China’s new $100 billion metropolis: Is Forest City a Field of Dreams?

In Johor Bahru did Kublai Khan/A stately pleasure dome decree …

China’s getting good at building islands. So far their method of dredging up sand for gun-platform berms in the South China Sea has been for strategic and military purposes, in other words to claim more territory. Recently, though, a massive real estate project has dwarfed all previous efforts by the Middle Kingdom to impose its presence on Nature.

Before I begin to describe what’s going on just off the south coast of Malaysia, let me say why I am interested in the subject.

I’ve written a few times before, here, here  and here, about how and why India should transform its neglected territories, the Andaman Islands, into a new ecological Hong Kong/Dubai with tri-services military presence and a deepwater shipping port for freight and luxury liners.

The geographical position of Port Blair, on South Andaman Island, is almost unrivalled in strategic terms—holding the fort, so to speak, at the north end of the Malacca Straits, and having also a commanding position over the other, more southerly sea-route route from Australia around the west of Java and Sumatra. Perfect for trade, tourism and above all, security. I suggested a fabulous, futuristic—which is to say sensitive and ecological—enhancement/terraforming of Port Blair and its environs, and imagined it would be a very big project, probably at least $20 billion for the first stage and $100 billion plus overall. Above everything, I said that it could transform India’s regional heft as a trading and defensive security power, and add at least a percent or two to India’s GDP performance as it directly rivals China for South Asian-Western trade.

So now it appears that China has had a similar idea and is spending—wait for it—$100 billion on creating an island city of its own.

Forest City

On the southern tip of Malaysia is Johor Bahru, a city (incorporated in 1994 with a population of half a million) and an economic development zone, presided over by the all-powerful Sultan Ibrahim Ismail, the local Kublai Khan. The east-west Johor Straits, at the southern end of the roughly north-south Malacca Straits, narrows into a channel that follows all the way around the north and north-east shoreline of Singapore. At the Westerly mouth of the channel, where the E3 freeway bridge connects Singapore with mainland Malaysia, an enormous new development is being built.

It is constructed on four massive artificial islands that will contain 500,000 apartments, together with offices, hotels and so on, and be home to around 700,000 people. All this from scratch, where before there was simply a wide expanse of water: seagrass meadows waving gently under a clear tide and reclining on the littorals, picturesque fishermen’s villages. The peaceful currents flowed back and forth between the two neighbours, Malaysia and Singapore, in and out of the mouth of the waterway, as they had done since time immemorial.

But Forest City, as the new settlement will be known, is like a giant cork in the mouth of the straits, a dam, effectively, that will raise the water-level, narrow the flow and therefore increase the velocity and power of the water. But we’ll come to the ecological aspects later.

Forest City is not a Chinese government project—or at least, it is as private as private enterprise can get in China. The idea is to make a killing by selling apartments to prosperous Chinese. In fact if you buy an expensive apartment in Shanghai, you will be given another one in Forest City for free. Nonetheless, it is again a projection of Chinese presence and power. This is the creation of a Chinese city, provocatively, smack in the middle of the territory of two other sovereign states. Malaysia agreed to it but Singapore, which the project directly abuts, is not very happy.

Half a million new apartments, at an average price of less than $300k, means that the much pricier property in Singapore will likely crash. (And it’s more houses than have ever been built in the city-state.) And while $300k is cheap for Singapore, it is astronomical for most Malaysians across the straits to the north, with the result that most of the new population in Forest City will be foreign (that is, Chinese), despite it being in Malaysian territory.

Still, money’s what counts, ain’t it?

A new five-star hotel is already up and running to accommodate prospective buyers. The artificial causeway in the straits that’s used to haul the millions of tons of sand needed onto the new islands has already impacted the daily harvests of seafood the locals depend on. (For a brilliant assessment of the local impact of the building see this article in The Diplomat. The authors have used pseudonyms in an attempt to avoid prison or nine grams of lead.)

