National 9 (Spotlight Weekly)

China and SAARC

By Niaz A. Naik

Introduction: South Asia was relatively late in evolving an institutional framework for regional cooperation. It was not until 1985 that the South Asian Association For Regional Cooperation (SAARC) was formally established at the first Summit meeting at Dhaka.

In fact SAARC was established nearly three decades after the birth of European Community in 1957, two decades after the advent of ASEAN in 1967 and the full decade after the West African Economic Community emerged in1857.

Assessment of SAARC

The achievements of SAARC during the past 17 years of its existence, though significant, have fallen short of the aspirations underlying the formation of the Association Several reasons account for the failure of SAARC to realize its full potential.

While other regions were quick to realize the inherent advantages of collective regional endeavors, the atmosphere of a politically sensitive, tension and conflict ridden South Asia was not conductive for regional cooperation. The member countries were still remain embroiled in bilateral issues of stalemate and conflict. The events of 9/11 have greatly accentuated the tensions particularly between the two nuclear neighbors India and Pakistan.

The concept of regional cooperation when proposed by Bangladesh in 1980 was received with skepticism. The distrust, suspicion and intra-regional tensions directly influenced the slow and cautions evolution of the concept of regional cooperation in South Asia.

SAARC from its inception became an inward looking organization. The crippling limitation in its Charter of all the seven must be present in all meetings particularly the Summit decisions must be taken in the basis of unanimity and not consensus and exclusion of bilateral and contentious issues firm its ambit. The limitations resulted in the stunted and slow growth of SAARC.

The initially agreed areas of cooperation were peripheral and did not include the vital areas of trade, joint ventures, investments, harmonization of fiscal and social policies which constitute the hard core of integration as evidence in other similar groupings around the world. South Asia thus failed to share the economic dynamicism of the rest of Asia. The average growth rate for the South Asia in the past 25 years was only 4.6% as compared with 8.8% in South East Asia. The difference between trade performance of South Asia and rest of Asia became even more striking. While in the aggregate the other Asian countries increased their share of world trade by about 180% between 1870-1990s, South Asian share declined by 25%. Moreover, the relatively slower economic growth along with faster population growth in South Asia sharply increased income differentials between it and other regions of Asia. South Asiaís GDP per capita is $430, lowest among the developing world. Its annual real growth is just about 4.6%. Net oil flows are 9.9% of GNP or in other words $4 per person. The compulsion of globalization, the reduction in aid, the mounting debt burden, the deteriorating terms of trade, the projectionist policies of the western industrialized states and the regulatory process being evolved in the WTO placed the already marginalized South Asia under further stress and strains.

The asymmetry of the South Asian region, the predominant size, population, power of India and the range of her interests remain an unalterable reality. The fact that India alone has borders and physical contract with each neighbor enhances the fear of Indian dominance. Indiaís neighbors sought support in external links which were perceived as a means of survival. Conversely India perceived and remain convinced even today that these links constitute forms of extra regional involvement inimical to her own interests. The centrality of India is underlined that it accounts for 74% of the regionís total population 76% of the total GNP and 64% of its export trade.

Although SAARC was established in 1985 SAPTA was accepted only in 1993 and came into operation with the ratification of the first round of negotiation only in December 1995. Three rounds of negotiations have been held under SAPTA and the total concessions offered to all member countries still remain very limited at only 1990 of a total of 6000 tariff lines available for concessions. Experience of individual countries such as Sri Lanka, Bangladesh and Pakistan illustrate the irrelevance of much of the goods on which South Asian countries have offered concessions to each other under the SAPTA.

Poverty alleviation has been the main endeavor of SAARC. Despite all efforts the current situation represents a dismal picture. South Asia has the largest concentration of the worldís poor with a global population share. Today almost one third of the population is poor.

The human poverty statistics take a story beyond deprivation of Incomes to a denial of rights, of opportunities of the very hope of the future. For example, the number of illiterates in South Asia continues to increase by over 10 million during the 1990s. The region has a one third of the worldís maternal deaths and more than half of the children are malnourished.

