That China Pakistan Economic Corridor (CPEC) is critical to the economic and social development of the country is a fact that has found its best expression in the remarks of Adviser to Prime Minister on Foreign Affairs Sartaj Aziz.
Inaugurating the 32nd Annual General Meeting and Conference on Pakistan Society of Development Economists (PSDE) on CPEC organised by the Pakistan Institute of Development Economics (PIDE) with the support of Ministry of Planning, Development and Reforms last week (other sponsors were UNDP, FES, World Bank, PPAF, Oxfam, IFC, ILO, IUCN, AKRSP, IFPRI, ADB and ECO-SF), Sartaj Aziz, who has also previously served as country’s finance minister, articulated his perspective on the CPEC, informing everyone present at the event and elsewhere about the most critical aspects of present status of country’s economy in general and the prospects of CPEC in particular.
During his talk, he provided answers to a variety of questions that generally characterize debates on the $46 billion Chinese investment in Pakistan through CPEC. According to him, for example, CPEC loans for infrastructure creation are at the interest rate of 2 percent while the payback time for such loans ranges from 20 years to 25 years. He successfully used the event to clarify that most of the CPEC outlay is in the form of investment and that too in energy generation and transmission.
Sartaj Aziz, who is widely-acknowledged expert in the field of economics and finance, unfortunately, chose to make a seemingly inappropriate if not an entirely wrong comparison by drawing parallels between CPEC investment by China and loans that are offered by the World Bank to developing economies. According to him, “it takes many years to get a loan of one or two billion dollars from the World Bank while the CPEC loans are on soft loan basis at the rate of 2 percent and the payback time is 20 to 25 years.” Sartaj Aziz might have ignored the fact every student of economics knows that the World Bank is an international organisation that provides financing, advice and research to developing nations with a view to aiding their economic advancement.
Its most visible footprints in Pakistan could be found in the World Bank-sponsored Indus Water Treaty that eventually led to the construction of Pakistan’s hydro electric power projects-Mangla and later Tarbela. It is also a widely known fact that the World Bank does not function absolutely independently and free from any outside pressure per se as the US Congress does influence the World Bank priority sets and outcomes. The US Senate and the House of Representatives, however, do it in a largely subtle manner.
One would, however, be profoundly naïve to believe that the unprecedented Chinese investment in Pakistan is without any strings attached; it certainly involves special demands, rights and limits. What are those demands, rights and limits? The perceived set of special demands, rights and limits could not be even the poorest reflection of that Josef Stalin had extracted for Soviet Union in Manchuria and Xinjiang from Nationalists led by Chiang Kai Shek. In the context of Pakistan, however, a plausible answer to this question could be found in the current Pak-Sino slogan: the CPEC is a flagship project of the Chinese vision of “One Belt One Road”.
Hence the need for a critical examination: at the heart of this project lies the creation of an economic land belt that comprises countries on the original Silk Road through Central Asia, West Asia, the Middle East and Europe, as well as a maritime road that links China’s port facilities with the African coast, pushing up through the Suez Canal into the Mediterranean. The project envisioned by the current Chinese leadership is aimed at redirecting the country’s domestic overcapacity and capital for regional infrastructure development to improve trade and relations with ASEAN, Central Asian and European countries. Pakistan, therefore, stands to play the most critical role insofar as successful translation of “One Belt One Road” concept into a profound reality is concerned.
In his remarks, Sartaj Aziz spoke about one of the most critical elements of CPEC in relation to the scope of creation of new job opportunities in Pakistan. According to him, labour market dynamics are very important “because once the industries are set up we cannot expect the Chinese labour force to work in those industries. All in all, we are on the threshold of a significant phase of our development and need to take full advantage of it”. He, however, seems to have lost sight of the fact that it is quite likely that the Chinese labour force will be staying in Pakistan for much longer time than he or others could imagine.
Jobs in manufacturing have been declining in China owing to a variety of reasons and one of the principal reasons is the fact that a structural shift from labour-intensive manufacturing to higher tech industries and services is fuelling job insecurity in the former ‘Middle Kingdom’. But this must not cause any despondency or breed complacency among Pakistan’s policymakers.
Though Punjab’s TEVTA is doing a good job, it is not enough. The same goes for similar departments in other provinces. They must work towards creating a massive pool of trained people by equipping them with required skills and techniques through which they could strive to compete with their Chinese counterparts. Only then will CPEC help our governments overcome the joblessness challenge in an effective and meaningful manner.