The Belt and Road Initiative (BRI), first proposed by Chinese government in 2013, is an ambitious effort to improve regional cooperation and connectivity on a trans-continental scale through infrastructure, trade and investment by linking Southeast Asia to Eastern Europe and Africa.
Responding to this grand, wide-reaching development strategy which continues to have a growing effect on various labor markets involved, and also recognizing the importance of regional diversity in such academic discussions, IESR and GLO joined their forces in organizing IESR–GLO Workshop on Belt and Road Labor Markets, held at Jinan University, Guangzhou on March 21–22, 2019. It is already the second time IESR Dean Prof. Shuaizhang Feng and GLO President Prof. Klaus F. Zimmermann collaborates in organizing labor-focused workshop (see IESR–GLO Labor Workshop in 2018).
The workshop welcomed scholars from China, Bangladesh, Cambodia, Malaysia, Italy and Germany to discuss labor market challenges that arise due to this initiative, and to compare research findings on labor markets from the Belt and Road countries, particularly focusing on China and the regions of South and Southeast Asia. As Professor Shuaizhang Feng noted in his welcoming speech, rather than simply focusing on BRI as such, this academic event is more about creating an international platform to enhance mutual understanding between various countries and scholars, and giving them a chance to better know each other.
As a GLO representative, Klaus F. Zimmermann noted that this workshop brings a perfect opportunity to establish long term perspectives for GLO by meeting, collaborating and finding topics of global interest. What is more, it also serves as the response to the anti-globalization movements so widespread these days (i.e. movements that rise not only from below, but also from above, as economist noted referring to the Donald Trump’s politics). This workshop is an effort to conquer these destructive tendencies by connecting academics from all over the world who are willing to keep close ties with each other and work on a shared vision. As regards BRI, although the initiative in itself is all about infrastructure and trade – not about people and human resources – but, professor believes, that definitely does not mean that scholars shouldn't look at the other side. On the contrary, one of main purposes of this workshop is to bring in the perspectives of people into BRI because that is something that must be better analyzed.
Over the two days of IESR–GLO Workshop on Belt and Road Labor Markets, there were 8 presentations on a range of topics focusing on China and different countries in South and Southeast Asia.
Michele Bruni
Professor of the Centre for the Analysis of Public Policies, University of Modena, Team Leader and Resident Expert of EU-China Social Protection Reform Project
China and the BRI Countries at a Demographic Crossroad: Labor Market Implications, Challenges and Opportunities
Asad Islam
Associate Professor of the Department of Economics, Monash University
Can Referral Improve Targeting? Evidence from a Training Experiment
Jinseong Park
Assistant Professor of IESR, Jinan University
Parental Wealth, Time to First Job, and Labor Market Outcomes: Evidence from Housing Wealth Shocks in South Korea
M Niaz Asadullah
Professor of the Faculty of Economics and Administration, Malaya University
Female Seclusion from Paid Work: A Social Norm or Cultural Preference?
Shuaizhang Feng
Professor and Dean of IESR, Jinan University
The Challenge of Internal Migration on China’s Long Term Sustainable Growth
Chandarany Ouch
Research Fellow and Head of Economics Unit, Cambodia Development Resource Institute
China's BRI and Challenges and Opportunities for Cambodia's Labor Market
Sen Xue
Assistant Professor of IESR, Jinan University
Institutional Restrictions on Migration and Migrant Consumption and Savings Response
Klaus F. Zimmermann
Professor of Bonn University and UNU-MERIT, President of GLO and Co-director of POP at UNU-MERIT
Arsenic Contamination of Drinking Water in Bangladesh: Knowledge and Response
Being at the very core of this year’s IESR–GLO workshop and bringing all these scholars together this March 2019, Belt and Road Initiative was also the topic that some of the participants had gladly agreed to share their personal thoughts on: Asad Islam (Bangladesh), Chandarany Ouch (Cambodia), M Niaz Asadullah (Bangladesh, Malaysia), Michele Bruni (Italy) and Klaus F. Zimmermann (Germany).
What is you view on the Belt and Road Initiative (BRI)?
Asad Islam: I think that's a great initiative – it will make a huge impact in terms of the connectivity in the regional setting and especially in South and Southeast Asia. I particularly think that this has a great potential in improving productivity and economic growth. China will play an active role in connecting with these countries and making progress in infrastructure.
Chandarany Ouch: It is a good initiative because it gets people connected between different countries through infrastructure, transportation, etc. It also contributes to country’s development and growth, especially for Cambodia which is a part of BRI since the very beginning. With infrastructure and good transportation, the country can increase cross-border trade and access different kind of services, education included.
