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PM reiterates Pakistan’s resolve to complete projects under CPEC

Prime Minister Imran Khan has reiterated Pakistan’s resolve to complete ongoing projects under China Pakistan Economic Corridor which will contribute substantially to Pakistan’s development and prosperity.

Talking to Chinese Ambassador Yao Jing, who called on him in Islamabad on Tuesday, the Prime Minister also reaffirmed Pakistan’s commitment to further strengthening the All-Weather Strategic Cooperative Partnership with China.

On this occasion, Chinese Ambassador Yao Jing conveyed the best wishes of President Xi Jinping to Imran Khan on his forthcoming birthday.

The Prime Minister asked the Ambassador to convey his thanks to the Chinese President.

Source: Radio Pakistan

Dated on: 18/9/2019

CPEC review meeting for removing bottlenecks of projects

ISLAMABAD: The China Pakistan Economic Corridor (CPEC) review meeting Friday deliberated upon issues confronting different projects under CPEC decided to fast track their resolution for timely completion of all projects.

Minister for Planning underlined the need for meeting the projects’ timelines and called for further gearing up the momentum in CPEC projects.

The 58th progress review meeting of CPEC projects was held here under the Chairmanship of Minister for Planning, Development and Reform Mukhdum Khusro Bakhtyar.

The minister underlined the need for meeting projects’ timelines and called for further gearing up the momentum in CPEC projects.

He said CPEC, as stated by Prime Minister Imran Khan, is a project of great national significant for Pakistan which will be a harbinger of development and prosperity for Pakistan and the region.

Chinese Ambassador Yao Jing, DCPC Dr. Mohammad Jehanzeb Khan, Secretary Planning Zafar Hasan, representatives from Chinese enterprises and senior officials from relevant ministries also attended the meeting.

The Minister said that the incumbent Government, in consultation with the Government of China, has succeeded in expanding its scope to include other priority areas under its framework including socio-economic development, poverty alleviation, agricultural and industrial cooperation.

The second phase, as envisioned by Prime Minister Imran Khan, will focus, among others, on welfare projects for the betterment of the people of Pakistan and we are thankful to the Government of China for broadening its framework which will contribute to the sustained development of Pakistan, stated the Minister.

The Minister reiterated that the Government remains fully committed to realize the potential and opportunities under CPEC framework.

Speaking on the occasion, Chinese Ambassador Yao Jing said that CPEC is heading in the right direction adding that CPEC is quite different from other Belt and Road initiatives as this flagship project manifests the longstanding friendship between the two friendly countries and will bring prosperity and progress for Pakistan.

CPEC is a product of vision of two brotherly countries that goes beyond traditional business dealings reflecting decades old strong bonds of bilateral cooperation and shared goals with win-win situation for all.

He stressed that the project will continue to progress on expedited pace, as reiterated by Prime Minister Imran Khan in his recent meeting with Chinese Foreign Minister, for timely completion of all projects.

During the meeting, various projects of CPEC were discussed in detail one by one. Secretary Power informed that the synchronized demand-supply study of CPEC energy projects will be firmed up by October 2019. NEPRA said that all pending tariff issues including of of Port Qasim and Gwadar 300 MW coal project will be resolved soon.

Talking about Kohala Hydro power project, the minister said that it is an important project and expressed gratitude to the Government of China and Three Gorges for extending cooperation in this regard. It was decided that process for establishing appellate tribunal will be expedited to resolve future tariff issues of energy projects.

It was informed that the Gwadar development Authority, headed by Chief Minister Balochistan, has approved the Gwadar city master plan with some minor modifications. Secretary Communications informed that Multan-Sukkur motorway will be opened soon for general traffic as the work was almost complete.

The Minister and the Chinese ambassador appreciated the pace of work on the East Bay Expressway project.

Orange Line Train project and ongoing projects in Gwadar were also deliberated upon in detail.

The Minister said that SEZs would help in boosting Pakistan’s exports and achieving sustainable economic growth.

Source: Business Recorder 

Dated on: 16/9/2019

Political stability, good governance key to CPEC success: experts

PESHAWAR: Human resource development, political stability and good governance can be the main components to make the multibillion dollars China-Pakistan Economic Corridor (CPEC) project sustainable and result-oriented.

