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With Chinese Investment, Nicaraguan Passage Could Dwarf Panama Canal
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.
My impression is Chinese are thinking big plans for future. Way back in late 1800s early 1900s US was thinking same thing: Panama Canal was a huge project with lots of opportunity for failure. But reaped benefits for decades after. Also Chinese have lots of cash and putting it into big projects (ok some will fail but whatever they will secure strategic advantage). Meanwhile US put lots of resources into backwards countries with not much to show for it.
mfwright@batnet.com
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.
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China has poured 47% more concrete in the last 3 years than the US has poured in the last century. They know how to build.
The Panama Canal was dug around 1910. In 1910, about 38% of Americans were employed in agriculture... now it is under 2%. In other words, humankind is radically better at things like "moving dirt." There is no comparison.
The current expansion of the Panama canal goes online 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 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.
Maw! Fire up the karma burner!
The Panama Canal - by virtue of being the only alternative to a trip around the tip of South America - can charge passage fees just less than the cost of a trip around South America. Consequently they make a huge profit margin off of operating it. A quick google search says it brings in about $2 billion/yr, but only costs about $600 million/yr to operate. So they've got a massive 233% profit margin.
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.
Doesn't have the same ring to it. I can see why they picked Panama for the first one.
Well at the time they were using the most massive equipment available to the point that a whole new class of steam shovels was created specifically for the project. They were rail mounted 105 ton (US tons and that is the vehicle weight not capacity) steam shovels. You can see one of the 6 prototypes for the project here. It has a 2 1/2 cubic yard bucket instead of the original 5 cubic yard one (changed because the iron ore was substantially denser) and was also converted to crawler tracks to run in the iron mines of northern Minnesota but is the only remaining one of the prototypes. While this shovel never worked on the Panama Canal the only other surviving example of this type of shovel that may have is in much worse shape and exists in upstate new york. They were built on a 40' railroad box car which houses the boiler with an additional 8' added on to the back for a coal hopper with the boom and arm attached to the front.
Time to offend someone
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.
The guy who said the election was rigged won the presidency with the second-most votes.