bumbar, Munja, Rasir, Mandur, Cenab r: Sapur r: Ruka, Manda, Macura, Sarbatu, Arka, Belaspur, Kidanar: Timok r: Una r: and place, Kora r: Kaca, Gora r: Pita r. Karaca I Andri bay: Somnjana on Las, Kumrisa, Sata r. Vikar, Sehusan, Serbistan, Oral r. Mokran r. Bakar or old Mazura, Dragi on Koc, Gondava, Utca, Satledza, Beasa or Belasa r. Malican, Djura r.

  4. “The difference between Iran and India is that the former eventually became majority Muslim, while the latter remained majority non-Muslim”

    Is this true for the portion of India most relevant to inner Asians — the Indo-gangetic plain? The aryavarta/cowbelt/mughalstan? By a rough calculation, the triangle formed by Rawalpindi, Karachi, and Dhaka is 50% Muslim and 50% Hindu.

    Arguably, this is the approximate equivalent of the Hungarian plain – the south is geographically inaccessible, and the Muslim empires there were mostly established by Muslims born in the north of the country.

    1. i looked up the 1881 census. the figure is closer to 30% (i included bengal) for the indus-gangetic basin and areas of cowbelt adjacent (rajputania). so your qualitatively point is correct.

      that being said, this is also qualitatively different from the situation in the near east, when even in very settled areas with lots of dhimmis, such as the levant or in anatolia, the % of *muslims* was closer to 30% (for stupid commenters, please remember lots of christians of various groups lived in anatolia before the 1920s exchange).

      i do think “south india” is much closer to a “protected zone”.

          1. Are you saying the percentages of Dhimmis in levant /Anatolia in 1881= muslim population of indus gangetic basin+cowbelt in 1881?

          2. Yes figured. Sounds right. Did a quick calc using 2011 figures. Around 35-40% mark (overestimated somewhat).

      1. I added modern (census 2017/2011) data for Sindh, both Punjabs, Haryana, Delhi, UP, Bihar, both Bengals.

        Got about 425 m Hindus and 415m Muslims in core India.

        Goes more Muslim if you add NWFP, FATA or Kashmir. More Hindu if you add Uttarkhand, Gujarat or Assam. Everyone has their own cowbelt recipe.

        I’ll take a look at the 1880 census later to check apples to apples.

        1. Forget Gujarat, you forgot to include India’s two biggest states: Rajasthan and Madhya Pradesh. It’s like half the cow belt isn’t even there…

          India had 980 million Hindus in 2011. If 425 are in the cowbelt, got to ask yourself where the hell are the rest of 460 million hiding? S & NE India are far less populated.

  5. 5th century plus Eurasian nomads are latter day equivalent of steppe people spread in 3000 bc . Both should have been caused by environmental factors.

  6. You guys on brown Pandits inspired me to dust off my old pc strategy games from the Total War series. Not sure if you guys play or are familiar with them, but if not, most of you will love them

  7. Are you saying the percentages of Dhimmis in levant /Anatolia in 1881= muslim population of indus gangetic basin+cowbelt in 1881?

    i’m close. i probably underestimated % of muslims a bit in anatolia. https://upload.wikimedia.org/wikipedia/commons/4/4e/Proportions_des_populations_en_Asie_Mineure_statistique_officielle_d1914.png

    but syria was 25% christian in in 1920, which is AFTER waves of late ottoman outmigration. so probably somewhere in the 20s for christians total works (since anatolia is more populous downweight levant).

  8. Anyone else noticed how diaspora politics are so confusing (and ironic ). Just had lunch with Bengali guy who went for HSS event who got lambasted by a Gujrati for doing so

  9. Another one tumbles out of the closet though atleast part of the
    fault for this one lies with the general notion of Indians that all infrastructure should be free. Courts striking down tolls for expressways mean bankruptcy for the financiers down the line. Simple math. And using Life Insurance Corp to rescue banks and airways (something with Air India is also being talked about) is a frikkin joke.


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