SECURITY SCARE, UNEVEN ECONOMIC PATH MAY OBSTRUCT CPEC 2.0

The taste of pudding, as they say, is in eating. Beyond the hype over last week’s reiteration of political resolve by the Chinese and Pakistani leadership to push the second phase of China Pakistan Economic Corridor (CPEC) lie long-term challenges of resolving daunting security concerns and matching of two vastly unequal economies.

Coinciding with Prime Minister Imran Khan’s high profile Beijing visit last week were a series of terror attacks in Balochistan and Khyber Pakhtunkhwa provinces through which the CPEC runs. The continuing violence has claimed the lives of 50 soldiers and civilians since beginning of this year. At least one Chinese worker was reportedly wounded. Such casualties are  sensitive issues with Beijing. Safety concerns trouble Chinese investors and their Pakistani partners alike.

How the business community perceives the situation matters. A former President of the Federation of Pakistan Chamber of Commerce and Industry (FPCCI), speaking on condition of anonymity to Dawn newspaper (February 7, 2022), shared his anxieties over the resurgence of increasingly lethal ‘nationalist’ outfits in Balochistan who see the CPEC as intrusive and exploitative, besides the Tehreek-e-Taliban Pakistan (TTP) that Islamabad complains that Kabul’s new rulers have failed to curb. Chinese have already voiced their security concerns and can interpret the recent attacks as a failure on the part of the government to neutralise threats to their interests here.

The “powerful friend” itself has to contend with Uighurs, the Eastern Turkestan Islamic Movement (ETIM) and the Turkistan Islamic Parry (TIP), besides several Al Qaida and Islamic State (IS) groups that are active in the ungovernable tribal areas that straddle Afghanistan-Pakistan region as per the recently released 29th report of the UN Analytical Support and Sanctions Monitoring Team. 

As for economic ties, the unevenness of the two economies becomes glaring the way they cooperate. They enable the Chinese to explore and where possible, capture, the Pakistani market, as the cost of the local enterprises. 

As for bilateral trade, China has been Pakistan’s biggest trading partner for six consecutive years since the 2015 fiscal year. But in 2020, the total trade between the two countries $17.49 billion, a year-on-year decrease of 2.7 percent, with imports from Pakistan reaching $2.12 billion, an increase of 17.5 percent compared with the previous year, according to data from the Ministry of Commerce.

How the Chinese investors who showed interest in Pakistani market to the tune of USD 3.5 billion actually see the ground reality is not clear. In Pakistan, however, a series of interviews Dawn newspaper (February 7, 2022) conducted during Khan’s visit indicate that while the government officials and heads of chambers of commerce and industry spoke positively of the Sino-Pak economic prospects, caution and criticism came from some who chose not to be named, especially from private sector players – bankers, businessmen and economists. 

One such commentator tersely observed that Khan had gone “seeking a loan, not a medal” to China. Both the governments are tight-lipped on whether the Chinese conceded the USD three billion loan that Pakistan urgently needs. 

Ehsan Malik, CEO of the Pakistan Business Council, said: “With commodity headwinds likely to last another six months and the Saudi deposit now exhausted, even with the $1bn each from the International Monetary Fund and the Sukuk floatation, Pakistan will need further assistance. Malik said: “We also need to be careful about the type of investment we seek from China. Most of the current foreign direct investment (FDI) here is of  market-seeking nature. Further investment from China of this variety will undermine the existing local and foreign investments. Pakistan needs FDI to generate value-added exports and import substitution.”

A senior corporate lawyer, who had voted for Khan’s PTI in the 2018 elections, without being named, summed up the overall situation thus: “We have never been proficient in handling commercial affairs with our partners, but the ruling party has breached all records. It has alienated everyone, resulting in costlier deals. We can deal with American hostility as we know what to expect. China is a different ball game. We only know it as a friend. I sincerely hope that we are not exposed to what it means otherwise.” (Ends)