This was the crux of the speeches delivered during the two-day international conference, which ended here on Thursday.

The University of Peshawar’s Area Study Centre and Chinese Embassy had jointly organised the event on ‘Belt and Road Initiative, China-Pakistan Economic Corridor and Trans-Regional Integration’, where ambassadors and diplomats from China, Russia, Central Asian Republics, Iran and Afghanistan were in attendance.

Seven scholars from abroad, including Russian Federation, and academicians and experts representing think tanks read out their papers in the two-day conference.

International moot on BRI, corridor initiatives ends

The experts highlighted challenges and prospects of the BRI and CPEC, brainchild of Chinese President Xi Jinping that would economically integrate more than 60 countries in Asia, Africa and Europe.

Former chief secretary Shakeel Durrani told participants that the BRI-CPEC was our version of the Martial Plan, which was introduced in Europe after the World War-II.

He said the Martial Plan had transformed Europe after the war.

Mr Durrani proposed that the railway network occupy central place in the integration of the region. He supported the proposed construction of the Kabul-Peshawar Motorway.

The former chief secretary said the projects like CPEC could either rid the country of poverty or face failure.

He said on one hand, the projects like Gadoon Amazai Industrial Estate in Khyber Pakhtunkhwa failed to produce the desired results but on the other, the projects like Tarbela and Mangla dams continued to contribute to the national economy.

Mr Durrani said the CPEC had to be a self-sustained project, while the Pakistani government had to focus on human resource development, political stability and good governance.

He said one of the major reasons for the failure of Gadoon Amazai initiative was bad governance.

The former chief secretary also called for control of population growth. Afghan academician Abdul Baqi said his country would play a central role in regional connectivity due to its geographical location.

He said Afghanistan was in the centre of South Asia and Central Asia, so two major energy projects would pass through its territory.

Mr Baqi said the prevailing security situation in Afghanistan were major hurdles to the laying of railway line, which could link South Asia with Central Asia.

Expressing concern over the existing security situation in Afghanistan, he said who was behind the so-called Islamic State or Daesh militant outfits was a mystery.

He said regional countries could play a role in intra-Afghan dialogue to end decades long conflict.

In a paper, Kazakhstani researcher Dr Seyit Ali Avcu insisted that anti-Chinese sentiment and fear of over-indebting to China while misusing its own finances and re-education camps in Xinjiang that caused uproar could pose threat to the BRI.

He said since the economic and political relations between Russian and China had never been so good, not all Central Asian countries were part of Eurasian Economic Union.

The researcher said the Chinese influence on Central Asia was purely economic rather than political and that Eurasian Economic Union and BRI initiative would coexist and prosper side by side.

He added that the New Silk Road initiative of the US would have negative effect since the US was withdrawing from the region and was not committing enough funds to make the initiative sustainable.

Published in Dawn, September 13th, 2019

Dated on: 13/9/2019

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Peshawar-Kabul motorway paves way for Afghanistan’s entry to CPEC

ISLAMABAD: In a major breakthrough, China, Pakistan, and Afghanistan have agreed to expand road connectivity as the China-Pakistan Economic Corridor (CPEC) enters its second phase.

The agreement was made at the third round of the third Trilateral Dialogue between the three neighbours, where they agreed to the construction of the Peshawar-Kabul motorway.

Diplomatic sources told Pakistan Today that foreign ministers of the three countries discussed the future regional scenario as US forces plan their withdrawal from war-torn Afghanistan, observing that the Peshawar-Kabul motorway may provide the foundation for Afghanistan’s formal joining of the CPEC as Peshawar is already linked with the route.

“So when Kabul and Peshawar are linked through road, it would automatically connect Kabul to CPEC – the pilot project of a multi-continental connectivity project launched by China called the Belt and Road Initiative (BRI). The formal announcement may be made at some later stage,” the source added.

“The construction of this motorway would not only link Afghanistan with Pakistan and China, it would also link landlocked Afghanistan with Pakistan’s strategic port of Gwadar which would alleviate Kabul’s trade issues,” the source further said.