Of the 162 countries ranked in 2001 with respect to life expectancy, educational attainment and adjusted real income on UNDPs Human Development Index, South Asian countries still most occupy the lower positions:

Maldives (77); Sri Lanka (81); India (115); Pakistan (127); Nepal (129); Bhutan (130); and Bangladesh (132). It is clear that South Asia is far from reaching the target embodied in the Millennium Development Goals (MDG) set by the UN general Assembly in September 2000 of reducing poverty by half in relation to 1990 level by the year 2015.

For South Asia as a whole it is vital to have a growth rate of 6% per annum in order to reduce that number of absolute poor in addition to the growth process to be pro-poor by generating greater economic opportunities including their access to assets, resources and jobs.

Group Of Eminent Persons

An important step was taken at the 9th SAARC Summit (Male 1997) to accelerate regional cooperation. The leaders of the seven SAARC countries shared their conviction that regional cooperation was indispensable in an inter-dependent world for the realization of the full potential of the South Asian region. To this end, the Male Summit decided to establish a SAARC Group of Eminent Persons (GEP) to undertake a comprehensive appraisal of SAARC and identify measures including mechanisms ti further vitalize and enhance the Association in achieving its objectives. The Summit further mandated the GEP to develop a long range vision and formulate a perspective plan of action including a SAARC Agenda for 2000 and beyond which will spell out the targets that can and must be achieved by the year 2020. In its report, the GEP made specific recommendations for moving from SAPTA to SAETA and eventually moving beyond it to the establishment of a South Asian Economic Community.

It is self evident that SAARC countries must agree on the specifics of a comprehensive multisectoral agenda for the cooperation in core areas like trade, investment, infrastructural development as well as the optimum utilization and development of human and natural resources of the region.

The 10th SAARC Summit at Colombo (1999) was expected to consider and approve the various recommendations made in the GEP report. It is rather unfortunate that the GEP report has not received the focused attention of the SAARC Summits which have been frequently postponed for the reasons not related to its Charter. The 12th SAARC Summit scheduled to be held from 11-13th January 2003 at Islamabad has been indefinitely postponed.

Bilateral Agreements

In the face of slow progress in promoting regional cooperation due to several factors indicated above, a resultant development has been the shift in focus to sub-regional approach and to bilateral trade agreements between SAARC countries. Such as approach raises fundamental question. What are the implications of pursuing an essential bilateral agenda in the context of efforts to promote economic cooperation at the regional level? There is very little evidence of similar trends in other regional groups such as the EU and the ASEAN. The vast majority of regional blocs have started from an agreed base on the intensity or degree of cooperation and have progressed from there taking collective decisions. But South Asia is currently faced with the specter of countries within an existing regional trade arrangement (SAPTA and SAFTA) moving ahead to form bilateral agreements. There is a real danger that bilateral agreements may undermine commitment to a greater South Asian Economic Community. Some fear that bilateral trade agreements among SAARC countries is likely to lead to further fragmentation of a common South Asian goal towards regional integration. This would constitute a serious setback for the South Asian region. Alternative strategies must be considered, if necessary, out the preview of SAARC.

16th National Congress Of The SPC

The 16th National Congress of the CPC was the first held in the new millennium. With the election of Hu Jintao Secretary General of the Communist Party, the leadership in China passed on to the younger and fourth generation. The document adopted at the 16th Congress emphasized that China has dramatically been transformed into an economic giant. In terms of purchasing power parity, Chinaís economy is second only to Americaís and to its GDP has exceeded US$ 1.20 trillion.

The Congress agreed to carry forward Deng Xiaopingís strategy of keeping peace, build a well off society and all round way, speed up socialist modernization and work hard to create a new situation in building socialism with Chinese characteristics.

The Congress stated that the national economy has maintained a sustained, rapid and sound development. The strategic adjustment of the economic structure has been crowned with success. The position of agriculture as the foundation of the economy has been strengthened. Traditional industries have been upgrade. High and new technology industries and modern service have gained speed. A large number of infrastructural projects in such areas as water conservation, transportation, telecommunications, energy and environment protection have been completed.

The Congress stressed that with its accession to the WTO China has entered a new stage in its ìopening upî. New prospects have been opened up in Chinaís external work. In the light of the developments in the international situation China adhered to correct and independent foreign policy. China has carried out both its bilateral and multilateral diplomatic activities extensively and taken an active part in international exchanges Cooperation and common development.

