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Millennium Post

Dragon changes regional gears

There has occurred a perceptible shift in Chinese investment patterns in South Asia: China’s focus is now more on Bangladesh, following recent signs of a certain distancing between Myanmar and its dominating northern neighbour.

The Chinese firm Poly Technologies group has offered to invest $2.4 billion to help build the 6.1 km long new rail-cum-road Padma bridge in Bangladesh. It is one of the biggest infrastructural projects in the region. According to Dhaka media reports, the Chinese favour the BOT principle for the project and have a keen interest in other major projects in Bangladesh as well.

This stands in stark contrast to the recent setbacks in China’s relationship with the new ruling dispensation in Myanmar. The new government scrapped. The major multibillion billion power generating and dam building project at Myitsone in Kachin territory on environmental and other grounds. The Chinese who had plans to use the bulk of the 6,000 MW of power proposed to be generated for their domestic consumption, had good reasons to be miffed – especially after their proposal for fresh talks on the matter was not accepted. But Myanmar authorities could not ride roughshod over local resentments over the project which would have put in jeopardy the future of the river Irrawady. Burmese protestors significantly drew attention to the alarming condition of most rivers in China and the high levels of industrial pollution prevailing in the country. 

Apparently, the Chinese obviously do not believe in letting the grass grow under their feet in the sphere of bilateral relations. Retribution followed swiftly for Myanmar, as the Chinese suddenly imposed fresh levies and duties on certain Burmese goods in their border trade sector. This hurt Myanmar producers economically.  The Chinese have now begun to sell sophisticated weaponry to alienated warring border tribes that have been battling Myanmar authorities for ages. As it is, the writ of the Myanmar government runs tenuously in its border areas. With the ethnic rebels acquiring modern arms, the country’s army will understandably be more reluctant than before to engage in battle against the insurgents.

Relations between the Chinese and Myanmar were very warm when the latter was under army rule, reeling under sanctions from the US-led West. China was the only country which talked to and did business, with Myanmar army top brass. However, Myanmar also had to pay a heavy price for its critical dependence on its bigger northern neighbour. The Chinese did not employ local labour in the projects they undertook, whether in the mining, timber or other sectors. They brought no new technology. Worse, they used up local resources ruthlessly and damaged the environment, causing much local resentment.

Under the new elected dispensation, conditions are now vastly different. The EU countries, along with Asian countries like Japan, Thailand and India are showing more interest in a ‘free democratic Myanmar’ and investing in a large way. Even the US lifted its sanctions partially as the US president visited Myanmar, after a gap of several decades. The Chinese, not wishing to be caught in a contrarian mode, welcomed the economic liberalisation guardedly. At the same time, they did not hide their concern as to whether Myanmar, mired in its economic backwardness, was ready to face the new complex challenges and problems that would impact their economy and culture. With the new liberal dispensation not yet able to settle the problem of the Rohingyas and the Kachin insurgency, it cannot be said that the Chinese concern was totally misplaced.

Bangladesh is a different matter altogether. The construction of the new Padma bridge is a matter of national pride. Initially the World Bank had agreed to provide $1.2 billion out of the proposed cost of $2.9 billion. However, a controversy regarding the alleged corruption of certain Ministers and officials associated with the project induced a change of mind among WB authorities. Later, Bangladesh itself withdrew its request for funding. Prime Minister Sheikh Hasina sought help from India, Malaysia and China, among others. She was determined to build the bridge with the country’s own resources, in view of its importance. The Bangladesh had allotted 68.52 billion taka ($88 billion) for the work in its budget 2013-2014. Latest information from Dhaka suggests that Bangladesh Government favours going through a world tender process before finalising its partner for the bridge building project.

Finance Minister A M A Muhith told newsmen that since there had earlier arisen a charge of corruption in the matter, going through a fresh tender process was now ‘basic’ for the government. Meanwhile, Russia too had offered its help for the construction of the rail-cum-road bridge.  With the Chinese stepping in to help, the financial situation has brightened considerably for Bangladesh. Not only this, China is also interested in building an elevated highway linking Dhaka with Chittagong. Dhaka is examining the proposal.  China is helping other sectors of Bangladesh economy. Chinese firms are setting up garments producing units, having purchased three plots near Dhaka recently. It makes economic sense. While it costs around $180-200 by way of average monthly salary for a worker in China, it comes to $100-120 in Viet Nam and Laos, and only $80-100 in Bangladesh.

Bangladesh is also an important regional buyer of Chinese arms and weaponry. Especially under the BNP rule, China had been the closest friends of Bangladesh, as then Prime Minister Khaleda Zia sought to cultivate the country as an effective counterweight to India. It has helped build Bangladesh upgrade its Port facilities in return for special operating rights for itself. The relationship has been symbiotic. Some analysts feel that with its’ string of pearls’ concept, China seeks to surround India with its firm foothold in most countries in South Asia and its immediate neighbourhood. The objective is to remind every country that as the bigger, more powerful country in the region China cannot be ignored despite the presence of India.

Until recently, Myanmar was almost totally under the domination of China. Now things have changed, but the Chinese still remain overwhelmingly strong in terms of their presence, reach and investments there. As for now, the temporary setbacks in Myanmar can be more than compensated/balanced by adopting closer economic ties with Bangladesh. In any case Prime Minister Sheikh Hasina, diplomatically struggling with a hostile US-led consortium of Western countries, would have good reason to welcome such unexpected help in the economic sphere from China. Coupled with her time-tested close ties with India, this can only consolidate her position as a power, sovereign regional leader.

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