- Thursday, 09 July 2015 06:24
by Atia Ali Kazmi
The Vision of China-Pakistan Commercial Cooperation and the Economic Corridor. The writer is Senior Research and Policy Analyst at NUST Global Think Tank Network
The month of May brings some exclusive remembrances for the Pakistani nation. 28th of May is commemorated as Youm-e-Takbeer (Day of Greatness) and rejuvenates our faith in national strength driven by a broad consensus on the strategic program. The event predicates the fact that once it comes to national integrity, a common Pakistani and the civil and military leadership have unanimity of views. Likewise, May 21 marks the centenary of the establishment of Sino-Pak all-weather friendship, which has witnessed 64 years of beautiful association, mutual trust and mature considerations. There is little doubt that not only the leadership of Pakistan and China but also the people of this iron relationship have worked in an array of avenues right from conceptualisation to the near realisation of common dreams.
The CPEC is the pivot of this friendship and defines a well-thought and sustainable roadmap of infrastructure-based development in Western China and Pakistan. The vision is one of its kinds, which offers a diverse package of positive externalities for the region. The idea has no parallel in utilising Pakistan’s territory for geo-economic gains rather than mere geo-strategic interests.
The initiation of formal work on the CPEC promises inclusive economic opportunities for the two nations and the region at large. This spirit gets its essence from President Xi Jinping’s recent statement: “It is important that we protect our common interests and foster a peaceful and stable neighbouring environment” – a disposition which defines the Chinese exceptionalism.
If one navigates the course of China-Pakistan commercial cooperation, it is easy to infer that they have an outstanding potential and the strategic vision for further strengthening bilateral relations. They have consistently supported each other against all incompatibilities, without being ensnared by the mantra of quid pro quos.
The CPEC is the convergence of China and Pakistan’s already established cooperation undertakings. The two countries are further set to broaden economic and technical cooperation in agriculture, health, energy, education, and public transport and other projects that do not merely serve the appetite for hegemonic ideals but the divine pursuit of benefitting the people for achieving greater and collective good. Hence, the lackluster arguments of opponents of CPEC, who view the landmark design through their soi-disant non-constructivist lens, are doomed to wither like autumn leaves.
The Sino-Pak commercial cooperation covers a spectrum of government-to- government, business-to-consumer and business-to-business ventures. Many Chinese are working in Pakistan on major infrastructure and development projects. Their business councils are already operating suitably and the FTAs are geared for predictable investment regimes.
However, the fact that Pakistan is an emerging economy with myriad challenges has to be considered. Also, the prevailing security and economic problems call for understanding the unique nature of challenges that lie ahead for China and Pakistan, and the opportunities to be tapped into.
In order to develop lasting commercial relations with Beijing and realise the dream of the economic corridor, Islamabad would have to foster structural transformation. Economic reforms are critical to Pakistan’s sustainable development and must be an essential constituent of the vision of Pak-China friendship.
The Chinese model of best economic practices gives Pakistan many options to adapt to the new millennium and deal with its challenges of poverty alleviation, training of human resource, establishment of a chain of technology and innovation based education and industry sector, enhanced reliance on high technology manufacturing and production of domestic firms and efficient management of FDI flows.
China’s endeavors in the inclusive economic uplift sans borders support its credence in pursuing economic coexistence. It has emerged as the most prominent outward investor and has whittled for itself a distinct niche in the global political economy. Chinese leadership’s vision and pragmatic, well-coordinated, consolidated, sustained and swift reforms for the previous three decades have much to do with these strides.
The World Bank’s report sums them up: “China’s uniqueness among developing countries is not what it did to achieve success, but how it did it. China adapted a strategy known as ‘crossing the river by feeling stones’…”. This model has now to be followed by Pakistan – the CPEC can be the precursor of effective policies and their conscientious implementation.
It goes without saying that China-Pakistan relations outdo the geopolitical and geo-economic expediencies and have withstood the stresses of regional and global realpolitik. Even if Pakistan’s relations diversify, friendship with China will remain the cornerstone of its foreign policy. Almost seven decades of policies of successive Pakistani governments and reciprocity by Chinese leadership bear witness to this centrality of their bilateral relations.
