By YASIR HABIB KHAN
SINCE South Asian Association for Regional Cooperation (SAARC) and Association of Southeast Asian Nations (ASEAN) countries are becoming the largest recipients of economic leverage unleashed by China over the last few years, a flurry of financial, trade, and infrastructure fortunes pour in both regions. This augurs well for South Asia (SA) and South East Asia (SEA) to channelize their development growth and blossom into leading economies of the world.
Judging their upswing progress trajectory, international monetary and financial institutions label both SA and SEA as fastest-expanding economies giving credit to China' deepening market-oriented footprint in these regions. Internationally known credit rating agency Moody's has to say that Belt and Road Initiative begets more positive than negative effects both for China and the recipient countries.
Some years ago, SAARC and ASEAN countries were underperforming, economically cash-strapped, financially poor with sketchy trade, communication, and IT infrastructure. In an unsavory situation, it seemed like a lost cause to divert investment and resources to these feeble countries.
The West made a mockery of China for selecting the area for extensive business joint ventures and huge investments. Shrugging off qualms and negative propaganda, China teamed up with them to grow mutually, sharing a bonanza of incredible success.
In order to rejuvenate ASEAN, China has increased flow of foreign direct investment (FDI) into the region. The U.S., Japan, and Europe have historically sunk in a massive chunk of FDI into ASEAN, but China has now changed the equation.
United Overseas Bank (M) Bhd believes that stock of FDI accumulation in ASEAN has been swelling at the rate of 15 percent. It is expected that FDI flows into ASEAN will gain further momentum and will triple to US $5.2 trillion in 2030, from estimates of US $1.8 trillion in 2015. The implementation of the ASEAN Economic Community is also a step toward the closer cooperation among ASEAN economies.
China-driven growth has been ushering in an economic boom in ASEAN members. Growth rates of more than six percent reflect the pace of development in the Philippines and Vietnam. The World Economic Forum foresees that with a combined population density of more than 620 million and economic size of US $2.6 trillion, the region has full potential to be the world's fifth largest economy till 2020.
China's epic Belt & Road Initiative is proving to be the icing on the cake in the robust growth of ASEAN. Projects of a new high-speed rail line that runs from southern China through Laos to Thailand's industrial east coast, along with rail projects in Laos, Indonesia, and Thailand will catalyze regional integration and progress.
Similarly being a beneficiary of China-led investment and infrastructure projects, SAARC countries are gearing up to be new driving engines for global economic growth in South Asia. China's investments in South Asian countries, including Sri Lanka, Pakistan, India and others have been climbing to more than US $12.29 billion and regional trade jumped to over US $111 billion. China, the largest lender to Sri Lanka also pumped over US $7 billion in the island nation.
Pakistan's trade volume with China has amounted to more than US $15 billion during the last fiscal year and it has potential to grow to US $45 billion – only one percent of China's total trade – through connecting underdeveloped regions with the ongoing China-Pakistan economic corridor.
With US $10 billion in total trade volume between China and Nepal, business activities are increasing at a rate of 39 percent per annum. Business is expected to get a boost from the new policy outlook of the ambitious Belt and Road Initiative and its associated investment in infrastructure. During the March 2017 post-earthquake investment summit in Kathmandu, representatives of 89 Chinese firms participated – the largest delegation of all – and committed US $8.3 billion in investments to different sectors. Beijing-based Asian Infrastructure Investment Bank (AIIB) also announced at the summit that Nepal would receive loans from the Bank starting in 2018.
China now is the biggest trading partner of Bangladesh. Chinese companies' engineering, procurement, and construction contract volume in the first 10 months of 2017 increased 24.1 percent year-on-year to US $6.4 billion. As announced on the Belt and Road Forum for International Cooperation held in May 2017, China will host the first China International Import Expo (CIIE) in Shanghai in November 2018. It is estimated that 150,000 professional buyers will come to attend the CIIE. Bangladeshi enterprises are more than welcome to attend the CIIE and share the benefits brought about by China's economic growth.
China's long term investment commitment towards South Asia and ASEAN is highly likely to benefit from tremendous economic advantages for the recipient countries. The region's connectivity to the rest of the world will be vastly broadened, on the back of planned major infrastructure projects. This, together with the spread of Chinese companies' regional clout in SAARC and ASEAN will bring into being enormous employment opportunities for the latter. More importantly, both regions will have access to much needed financing and expertise which were previously deficient.
To top it all, China's economic growth vibes will help both SAARC and ASEAN to be self-reliant financially, economically, and improve living standards of people by heralding a new era of shared prosperity, peace, and progress.
YASIR HABIB KHAN is a senior journalist writing about the economy, diplomacy, international relations, governance, and environment. He is a fellow of the International Center for Journalist (ICFJ).