Why BRI is the game changer in geoeconomics?

China plays her cards well, as BRI has so far rolled out to 138 countries with a staggering US$ 200 billion by way of investment. By 2030 China would have invested humongous amount of US$ 1.5 Trillion, a feat that makes all what US has doled out under Marshall Plan to pale out into insignificance. Thus, BRI has secured unassailable position for China in geoeconomics. 

Deep pockets are with China now more than US, which has only the printing machine that spews out fiat currency notes without internal backing for its purchasing power. In contrast, China guards her Yuan and deliberately keeps it undervalued thereby allowing US Dollar to be overvalued. 

Real value of US Dollar is on steep decline. To exacerbate China has a cash reserve of more than 3 trillion US$ whose major part of it, say, 1.25 trillion is parked in the US Treasuries.  Hence US is caught on catch 22 position where she has to safeguard the value of the US$ in the international market and at the same time avoid any chance of sovereign default. Consequently, US manoeuvring in monetary economics is severely restricted.

Then China did something unthinkable. She did not use the massive dollar resources to fund China Dream domestically. She came out with a checkmate plan in her business strategy. She invented the hen that lays the golden egg that is road and bridge initiative, BRI for short. Predictably, China did not want to import the US Dollar inflation into the country if she starts spending dollar reserves domestically necessitating printing more yuan to absorb the liquidity.

Conceivably, BRI fits the overall business strategy of making China major player in the field of geoeconomics next only to US. BRI format serves twin purposes: 

Firstly, China brings prosperity to the host country which needs whale of a lot of dollars that could be used to generate employment and consequent enhancement in production of goods and services.

Secondly, the economic growth in host country is back channelled to China by way of imports of goods from China as well as payment for services rendered in terms of construction of infra-structure and other facilities inside host country.

BRI does something great by affording a big place for China in geoeconomics. Plainly put, BRI allows China having a weighted say in the host country’s domestic affairs and international relations. The overall result is that US now finds itself in a loser’s place with fewer countries toeing her line in the Anti-China narrative!

 

Cheers! 

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist