Sino-Bangladesh aid profile: Promoting economic development
China, however, emerged out of foreign occupation and exploitation, and years of massive internal strifes and class-war as a people's republic in 1949 but was denied a seat in the United Nations Organisation for more than two decades. But this land of sorrows, sufferings, famines and floods with the world's largest population steeped in poverty and illiteracy made its entry into the field of international aid in 1954, and gradually widened its sphere and extent in Asia, Africa and Latin America.
After the Bandung Conference of 1955 in which China supported the anti-imperialist united front of Afro-Asian states, it looked for progressive forces in the ruling national bourgeoisie to whom economic aid could be extended; and it became clear that Chinese aid might go to non-capitalist sympathetic developing countries. Egypt became the first recipient of $4 million as donation, following the Anglo-French attack on the Suez in 1956. Between 1956-60, Myanmar, Cambodia, Indonesia, Nepal, Sri Lanka, Algeria and Yemen received Chinese assistance.
For all latest news, follow The Daily Star's Google News channel. During 1960's China continued its policy of selectively extending aid to sympathetic governments when they came to power, and cutting it off when such governments toppled, and this policy continued. Project loans to Ghana extended in 1961 were terminated in 1966 when Nkrumah fell from power. In Indonesia, all projects were halted after the military coup of 1965. A similar pattern was evident in Uganda, Mali, Congo and Chile. It was claimed in anti-Chinese forum that this aid was directed primarily toward the development of the revolutionary potentials of the recipients. In reply, Chinese press said that aid from USA and other sources were "tricks and plunder and sugar-coated poisonous pills". (Cohen, Alan, ed. "The Dynamics of Foreign relations," p.6).
In the 1970's, Chinese aid spread to a large number of countries including the sub-Sahara region. And of the total Chinese aid, 48 per cent went to Africa, 32 per cent to Asia, 13.2 per cent to the Middle East, and 4.8 per cent to Latin America. Chinese aid reached Iraq, Sudan, Somalia, Ethiopia and a lot of African countries. Between 1963-74, Pakistan got disbursement of $350 million.
The Chinese foreign-aid policy-document was released to the world press by Chou-en-Lai in a speech in Mali in 1964, laying down the principles on economic and technical assistance which have still continued as the cornerstone of its aid policy.
Most of the aid is project-oriented, and repayable in local currency or in commodities and closely related to trade. From the balance of payment position, this aspect is highly attractive to both parties. Since 1960, China gradually adopted a policy of low interest-free loans with 10 years grace period, repayable in 10 years which was undoubtedly more development-conducive.
Besides, Chinese specialists working in the recipient countries are markedly less expensive than others. To buy an expert out of a grant from China is decidedly a less costly deal. By mid 1960's, Chinese aid totalled over one billion US dollar, 87 per cent of which went to non-socialist countries mostly in Asia. China concentrated in small light industrial projects, the main advantage of which was that they could be put into operation quickly and their immediate effect could be seen.
It was in 1958 that Mao stressed that steel and machinery constituted the foundation of Chinese industrialisation, the material basis for agricultural modernisation, the basis for technological transformation of the economy. He clearly visualised the role of machine-building in the development of the country's underdeveloped economy in providing capital goods for other industries and as a major factor in productivity. Under Mao's direction, the Chinese focussed certain elements such as demand and supply, import and export, growth rate in gross and net-output value, input output relationship, changes in output composition, limitation of capital resources and technology, sources of constraints, ratio of domestic production to total demand, resource allocation, growth of output compared with inputs in labour and capital, growth of technical manpower etc.
The ministry of machine building set up in 1959 had a lot of functional departments. There were the Production Control Bureaus each having major areas of production supervision. In China, basic industrial trades have been grouped into 254 sections which are then assigned to 21 broad industrial departments. The statistical and planning systems were mostly imported from Russia. It is worthwhile to note that in China there are eight ministries in charge of machine building, each having distinct responsibility. A lot of products are undertaken by the non-machinery ministries also.
China joined UNESCO in 1974 and contributed small amounts to UNDP and UNICEF. China did not join the World Bank and FAO. In 1973, the socialist countries including China established a Development Aid Fund to be administered by an International Investment Bank, which started operation in 1976. The fund was to make loan with 15-year maturities and low interest to non-communist countries. Socialist countries maintained an unfavourable balance of trade with LDCs, because they followed the buying policy more from young nations that were short of currency and had a few markets for their products.
The main features of the principles are that the Chinese government
- Consistently abides by the principle of equality and mutual benefit;
- Strictly respects sovereignty of recipient countries, and attaches no condition or asks for any privilege;
- Provides economic assistance by giving interest-free or low-interest loans, and extends the limit for repayment to avoid burden of the recipient countries;
- Provides the best-quality equipment and material of its own manufacture at international market-price, and undertakes to replace these if found qualitatively inferior to agreed specification;
- The project selected are such that the recipient country gets quick results and income;
- In the case of technical assistance, the principle is to ensure that the recipient country gets the fullest measure of the intended benefit;
- Chinese experts for construction have the same standard of living as that of the recipient countries.
These remarkable principles apart, Chinese aid has been used to help trade. Loans can be repaid by host-country products or currency. China is not technologically very advanced and as such the wide range of Chinese goods are not competitive with the products of LDCs. As Larkin puts it, "In large measure China's aims appear to be simply those of normal commerce." (Larkin, Bruce, A, China and Africa 1949-1970, p. 106).
China emphasises self-reliance, agricultural and industrial balance and infrastructure model from its own experience, and allows consessional terms of loan (interest free or low-interest, repayable in 10-30 years, grant element about 85%, grace period 5-15 years) especially attuned to the needs of the recipient. It is apparent, within its own limited technological and resources capability, China has done the best in the economic aid and is particularly interested in bilateral aid based on its aid principles.
The Chinese economy as it stands in the 2004 edition of the Economist Pocket World in figures is as under: population 1285m, GDP $1159bn, average annual growth in real GDP 1991-2001 9.8%, adult literacy 84.7%, urban population 36.7%. Such an economy can now afford a far higher quantum of economic aid than that of the 1970's and there after. China is no longer holding on to its tough-line initial approach which created division in the party high-up. Among communist countries there is a wide variety of foreign and domestic policy-approaches, indicating the non-monolithic character of their doctrine.
Very recently the Prime Minister of Bangladesh and the Prime Minister of China entered upon several bilateral agreements of co-operative development assistance, e.g. in respect of peaceful use of nuclear energy for medicine, electricity generation etc, in sewerage, tourism, water treatment and a few other projects. It is heartening that China agreed to give duty-free excess for many more Bangladeshi items, and also to extend assistance for our export capacity building. It was very nice of China to grant scholarships and core assistance for our human development. In a gesture of courtesy, the Prime Minister of Bangladesh offered to China an exclusive export-processing zone.
We may mention a strategic policy followed by China in international fairs. China sends a huge lot of technical and technological experts and scientists to such fairs. They very closely observe the machinery and tools etc. presented in the fair and take necessary notes thereof. When the fair starts winding up, China buys machineries and technological gadgets and instruments at a very low price for use in China. This strategy has helped China imitate a lot of advances made and presented by participating countries in international fairs. We may emulate the same strategy.
Viewed in light of what we have said regarding our bilateral relationship with China and the strategy of Chinese industrial and economic aid policy we are confident that China will do its best to fulfil all commitments, and promote our economic development with utmost expedition and thereby strengthen the tie of fraternity between the two peoples.