Rising together: India, China and Bangladesh

Ashfaqur Rahman

PHOTO: AFP

It may surprise many that we are trying to simulate a growth scenario in the 21st century with two giants (India and China) and a minnow (Bangladesh). Between China and India they command more than 20% of the world GDP. Their combined population is more than 2.6 billion which is 35% of the total population of the world. With the economic rise of these two giant nations, education, skills, innovations of the world are slowly tilting towards this great arc of growth in South and East Asia.

Bangladesh with the size of a small province of China sits like a small door knob between these two countries who are like two large panels of a single door. With a population of 160 million and one of the most fertile piece of agricultural land that produces three to four crops a year, the country has the possibility with the other two giants to unlock further the economic prospects of the people of this large region. The Himalaya mountains, which stitches the two giants and keeps Bangladesh in place is also the last 'frontier' which remains unexploited by man. Time is now ripe to consider a change of policy as well as formulate a growth strategy that can look at this huge sweep of land as one economic block.

It would be appropriate therefore to consider first the challenges and the opportunities that exist, if we consider the possibility of these three countries rising together.

Let us first begin with some comparisons between India and China. We all know that what China is today in manufacturing, India is to services. An important yardstick to measure prosperity is a country's ability to manufacture goods for its own consumption and for exports. In this respect China is a master and has achieved the expected yardstick.

She has built world class infrastructure like roads, ports, airports and energy supply systems to attract domestic and foreign investments for industrial growth. She invests her savings which is equal to 40% of her GDP and attracts $100 billion or more in foreign investment each year for industrial growth. She has acquired technology, managerial expertise and factories on an unbelievable scale.

Contrast this to today's India which saves just over 24% of her GDP and diverts them to industries and services. With an antiquated physical infrastructure she can attract not more than $3 billion a year in foreign investment. The comparisons do not end here.

Other indicators of modernization are many that tell the remaining story. They are:

1. Percentage of population with access to improved water supply.

2. Percentage of urban population with access to improved sanitation.

On these two counts, though India is better than China but the latter is improving them at a faster rate than India.

The next comparison could be on
1. Number of internet users
2. Number of cell phone users

In spite of India being in the forefront of the Information Technology boom, she lags behind China on both these aspects. India has only 81 million internet users while China has 420 million (2010). The number of cell phone users in India are 706 million while the number of cell phone subscribers in China are 833 million. A striking difference is in the number of broad band users. China has 364 million people using broadband today while India has only 10.5 million.

To give another comparison between India and China, we can say that China attracts more than 100 million tourists each year, while India with its ancient history and culture and 21 languages can attract only 3 million visitors. Tourism is seven times the size of Information Technology or Software industry in terms of income generation.

A final but not conclusive comparison between India and China is about education of youth. China has been able to give more than 99% of her children a nine year education which allows a high level of literacy. India has now given 65% or more of its 1.3 billion population a nine year education.

One may well ask how Bangladesh with a comparative smaller population, inadequate infrastructure, poorly skilled population and even poorer governance hope to team up with China and India in its quest to rise together. The issue here is less of comparisons and more of a vision which raises some strategic questions that can lead to some startling results.

First, can China and India which are Asia's biggest rivals join hands to transform their countries into prosperous nations? Second, will China allow the peaceful growth of India? Third, can Bangladesh hope to work amicably with India and encourage China to build synergies with India? Can Bangladesh jump on the wings of these two giants and rise with them? What should be the strategy for all this to happen? These questions need to be answered before this grand vision can be materialized.

There is no doubt that if all the three countries forgo their past policy of rivalry then pragmatic answers can be found to use available resources for faster growth.

Let us consider the synergies that each of the three countries can create for each other.

China and India share the great Himalaya mountains along with a few small neighbors. These mountain ranges house great potentials in generating hydroelectricity. India, China and Bangladesh all have huge energy needs for industrialization and growth. Instead of scouring the world for thermal energy they can invest in hydroelectric projects in the vicinity of the Himalayas. For this to happen, India and China must make a major shift of policy and agree to be strategic partners instead of strategic competitors. As a result they can produce clean, safe and sufficient energy for their own growth.

All the three countries are vulnerable to oil supply disruptions. Such collaboration will allow each of the countries to have unlimited energy supply at low costs.

The second synergy among the three countries is sharing the waters of common rivers flowing through them for agriculture and industries. The runoff from the Himalayas has created major river systems which flow through both India and Bangladesh. The Ganges with its tributaries is one such river system.

The other major river system is the Brahmaputra which originates in China and then flows through India and Bangladesh. The only rational way to harness the flow of these rivers is to switch to development of the entire river basins instead of piecemeal diversion of water by each country to suit its national needs. The sharing of the waters of entire basins on an equitable basis can bring benefit to all.

Another synergy that is available to the three countries is their proximity to innumerable markets. Each of these three countries have huge consumer bases for manufactured products and they have ready markets in close proximity. Due to historical reasons, each country had sought markets for their products in other continents. In the future, close economic collaboration can lead to marketing of huge quantity of their products in each others country at a much lower cost. All the three countries can target each others markets to sell their diversified products.

Last but not the least, all the three countries have enormous human resources. India, China and Bangladesh have large populations who are young and resourceful. With education this huge pool of labor can be effectively used to manufacture value added products cheaply. China because of its competitively priced labor has become the factory of the world. Tomorrow for the same reason this huge arc in South and East Asia would be known not only for manufacturing but also for services around the world.

Due to the presence of such large populations the area can also be a giant incubator for great ideas which could lead to inventions. Three great civilizations inhabit these three countries. It is only natural that there would be great intellectual fermentation in this area that can lead to scientific discoveries on a large scale.

But let us not forget that there are also important disconnect between and among these three countries. There is asymmetrical economic development between India and China. Bangladesh has much to do to catch up with India and China. There are no direct road or train links among the three countries. In all the three countries there is intense competition to market similar products. Productivity of labor in China is higher than in India and Bangladesh. India however has a head-start over China and Bangladesh in IT and services sector.

The biggest disconnect remains in policy matters between India and China. They have border disputes which also needs amicable resolution before any such vision can be shared. So is the case between Bangladesh and India. There are outstanding bilateral issues that need to be resolved first.

In the ultimate analysis, the positives out-weigh the negatives on the matter of economic cooperation among the three countries. However nothing significant is going to take place soon. It would be far into the future before anything concrete along such lines would start happening. Yet the vision remains and hope lingers.

Ashfaqur Rahman is a former Ambassador and Chairman of the Centre for Foreign Affairs Studies.