China is emerging as a ‘balancer’ in the context of the evolving economic, strategic and geopolitical scenario in South Asia vis-à-vis the role played by the traditional superpowers on the one hand and India on the other.
Through aid, trade and investment in infrastructure and other forms of influence, China is making in-roads to South Asia in somewhat of a way that Japan did in earlier years in East Asia, mainly through FDI. In doing so, China is performing a ‘balancing act’ between diverse interests which are at play in South Asia.
The observations emerged from a discussion on “China as a Balancer in South Asia: An Economic Perspective” – a presentation by Dr Saman Kelegama, Executive Director of Institute of Policy Studies (IPS), Sri Lanka, presented at the CPD Dialogue Room on Wednesday, 7 May 2014.
Commenting on Dr Kelegama’s presentation, Professor Rehman Sobhan, Chairman, CPD observed that smaller SAC would need to do their own ‘balancing’ in various configurations between China, India and the US in order to safeguard their own interests.
Taking the case of Sri Lanka, Dr Kelegama drew upon China’s growing trade partnership with most South Asian countries (SACs), its regional collaborations, growing trade with India, Chinese development aid flow to SAC, and Chinese labour in Sri Lanka.
According to Dr Kelegama, SACs have more complementarities with China than India and this is demonstrated in trading patterns where US$ 5.7 bn trade (import and export) between China and South Asia in 2001 increased to US$ 97 bn by 2011. In contrast to Indian FDI flow directed at the US, EU, Middle East and East Asian countries, driven by services sector, Chinese FDI has been increasingly directed to SACs, particularly in developing the infrastructure.[media url=”https://www.youtube.com/watch?v=nI-ZcHsoTHA” width=”600″ height=”400″ jwplayer=”controlbar=bottom”]
The discussion was also complemented by observations from CPD Distinguished Fellow Dr Debapriya Bhattacharya; Dr Binayak Sen, Research Director, Bangladesh Institute of Development Studies (BIDS); Ambassador Munshi Faiz Ahmad, Chairman, Bangladesh Institute of International & Strategic Studies (BIISS); Professor MM Akash of Department of Economics, Dhaka University; Mr Iqbal Ahmed, Director (EA), Ministry of Foreign Affairs, Government of Bangladesh; and CPD senior researchers and research associates.