It’s not altogether clear, from what I’ve been able to find out, whether there will be hospitals, schools and other necessary facilities included on the islands, which seem overwhelmingly residential. Will the new inhabitants use the mainland and Singapore for their essential and emergency needs? It will be interesting to see whether an entirely artificial city—in contrast to the expansion of a well-established one such as Port Blair—can become socially successful.

What looks like large-scale ecological destruction on the ground is being relentlessly spun by the constructors (and their influential investors) as some sort of innovative clean-air project, due to the fact that there will be small trees on the balconies of the hundreds of condo towers. The Western mainstream media, no surprise, is lapping up the good news.

Forbes: China’s New Forest City Will Make You Rethink Urban Cities

BBC: China’s forest city

CNN: China unveils plans for pollution-eating “Forest City”

The Guardian: Forest cities: the radical plan to save China from air pollution

But as one anonymous local put it, “Trees on balconies won’t help with shoreline erosion.”

In truth, Forest City is the opposite of what Port Blair could become. It’s in shallow water, so no paramax port is possible; there’s no security angle either, except to insert a piece of China as a foreign body into the arteries connecting two other countries—the world can make of that tactic what it will, but if it’s OK with the Sultan …

I cite Forest City to show the scale of what is now possible, not just in terms of physical infrastructure (and the sheer speed of its deployment), but financial infrastructure as well. Forest City is a $100 billion real-estate punt. Port Blair, for similar money, would be simply epoch-making.

China: and another thing …

Beijing’s One Belt One Road initiative is anything but innocent, and China tried it already – 2000 years ago.

Apologies for my absence: vacations and other writing assignments are to blame; but the lousy weather has returned and it’s back to the routine as autumn approaches. I meant to write something about the Modi cabinet reshuffle that took place last week, but I found I was thinking about China and feeling a bit browned off about it. Don’t misunderstand me: I love the Chinese people and Chinese culture and all that, but I think I hate crony communism even more than I hate crony capitalism. And dopey authoritarians, too. Hate them here, hate them there.

As usual, Minhaz Merchant says the important stuff about the Modi reshuffle best, so if you want to know, go here.

Anyway, China:

  1. Kim Jong Who?

I’m heartily sick of reading acres of useless journalism about North Korea and what the USA might or might not do about the nuclear threat. It’s very simple, as Steve Bannon told David P Goldman a few weeks ago: the USA cannot realistically do anything about North Korea. Were they to try, half of South Korea would be vapourised and clouds of fallout would be floating everywhere to nobody’s benefit. China could deal with North Korea any time it likes, but it is just tapping the USA along because North Korea is its creature and everything North Korea does suits China very well, strategically speaking. Were this not so it would not happen. North Korea keeps the USA occupied, for example, while China gets on with all the things it wants to do relatively unobserved – at least in the media.

I’m sick of journalists writing that, ooh, 90% of North Korea’s trade is with China: if only Beijing would impose sanctions, Kim would cave in, and so forth. What nonsense. Why would China do that and hurt its own economy when North Korea is already doing everything commanded or condoned by China? Look: that pudgy little demon Kim Jong Un is the only one in the room who thinks he is in charge. As for those generals always standing around him with the shit-eating grins and stupid hats? That’s Beijing. If the Chinese had had enough of Kim then five minutes later his bullet-riddled corpse would be lying on the floor. The shit-eating grins would still be standing there, but holding smoking Makarovs (that’s not a cigarette, by the way). While we are on the subject, read Peter Zeihan’s funny and cruel take down of North Korea here.

  1. About that Silk Road plan …

I love this. It turns out that the whole bait-and-switch One Belt One Road scheme –or the ‘Belt and Road Initiative’ (BRI) as we are now supposed to call it – has been …. tried by China before! 2000 years ago! In fact it might not be going too far to say that certain Chinese high-ups came across the original scheme, dusted it off and decided to duplicate it.

