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Business/Finance See other Business/Finance Articles Title: Beijing's Indonesia rail win comes at a heavy cost @WantChinaTimes The high-speed rail project in Indonesia might be a victory for China over Japan, but perhaps at too steep a cost, reports our Chinese-language sister paper Want Daily. A superior financial package was the main reason Indonesia awarded the contract to China, according to the Financial Times. The Chinese proposal does not require a loan guarantee from the Indonesian government and does not involve the state budget. The terms are more lenient as well: The Indonesian state-owned business consortium will have 40 years to repay the US$4 billion loan with an annual interest rate of 2%, and only have to pay installments 11 years after the railway begins operation. Phoenix News outlet Ifeng.com, however, has argued that China's package was not more attractive. The cost of Chinese proposal, after all, was US$600 million higher than Japanese proposal. China proposed around 213 million yuan (US$33.5 million) per km for the Indonesian railway project, while domestically China spent less than 100 million yuan (US$15.7 million) per kilometer on the Wuhan-Guangzhou High-Speed Railway and around 177 million yuan (US$27.8 million)/km on the Beijing-Shanghai High-Speed Railway. Related News Shanghai housing fair draws smaller crowd than last year Internet money market funds in China post declining returns Beijing hopes yuan can join SDR basket later this year IMF to complete assessment of renminbi by year-end: Lagarde Beijing also promised that the Indonesia rail project begin operations by the end of 2018, sooner than Japan's proposal of 2021. The Chinese proposal demanded a longer track (150 km) as opposed to Japan (144.6 km) and more stations (eight). One Japanese official doubts that China will be able to complete the project as promised and said it may even lose money in the end, according to the Financial Times. Beijing also faces other risks from its no-guarantee loan and the technology transfer promised to Jakarta. The deal marks China's first overseas high-speed railway project, a milestone which would have gone to China's Mexico consortium last November until the deal was abruptly scrapped by the Mexican government. Jakarta's decision to award the rail project has been labeled a setback for the Japanese government, which spent over years studying, promoting and financing the project. Japanese Prime Minister Shinzo Abe's call for infrastructure investments in Asia has also been, if but temporarily, derailed. Post Comment Private Reply Ignore Thread
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