With Chinese Investment, Nicaraguan Passage Could Dwarf Panama Canal 322
Nicaragua is now home to the early stages of one of the largest infrastructure projects on earth, plans for which have been raising questions for some time now. In a move that will affect global trade in the long term, "A Chinese telecom billionaire has joined forces with Nicaragua's famously anti-American president to construct a waterway between the Caribbean Sea and the Pacific Ocean to rival the Panama Canal. The massive engineering undertaking would literally slice through Nicaragua and be large enough to accommodate the supertankers that are the hallmark of fleets around the world today." (Here's a related article with a bit more on the project from Wang Jing, the Chinese telecoms entrepreneur now also at the head of the Hong Kong Nicaragua Canal Development Investment Co.) One potential problem with the canal: disruption of surfing in Nicaragua.
think big, plan for future (Score:5, Interesting)
Interesting (Score:5, Interesting)
When the original Panama Canal was built, there were huge engineering problems that couldn't be easily solved. What will be interesting to see is how quickly this one will be completed with modern technology, modern medicine against tropical diseases, etc. I thought there were plans to widen the existing Panama Canal - were those scrapped?
The other interesting thing to see is China making these huge investments in other countries. Having a competitor for the Panama Canal would really change international trade. I also heard China is investing heavily in Africa and the Middle East, basically for leverage against the US and Europe. It may be one telecom billionaire making the investment, but I'm sure the Chinese government is going to do anything it can to help.
One of the things most people see as a bug but I see as a feature with China is their ability to just do things. There's no debate, no fighting with Congress, etc...they can just tell millions of people to move out of the way of an infrastructure project (e.g. Three Gorges Dam.) That's going to be a huge advantage they have over the West during this century. Another big shift that China is basically just making happen by fiat is the forced urbanization of the country...moving peasant farmers off their land and into cities (which is what those "Ghost Cities" are supposed to be for.) Just look at the fights that happen when someone's land is claimed by eminent domain for a construction project in the US...none of that happens there, and anyone who complains is marginalized.
Re:Panama Canal took 33 years, 4 countries (Score:4, Interesting)
When they started Panama and Colombia were a single country. The independency for Panama movement was bankrolled and organized by the France and the U.S in order to reduce costs and to avoid government regulations for the canal construction
New Panamax (Score:5, Interesting)
The current expansion of the Panama canal goes online [marinelog.com] next year. "New Panamax" ships are 13,000 TEU vs 5,000 for current Panamax ships. All the important East coast ports have already been or a currently being dredged out to accommodate these ships. This was accomplished quickly and quietly beginning in 2012 when Obama exempted [redstate.com] the dredging operations from the Clean Air Act, Clean Water Act and Endangered Species Act.
Guess they'll be needing another bunch of pencil whipped wavers to dredge out the ports even deeper for the EquadorMax ships, because what China wants China gets.
Might not be as profitable as they think (Score:5, Interesting)
Add a second canal, and suddenly they're not competing with a trip around South America. They're competing with each other. Unless they collude together to fix the prices so that they're essentially the same (divide traffic 50/50, which might actually be a good thing since I hear wait times at the Panama Canal can be a week or more), the price is going to drop to slightly higher than what it costs them to operate the more expensive canal. That is the nature of competition. e.g. If the profit margin drops to a still-high 50%, profit from the current level of traffic would be just $300m/yr, and it'll take them 167 years to recoup the $50b construction cost even if they were able to borrow that $50b interest-free. Since the Panama Canal is essentially paid for, the Nicaraguan canal would probably have higher costs and thus slimmer margins, and will likely take centuries to pay for its construction.
A Nicaraguan canal would have the advantage of allowing passage of larger-than-Panamax ships (ships designed so their width barely fits through the Panama Canal). But again, if they try to charge significantly more for such ships, operators will simply continue building Panamax ships. Any surcharge they add on has to be less than the money operators would save by using larger-than-Panamax ships. (Significantly more since such ships would have to be built in the first place.)
It'll be great for the rest of the world - cheaper transport costs, more capacity, faster travel. But could end up tanking both the Nicaraguan and Panamanian economies.
And then ... (Score:2, Interesting)
Re:Geography of panama vs nicaragua (Score:2, Interesting)
They are going through Lake Nicaraugua, which will considerably shorten the length of the canal they need (to about 80 miles).
Re:think big, plan for future (Score:5, Interesting)
The Panama Canal was built to get US goods from the east coast to the west coast. The new canal is to connect China with Europe/Africa. They have different goals.
Re:Money pit (Score:5, Interesting)
Hurray! USA is going to get another canal cheap! (Score:5, Interesting)
So don't worry, our government could be weak and our military power could be misapplied. But we have some really cunning bankers who would steal the loin cloth of Papua New Guineans if they could make a dollar or two. They will steal this spanking new Chinese built canal from Nicaragua for us. Some two decades later we the tax payers will compensate the victims of their greed.
Re:Money pit (Score:5, Interesting)
No, most of that concrete went into infrastructure projects. in the space of a decade China laid down a modern "interstate" highway system tremendously larger than the entire US Interstate and US HWY highway system combined.
They did this because they knew, from looking at history, of the power of massive public works/modernization projects. Particularly a modern highway system. This project both spurred economic growth in its own right from the labor and materials required, and will spurr further growth through time as it begins to allow the same things we saw happen in the US. Manufacturing can be located even further inland. It can also specialize into sub-assemblies that go elsewhere for final assembly. It' easier to transport goods, services, and people now into the interior of China. This will and has spurred the movement of people seeking better opportunities, and promoted growth of cities further inland, in contrast to past history where most of China's economy and trade depended on access to and was oriented around sea ports.
I only point this out, because while they tackle the problem of modern infrastructure, we're kicking the can down the road repeatedly, only doing small things after bridges have already collapsed, and roads become nearly unusable. that new "infrastructre bill" they just passed that was supposed to fund the HWY fund for a little longer? It's actually a loan from private businesses that will be repaid with tax dollars, at a profit to the businesses, a few years down the road. It's absolutely shameless.
Comment removed (Score:5, Interesting)
Re:think big, plan for future (Score:2, Interesting)
I talked it over with one of the top international policy dudes in the US like two years ago. He says that it is at least 100 times cheaper to feed all countries than to fight one country, and that's all there is to it. It also grants us enormous diplomatic leverage. People of the world want American food. It is our prime export.
Re:think big, plan for future (Score:4, Interesting)
There is little need for super-tankers to transit the canal. The price of oil is about the same on either coast, and oil production in Alaska and California pretty well balance out the demand.
Oil? Who said this was about oil?
South America has massive mineral reserves.
The Chinese have also been buying up huge chunks of land for farming grains that can be shipped back to China.
China wants this canal so it can cheaply move enormous volumes of resources (especially from Brazil) to its ports.
$49 billion is a drop in the bucket for China's long term economic needs.
Re:Chinese telecom billionaire (Score:4, Interesting)
*every* communist country had enormous differences in wealth between their citicens. Compare the members of the Soviet nomenclature (who had even special shops with Western goods) with the Gulag-slave. (More than 10% of the population were Gulag-inhabitants, so we are talking about a large segment of the population here.)
A little known-fact was that the income differences in East Germany were about the same as in West Germany - but only when you assume that the people had equal rights which of course they hadn't. When you take all the privileges/penalties into account the differences were much greater than anybody in the West can even imagine.