I learned about this via Raoul McLaughlin, who is a fabulously good scholar, digging away at uncovering all the history of ancient trade and commerce – a much-underdeveloped area of research that I predict will soon be very visible and popular because of all the useful things it can tell us regarding our situation today. Anyway, I came across this in his book, Rome And The Distant East: Trade Routes To The Ancient Lands Of Arabia, India And China, and it explains how and why China’s OBOR scheme has been put in place, and what Beijing secretly aims to achieve by it (my italics):

In the ancient world, the struggle for supremacy was not always decided by invasion and war. In lands remote from Rome, imperial agents were using economic strategies to bring foreign peoples into positions of subservience. In the Far East, the Han set in motion subtle long-term schemes to undermine their foreign enemies and damage any ability to resist, or make war, on China. The Han encouraged a market for Chinese foodstuffs and fashions amongst foreign peoples including the Xiongnu hordes of the Mongolian Steppe. The eventual aim was to make these populations dependent on Chinese foods and manufactured goods so that these items could be withheld, or offered in diminished amounts, to inflict economic damage on these foreign communities. A Han official outlined how this strategy should be implemented, advising, ‘Every large border market we establish must be fitted with shops … and all shops must be large enough to serve between one to two hundred people … The Xiongnu will then develop a craving for our products and this will be their fatal weakness’. The Xiongnu were beguiled through thousands of trade exchanges that collectively reduced their resources and weakened their economic independence. As another Han official reported, ‘A piece of plain Chinese silk can be exchanged with the Xiongnu nomads for articles worth several pieces of gold. By these means we can reduce the resources of our enemy’. With calculated foresight the Han slowly, but surely, gained an economic stranglehold over their most dangerous opponents.

As I wrote in my earlier piece, OBOR: China’s bait-and-switch debt trap strategy, what China is doing is lending its neighbours the development funds to build infrastructre that China will end up owning and using to push Chinese products and interests into other countries, rendering them vassals in the process. In a generalised way China has been doing this across the world, and America’s uneasiness about how many dollars have been ending up in China due to the importation of its cheap goods, indebting the economy and destroying American jobs, surely contributed to the election victory of Donald Trump.

Today it’s cheap rebar and flat-screen TVs; in ancient times the Romans agonised over the high levels of luxury imports from China in the form of expensive silks that Roman women especially doted on (‘Our wealth is transported to alien and hostile countries because of the promiscuous dress worn by men and women – especially women,’ opined Emperor Tiberius.)

The writer Seneca worried about the political intent of these distant foreign merchants he suspected were looting the Roman empire and weakening it. Pliny the Elder wrote in his Natural History of how the ‘Silk People’ (the Chinese) were effectively pillaging Roman bullion on purpose for nefarious strategic ends. He wrote that they ‘take 100 million sesterces from our empire every year – so much do our luxuries and our women cost us.’ That was probably an eighth of Roman annual expenditure.

Note well the two primary reasons cited by the ancient Chinese planners for their OBOR scheme back then:

  1. Foreign nations ‘will then develop a craving for our products and this will be their fatal weakness.’
  2. ‘By these means we can reduce the resources of our enemy.’

With this track record in mind, I submit that it is far-sighted by Modi to have India resist the commercial blandishments emanating from Beijing towards the countries of the region (and to those even as far away as Europe).

China has just backed down from the confrontation over Doklam and the Siliguri Corridor – and they did back down because the road-building equipment has been withdrawn. Standing up to China over their ultimately damaging and aggressive ‘trade’ plans may likewise produce positive results.

 

Pakistan and China: India’s strategic challenge in 2017

Examining the tactics India can use to turn the tables on its less-than-all-powerful tormentors

Look at a map of South Asia. I’ve said before that China’s unappealing wingmen are Pakistan and North Korea but luckily North Korea has shown no interest in India, lying as it does to the far east of the Middle Kingdom. China, though, right on top of India, is a threatening presence, while also shaking a fist at all the other countries in its neighbourhood, such as Vietnam and the Phillipines, as the People’s Republic throws its weight around the region. Pakistan is its enthusiastic henchman where India is concerned.