Referring to the international situation, the Congress underscored that peace and development remain the principal themes of the contemporary era. It went on to add that China will continue to consent its friendly ties with its neighbors and persists in building up a good neighborly relationship and partnership with them. China will step up regional cooperation and bring its exchanges and cooperation with its surrounding countries to a new height. China will continue to enhance its solidarity and cooperation with other Third World countries, enlarge areas of cooperation and make it more fruitful.

Development Of Western Region Of China

The Congress reaffirmed its commitment to speed up the all round development of the Western region of the country. This project is one important strategic decision of the Chinese government in the new century. This project covers a huge part of Chinese territory and population equals to ìcreating another Chinaî. The development project covers 12 provinces, autonomous regions and municipalities with an area of 6.83 million square kilometers occupying 71% of the whole land area of China. It involves 320 million people occupying 28.4% of the whole population with about 87% of Chinese ethnic minorities will directly benefit from this great project. In the first 10 years only the construction of the infrastructure will cost US$ 90 billion. Apart from the benefits to China, this project will cause significant repercussions in the international community especially to the neighboring countries. India, Bhutan, Nepal and Pakistan have contiguous border with China. During the five decades of the Sino-Indian conflict China has built up close relations with other neighbors of India such as Pakistan, Nepal, Bangladesh and Sri Lanka. These relations have been deepened based on the Five Principles of Peaceful Co-existence. Chinaís policies towards South Asia have assumed greater importance. Though Sino-Indian relations have also been moving towards normalization. But the pending agenda of differences and the ambitions of the two most populous Asian countries have accentuated the competitive aspect of their bilateral relations. Furthermore given Indiaís hegemonic ambitions in South Asia and Chinaís principled opposition to hegemony, the other countries of South Asia have developed good relations with China as a means of restraint on the India.

The development project of Western China presents a new opportunity to Nepal, Bangladesh and Pakistan to deepen their relation with China in order to attain higher standard of life for their impoverished populations. In the recent past Chinaís time tested relations with Pakistan have taken a quantum jump. China is currently undertaking mega development projects in Pakistan including the creation of a deep sea seaport at Gawader (Mekran Coast) developing road and telecommunication infrastructure linking the projected Gawader sea port with the rest of Pakistan. This would provide immense opportunities of transit trade to China and landlocked Nepal.

The significance of the Western Region for China is manifold. Being source of Chinaís major river system including Yangtze, Yellow and Peal Rivers, the ecological and environmental balance pertains to very survival and prosperity of the Chinese people. The Western region of China is rich in hydropower resources, gas, petrol, minerals, tourism, herbs and cotton production. It boasts of heavy industries such as Petro chemical, Fertilizer, Automobile, Electronic, Pharmaceuticals, Food processing etc. According to official estimates, some 60 percent of raw materials for Chinaís growth in 21st Century including 50 percent of its energy requirements will come from the Western regions.

The way forward emphasizes to establish sub-regional economic cooperation and development organization between China and its neighbors Nepal, Pakistan and Bangladesh. In the south west part of China there already exist such kind of cooperation. For example since 1999 the Yunnan and Sichuan provinces of China and India, Burma and Bangladesh are actively engaged into the sub-regional economic cooperation and development. Moreover the South-eastern part of China has greatly strengthened its economic ties with ASEAN countries.

Recently China signed a free trade agreement with ASEAN countries which envisages two way trade of US$ 1.3 trillion BIMSTEC and the Gonka-Meskong Cooperation are progressing rapidly. China is engaged in a similar effort with the African Common Market community.

A similar sub-regional economic and development cooperation arrangement between China and Bangladesh, Nepal and Pakistan seems to be highly desirable and profitable. Apart from economic benefits this sub regional arrangement will increase the potential tourism market. The ecological challenges would be effectively dealt with under the collective endeavors of the sub-regional arrangements. It will greatly improve the security environment of the entire area. With the new leadership elected in the 16th National Congress of CPC, the prospects of evolving such a sub-regional approach has become necessary and timely.

(Excerpts of paper presented by Niaz A.Naik, former foreign secretary of Pakistan, at a seminar China And SAARC organized by China Study Center at Kathmandu recently)