China can help Bangladesh in a big way

Once the U.S. economy was called the engine of growth for the global economy, perhaps it still is, but the leadership of the global development is in the hands of China. China, itself still a developing economy, grew annually at more than 10 per cent, the highest rate ever witnessed over so long a period in the history of economic development. Besides its own development, China is now carrying with it the other underdeveloped regions of the world towards a faster economic growth. China has turned out to be the number one economy in many respects, if not in all aspects, in a period much shorter than many had thought of. Economists and growth specialists forecast in the beginning of the present century that China would be the number one economy by 2020 or a few years later, but the same people now are saying that China has already attained that position, and that the world economy is going to be re-structured to undergo a major shift under Chinese leadership. The symptoms all around are also echoing so. China already accumulated trillions of dollars and other foreign currencies in its coffer from the trade surplus it enjoyed over the years. China is prudently investing the wealth in the advanced western economies, and a part of that wealth is also finding way to the developing economies of Africa, Latin America and Asia.
For many years, the world economy remained unipolar under the US leadership but now things have started to change at a much faster speed than many people foresaw. The world economy that was shaped and modelled upon the outcome of the Breton Wood Conference in 1946  (attended by the western countries led by the United States) withstood all kinds of pressure to change from the outside world till recently, but it now seems to be yielding, though slowly, to demands for a change. The Bretton Wood Conference that created two institutions --the International Monetary Fund (IMF) and the World Bank (WB) will not accommodate interests of the emerging economies on their own; they will only do so if the US wants so. The U.S. is the only veto wielding power in their decision making process and till now the U.S. Congress did not allow any change to be brought into the system.
The emerging economies for long wanted to have enhanced voting power in their decision making but failed to have that in the face of opposition from the U.S. Being disillusioned, the five biggest emerging economies Brazil, Russia, India, China, South Africa agreed to form a parallel institution named BRICS in the beginning of the year. In Asia, China took the leadership in forming another institution solely for the purpose of long-term infrastructure investment named as the Asian Infrastructure Investment Bank (AIIB). Bangladesh also signed the founding papers of the proposed AIIB as one the sponsors. Bangladesh has done the right thing in this respect, and hopefully Bangladesh will always remain enthusiastic in giving it a proper shape in making it operational. China is handing out billions of dollars to the African countries for the development and also signed many trade and investment agreements with them. No African country sees China as a country with imperial design unlike the way they saw the European countries.
In the neighbourhood, Sri Lanka, Pakistan and Nepal are being tremendously benefited from Chinese investment and trade facilities. Recently, China committed more than $ 40b worth of investment fund for Pakistan. The lone deep sea port of Sri Lanka was built by China. Both Sri Lanka and Nepal see China as a countervailing force against Indian interference in their internal affairs. China has proved that it has the heart and capacity to help out developing counties like Bangladesh.
Bangladesh can involve China with the construction and operation of the proposed deep sea port at the Bay Bengal. China can also be a cheap source of capital for our other infrastructure projects. Even the military hardware for the Bangladesh army can be procured from China at a much lower cost. The proposed economic corridor involving Bangladesh, China, India and Myanmar (BCIM) can open up a new horizon in economic activities for Bangladesh and other member countries. Pending BCIM becoming operational, Bangladesh should strive to link itself with China and Myanmar by land and rail routes. In this case, as China has influence over Myanmar, Chinese leadership can help break the logjam. Chinese proposal for a Free Trade Agreement (FTA) with Bangladesh should also be considered with an open mind. Bangladesh is the only country in this region which could not ink a single FTA with any country of the world, though the world is being awashed with so many FTAs. We opine that Bangladesh economy should be opened up fully to the Chinese investment. The proposed economic zone exclusively for Chinese investment can only be one option in this regard. Bangladesh should not take extra time in calculating the benefit analysis of cooperation with China. In this part of the world, economies that plan to have faster economic growth will have to rely on how better these are integrated with the other economies of the world. Bangladesh economy, if it gets integrated with the fastest growing and the number one global economy, will also be in a position to be integrated more easily with the other economies of the world.
The writer is professor of Economics, University of Dhaka. abuahmedecon@yahoo.com