“However, due to some diplomatic hitches, the three friendly neighbours have decided that the motorway would be named ‘China-Afghanistan-Pakistan Plus Cooperation’ (CAPPC). The initiative aims at jointly working towards promoting trade and connectivity projects between the three countries,” the sources stated, adding that a document was also signed at the moot.

It merits mention here that CPEC is being constructed in Pakistan under a mega investment initiative of around $62 billion by China. Out of the total portfolio, projects worth $20 billion have already been completed while the remaining projects are being executed.

BRI was launched by Chinese President Xi Jinping in late 2013. Since then, around 165 countries and international organisations have joined the initiative while 86 countries, including Afghanistan, have signed a Memorandum of Understanding (MoU) with China so far.

It is self-evident that the BRI mega project carries much significance for Afghanistan, which intends to regain its historical position as an “Asian transit and trade roundabout” connecting South Asia to Central Asia, and East Asia to West Asia.

Afghanistan also became a permanent member of the Asian Infrastructure Investment Bank (AIIB) in 2017.

“It seems that Afghan President Dr Ashraf Ghani has a change of heart on joining the CPEC. China had initially floated the idea to include Afghanistan into CPEC in 2017 but Dr Ghani was reluctant so he did not take up the offer,” the diplomatic source said.

The source revealed that the offer was again put forth in the second Trilateral Dialogue held in 2018 but Kabul regime did not respond. China had also hinted on the offer publicly when Chinese Ambassador Yao Jing in November 2018 had said that Kabul can also act as a bridge to help expand connectivity between east, south and central Asian regions.

“Under the BRI, China wants peaceful development of all its neighbours and would take all necessary measures to achieve peaceful development in Afghanistan,” the source quoted Yao.

Further, the Joint Declaration issued after the third Trilateral Dialogue in Islamabad again hinted on the development.

“The three sides reaffirmed their commitment to further strengthening their relations, exploring new ways of deepening cooperation, including advancing connectivity under the Belt and Road Initiative (BRI), Regional Economic Cooperation Conference on Afghanistan (RECCA) and other regional economic initiatives,” the declaation stated.

“The three sides welcomed the progress made on implementation of projects agreed under the China-Afghanistan-Pakistan Practical Cooperation Dialogue (CAPPCD). They agreed to continue cooperation in the fields of economic development, capacity building, improving livelihood and people-to-people exchanges,” the declaration added.

Another important development includes the decision to jointly wage counter terrorism operations against terrorist forces present inside Afghanistan and bordering areas including Islamic State (Da’ish), Tehreek-e-Taliban Pakistan (TTP) and East Turkestan Islamic Movement (ETIM).

Source: Pakistan Today

Dated on: 08/9/2019

Author: Mian Abrar

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Top Baloch tribal leaders vow to support, protect CPEC projects

BEIJING, China – In a major breakthrough, leaders of top Baloch tribes traditionally thought to be opposed to China-Pakistan Economic Corridor (CPEC) have vowed to fully support the CPEC and promised to provide security to the Chinese nationals working in across Balochistan.

The leaders of different tribes of Balochistan also downplayed negative western propaganda vis-a-vis China’s investment made under China Pakistan Economic Corridor (CPEC) and vowed to support the initiatives of CPEC and Belt and Road.

The Pakistani delegation  is being led by the governor Balochistan including former Chief Minister Balochistan Dr. Abdul Malik Baloch, Central Joint Secretary of Pakistan Tehreek Insaf (PTI) Bayazeed Kasi, Balochistan Minister for Sports and Culture Abdul Khaliq Hazara, Member of Provisional Assembly (MP) Sanaullah Baloch, eminent tribal leaders Abdul Kasi, Nasir Zaman Khan, Senator Muhammad Daud, Mir Liaqat Ali, Mir Mehroze Marri, Mohammad Humayun Barakzai, Faisal Hayat Khan, Chairperson of Balochistan Institute of Research and Development (BIRD) Ms Javeria Tareen and political leaders, businessmen, and think tanks. The delegation has visited Urumqi, Kashgar, and Beijing during their stay here.

It merits mention that western media has been projecting Balochistan’s nationalist tribes and groups including Marri, Bugti and National Party led by Dr Abdul Malik Baloch as  critics of the CPEC. Their support to CPEC is a major development.

