Tuesday, August 2, 2005

Give Bangladesh a chance

Bangladesh as a dangling metaphor
CYBER AGE
From The Statesman
ND BATRA

There is a reason for Bangladesh textile exporters to be optimistic about the long-term outcome of China’s revaluation of the yuan. Of the $7.57 billion export last year, its textile accounted for 75 per cent; but since the phasing out of quota in January 2005, Bangladesh exporters have feared that they might be mauled by China’s cheaper exports.

Fazul Haq, Bangladesh Knitwear Manufacturers Exporters Association president, was quoted as saying, “The appreciation of the Chinese currency means a lot of Bangladeshi exports and jobs since Chinese products are a competitor in the global marketplace.” Chinese products, though cheaper, are certainly not better. The cost-conscious American consumer does not care who made it.

In other words, by pegging the yuan to the dollar and keeping it artificially low, China has been indirectly siphoning off jobs from Bangladesh, a proud democratic Muslim country which needs US help in keeping Islamic militants at bay. To some extent it has been successful. Creating jobs is one way of doing it. But Americans have been more interested in seeing what free market capitalism does to Communist China than its transformational effects upon a Muslim society, which might fall into the kind of hell hole that the Taliban created in Afghanistan.

It is a specious argument that the American consumer would have to pay more if Wal-Mart, JC Penny, Target and other global buyers and mega stores could not buy cheap goods from China. They would look somewhere else and countries like Bangladesh, the quality of whose garments compares favourably with China’s, could easily provide an equally attractive alternative source of supply.

But the political and social consequences of a dollar going to Bangladesh are far more momentous than a dollar going to China. Consider what Jeffrey D Sachs, the Director of The Earth Institute at Columbia University says about Bangladesh in his remarkable new book, The End of Poverty: “Not only is the garment sector fuelling Bangladesh economic growth of more than 5 per cent per year in recent years, but it is also raising consciousness and power of women in a society that was long brazenly biased against women’s chances of life.”

Since most of the employees of export-oriented garment industry are women, just imagine if, Wal-Mart, for example, which buys most of its garments from China, shifts its production by 10 per cent to Bangladesh, the social consequences would be tremendous and would reverberate throughout the Muslim world. Henry Kissinger once called Bangladesh an international basket case, but he has been proved wrong. Bangladesh has climbed the first rung of the development ladder and its growing middle class is proud of the biggest shopping mall in Asia, Bashundhara, with 2,000 stores, which recently opened in Dhaka. Bangladesh might yet escape the fate of becoming another Afghanistan.

Continuing how the garments industry is transforming life in Bangladesh, Dr Sachs says, “The job for women in the cities and rural off-farm microenterprises; a new spirit of women’s rights and independence and empowerment; dramatically reduced rates of child mortality; rising literacy of girls and young women; and, crucially, the availability of family planning and contraception have made all the difference for these women.” But what has this to do with China?

If the global marketplace is a level playing field, economic growth would take place in many countries and prosperity would spread globally. But the USA has been timid in dealing with China, fearing that if China stopped investing its export-earned dollars in the US Treasury, US interest rates would go up, mortgages would become more expensive and the housing bubble would burst.

Since the Chinese don’t buy much from the USA, the surplus dollar is invested in the US Treasury at a low rate. In other words, China has been providing cheep loans to Americans to buy goods from China. China holds $270 billion in US Treasury bonds, which is a kind of threat to the US dollar. What if China shifts its investment from the US Treasury to euro?

This question would not have arisen, if American companies had diversified their buying and let countries like Bangladesh accumulate dollars. In July, a Chinese General threatened to nuke several US cities in case the US intervened in the China-Taiwan conflict. Do you think a Bangladeshi General would have been foolish enough to utter such a diplomatic stupidity? Even a country like the USA that believes in free market capitalism cannot separate foreign trade from public diplomacy. Wal-Mart is not politically neutral. The question is whether China’s announcement of the revaluation of its currency by 2.1 per cent, unpegging it from the dollar but tying it to a basket of undisclosed currencies, is simply a rope trick to muffle American criticism.

Hong Kong, “whose currency,” according to Financial Times, “is considered a proxy for the Chinese currency,” has not revalued its dollar, which means that what China is giving with one hand is taking with the other.

Maybe the yuan revaluation is a clever diplomatic move to soften Congress anger and make way for a red carpet treatment for President Hu Jintao’s US visits in September. And there lies the danger. As China continues mesmerising Americans with its phenomenal export-oriented economic growth, spectacular attempts to take over American companies like Unocol and Maytag, and Machiavellian manoeuvres to oust the USA from Central Asia, I am afraid, Bangladesh—a metaphor dangling between Bashundhara and the Taliban, an exemplar of what the dollar could do to a Muslim country struggling to keep itself away from destructive Islamic extremism — would be forgotten.

9 comments:

  1. You have correctly identified the truth and made positive comments with guidance for solving a very real and dangerous problem. Your compassion stands out from others who love to bash this scapegoat country due to the inability of good governance by the elected representatives of Bangladesh. Thanks!

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  2. Can't help but notice your obsession with the fact that Bangladesh is on the verge of an Islamist revolution :P And really, there is no substance to this piece.

