Bangladesh can benefit enormously from the China-led 'One Belt, One Road' (OBOR) project as the country is located at the centre-point of the project. Chinese President Xi Jinping recently presided over a summit of the heads of the government of Asian and African countries and others in Beijing. Though the project was launched a few years back, it was for the first time that the leaders of the would-be beneficiary countries gathered under the very leadership of the country which promoted the idea of connecting them, specially the emerging economies, through a network of roads and sea lanes.
The OBOR project comprises the ancient Silk Road that once connected the western part of China with Europe through an overland road network. For many years, the ancient Silk Road was the main trading route between China and Europe and also between Europe and India. The OBOR project now intends to revive the old Silk Road, albeit, differently. Already China has revived a great part of that road extending the same from the Chinese western border to Pakistan.
With the Chinese help, Pakistan has constructed its first sea port in Gwadar. It is on the Arabian Sea in the province of Baluchistan. But the port remained unused for years because of non-connectivity by road between China and Pakistan. Now China has undertaken a big project under the CPEC (China-Pakistan Economic Corridor) scheme to connect the Chinese western part with the Gwadar port by road and the project is about to be completed. Pakistan is providing land and security. The country is seeing a big prospect in trade and investment from the project once the port becomes operational. While Pakistan was on the verge of going bankrupt even a few years back, it has now started getting benefit from the OBOR project. A massive US$ 46 billion Chinese investment in Pakistan's power and infrastructures has helped its economy grow at more than 4.5 per cent per annum.
Bangladesh is also under the OBOR project and is receiving a substantial amount of investment from China in power and infrastructural projects. Chinese investment in Bangladesh is already visible and it will be more so once the Chinese Special Economic Zone at Chittagong becomes operational in a few years' time. The Chinese Ambassador in Bangladesh has recently pointed out that his country has already become the number one foreign investor in Bangladesh, leaving the USA behind.
The Chinese investment topped the list with the acquisition of US oil-gas company Chevron's Bangladesh's assets. The company is operating three gas fields in Bangladesh under the production-sharing contract and accounted for supplying 60 per cent of the gas supply in the country now.
China has a will and capability to help Bangladesh attain a higher growth rate beyond 7.0 per cent per annum. Beijing has already proposed a free trade agreement (FTA) with Bangladesh, which the latter is yet to respond.
Many emerging countries of Asia and Africa have already inked free trade deals of one type or the other with China. But Bangladesh is taking an extra time in moving toward that direction. The Chinese economy is the number two in the world, with that of the US being the number one, but the gap between these two economies is narrowing fast. Trade experts have already made a forecast that even before 2030, China will overtake the US economy in size. Chinese currency Yuan has already attained the status of the reserve currency with its inclusion in the IMF's basket of currencies known as the Special Drawing Rights (SDRs).
The Chinese military has also started flexing its muscle - as in the South China Sea region. Many allies of the US, including the Philippines, are now seriously coveting the friendship of China. Bangladesh is small both territorially and economically. But it has the prospect to grow by linking itself with the global system. The Chinese offer of signing a FTA with it is a great opportunity for Bangladesh to bind itself firmly with the world's second largest economy.
Bangladesh should also look for having more of FTAs with other countries. This will encourage the rich Bangladeshis to keep their capital in the country and also attract foreign investors to have a stake in the Bangladesh economy. Whatever good Bangladesh is doing might be slowed down with the fall in inflow of remittances and the falling growth rate of exports. Bangladesh should see how it can align its economy with other economies of which the Chinese one can be a better option.
China has already committed $ 124 billion for the OBOR project and more will be coming if all member-countries start implementing development projects under it. We do not see even in distant history whether any other country had offered so much so liberally to the emerging and developing countries of the world.
The writer is Professor of Economics University of Dhaka.