China’s strategy for regional –hemispheric? – domination consists of several elements. Forget for now its economy: nearly all growth in China today and tomorrow is debt-fuelled and will deplete wealth in the long run (Michael Pettis has done the calculations here). In fact it’s exactly because China’s real economic growth is grinding to a halt and its debt load reaching nose-bleed levels that expansion and power must now be projected by additional, alternative means.

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OBOR: China’s bait-and-switch debt trap strategy

There’s a loan shark prowling in the South China Sea

In an important article for Project Syndicate, Brahma Chellaney says that if there’s one thing China excels at, it’s the use of economic tools to advance perceived geostrategic interests. On a petty level that means dredging sand up into little island berms in the South China Sea and parking machine guns on them. In the grander scheme of things it is what has become known colloquially as ‘The New Silk Road’, or to give the project its proper title and acronym, the One Belt One Road initiative (OBOR). It’s a trillion dollar boondoggle that has as its superficial aim the re-establishment, in the interests of commonwealth and trade, of the ancient merchant route that connected East to West, along which the Romans travelled all the way to India and China two thousand years ago (the Chinese name for the Romans, by the way, is ‘lei jun’ – legion).

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Turning the screw on Pakistan

Modi and Doval ensure that Pakistan’s villainy is at last being internationalised.

If India seems to have an unusual affinity with Israel – they increasingly share trade and technology links and so on – it might partly be because their recent histories are oddly similar.

Both had the experience of declaring statehood as secular democracies at roughly the same time (India in 1947, Israel in 1948).

Then, immediately afterwards, both were attacked by Islamic neighbours: India by Pakistan; Israel by Egypt, Jordan, Syria and whoever else had a hammer. Israel was again attacked by Muslim neighbours in 1967 (the Six-Day War) and yet again in 1973 (the Yom Kippur War). Stridently Islamic Pakistan attacked India again in 1965 and yet again in 1971.

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Andaman and Nicobar Islands #2

Above the law, below the law: the trials of the tribals

This is the second post in an occasional series about the future of the Andaman and Nicobar Islands, which sit at the eastern edge of the Bay of Bengal facing Myanmar, Thailand and Malaysia. The open sea to the south gives these strategically important islands access to the Indian Ocean (next stop Australia) and onto the vastness of China’s wished-for sphere of influence in South Asia. It’s a perfect spot for an armed check-point and border control for all traffic travelling westward out of the Malacca Straits and a platform for defence that can vastly magnify India’s military footprint in the region.

India has scandalously neglected these utterly beautiful islands, already home to a tri-services base (the old ‘Project Yatrik’) and an under populated, underdeveloped local economy. In truth the Andamans are key to India’s future as an influential regional political power, not to mention an economic one (see Indian Ocean and India’s Security, Raj Narain Misra, 1986). If Goa is India’s California then the Andaman and Nicobar Islands are its Hawaii – it has the navy, not just the beaches, and the beaches are superior to those in Thailand, across the water.

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India underestimated (again)

For savvy investors, that can actually be a good opportunity

I recommend everybody to watch Peter Zeihan here as he delivers a barnstorming illustrated speech on the future of the world. He is a geopolitical analyst who for years worked at Stratfor, known as the ‘private sector CIA’ and has since struck out on his own. He is a great speaker, very funny, knowledgeable, engaging and stimulating.

I should warn that it is very much a Texan’s-eye view, and I am mentioning Zeihan mostly because he mentions India, at 47 minutes in, thusly:

‘The short version on India is that if you’re happy with it today, it’s not going to change a whole lot, the reason being that the Ganges basin is the most productive agricultural zone on the planet in terms of calories per acre per year. That gives you endless population growth. However, there is not a single navigable river in the country. So high populations, no capital. That’s abstract [sic: abject?], total, unending poverty. But India’s looked like this since the fifth century. So if this is an India you can operate in, an India you know and like – great! They are not a major player in Bretton Woods, never have been. They’re not going to change, but if you think India’s about to turn the corner, the whole ‘Shining India’ concept, I’m sorry. It’s looked like this for 1500 years; it’s not about to change.’

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