Westward growth

  • As Xi begins next five years as leader of China, neighbours should benefit from flagship BRI

Oct 18, 2017-

Top leaders of the Communist Party of China (CPC) are set to begin their once-in-five-years congress today in Beijing. Not only will Xi Jinping continue as CPC chairman for the next half a decade, he is also set to further strengthen his leadership. By all measure, this will give him greater power to mould China, both domestically and globally.

Xi’s first tenure as Chinese president has set strong economic imperatives that will have a huge impact on his foreign policy conduct. Analysts are already mentioning how this congress will be the first one in Chinese history that will hold extensive discussions on global and foreign policy isssues. Formally started in his two landmark speeches in 2013, Xi is expected to project the Belt and Road Initiative as his key foreign policy architecture.

In 1978, Deng Xiaoping had routed out hard-line communists from leadership to steer the country towards a more open economy. Deng’s Special Economic Zone approach helped the southeast coastal areas--Guangdong, Fujian and Xiamen--become manufacturing hubs with facilities to ship abroad what they made from cheap labour. By the 1990s the coastal provinces had become the engine to drive economic growth all over China. This model was gradually replicated elsewhere. However, the inland provinces--such as Xinjiang, Gansu, Tibet and Ningxia--still lag way behind the richer coastal states.

One driving force behind the BRI is to create wealth in the inland provinces. This is where BRI countries could become potential beneficiaries. The project, whose “Belt” component connects Central Asia and Europe to China’s inland western provinces, aims to establish new value chains through ambitious road and rail networks. If all goes well, Nepal’s Rasuwagadhi will be linked to the Chinese railway point Chherung by 2020.

Already, China has developed a state-of-the-art dry port in Lanzhou, the capital of Gansu, which has railway connection with Tibet. Through a network of roads and railways, shipments received from an eastern coastal Chinese ports and trade with China will be much easier. In the long run, this could potentially develop Nepal into a bridge between the world’s largest production factory to new markets in South Asia, home to 1.7 billion people. New South Asian production hubs could come into being as labour becomes more expensive in China.

While greater connectivity will greatly contribute to Nepal’s overseas trade, the ambitous infrastructure development will also have multiplier effects. The influx of Chinese tourists into Nepal (already on the upswing with 14 percent growth between the first half of this year and the last) is bound to rise with cheaper connectivity.

Still, there’s a naïve thought, especially among Nepal’s political leaders, that development will happen by itself. While China’s investment will greatly exact positive change in terms of trade and connectivity, political stability and good governance will remain key to Nepal’s development. Still, we should be realistic: Even if we are to achieve a high and steady growth rate for years, it will be some time before we catch up to even our own South Asian neighbours, such Bhutan as and Sri Lanka. Our leaders should most certainly stop talking about Singapore.

Published: 18-10-2017 08:17

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