In the 18th century, China contributed one fifth to global GDP and accounted for one-fourth of world’s population. China had been the beacon of innovation and progress, as Chinese scholars kept spearheading cutting-edge scientific discoveries, while Chinese factories kept churning highly sophisticated consumer products like silk and ceramics. As a result, China found itself at the centre of global trade routes, supplying coveted products to affluent Middle-Eastern and European consumers. This ancient trade route connecting Europe with China is known as the ‘Silk Route’. However, over the last two hundred years, the ascent of industrial Europe and corresponding entrenchment of China behind the so-called bamboo curtain contributed to the changing dynamics within the region. Cheap industrial products manufactured from European factories started flooding the Asian markets.
Over the last 70 years, China had transitioned to a communist form of Government, but in the recent past, gradually morphed into a hybrid of communism and capitalism. Starting from 1980s, China started opening up its economy, attracting investments and improving roads and infrastructure, in the process, benefiting from its large untapped labour force. Due to conducive investment climate, China’s FDI skyrocketed and its growth rate went over the roof. The 1990s and 2000s saw consolidation of the economy, as millions of Chinese escaped poverty and a prosperous middle-class population cropped up in different urban centres. Over the last 10 years, the world has seen a confident and purposeful superpower in China, intent on making its voice heard.
As the USA becomes more aloof as global superpower after Trump’s ascendance, China has scrambled to take full opportunity to fill in the void. The government had fully used its economic muscle by bestowing economic largesse on different Asian and African countries to extend its soft power. As a cornerstone of this charm offensive, the current Chinese President, Xi Jinping, had conceptualised and championed the One Belt One Road (OBOR) initiative, which aims to revive the ancient silk route, placing China at the centre of the global economic roadmap.
What is the OBOR initiative? : “The One Belt, One Road” initiative has two components — the Silk Road Economic Belt (SREB) that would be established along the Eurasian land corridor from the Pacific coast to the Baltic Sea, and the 21st century Maritime Silk Road (MSR). Involving 68 countries, The SREB focuses on bringing together China, Central Asia, Russia and Europe (the Baltic); linking China with the Persian Gulf and the Mediterranean Sea through Central Asia and West Asia; and connecting China with Southeast Asia, South Asia and the Indian Ocean. The 21st-Century MSR, in turn, is designed to go from China’s coast to Europe through the South China Sea and the Indian Ocean on one route, and from China’s coast through the South China Sea to the South Pacific on the other.
Why the OBOR initiative? : The OBOR project will yield great economic benefits for China. Suffering from widespread overcapacity in heavy industries such as steel, cement and aluminium, China is looking for new markets for Chinese goods. “Belt and Road” route countries will connect some resource-rich countries and the infrastructural changes that need to take place to make this happen will be funded and carried out by China itself. Some core projects include a $54b land route from China’s Xinjiang region to a deep-water port in Pakistan, Gwadar. China will spend $1.1b for creating a “port city” in Sri Lanka’s Colombo, across from Gwadar. A planned 3,000km (1,900 mile) high-speed-rail line from southwest China to Singapore will also be built in addition to improving the export opportunities. All these infrastructural developments make this project greatly desirable for all the parties involved.
The OBOR initiative will give China access to some strategically important geopolitical countries — all the while China being the country which will provide additional security and protection. For example, China has recently established a 1,100-mile oil-and-natural-gas pipeline from Myanmar’s Arakan coast on the Bay of Bengal all the way to Kunming, a major city in China’s southwest Yunnan province, which will reduce China’s dependence on Malacca straits (through which about one-fourth of the world’s trade goods pass) and make China’s future secure in terms of energy in the foreseeable future. It will also help China to leverage its financial footing to assert geopolitical influence from East Asia to Africa. Ultimately, it’s a soft-power move by China which will remake the world order.
How Bangladesh could benefit from OBOR initiative: Since China’s recognition of Bangladesh in 1975, both have developed a win-win relationship in terms of trade and investments. Although bilateral trade figures are heavily skewed towards China, Bangladesh receives soft loans and grants from the Chinese Government for making infrastructure investments. China is also the leading supplier of cheap but reliable defence equipment for Bangladesh.
The Chinese President, Xi, in his recent state visit to Bangladesh (Oct 2016), pledged up to USD 24 billion for investments in different sectors. Alongside, China has a standing offer to finance and construct a deep-sea port in Sonadia. Chinese investors are keen to investment in Bangladesh, and the Government of Bangladesh (GOB) has pledged to dedicate a specialized economic zone for Chinese investors.
Although the OBOR initiative can be attributed as an effort to encircle and isolate India, Bangladesh can significantly benefit economically, which would help them break through the middle-income status.
Becoming prime destination for China’s sunset industries: China is shifting towards high-tech, high-margin and high-end industries, such as, IT, Aerospace, and Telecommunications. Existing Chinese companies that deal in low-tech labour-intensive industries are trying to relocate their manufacturing plants to places that offer cheap labour and quality work. Bangladesh whose key demography is between age 15 and 30 could very well become prime destination for these industries.
Bringing in loans and foreign direct investments: During the visit of Chinese President Xi Jinping in October 2016, 34 Memorandums of Understanding had been signed between Bangladesh and China, worth $13.6 billion, in trade and investment. In addition, $20 billion worth of loan agreements have been carried out by both governments. These investments will welcome future FDIs that will most definitely help BD economy to get bigger. Apart from the ADB and the World Bank, newly-established AIIB (Asian Infrastructure Investment Bank) could become a major source of foreign loans for infrastructural development in Bangladesh.
BCIM (Bangladesh-China-India-Myanmar) economic corridor: Bangladesh is centrally situated in the BCIM corridor which provides export opportunity for Bangladeshi products. Bangladesh has already requested duty-free access of 22 Bangladeshi products, which, if granted, will help to substantially decrease the trade deficit of the country. Bangladesh also occupies a strategic position along the Maritime Silk Road (MSR) with its Chittagong port as a major maritime hub through the Indian Ocean, and it will be more so once the Chinese Special Economic Zone in Chittagong becomes operational in a few years’ time.
China’s One Belt One Road Initiative offers a huge opportunity for countries to stimulate economic growth through massive infrastructure development, which in turn will enable greater flows of trade across borders. Bangladesh with its unique geopolitical position between China and India stands to gain.