CPEC’s regional gains
The China-Pakistan Economic Corridor (CPEC) and the Belt and Road Initiative (BRI), are now reaching a stage of consensus amongst all stakeholders. The National Development Reform Commission of China and the Chinese Foreign Ministry laid out the scope of the BRI as a platform to explore markets and the free flow of economic factors. Countries like the United Kingdom (UK) have also shown keen interest in the Chinese investments, which shows the broader impact of CPEC and BRI across the globe.
The visionary initiative of BRI and China Pakistan Economic Corridor (CPEC) by China is probably the most discussed subject around the globe and in spite of its criticism by the USA and some other detractors there seems a consensus about the transformational role of both these mega-economic undertakings. An action plan jointly issued by China’s National Development and Reform Commission in conjunction with China’s Foreign Ministry and Commerce Ministry on 28th March 2014 narrated the objectives of this grandiose initiative in these worlds “ It is aimed at promoting orderly and free flow of economic factors, highly efficient allocation of resources ad deep integration of markets, encouraging the countries along the Belt and Road to achieve economic policy coordination and carry out broader and more in-depth regional cooperation of higher standards and jointly creating an open, inclusive and balanced regional economic cooperation architecture that benefits all”. It clearly enunciated partnership premised on the idea of sharing the benefits among the countries under the umbrella of BRI and CPEC.
Impressed by the scope and the likely economic impact of the initiative on the regional and global economy, even UK and some other countries have indicated their interest in becoming part of the scheme. At the same time a persistent campaign by the countries and elements inimical to BRI and CPEC has also been going on with the often professed claim that the participating countries will ultimately become debt slaves of China like Sri Lanka. Spurning of Chinese loans by Malaysia is also preferred as an argument in support of their claims. Even in Pakistan certain lobbies have also been supporting that argument and expressing reservations about economic benefits of CPEC.
Nevertheless the fact remains that the transformational role of both BRI and CPEC in lifting the economic profile of the region and is beyond reproach. World Bank’s director Macroeconomic, Trade and Investment Caroline Freund addressing SDPI Conference in Islamabad the other day that BRI and CPEC were playing important role for promoting intra-regional trade by building infrastructure. On the debt burden said “we are concluding a detailed study about BRI but our initial assessment shows that debt has not become major problem for loan recipient countries under this mega initiative. It stands at around 5 per cent of total loan portfolios of 71 countries of BRI” The Chinese Deputy Chief of Mission in Pakistan Lijian Zhao informed the audience that the misconception of debt trap levelled against BRI proved a lie through the work done by the World Bank. He revealed that BRI had generated 200000 jobs out of which 75000 were created in Pakistan through CPEC adding that Pakistan was the largest recipient of FDI from China and the largest trading partner with the help of CPEC.
The foregoing observations are irrefutable realities. As far as Chinese loans to Pakistan are concerned they constitute only 6.3 per cent of its total debt liabilities and therefore belie the argument of the detractors and the US that the current economic crisis was attributable to the growing Chinese loans. It is pertinent to point out that most of the CPEC projects, particularly pertaining to energy sector with an estimated cost of $ 34 billion are direct investment with no debt liability at all. The loans given on the infrastructure projects were advanced on much lower the rates charged by the international lending agencies. It is estimated that more than 3000 MW of electricity has already been added to the system through the energy projects initiated under CPEC which means they have already started contributing to the national economy. The rest of them would be completed by the end of 2019 leading to an addition of 10,600 MW to the national grid with all the accompanying potential and benefits for growth of industry and other development projects. The infrastructure that will be built under CPEC including roads and railway tracks will also provide tremendous impetus to the growth process and make Pakistan a hub of regional economic activity. Nobody in his right mind can contest that emerging reality. Infrastructure development is the fundamental ingredient and engine of growth in any economy.
The phenomenal economic prosperity and industrial development in the Asian countries such as China, South Korea, Singapore and Malaysia during the last three decades is a ranting testimony of this modern reality. Attainment of high level growth is unimaginable without industrialisation and gradual lessening of dependence on the agriculture sector. CPEC is undoubtedly a complete recipe for bringing that transformation in Pakistan.
China is the most trusted friend of Pakistan which over the years has played a very significant role in the economic development of the country besides boosting its defence capabilities. The relations between the two have been on the upward curve irrespective of who was in power in both the countries. It has withstood vicissitudes of time and is now poised to achieve eternity with the initiation of CPEC.
During the recent visit to China by Prime Minister Imran Khan both the countries not only reaffirmed their unflinching commitment to continue with the current CPEC projects but also to expand its scope by adding 15 more projects to it which imparted new dimension to the strategic partnership and friendship between the two countries. Chinese Consul General in Lahore talking to media revealed that instead of hard cash China was planning to eventually provide multiple forms of bailout packages to Pakistan in the shape of phenomenal investments in fresh projects which he reiterated would boost and help her to overcome the financial crunch. He emphatically declared that China would not leave Pakistan in lurch and channelise maximum resources to strengthen its languishing economy.
The statement of the Consul General indicates the depth of relations between the two countries and the genuine concern of the Chinese government about economic difficulties of Pakistan. The flow of direct investment is actually the best recipe to contain the debt burden and for generating additional resources for developmental needs of the country. The countries faced with resource constraint invariably try to create avenues for foreign direct investment which in the modern era have become a pivotal ingredient of growth and development. The Chinese new strategy to help Pakistan to tide over the economic melt-down is indeed a visionary move that provides a credible and long lasting mechanism to boost the economy and realistically speaking deserves unqualified appreciation.