Nepal-China Economic Relationship: Learning and Unlearning from Chinese Model of Development

Transcription

1 1 WELCOME TO THE PRESENTATION ON Nepal-China Economic Relationship: Learning and Unlearning from Chinese Model of Development Pukar Lamichhane

2 2 Presentation Outline 1. Introduction 2. Overview of Chinese Model of Development 3. How is China Transforming? 4. One Belt, One Road: An Economic Core of Eurasia 5. Chinese Geo-economics around the World 6. Learning from China 7. Unlearning from China 8. Nepal's Economic Relations with China

3 3 Introduction Population 1.38 billion HDI (90 th position) 2 nd largest economy for nominal GDP, based on export GDP growth - an average of 10.0% for 33 years, i.e. from 1978 to 2010 (Zhang, 2011)

4 4 Overview of Chinese Model of Development Four corner-stones of Chinese development model. (Zhang, 2011): i. State-Led Development ii. Development as the Top Priority iii.focus on Good Governance iv.gradual and Pragmatic Reform Chinese model of development: a lot of attention all around the world an alternative model for developing countries Because of: high growth & economic stability improved living standards

5 5 How is China Transforming? China s industries are highly competitive in the world economy State play the vital role: Reduction in the prices of commodity and energy artificially maintained low interest rate undervalued RMB exchange rate demographic surplus China successfully integrated; the elements of liberal economic policy with its own political meritocracy - Beijing Consensus

6 6 One Belt, One Road: An Economic Core of Eurasia Concept of OBOR- by Xi Jinping in 2013 Roadways, Railways, Waterways Consists of - economic corridors, such as: The Silk Road Economic Belt (BCIM, CPEC) The 21st-Century Maritime Silk Road Strings of pearl

7 7 One Belt, One Road: An Economic Core of Eurasia Major objective of OBOR: mutual economic growth via economic cooperation to facilitate trade and investment, to improve connectivity more efficient communication Asian Infrastructure Investment Bank (AIIB) to provide financial support for OBOR Nepal officially signed OBOR on 12 th May, 2017

8 8 Chinese Geo-economics around the World Largest trading partner countries In 2015, Slow down in Chinese economic growth in 2015 sent a chill through the global market, if the Dragon sneezes, the world gets a cold (Xinbo, 2016) Huge impact on world economy 3 rd largest provider of FDI, (2012 to 2014) behind USA and Japan (Source: World Economic Forum)

9 9 Learning from China Role of state in the economic development Huge population - as a resource China disproved democracies are good and authoritarian regimes are bad at least in terms of economic development Since 1978, China lifted 800 million people out of poverty First country to introduce a circular economy promotion law (2009) - to increase the re-use and recycling of materials $102.9 billion, or 36% of total global investment on renewable energy power sector (excluding hydro) Coal-based energy is decreasing, halted -103 coal-powered power plants (2015)

10 10 Drawbacks of Chinese model of development Source: World Bank SOE s are performing good but small and medium sized enterprises are still weak

11 11 Unlearning from China Investment and export Rate of private consumption Symptoms of fragile economy Imbalance between manufacturing industry (tradable sector) and service industry (non-tradable sector)

12 12 Unlearning from China Economy takes over the issue of environment Sustainability of Development?? Adverse impacts are reflected on public health, water pollution, and pollution of arable land Smog-filled cities, like Beijing with highest level of pollution China is also criticized for corruption Increasing economic disparity

13 13 Nepal's Economic Relations with China Bhrikuti ( ) & Araniko's( ) Informal trade relationship People from Northern Himalayan region - make business with Laasha Formal diplomatic relation-august 1, 1955 First trade agreement - September 20, 1956 Huge opportunity and prospect for Nepal Bhusal, B., R. & Parajuli, S. (2017)

14 14 Nepal's Economic Relations with China China - member of Nepal development forum (NDF) Assisting development activities in Nepal, such as roads, energy based industries, tourism sector, and agriculture sector So far, China has contributed: to construct a dry port at Tatopani Invested in more than 400 industries FDI (Approx $70 million) that created job opportunities for 23,325 people Bhusal, B., R. & Parajuli, S. (2017) Proposal to build railway lines under OBOR initiatives

15 15 Direction of Nepal's total trade, 2001/02 and 2010/11 SN. Country 2001/2 2010/11 Value in $ Share in % Value in $ 1 India 84,578, ,030, China 12,307, ,555, Others 59,136, ,512, Share in % Total 156,021, ,098, Source: Trade Statistics, Trade and Export Promotion Centre, Gov. of Nepal, 2013

16 16 Challenge for Nepal Trade of Nepal with China (Jan 2009 to Dec 2016) Import - $57.8 million Export - $ 14.5 million Huge trade deficit (GoN, Ministry of Commerce and Supplies) Inconveniences in Nepal-China trade relation due to : lack of adequate trade routes no special trade and investment treaty lack of export processing zone in Nepal Despite of long economic relationship, unable to enhance economic activities

17 THANK YOU!!! 17