M Niaz Asadullah: For me, being based in Malaysia, and been born in Bangladesh, I see this as an initiative that is about greater connectivity, expanded markets, and the outcome which is in the interest of everyone. This is a time when the center of global economy is shifting from Europe to Asia. We need a better, shared infrastructure, one that is not specific to one country but that extends to the whole region – this is where BRI has a tremendous scope to make a difference and truly enforce the century of Asia.
One way to look at BRI is through the lens of politics. It is one large economy trying to exert its influence over neighboring countries – it is a tool for political control, it is about hegemony. But there is also a more optimistic, inclusive viewpoint of this, which is about creating public goods that requires a lot of resources which a small country doesn't have – and this is where China has a competitive advantage as well as responsibility as the largest economy in Asia. It genuinely has a potential to benefit countries in Asia beyond Chinese border by connecting these economies and, hopefully, one day creating a unified Asian market of the kind that we see in Europe. So, I think, this is where we should embrace pragmatism, positivism, hope, rise beyond our suspicion, and look more at the economics rather than politics.
Michele Bruni: I think it's a fantastic idea, the most innovative idea in a long time. It was done by the U.S. in 1960s, it was called Marshall plan, and now China is doing it. It's a difficult thing to do and China needs to clear out more what it wants, because now – it's just a sketch. It's clear that it wants to make investments but, at the same time, it's promoting itself. China is a huge country which can do a lot of great things, but it will not oblige to other countries, at least openly, by saying what it really wants.
There are many countries in the BRI, starting with China, that will not have enough labor (which is a little strange because there are 1.4 billion people in China). China is missing about 200 million people as workers, whereas in other countries – there are too many [as his research suggests]. Therefore, one important thing would be to spread education through BRI – do more education as well as vocational training in countries that have too much labor. This way people could not only provide important input to the country they live in, but they could also move to other countries where they are needed. Of course, BRI has nothing to do with human resources which, I believe, is definitely one of the missing aspects.
Klaus F. Zimmermann: It is an interesting initiative in the time when the world is on the verge of collapse – national collaborations are no longer in such high apreciation, countries think of their national interests while global visions are no longer in favor. The exception is Africa – African states at least want to collaborate closer with each other, open borders and build economic institutions. Another exception is BRI which has a very global perspective, historical tradition and, of course, it follows its national interest. China wants to define itself in the world with this objective, and connect with the areas of the world where it could establish promising long-term relations, and where are resources. That's a very welcoming initiative that we, as scientists, cannot ignore because it has effects. It's not just about infrastructure, you also make other countries dependent on you, in a way. The investment for the country is hoped to bring loyalty to China and therefore dependency, because it doesn’t come for free. China gives money to do this, brings its own workers – it is not a gift but an investment which will only work out well if there will be a collaboration. If things are politically stable, that will hopefully create a more balanced and stable world. If countries feel exploited, it could bring an uprising... Whatever is in the self-interest of China – one has to have a respect, because all countries have some self-interest in one way or another.
What challenges does BRI bring?
Asad Islam: The challenges are mainly political. Belt and Road countries have diverse political and geopolitical interests, especially in India, which hasn’t signed up for BRI yet. India is trying to play a role in countries like Bangladesh and it doesn’t want them to have anything to do with BRI. It will really depend on how much BRI will intervene in those countries. In my opinion, countries will eventually have to join BRI because this is a great initiative and those that will not – will probably lose out on this.
Chandarany Ouch: The challenge is that even as researchers we don’t really know what projects are under BRI in Cambodia. That’s not clear mainly because China has been already providing a lot of development assistance to Cambodia since 1990s. As I presented this morning, the contribution has been almost the same over the last ten years.
M Niaz Asadullah: China is not the only large economy in Asia with ambition – there is also India. There are major ideological differences between these two countries and it causes friction. With any large infrastructure project, the challenges are not just about fiscal constraint or mobilization of resources to make it happen, but it is also about insuring political sustainability and agreement among the players. If we have a tense regional environment, then the fiscal cost of this can go up, and that's where there is a need for dialogue – dialogue which I don’t see happening right now. There is this cold war now as we speak between China, the U.S., and the U.S. proxy in Asia which now includes India. I think, the success of BRI will critically depend on not just working through the economics of BRI but also for China to see through the politics of it.
