Under the Asian Infrastructure Investment Bank (AIIB), China could move some of its manufacturing industry to places like Brunei, Laos, Malaysia, Myanmar, the Philippines and Vietnam, and help these countries prosper by providing them with financial assistance to build highways, harbours and utility facilities.
This is what Oliver Rui, professor of finance and accounting at the China Europe International Business School and Director of its World Bank China Centre for Inclusive Finance, believes Beijing is trying to accomplish with the help of the recently created AIIB, which he thinks China has launched with the additional purpose to move beyond its labour-intensive economy. He made these observations while participating in a debate on the pros and cons of the AIIB — (“Room for debate” — excerpt published in the International New York Times on October 24, 2014).
The professor did not mention Pakistan in the list of countries where China could move some of its labour-intensive manufacturing facilities perhaps, because despite being a close neighbour, we are located too far away from China’s developed regions. Still, considering our expertise in textile production, China could relocate some of its textile manufacturing facilities to Pakistan and benefit immensely by exporting the produce to the nearby oil-rich Middle East market.
Here, it would not be out of place to divulge the secret of the not-so-secret East Asian miracle that some countries of the developing world, like Pakistan, had watched from the sidelines, with so much wonder during the last two decades of the 20th century. Actually, it was no miracle, but simply, the result of relocation of the developed world’s (especially America’s) labour-intensive, low-tech manufacturing facilities in the labour-cheap East Asian countries willing to become sweatshops of the former. Developed countries brought in their capital, technology and managerial capabilities, and provided the latter their own captive export markets. The Asian Tigers-in-the-making offered cheap labour in return and in the process, boosted their exports, benefited from technology transfers and accumulated much-needed capital to finance their way out of abject poverty.
“Many credit these labour-intensive industries for propelling the Asian Tigers — Hong Kong, South Korea, Singapore and Taiwan — into the economically developed world. A study on poverty relief and development by the University of Santiago de Compostela also suggests that such sustainable international investment in low-income countries is important for economic progress. America’s sizeable investments in developing Asian countries represent not only investments in production facilities, but also add to the latter’s investible resources and capital formation, transfer production technology, skills, innovative capacity, organisational and managerial practices, as well as provide access to international marketing networks, all of which are exceedingly helpful to these developing economies.” (“Two Faces of Economic Development: The Ethical Controversy Surrounding US-Related Sweatshops in Developing Asian Countries” — blog posted by Annabelle Wong on May 1, 2013).
And lest we forget, the security of these East Asian countries, including that of Japan, also was underwritten by the US, which has maintained a huge military presence in and around these countries since the 1950s, helping them to divert most of their incomes towards socio-economic progress by rapidly building their own economically viable physical and social infrastructure.
China had remained out of this loop as were most countries of South Asia and of the oil-rich Middle East. And while China in East Asia and India in South Asia followed their own respective, but highly protective, economic policies in differing degrees for nearly 50 years to become by the year 2000 the two main charioteers of what is called the Asian Century, Pakistan seemed to have been left far behind because it took the easy way out from day one by readily adopting what is called the dole-dependent economy, focusing mostly on developing its security muscle, rather than spending the dole on its education and health sectors. It also made easy money by renting out on occasions its security muscle to the US whenever Washington needed our help to promote and protect its global imperial interests. The AIIB provides an excellent opportunity to Pakistan to get out of the economic rut that it has landed itself into. We don’t need to become China’s sweatshop, but there should not be any uncalled-for hesitation on our part in becoming Beijing’s partner for mutual progress.
Published in The Express Tribune, October 29th, 2014.
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This better stop now, and for good. We have some of the worst social indices in the world, in some departments outdoing even sub-Sahara Africa. The money pendulum must now swing decisively toward education, healthcare, rule of law (hire more judges so cases can end in less than 50 years), institution-building, and civil infrastructure. We're done with buying toys for the boys while starving our population. If some economic genius can come up with a way of retaining the current level of military spending while paying attention to the social sector, great! But if the USSR couldn't find such an economic genius, my guess is we won't either.
China has huge demand of labour intensive industry in its own hinterland away from its East Metropolis, so it will go to foreign shore mainly for resource gathering i.e mines,minerals,petroleum etc and in the process may build infrastructure like it has done in latin America and Africa. Pakistan should eye to get any significant labour intensive industry help from China.