Governor of Balochistan, Amanullah Khan Yasinzai, along with other representatives of local tribes also inaugurated the Silk Road Community Building on Friday here in Xinjiang, China. The Silk Road Community Building Initiative was launched at a thematic forum of people-to-people connectivity of the Second Belt and Road Forum for International Cooperation in Beijing on April 25.

The delegation called on Mr Song Tao, head of the International Department of the Communist Party of China Central Committee, during his meeting with the delegation, said that the people to people connectivity was themed as “Working together for better lives: people-to-people connectivity and cooperation”.

“The thematic forum is aimed at building consensus and reviving the Silk Road spirit to create a brighter tomorrow. Since the First Belt and Road Forum held in 2017, there have been extensive and meaningful exchanges and cooperation between China and other Belt and Road partner countries involving people from all walks of life,” he added.

“People-to-people connectivity is the important content of the BRI, and it is also the spirit, base and goal of the BRI,” Song said, calling for working together for cultural win-win cooperation, openness, inclusiveness and innovation and for more cooperation, not only between governments, but also social organizations.

DiploMag had a special sitting with the delegation here in Beijing. Balochistan Governor Amanullah Khan Yasinzai said the Silk Road community building initiative between Balochistan, Pakistan and Xinjiang, China will help boost the CPEC.

“CPEC enters in second phase which is based on social development, capacity building and welfare projects. Balochistan and Xinjiang are sister provinces as both fall in geo-strategic and ethnic location,” he said.

He said Gawadar is a China’s billion-dollar gateway to subcontinent. “We need to learn from Chinese development model of Xinjiang to speed up development in Balochistan. We also need China’s cooperation in education, agriculture and women development sectors,” he added.

He stressed for the need to start exchange programs for Balochistan tribe leaders and political leaders to learn from Chinese models.

“There is a need to promote university-to-university cooperation between the two countries as it would help build a knowledge-based society in Pakistan’s largest province of Balochistan and the establishment of vocational training institutes in Quetta and Gwadar which would help impart modern skills and training on the local youth,” he mentioned.

Bayazeed Kasi said that PTI government was pursuing Prime Minister Imran Khan’s vision of boosting mutual cooperation in fields of agriculture, education and health between the two all weather friends.

“We are learning from China how to alleviate poverty as China has pulled 800 million people out of poverty. This poverty alleviation model would largely help Pakistan build a community of shared destiny working closely with the vision of Chinese visionary President Xi Jinping,” he added.

Bayazeed Kasi said CPEC has emerged as an opportunity for the people of Balochistan who have faced terrorism and negligence. He said our prestigious arm forces have overcome all security issues and crushed almost all terrorist. He said the CPEC has opened for world to investment in Pakistan.

“We need scholarships for Balochistan students and to construct vocational training institutes for youth,” he added.

Mir Mehroze Marri said he was happy to observe the development model of China. “We are looking for such projects in our Balochistan on poverty alleviation. We need technology transfer in hospitals and educational sectors. Balochistan is neglected in past but now CPEC has made our province very important. Gawadar is important for both our countries on mutual understanding. We should promote Pakistan and CPEC for better future of our generation,” he asserted.

Member of PEMRA Mohammad Humayun Barakzai said Pakistan and China need to promote people to people connectivity to help remove misunderstandings.

“China is the only our sincere friend Pakistan has today and we will counter all propaganda against the CPEC. We need to construct new railway lines in Balochistan to promote local industries export products to world. We need cooperation in media sector to ensure encounter of all negative propaganda of western media against CPEC,” he added.

Mir Liaqat Marri stressed the need for promotion of people-to-people contacts between Pakistan and China. “We will support CPEC projects with our lives, with our tribes,” he said, adding that the fruits of CPEC should also trickle down to the ignored people of Balochistan as well.

Senator Daud Khan said that the delegates had visited three cities of China and learnt from Chinese development model.

“We need Xinjiang development model to develop Balochistan. We ensure full proof security for all Chinese companies. Our all political and tribal leaders of Balochistan supporting CPEC,” he added.

Faisa Hayat was of the view that the Pakistan and China need to develop closer institutional collaboration so as the two friendly states  could build closer cooperation irrespective of the change in leadership at various levels. He said the military-to-military ties between the two countries were exceptional and there was a need to also promote people-to-people contacts.