Michele Bruni: Political, ideological opposition which has already started. Italy is entering BRI this very day, and the White House came down saying that “you are idiots!”, “what are you doing!”. But, I think this decision is correct. Besides, why should others tell us what to do?
Klaus F. Zimmermann: The whole topic is very broad and it involves large part of the world. Speaking of challenges, global warming issues, the migration topics are already coming out – that is something we briefly discussed today. BRI has to realize that there is a large variety of challenges in all of those countries. For instance, population size (that was also discussed in the meeting). Some countries will grow substantially, like India, while other countries will shrink, like China. So, there are huge demographic imbalances. One idea on what this initiative must do, is to face various human developments in BRI countries and propose a policy that could moderate all those negative impacts.
How BRI is perceived in your home country? What impact does it have on local labor market and its overall development?
Asad Islam: People have a very positive impression about this initiative. Of course, there are people on both sides, but the majority of them think that it is an initiative that we should all embrace. Generally speaking, Bangladesh has a very strong potential [with regards to its future development] because geographically it is very close to China and you can easily connect these two countries by the road network. We have a poor infrastructure, so we definitely need the investment as well as connectivity both by land and sea. BRI gives a great opportunity for us. When you have a good infrastructure – the movement and connectivity go up because people migrate more. Then, transportation and other services can also catch up which would increase labor market participation, particularly the one of women and people from rural areas who are still relying on agriculture. With infrastructure, they will be able to work in the industry and service sectors.
Chandarany Ouch: People feel positively because of the benefits of infrastructure, but due to the rising China’s influence in Cambodia there is also a negative image which is mostly because of the way the funding goes to the country. For example, most of the Chinese funded projects go directly to the government – there is a lack of transparency which means there is a room for corruption. As for China, it doesn’t care about monitoring or evaluation of that money, that's why the money come with no strings attached – that is, we don’t need to commit to human rights, democracy or election in the country, like it would be with European or U.S. funding.
Chinese investments in Cambodia have led to the increase of land price, real estate, housing price. Some people are not that happy about that, while others benefit from this increase. Of course, I have to acknowledge that Chinese investments create jobs, but only for low skilled workers. There is a huge benefit from China’s investment in garment and textile sector. It also creates jobs for people in rural areas who can finally move to the cities, get jobs in the factories. But in terms of skilled work or technology transfer – not so much.
M Niaz Asadullah: Malaysia and Bangladesh respond very differently to the BRI. In Bangladesh, it has been welcomed. It is the country which is very close to China in terms of geography, and it sits right next to India, so there is an intense competition between India and China to have a greater control of Bangladesh – it has very good access to seaports, and very unique strategic advantage in terms of serving as the key point in the Belt and Road network. At the same time, India has lobbied intensively against China, it even succeeded in canceling one Chinese project of building a deep seaport. Bangladesh has played the game very well, both by retaining the Chinese ties, and not saying “no” to India.
But when I come to Malaysia, it hasn’t been such a happy experience there. Last year, new government of Malaysia canceled a critical scheme as part of the Belt and Road network – the east coast rail network [connecting west cost of Malaysia, starting from Singapore, to the east cost of Malaysia]. The east coast is where there is a lack of investments and jobs, thus, the east coast’s population was eagerly looking forward to it. But, because of the politics and the political change, this project fell through the cracks. This example shows that in some cases – it is not enough to make good economic sense. I have spoken to colleagues in Malaysia, and they genuinely believed in the economic case for this massive infrastructure. So, despite the fact that there is an internal argument for it, it failed the political test. As for Bangladesh, we don’t have a history of major political standoff between the two countries, of the kind that India and China have, that's why the politics is easier.
Michele Bruni: BRI could have a big impact but it will depend on what they will put inside the memorandum of understanding [of BRI]. Now, the trains are coming directly from China, we also have a very good harbor – that could be a place where things could come. Trading should play a very important role.
Klaus F. Zimmermann: BRI doesn’t have a public profile in the public debate [as Germany is not part of BRI]. China didn’t come to Germany saying that “let’s build you a new airport in Berlin”. But, of course, it has been observed for a long time now that Chinese companies come to Europe and Germany to buy companies. It is fine as long as these are normal companies, but if they are strategically relevant for technology or security, then there is that nervousness that China might take over. Therefore, in some cases German government said “no, you cannot buy these companies”.
Many people still don’t understand what China really wants and what is it doing. And, what we are doing here, this workshop – it is an effort to rationalize it, see what is going on, what are the conditions under which BRI works, and what are the long-term consequences.
IESR–GLO Workshop on Belt and Road Labor Markets 2019
