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China crisis?

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casapinos
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China crisis?

#3638

Postby casapinos » November 11th, 2016, 9:57 am

Yesterday the UK government touted a range of infrastructure projects to the Chinese , offering them the opportunity to buy into predominantly Northern based developments.If these projects offer positive returns (and if they don't why would they bid?)why doesn't UK government borrow long-term at historically low rates to self fund?I know this would drive up gov borrowing, increase debt/ deficit BUT isn't that what all sensible financial entities do- borrow to invest, to improve productivity, to earn more ?Are we still to suffer from the Osborne failure to apply commonsense economic principles and allow others to reap our profits? Aiming to provoke an economic rather than political debate , despite the last sentence!!Actually aiming to provoke any debate to stimulate this lemony adventure.

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Re: China crisis?

#3643

Postby gryffron » November 11th, 2016, 10:10 am

I don't get this either. I said the same about the Nuke power station.

The UK govt is currently being PAID by the market to borrow. Gilt rates are <2% inflation target, and QE makes them even cheaper. So why on earth are we asking other people to fund our infrastructure? Presumably at a profit. No-one can borrow more cheaply than govt.

Not just this govt though is it? We had the ludicrous PPI farce from Labour. Which included 20 year supply contracts for things they could not possibly predict forward 20 years. Even then, when gilt rates were at a more realistic level, STILL no-one could borrow more cheaply than govt.

To me, it stinks of politicians being given backhanders to line the pockets of private sector companies with taxpayers' money. Surely not.

gryff

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Re: China crisis?

#3650

Postby redsturgeon » November 11th, 2016, 10:31 am

I can only think that the UK government is well aware of its own abysmal record on delivering major projects on time and on budget. Involving private partners, be they UK or foreign includes an element of risk sharing into the process.

That is the only rationale I can think of...pretty thin stuff I'll admit.

John

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Re: China crisis?

#3657

Postby casapinos » November 11th, 2016, 10:46 am

Ok gov is crap at delivering such projects but they don' t have to - as the most stable player economically (with the ability to print the money they borrow) they Finance these projects but leave execution to others , who hopefully do it better. Indeed as the potential creator of many , lucrative, large scale projects they fund, and then drive hard, results based, conditions, obvious innit?

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Re: China crisis?

#3662

Postby hamzahf » November 11th, 2016, 10:58 am

casapinos wrote:Yesterday the UK government touted a range of infrastructure projects to the Chinese , offering them the opportunity to buy into predominantly Northern based developments.


Algerian infrastructure has apparently been rapidly transformed by Chinese investment. However, that was achieved by Chinese workers as well as Chinese money. In a climate of opposition to bringing skilled foreign workers to the UK, do we have the skilled manpower to implement these much-needed infrastructure projects? There is a strong argument to create such jobs in the UK, but if that is so it should be controlled and financed domestically. I know that is at odds with the ownership of our existing utilities and transport services, but if the spirit of Brexit means anything then seeking further foreign ownership and control of our infrastructure is bizarre.

Get someone else to pay is an attractive idea, but PPI is a classic example of undesirable long-term consequences. Investment in infrastructure is a strategic need that should be funded by taxation or government borrowing. Training British workers to a high level should be part of that strategic goal.

Regards
Hamzah

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Re: China crisis?

#3739

Postby gryffron » November 11th, 2016, 1:46 pm

casapinos wrote:Ok gov is crap at delivering such projects but they don' t have to


I agree with your point that many govt depts are crap at delivering. But not all of them, so it needn't necessarily be so. Many could (IMO) learn a great deal from the Highways Agency. With whom I have dealt in the past. They have well qualified experts and they trust them to make decisions. How many road projects go way late/overbudget? It's pretty rare. By contrast, MoD procurement do everything by committee, because they're all too scared to take decisions. This results in ever-shifting requirements as the membership of the committee changes over time. Scrapping MoD procurement and handing the job to the HA could save the govt billions. And they're only just down the road from each other in Bristol.

gryff

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Re: China crisis?

#4414

Postby john10001 » November 13th, 2016, 10:40 am

Surely if infrastructure project and things like HS2 were viable and a good idea then the market and private sector would have already provided a solution.

I am unsure what infrastructure projects they are referring to regarding the North but as far as HS2 is concerned in the near future we will all be flying around in these so HS2 is an even more spectacular waste of money and waste of countryside.

https://www.youtube.com/watch?v=wbeoTnuo2-U

Agree fully with Gryffron on Hinckley. It is a very bad costly deal. It just doesn't make sense to me. I think we should be investing more ourselves into e.g. LFTR reactors. Other nations are pulling way ahead.

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Re: China crisis?

#5713

Postby muckshifter » November 16th, 2016, 5:11 pm

Imho the contracting methods now used by the HA, and those of PFI, were born out of the same regular contractual conflict which plagued "government" work for most of my working life. Both PFI and HA adopted contracting methods avoid the conflict, but increase costs, imho, so I don't see the Highways Agency as necessarily the contracting paragon to be copied by other government client organisations. It would be interesting to compare the overall cost of major road construction under current HA contracts with those of say the motorway construction era of late sixties / early 70s on an inflation adjusted full cost, excluding land purchase, basis. So the governments desire to off load risk, both that which used to surface as conflict, and that which I think currently surfaces as huge contingencies in the early planning stage, which the contractor then weedles out of the client, perhaps makes it safer to let the Chinese or the French have the deal.

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Re: China crisis?

#5813

Postby TahiPanas » November 17th, 2016, 7:49 am

hamzahf wrote:
casapinos wrote:Yesterday the UK government touted a range of infrastructure projects to the Chinese , offering them the opportunity to buy into predominantly Northern based developments.


Algerian infrastructure has apparently been rapidly transformed by Chinese investment. However, that was achieved by Chinese workers as well as Chinese money. In a climate of opposition to bringing skilled foreign workers to the UK, do we have the skilled manpower to implement these much-needed infrastructure projects? There is a strong argument to create such jobs in the UK, but if that is so it should be controlled and financed domestically. I know that is at odds with the ownership of our existing utilities and transport services, but if the spirit of Brexit means anything then seeking further foreign ownership and control of our infrastructure is bizarre.

Get someone else to pay is an attractive idea, but PPI is a classic example of undesirable long-term consequences. Investment in infrastructure is a strategic need that should be funded by taxation or government borrowing. Training British workers to a high level should be part of that strategic goal.

Regards
Hamzah



I'm not saying the following anecdotal evidence would apply in the UK but it seems to be a common approach by China when working in developing countries. There may be some read through though.
When I was working in Sri Lanka, China provided the total financial cost of certain public works which were essentially political statements in a near bankrupt country. They also provided all the staff to implement the work. Even Chinese labourers were imported and were forbidden to leave work camps presumably lest the Sri Lankan population find out that nobody local was employed. Sri Lanka was left with good facilities but at very high long term cost and no employment at all for construction locals.


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