RE: China's "financial repression", America used to do the same for decades. The US used the old Regulation Q, which placed a cap on interest rates for savings accounts at a rate below the rate of inflation and thus effectively transferred wealth from savers to banks and borrowers (both public and private). That's not one of the old "New Deal Era" policies I espouse BTW, it was one of the more technocratic policies pf the era whereas the ones I'd like to bring back tend to be the populist ones. However, as far as the technocratic polices of the era went, it was one of the better ones, in my view.
"I also think the memes of 'debt trap diplomacy' or 'Chinese colonialism' are nonsense." - thanks for saying that, it needs repetition to overcome the propaganda.
I landed at Entebbe in 1999. On the drive to Kampala, during which my driver paid 3 bribes (something he considered normal), we past the old Entebbe airport, then abandoned after the famous hijacking (and successful counter-operation by Israel). Later, the military took it over.
Thanks for the explanation of this very misunderstood term. This certainly encompasses more than I ever expected. I also didn’t understand just how far reaching this initiative was. I always learn a lot reading your posts.
Seems like China heard the criticism about "deb trap", and have obediently stopped/slowed down lending to Africa!? So hooray for all those Africans who didn't want to fall into Chinese debt trap. (Western debt trap is better?) China listened to you!
The strategy involves devaluing your currency, increasing the cost of food imports which are mostly priced in US dollars in order to help your exporting firms uncut other firms in global markets. Since many African countries heavily rely on imports due to low food yields, any increase in food prices often leads to riots or big protests. (Look at recent riots/mass protests when Kenya removed food subsides or Nigeria letting their currency float for examples). To implement this strategy successfully, your country needs to improve average food yields per hectare at a level beyond subsistence so food can be bought at home instead of relying on food imports.
Well written and informative as usual!
RE: China's "financial repression", America used to do the same for decades. The US used the old Regulation Q, which placed a cap on interest rates for savings accounts at a rate below the rate of inflation and thus effectively transferred wealth from savers to banks and borrowers (both public and private). That's not one of the old "New Deal Era" policies I espouse BTW, it was one of the more technocratic policies pf the era whereas the ones I'd like to bring back tend to be the populist ones. However, as far as the technocratic polices of the era went, it was one of the better ones, in my view.
Thanks for that note! Yep, super common policy. UK has done it as well.
"I also think the memes of 'debt trap diplomacy' or 'Chinese colonialism' are nonsense." - thanks for saying that, it needs repetition to overcome the propaganda.
I landed at Entebbe in 1999. On the drive to Kampala, during which my driver paid 3 bribes (something he considered normal), we past the old Entebbe airport, then abandoned after the famous hijacking (and successful counter-operation by Israel). Later, the military took it over.
Great read 👏
Congrats on the 10,000 monthly views!
Deep post!
Thanks for the explanation of this very misunderstood term. This certainly encompasses more than I ever expected. I also didn’t understand just how far reaching this initiative was. I always learn a lot reading your posts.
Seems like China heard the criticism about "deb trap", and have obediently stopped/slowed down lending to Africa!? So hooray for all those Africans who didn't want to fall into Chinese debt trap. (Western debt trap is better?) China listened to you!
(Just being facetious.)
Great info! The belt and road initiative has left many victims in its wake. Chinese mining projects in the DRC are the first to come to mind.
Yaw, interesting post! Can you explain more why agricultural yields in Africa must increase substantially before it can use this strategy?
The strategy involves devaluing your currency, increasing the cost of food imports which are mostly priced in US dollars in order to help your exporting firms uncut other firms in global markets. Since many African countries heavily rely on imports due to low food yields, any increase in food prices often leads to riots or big protests. (Look at recent riots/mass protests when Kenya removed food subsides or Nigeria letting their currency float for examples). To implement this strategy successfully, your country needs to improve average food yields per hectare at a level beyond subsistence so food can be bought at home instead of relying on food imports.
If you want to see the poor food yields, look here: https://ourworldindata.org/grapher/cereal-yield.
Happy to explain more if needed.