What lies behind Dhaka-Beijing strategic collaborations?

A quintessential aspect of any strategic partnership is to embrace and cultivate a relationship that is inclusive and complimentary enough to meet the economic and geopolitical needs of the parties. Although Dhaka and Beijing did develop such a relationship gradually since 1976, some existential realities had augmented and spruced up the vistas of mutual collaborations to the level where it can now match the momentum of time, irrespective of which particular brand of political regime governs China or Bangladesh.  And, contrary to conventional perception, the realities are more economic than military or otherwise. When Bangladesh sits on $35 billion worth of public debt and over $10 billion annual trade deficits while growing at a pace less than 7 per cent annually, how good is the country’s economic health when aboutr 30 million of Bangladeshis hit the bed hungry or half-fed?

Bangladesh’s economic woes are still bad, but they were worse in the past. As this overpopulated nation tries desperately to break away from this miserable state of affair by interacting with the world in a manner that helps uplift the fortunes of its people, one must not forget to put ‘country first’ as the main thrust of one’s commitment and learn how to put economics before politics. To do that, ensuring internal stability is a sine qua non and, chasing the money trail must precede by forethoughts about the country’s geopolitical necessities and economic realities.

The role of Bangladesh in the midst of the intractable Indo-Pak and Indo-Chinese rivalries has become an important one to the regional and global powers like China and the USA, the two most economically strongest nations of the time. And, money chasing being  the cardinal credo of the neo-capitalism sprawling under the shadow of globalization, the economic tsunami unleashed by this new reality is stirring tensions on one hand, and displacing traditional concentration of production venues away from home, to maximize profit, on the other.

Being the world’s largest LDC in terms of population and GDP, Bangladesh is among the top 12 developing countries to have achieved 6 plus percent growth in recent years. That rate must go higher to steer clear of the poverty trap that had battered this nation for ages. The World Bank had taken into cognizance the efforts being made by the suffering masses of Bangladesh to break away from the vicious cycles of poverty, and, it’s helping Bangladesh move forward by committing to invest more in poverty alleviation and meeting environmental guidelines.

China is world’s second largest economy, over $11 trillion strong. No wonder it’s also Bangladesh’s biggest trading partner, with bilateral exports and imports growing phenomenally. As of now, Bangladesh enjoys duty-free benefit on export of 5,054 products to China under a bilateral agreement. And, under the WTO rules, Bangladesh also enjoys, as a least developed country (LDC), duty-free benefit on export of products which are at least 97 percent Bangladesh-origin.  If anything, China and Bangladesh had proven two things for certain; that being large in terms of population is not always bad.  While China moved toward internal productivity to capture global markets, Bangladesh’s few million strong non-resident workforce have been sending home over $25 billion per year to bring some doses of happiness to every rural household. Time has arrived when the political and business captains of the nation must do much more to match the level of toil and dedication of the non-resident Bangladeshis. A united thrust of all the Bangladeshis will certainly be more rewarding.

Last week’s visit of the Chinese President to Dhaka had produced many tangible, substantive results to further China-Bangladesh economic collaborations.  The commitments on the government to government (G2G) collaborations on infrastructure building aside, 13 Bangladeshi companies had signed 13 joint venture agreements with their Chinese counterparts, involving $13.6 billion investments in infrastructures, power, railways, sports and the creation of a special economic zone, according to Sun Xiao, deputy director general of China Chamber of International Commerce (CCIC).

The deals look dashing in the context of where the bilateral economic ties stand. According to available data, Bangladesh exported goods worth $808.14 million to China in 2015-16, which represented broad upswing from only $319.66 million in 2010-11. Observable is the fact that there was a 30 per cent increase in export to China in the last five years. Import from China totaled about $9.8 billion in 2015-16, an increase from $5.9 billion in 2010-11. However, the growth of import being about 13 per cent lower than the growth of export, Bangladesh can catch up with the yawning trade balance by pushing for an annual export to China of at least $2 billion, starting now.  China and Bangladesh have been best of friends since the creation of Pakistan in 1947. The continuation of friendly relations with both Bangladesh and Pakistan is at the heart of Beijing’s regional policies, which is not the case with India. Why? For reasons that are so irreconcilable that the lengths of the total bilateral border between India and China remains disputed due to the Chinese claims of territory in both the eastern and the western fringes of India.

In western part of India, Beijing lays claim over the Aksai Chin in northeastern part of Ladakh in the Indian-controlled Jammu and Kashmir. In the east, it claims sovereignty over the British-designated Northeast Frontier Agency (NEFA), a part of which Delhi later renamed as Arunachal Prodesh and declared as one of India’s 29 states. China and India fought a major war in 1962 over those disputed landmasses.

From a pure economic standpoint, as the world’s second largest economy, China is graduating out of the garment and leather related production to higher end products, and it needs some safer and cheaper destinations to produce clothes and shoes for nearly 1.3 billion of its populations. With a plan in hand to connect Bangladesh on-land via Myanmar, Beijing finds Bangladesh a cheap source of labour and production, as well as a reliable outlet to receive its own imports at Bangladeshi ports.

Besides, labour costs in China are already 6-7 times higher than Bangladesh. If political stability prevails in Bangladesh, Chinese entrepreneurs will arrive in bigger numbers to set up more factories and production outlets due to Bangladesh not being within China’s threat perception parameter and having the expertise to meet the Chinese need. Bangladesh’s $28bn strong garment manufacturing industry is the world’s second largest, just after China’s, which currently accounts for 80pc of the country’s annual exports and employs about 40pc of industrial workforce.

Above all, over the decades, Beijing shared with Bangladesh its military expertise and weapon technology to secure a foothold at the Bay of Bengal littoral. In the Asia- Pacific, China is spending the most on its military than any other country; an estimated $215 billion in 2015, four times higher than India. Simply put, China accounts for 13 percent of the world’s total military expenditure and Bangladesh’s armed forces have been geared to design a defensive capability mostly by using Chinese military hardware. Bangladesh’s regional neighbors like Myanmar, Thailand, Pakistan and Sri Lanka also depend largely on Chinese military supplies, as do countries like Egypt, Nigeria and Sudan.

While the global economy digested recurring beatings from the spates of war, terrorism and market meltdown since 2001, Asian economies mostly adjusted to the shocks with ease, thanks to the booming Chinese economy which has lately begun to slide downward to single digit growth after performing over 10 per cent growth annually for over a decade. Beijing wants to hold onto the growth momentum by being more competitive; for which it needs to cut the cost of its production further by using cheap labours and friendly ambiance in the neighbourhood.

Hence, by investing in friendly countries like Bangladesh, Pakistan, Egypt, and many parts of Africa, Beijing aims to accrue handsome return on investment from both interest and profit. Among Beijing’s latest commitments, nearly $24 billion is destined to hit Bangladesh, $43 billion to Pakistan and $41 billion to Egypt.  Compared with the overall 2016 FDI commitment that Bangladesh had entertained and accepted, which is little shy of $2 billion and much less than $2.23 billion received in 2015, the Chinese commitments should ring like the melodious tune of a well composed musical soirée.

Source: Weekly Holiday