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China's Soft Power
Route Approved for China-Backed Canal in Nicaragua

Nicaragua approved a route yesterday for a Chinese-backed canal that would rival Panama’s, saying construction would begin by the end of the year. Reuters reports:

The committee of government officials, businessmen and academics approved a 172 mile (278 km) route from the mouth of the Brito river on the Pacific side to the Punto Gorda river on the Caribbean that was proposed by executives from the HK Nicaragua Canal Development Investment Co Ltd (HKND Group)…

The plan is to finish the canal in 2019 and begin operations in 2020, Talavera said.

The proposed channel would be more than three times longer than the 48-mile (77-km) Panama Canal, which took the United States a decade to build at the narrowest part of the Central American isthmus. It was completed in 1914.

Even with modern machinery this is an ambitious project. Wang Jing, the Chinese businessman behind HKND, calls it “the biggest [project] built in the history of humanity.” And as National Geographic notes, this is canal would be a coup for China:

For the Chinese, having a canal capable of handling huge bulk carriers would mean easier access to Venezuelan oil and Brazilian iron ore and soybeans, not to mention a valuable geopolitical foothold in the Americas.

For Nicaragua, the benefits are less clear. The country believes the canal will bring in money and jobs, but the agreement with HKND heavily favors the company, and most of the high-paying jobs may have go to foreign experts.

Most importantly, not everyone agrees that the canal is commercially viable. Its main advantage would lie in offering a route for tankers that are larger than “Panamax”—the maximum dimensions of the Panama Canal. But the Panama route has recently been enlarged, and while it still won’t be able to handle the largest ships, it should be able to handle expected growth in traffic. The Nicaraguan route, meanwhile, will require expensive upkeep when in operation. Critics of the plan also charge that the construction will damage the environment, including an important body of fresh water, Lake Nicaragua.

As we wrote recently, China is also expanding its reach into Africa with ambitious projects like a planned railway network in the east. Beijing, it seems, likes to think big.

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  • PKCasimir

    Not a word about financing or construction, etc. And they plan to start construction in six months. Right! Pigs will fly before this ever gets built.

    • Andrew Allison

      And, if it does get it built, how will it make money. Panama will have spent about $7 billion to accommodate the vast majority of oversized vessels, and US ports perhaps even more to accommodate them. The former will be able to offer relatively attractive rates for passage of New Panamax vessels, the latter may prove reluctant to start over. Will shipping commodities from Atlantic South America and Africa to China suffice to make it viable?

  • Andrew Allison

    That would be Punta Gorda, I believe (you can’t trust Reuters to fact check its reports).

  • Jacksonian_Libertarian

    The Chinese are smoking crack! We see this type of thing when economic bubbles are about to burst. Remember when the Japanese were going to own the World, and Tokyo was valued as worth the same as all of the continental US? China is about to hit the wall, and I still can’t name a single worldwide brand out of China like Sony, Toyota, Samsung, Intel, Apple, Google, etc… nothing they make or produce is unique, developed, or created in China.

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