The initiative gives us a timely opportunity to integrate with international markets
One Belt One Road (OBOR) has spurred much speculation among scholars and policy-makers around the world. In fact, many have dubbed it as China’s own “Marshall Plan.”
There is no doubt, however, that OBOR is indeed a game-changing initiative. It is the biggest initiative of its kind taken by any single nation in recorded human history, and, if implemented properly, could change the geo-political landscape of Eurasia to China’s favour.
OBOR was unveiled in 2013 by the Chinese government with an aim to connect the Eurasian landmass with the Chinese mainland. OBOR is basically an umbrella initiative of several infrastructural mega-projects to revive the ancient Silk Road, comprising two trade routes and six trade corridors.
An underlying aim of the initiative is to introduce Renminbi as a currency of international transactions as well as strategically channel Chinese foreign reserves to develop the infrastructures of Asian countries.
It seeks to reduce dependency on the US by creating new markets for Chinese products.
Under the initiative, China will build roads, airports, and sea-ports to integrate the developing and under-developed countries closely with the Chinese economy to fulfill its growing demands of raw materials and capital.
An opportunity for Bangladesh
Bangladesh officially became part of OBOR in 2016 after a visit by Chinese president Xi Jinping when the two countries signed several deals worth $21.5 billion.
However, some reports say that all these deals are still in paper only due to bureaucratic complexities.
Nevertheless, Bangladesh is part of the proposed Bangladesh-China-India-Myanmar corridor (BCIM), one of the six corridors of OBOR.
China plans to invest up to $4tn in OBOR-related projects in the next couple of decades. With proper policy co-ordination, Bangladesh can attract a large chunk of that investment
China has already shown interest in developing a deep sea-port in Bangladesh under the 21st century maritime Silk Road initiative. Memoranda of Understanding (MOU) have also been signed with China to build several components of the Pyra deep sea-port.
Geographically, Bangladesh can be a connecting corridor between semi-industrialised ASEAN countries and the highly populated Indian sub-continent. It is strategically located between South Asia and South-East Asia which makes it a very important player in trans-regional integration.
Bangladesh has the potential to leverage its geographical advantage through this initiative.
China plans to invest up to $4tn in OBOR-related projects in the next couple of decades. With proper policy co-ordination, Bangladesh can attract a large chunk of that investment.
The Chinese economy is transforming on a fundamental level.
The country is moving away from low-tech industries to high-tech ones.
Beijing is seeking to export its surplus industrial capacity abroad for the smooth transition into a developed economy.
As such, China is looking for cheap labour and highly productive economies for long-term investment. A large population, coupled with our advantageous geographical position, thus makes Bangladesh a perfect candidate for that.
But several challenges lie ahead for us.
First, we do not have a well-functioning financial system to absorb such large amounts of investment. Large-scale loans might harm macro-economic stability.
Corruption, policy deficits, and lack of transparency are also matters of concern.
Second, Sino-Indian rivalry might jeopardise Bangladesh’s prospects. India has already boycotted OBOR over Chinese involvement in the China Pakistan economic Corridor (CPEC), which, according to India, violates its sovereignty.
Along with Japan, India has expressed its intention to resist OBOR. Given India’s clout in South Asia, it can seriously delay or disrupt OBOR related projects in the region.
Though Bangladesh has already thrown its support behind China’s grand plan, without India’s tacit endorsement, it would be difficult for Bangladesh to reap the full benefits of OBOR.
Third, China is seeking to convert a part of its “soft loans” pledged to Bangladesh into commercial credits.
If disbursed as commercial credits instead of a government-to-government basis (G2G), the loans could be very expensive for us and could cause a long term debt crisis.
Both India and China are important partners for Bangladesh, and favouring one over the other could get in the way of Bangladesh’s national interests. Thus, we have to act with utmost caution, while all economic issues must be kept out of political considerations.
At the same time, Dhaka should develop a strategy to secure its interests vis-à-vis India and China.
As an independent country, Bangladesh must assert its sovereign right to build rapport with the outside world without external interference.
OBOR is offering an opportunity for Bangladesh to integrate with the international market. Bangladesh must embrace reforms in economic and policy aspects in order to successfully achieve the objectives of OBOR.
Rubiat Saimum a freelance contributor.