There is little gainsaying expressing the concern that the CPEC’s almost two decades plan will see different governments in Pakistan and a change in leadership would change the current trajectory of any aspect of Beijing-Islamabad relations – there is across the board consensus on the value of this friendship in Pakistan. It transcends all shades of Pakistan’s political spectrum, and supersedes the pushes and pulls of rich ethnic, religious and regional hews of the nation. CPEC is one significant proof of this assertion – it was visualised by one government and will be executed and operationalised by another.
China is one of Pakistan’s largest trading partners and Pakistan could also rank amongst the top Chinese partners if both can realise and sustain the immense potential particularly that of CPEC which is the touchstone for the already initiated ventures and projects. No other bilateral or multilateral initiative in this region has ever offered this harmony and stability. However, creating an enabling security, political, and trade environment would be the major challenges.
It is important to strategise to catalyse FDI flows, trade balance and Pakistan’s formal inclusion to regional multilateral forums such as the Shanghai Cooperation Organisation to complement the CPEC plan. Forums such as ASEAN+6 can be replicated and Pakistan can even be considered to become the seventh member of this regional medium of economic stability.
Moreover, Pakistan can manage with the rising monster of about 6 percent unemployment through infrastructure projects along the complete corridor route in the two countries. Well-timed and complete implementation of FTAs and similar arrangements will ensure the capacity building of local service suppliers, medium- and high-technology sector and transfer of technology. This is most crucial for Pakistan as 81 percent of exports are resource-based and low-tech and since a decade, its GDP comprises of a stagnant 13 percent share of the manufacturing sector.
The balance of trade between China and Pakistan has a potential to rise beyond existing levels. Pakistan’s export basket mainly includes resource-based products that are already in abundance in Chinese or other regional markets. Thus, special arrangements are required for facilitating Pakistani exporters in China.
The contribution of intellectual capital to CPEC cannot be undermined. Appointment of area specialists and optimisation of concerned knowledge domains is imperative for the success of CPEC plan. This also calls for introducing relevant disciplines and curricula in Pakistan’s educational institutions, technical training modules, and massive campaigns on all levels to create a knowledge base about the multimodal corridor in order to inculcate a national level spirit. Even a toddler in Pakistan must be aware of the responsibility his shoulders will bear in the next two decades.
Moreover, Pakistan’s government and people have to realise the importance of acquiring a culture of R&D and its long-term gains in terms of technology and innovation. Sustainable policies to introduce R&D into education and industry will also ensure effective functioning of start-ups and venture capitalists, thus paving the way for advancements such as technology spillovers from FDI to the domestic firms.
Chinese firms’ shift towards sophisticated products has created a need in China for repositioning of labour-intensive enterprises. The CPEC will thus usher in relocation of Chinese technology and business to Pakistan. Likewise, cooperation in the financial sector will also augment and diversify the mosaic of economic activities on the two sides. The Industrial and Commercial Bank of China Limited, which is a joint-stock limited company, is fully functional in Karachi and Islamabad since 2011. Pakistani banks must look up to opening in China. Also, the Government of Pakistan must expedite the establishment of long proposed Exim Bank, as it will be a lynchpin for setting a sound financial backdrop for the CPEC.
Having said all this, the issue of security is the Achilles’ heel of this chronicle of sustainable development and prosperity - or at least the adversaries use it this way. This argument can best be explained through the fact that no Chinese citizen has ever lost life in Pakistan to a case of robbery or theft as has happened in other countries like South Africa. Only those working for the realisation of China-Pakistan vision fall a victim. However, our joint resolve of not giving into naysayers will be instrumental in addressing this concern.
Some detractors might skeptically see the seemingly slow and gradual implementation of strategies in this light; but this cooperation has always contributed to our respective and regional socioeconomic calculi in a constructive manner. A famous Chinese proverb befittingly expresses this optimism: A diamond with a flaw is worth more than a pebble without imperfection. And the glimmer of diamonds pales in comparison to that of China-Pakistan friendship.
The leadership of the two countries appears to be well prepared to capitalising on their time-tested friendship and working mutually towards a new era of mature and sustained economic relations. The CPEC is the onset of a spectacular journey and God speed for the two resilient nations.