The Second Belt Road forum brought in more then 180 heads of states, key leaders and high level representatives form across the world to share their vision and float new ideas on investment, infrastructure and connectivity with the aim to benefit from China’s 1$ trillion Silk Road project, the BRI. The consensus reached in Beijing was on green development highlighting the sustainability of the BRI.
Prime Minister Imran Khanthrough his historic visit to Beijing showcased investment opportunities in the country, the prospects of CPEC as game changer and suggested many new ideas focusing on climate, investment, people to people contacts, tourism, labour and ways to end corruption.
Both, PM Khan government and its predecessor, (Sharif government) supported CPEC projects and welcomed Chinese investment; the Nawaz government emphasised more on infrastructure development while the Khan government has stressed on social development including seeking investment in industrial and agriculture sectors.
Imran Khan government is right in seeking investment and loans since China is better resourced then perhaps IMF and World Bank combined to keep its economy afloat. Indeed Imran Khan is trying to protect industry, reduce trade deficit and get maximum concessions under ASEAN concessions regime. FTA2 is remarkable achievement of both Chinese and Pakistani leadership.
We have sought to view Pakistan-China economic relations from narrow angle of trade concessions, loans and seeking market access for our less competitive industry, but we should not loose jungle for counting trees.
Since, China is rapidly rising as the new world economic power, Islambad needs to ponder how best it can expand on engagement with Beijing, enhance Chinese interests and also create new opportunities to raise Beijing’s stakes in Pakistan’s economy. We must remember that soon we will be competing with the entire world, which is after Chinese money, resources, technology, diplomatic clout and itsattention.Now Europeans have started joining the BRI, the latest example is of Swiss after Italy and Luxembourg.
Beijing, a rising world power, is also evolving to look at the world from its own lens of world power status rather then Islamabad’s viewport.
Let us look at the big picture of Pakistan-China relations and how best Beijing can be more invested long term, to deepen ties with the rising world power:
- China has never interfered with in Pakistan’s internal political squabbling nor it has stopped dealing with one government or the other; unlike the US which has influenced or manoeuvred regime changes to promote its strategic, geo-political and political interests. China has eschewed any policy perceived as an instrument of interference in Pakistan’s internal settings. This policy continues even today.
- Beijing has thwarted any Indian ambitions against Pakistan; its support at Nuclear Suppliers Group, at UN on Maulana Azhar issue, its pressure of 2016 on India (for being a lower riparian country to China) not to alter flow of water to Pakistan and its much neededeconomic assistance for balance of payment support, are few example.
- However, of recently, there has been a blip in Chinese investment what the PTI government termed as pause to take the CPEC to the next level: social development and Special Economic Zones. The fact remains China’s economic engagement with Pakistan has decreased over the last two years as more emphasis has been laid on social projects: since social projects promise less return to investors, they do not serve as lucrative enough to trigger massive investment.
- We urgently need to find new ways in enhancing economic component in our bilateral. Present level of actual Chinese investment stands around $22 billion through CPEC projects, which is not significant. We must aim at securing up to $50 billion investment. For this purpose our economic vision like SeZs, their timely feasibility and execution is the need of hour and all bureaucratic hurdles should be deal with on war footing. Just like national security we need CPEC specific national economic decision making body involving Prime Minister, his key team and top military leadership sending a message to domestic institutions, bureaucracy and Chinese counterparts as to how much Pakistan is serious is in intent, and resolve in the execution of SeZs.
- Indeed, Special Economic Zones are the real price of CPEC but we have no simplified in- house clearing rules due to different layers of governmental authorities complicating implementation processes which are time consuming and delaying critical projects to the frustration of Chinese investors. It took at least up to 15 months to finalise feasibility of a SeZ; for example, as one government was supposed to provide gas, the other land and still other water. In other words, 8th Amendment is the main hurdle since provinces have to decide land, connections, water, given their inherent weakness, ie, will, capacity and archaic bureaucracy, they are causing more red tape and delays.
