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Our relations with China: Unexplored potential

Syed Munir Khasru
EXTERNAL aid forms about 50% of ADP of Bangladesh, constituting more than 2% of GDP, leading to strong presence of donors in the country. A significant portion of the aid goes to the health, education, infrastructure,
and social sectors. We need further and diversified support that will accelerate growth, since about half the population is still stricken by poverty, with nearly one-third underemployed. If we do need further help, then from whom should we seek it?
In our own region, we have a miracle story about a country with a long history and tradition, facing many of the same problems which we are facing now, if not more: poverty, surplus labour, overpopulation, backward agriculture, lack of food security, natural disasters, weak industrial base etc. The miracle lies in the fact that in just over 2 decades not only were these problems mitigated, but the country also became one of the largest and most robust and resilient economies in the world. It is the People’s Republic of China that we are talking about, the third largest economy after US and Japan, with a nominal GDP of $4.3 trillion (2008) when measured in exchange-rate terms.
China has been the fastest-growing nation for the past quarter of a century with an average annual GDP growth rate above 10%. Major reforms which began in the 1980s enabled hundreds of millions to be lifted out of poverty, which went down from 53% in 1981 to 2.5% in 2005, nearly 20-fold decrease, an achievement unmatched in poverty alleviation. Infant mortality rate fell by 39.5% between 1990 and 2005, and maternal mortality by 41.1%. Access to telephone rose by 94-fold, to 57.1%. At the same time, China invested heavily on developing its human capital, an integral part of a modern economy. The student population in higher learning has doubled in a very short period and is one of the largest in the world.
China is a close ally of Bangladesh, offering infrastructural support, technical assistance, financial aid, military assistance and other forms of aid. In 2005,
China emerged as the number one import source for Bangladesh, overtaking India for the first time. By 2008, China-Bangladesh trade volume reached over $4.68 billion.
On the diplomatic front, 2005 was declared a "China- Bangladesh Friendship Year," marking the 30th anniversary of diplomatic relations. A firm believer in the one China policy, Bangladesh can gain much from this relationship. Since China rose rapidly from a situation not much different from our current predicament, it is of paramount importance that we effectively learn from the Chinese experience of reform and economic development.
In agriculture, there is much room to collaborate, considering that China is highly acclaimed for its ability to feed its growing population despite limited natural resources. Given China's strong agricultural research base, Bangladesh can benefit by developing a mechanism whereby we can tap into their research programs to transfer relevant learning to Bangladesh.
China can also help develop our human resource by offering increased technical support. It has numerous high powered, strong, and active policy research institutions that help the government in key decision making. Such institutions can help Bangladesh develop its capacity to effectively formulate, evaluate, and monitor policies. This will help us deal effectively with exogenous shocks like natural calami-ties or financial crisis.
Historically, Bangladesh has not performed well in trade negotiations --either multilateral or bilateral. The Chinese have proved themselves to be some of the smartest trade negotiators, who have successfully worked out trade deals that have propelled domestic production and benefited overseas consumers. Particularly, Chinese experience in effectively negotiating FTAs with countries like Australia and New Zealand can provide helpful insights to our policymakers as the South Asian regional trade still has much to achieve when compared to other trade regimes.
Re-branding is another area where Bangladesh can learn from China. For example, China has been quite often cited as one of the major polluters of the environment. China has re-branded itself as an environmentally proactive nation by enlisting with the Kyoto Protocol. By adopting the Kyoto Protocol, China has developed the image of an environment-friendly economy, which in turn has increased acceptability of products exported from China.
Similar lessons from China can be taken on re positioning with respect to the RMG sector. While Bangladesh mostly continues to cater to low-end products in the international market, China has increasingly shifted towards catering to high-end products, enjoying increased profitability. Our RMG entrepreneurs, instead of asking for cash subsidy while underpaying the work-
ers, can learn much by analysing the value additive strategies of RMG sector entrepreneurs of China.
China has successfully implemented a well thought out strategy of making large investments in its public infrastructure, which has led to greater output, more private investments, and higher employment.
In view of the recent emphasis of the Bangladesh government on using public-private partnership to spur economic growth, the role of the Chinese public sector in this regard can provide useful leads.
The Chinese economy also has substantially benefited by the manufacturing sector, which is backed up by an endogenous culture that supports reverse engineering -- thereby making China the largest exporter of electronic appliances.
While there is a tendency to emulate the Western models of economic development, countries like China and South Korea provide better examples to learn from. Because of greater commonality in the social, economic, and cultural arenas, chances are better that learning from such experience of industrial growth and economic development would not only be more relevant but also more rewarding for Bangladesh. Cooperation with China needs to be exploited further to the mutual advantage of both the countries.
Syed Munir Khasru is a Professor at the Institute of Business Administration (IBA). University of Dhaka.