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  3. Islam and the ideology of Taleban or Al-Queda are totally opposite. The later two deviated from true Islamic beliefs in order to attain their narrow political goals. Unfortunately the past and present rulers of Bangladesh could never disassociate themselves from the influence of Jamat-e-Islam (JI) because they wrongly believed that JI's support was essential to win national elections. JI is the same party that never accepted the birth of Bangladesh and after 1971 had perpetually conspired to convert Bangladesh into another fundamentalist Pakistan. JI's goal to achieve this objective is being implemented through distorting the teachings in numerous Madrassahs of Bangladesh. These institutions are richly financed through secretive foreign sources sympathetic to JI’s cause as well as through legal grants of GOB and small donations by citizens who believe it are for a good cause. So, JI have literally hijacked Bangladeshi Madrassahs which traditionally used to be good free educational institutions for the poor people of Bangladesh who otherwise could not afford regular education. Now it is the moral responsibility of the development partners of Bangladesh to inspect what is going on secretly and come up with a solution that helps the Madrassahs to run traditionally and frees these from evil influences of fundamentalist forces who endorse terrorism without any sense of guilt. It is not a secret in Bangladesh what is the nexus between Madrassahs and JI but ordinary citizens cannot protest for fear of reprisals by the GOB through excessive police actions and assault by goons of the ruling party. Bangladesh should be encouraged to become another Malaysia and not another Pakistan. ND Batra had well written indeed.

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  4. ND Batra should be considered as an educated Indian. But from his writing, evertyone can feel the Indian-style jeaous towards China.

    China's development not only benifit from the international trade. China is a huge market itself. Not like India. Give you same example:
    1. 55% of cement used in China. More than all the other contries combined.
    2. 1/3 of steel used in China. Almost 10 times of India. More than Japan and US combined.
    3. 700 million phone users in China, bigger than US, 7 times of India.
    4. 14 million PCs sold in China. more 4 times of India. Second largest market after US only.
    5.IT market? don't mention India. If you want to figure it out. Go to the top500.org to figure out how many supercomputers are used in China and India. You will know how pityful India's IT market is.
    ..............................


    Indians always talk about "huge" indian market. Please talk "huge" after you you how huge China's market is.



    Do you think US companies allow their government to have a unreoverable bad relation with China? They are smarter than ND Batra before the money, before the market.

    Inidans should worry about theirselves. Send more money back to India to support your pitiful country.

    Indians should work harder, not talk louder. India was much much better than China n 1949 when commie China was founded. But lag behind China even before China started the reform.

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  5. In biz, Bangladesh's gain is not neccesary to the lose of China. If Bangladesh is richer, they may buy more TVs and other products from China, right?

    ND Batra's articles are published in India. You should let your countryman know what is correct. Don't mislead your pityful India fellows. Use the freedom correctly.

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  6. For the Yuan revaluation, US bizmen know it will do noting good to US's economy and trade. It will not hurt China's economy either. Basically China's international trade is in balance status. Not like Japan in 70s and 80s of the last century. China sells and buys 5 times of what India does. Is that pityful?

    Many US bizmen are epxressing their concern now. You need only read or watch recent US media.

    India cannot successfully split the relationship between China and US. It is decided by interest not purely politics. Every new US president was hawkish to China at the very begining, Clinton, Bush..., but after 1 or 2 years, all of them changed their mind.

    China's companies buy US companies. US companies buy China's companies. It is very normal and just biz. Americans will get used to this. You Indians will get lost again.

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  7. I strongly suggest the auther to read the articles in the economist magz. They are biz view about China.


    http://www.economist.com/search/search.cfm?qr=China&area=5&Submit2=Go

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  8. Why are you saying that Bangladesh is a proud democratic muslim country, when given half a chance the majority of its population will migrate to greener pastures in Europe or in North America. As for democracy: there is I believe state sponsored terrorism where the members of the opposition and the media are frequently eliminated. Bangladesh is very much a theocratic state or rather a failed state and stands very high in corruption index as published by reputed observers.

    That such a poverty ridden nation can boast of the biggest shopping mall in Asia is simply frightening; it only proves the craze of obscene consumerism by the Bangladeshi elite, who as a class have totally failed to do anything constructive for their country.

    Bangladesh has received plenty of Arabian petrodollars since independence with little to show about its utilization and pumping in U.S Dollars will go the same way to line some local warlord’s pocket, or financing some jehadi organization.

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  9. N. D. Batra: Wal-mart and such companies will never make other countries rich by any means. Wal-mart pays China less than $20 billion each year for the 75% goods it sells in US, and its total revenue can be more than $200 billion.

    Chinese product quality? of course not at the top, but much better than the products from India and alike countries. Americans are not stupid.

    Chinese can make product much more cheap than India, not because of the cheap labor(No doubt, still higher than India), it is because of the concentration of the parts and components and large production scale. Give you examples: One town in Zhejiang province produces more than 50% of socks in the world. Galanz, a township company (Owned by farmers) in Guangdong (Canton) provice, produce more than 18 million microwave oven sets each year, the No. 1 in the world. In Dongguang County of Guangdong province, you can find all the parts and components in the circle less than 15 miles if you want to setup a electronical product company, or a PC company (Excude CPU), in Kunshan, a small county in Jiangsu province, you can find motherboard, memory, monitor, LCD, PC and notebook case..... companies. That's why many of the PC and laptops in the world are assembled there.

    For the above reasons, Chinese can make goods much cheaper than other countries.

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