- We also need to attract not only substantive Chinese public and private investment, but also should seek to prepare public opinion paving way to absorb at least 100,000 Chinese nationals, for example, so as to further raise Chinese The presence of Chinese nationals will bind both countries further. Ironically, Islambad has allowed Afghans refugees who are instead of contributing to the economy, are a burden on our basic resources/facilitates from health to education etc; we have nationals of Burmese, Bengalis and Iranian origins then why not Chinese who will contribute to our economy, expand Chinese equities in Pakistan. All xenophobic hue and cry is uncalled for.
- Pakistan needs to attract big companies like Huawei to re-exporting zones because they are being discouraged by Western world. So we need to set re-exporting zones for big Chinese companies as soon as possible. For this the federal and provincial capacities to quickly establish such zones are almost non-existent.
- Islambad needs to utilise intuitional memory, i.e., to engage more Pakistani experts who have specialised knowledge and expertise of China’s foreign policy and other trends since 2011 and who have worked with the foreign office or other departments including defence institutions. To pull that talent, a merit based strategic think tank needs to be stablished. This way we will be able to discern subtle trends and nuances in China’s posture and its future trajectories. For example, China now uses phrases like “Pakistan being an important country in the neighbourhood” instead of two very closed neighbours” or “all weather friend”. Chinese are no longer using the word “flagship” project for CPEC and describe it as important BRI project instead, as Beijing is also working on equally two important Corridors, (i.e., Mongolian and Myanmar Corridors).
- Interestingly, China’s engagement with India has increased manifold since being a rising world power it feels inclined not to isolate Delhi and ultimately pull it in the BRI. Equally, India’s rising economic trajectory, and its not too distant potential convergence with China on seeking reforms to present US-ledeconomic orderwill likely have impact on Pakistan’s strategic posture given Islambad’s widening economic differential with Delhi and solution to Kashmir issue becoming more elusive. China is getting smarter with more willingness and capacity to mange divergence with other neighbours and the US allies in Asia-Pacific. New nuances in Chinese policy would have wider implications for Pakistan’s vital interests. So “the imperative of big power assertiveness would lend to a new subtle strategy whereby Beijing would want to work with India”, said a China watcher. Pakistan especially needs ton study the last 10 years of Chinese foreign policy since President Xi took over power who is the main architect of the BRI and China’s remarkable economic rise.
- As pointed out, SeZs should lead to the next level of Chinese investment; Pakistani institutions like BOIs have no capacity to handle Chinese investment and SeZs. New action plan under PM’s direct leadership with input coming from the Army, on the pattern of National Action Plan, has to be launched, to timely execute SeZs and make them successful.
- Like investment policies of Malaysia and China itself, during the 1980s, Islamabad should offer huge tariff reliefs at least for two decades to Chinese private investors who’s money is being chased by lucrative markets from India, Europe to Africa. It is brave of them to invest in Pakistan when they have equally very attractive propositions on their table from other investment friendly countries and have much better environment in terms of ease of doing business. Therefore, we must make it worthwhile for them to invest in Pakistan.
- We should not loose interest and focus on reducing trade imbalance between Pakistan and China. The CA deficit dilemma should be resolved not by decreasing Chinese imports but by increasing our exports and their investment inflows. It is a unfortunate that our industry has not moved on with the time and is behind even Bangladesh and Vietnam.
- China has hugely invested in technology particularly in artificial intelligence. Pakistan needs to take benefit both from lower and higher end of technological and industrial value chain.
- This is the time we check corruption in our country as commission and kickbacks demanded by elites will inhibit the CPEC’s full execution. Here we need to follow Chinese model: Beijing’s capital punishment for corrupt officials has made China the preferred destination of investment around the world.
The bottom line is yes strategic and political relations with China is great; yes, China has also strategic interest to equally benefit from CPEC as one of the major Corridors of the BRI, but for Pakistan, substantive economic engagement with China is a must; for this to happen in simplified in house changes the only way forward. Is Pakistan ready to take the leaf forward instead of frogging in leveraging Chinese miracle? A question better left for policy makers to think through.
The views expressed in this article are that of the author and do not necessarily reflect the editorial policy of Surkhiyan.