Javeria Tareen stressed the need for establishment of more skill building and vocational training centers in Balochistan to train local youth and create opportunities for them. “We need to focus on women’s development projects and give more opportunities under people to people exchange programs,” she concluded.

Source: Diplomag

Dated on: 11/9/2019

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Huawei to put South Asian Regions Headquarters in Pakistan

Vice President of Huawei Group, Mark Xueman has announced that Huawei will invest $100 million in Pakistan this year, in his recent meeting with Pakistan ́s Federal Minister for Planning & Development Makhdum Khusro Bakhtyar.

The Investment will be utilised to upgrade the technical support centre of the company in Pakistani along with the establishment of Regional Headquarters in Islamabad.

¨Pakistan is a strategic market for China and Huawei, therefore the company will set up Headquarters for South Asian region in Islamabad¨

The project will cost around $55 million and will create employment opportunities for young engineers across the country.

Besides the Minister for Planning & Development, Planning Secretary Zafar Hasan and China-Pakistan Economic Corridor (CPEC) Project Director Hassan Daud were also present to discuss the projects Huawei’s VP plans to invest.

China-Pakistan Economic Corridor is the Pakistan arm of the Belt & Road Initiative with a collection of US$62 billion worth of infrastructure projects under construction across the country.

While discussing the details about its upcoming projects in Pakistan, Huawei’s VP said;

“Huawei will also invest $15 million in its technical support centre in Pakistan and it will also hire more workforce for it, taking the number of its staff from 600 to 800 this year. Huawei is eager to initiate more projects in Pakistan on grant funding from the Chinese Government.”

Meanwhile, Planning Minister Khusro Bakhtyar appreciated Huawei’s continued efforts to equip Pakistan with modern technology & infrastructure. He said that the world’s leading telecom giant can boost Information and Communications Technology (ICT) sector of the country.

Minister mentioned that Huawei not only has a 25% share in the mobile phone industry of Pakistan but is also the top tax-paying Chinese company in the Country.

Government of Pakistan is looking forward to Huawei to contribute to its e-governance initiative as well in centralising data to improve efficiency and productivity.

Source: Belt and Road News

Dated on: July 19, 2019

Proposal to set up CPEC authority opposed

ISLAMABAD: 

The Parliamentary Committee on China-Pakistan Economic Corridor (CPEC) on Thursday opposed the government’s proposal to set up a CPEC authority, terming it an unnecessary move that will create more confusion in the execution of the multibillion-dollar project.

The joint parliamentary committee also criticised government’s decision to set up the authority through a presidential ordinance – which will further erode the moral authority of the government after the Gas Infrastructure Development Cess (GIDC) Ordinance fiasco.

The 22-member joint committee of both the houses of the parliament held its meeting in-camera.

This week, the federal cabinet approved a summary to promulgate yet another presidential ordinance to set up the CPEC authority to oversee the implementation of CPEC projects, the Ministry of Planning and Development informed the parliamentary committee.

Creating yet another bureaucratic body is also against the notion of small and efficient government and it will add more financial burden on the government.

Pakistan Tehreek-e-Insaf’s (PTI) Member National Assembly Sher Ali Arbab chaired the meeting that had been convened to take briefing on the terms of reference (ToR) of the CPEC Authority, ToRs of the head of the authority and the proposed mode of legislation.  Majority of the members of the joint parliamentary committee expressed serious concerns over the decision to set up the authority, a committee member told The Express Tribune on condition of anonymity. The members rejected the CPEC authority proposal by showing off their hands.

The military establishment floated the CPEC Authority idea in 2016, which the then prime minister Nawaz Sharif had shot down.

But last month, in its maiden meeting, the National Development Council – a joint forum of civilian and military leadership, approved the constitution of the CPEC Authority for ensuring fast track implementation of CPEC projects. Former planning and development minister Ahsan Iqbal initiated the discussion about implications of setting up the CPEC Authority.

The planning ministry informed the parliamentary committee that the CPEC authority would be responsible for the identification and execution of the projects, said the members after the meeting.

A grade-22 officer would be the chairman of the authority who will be assisted by executive director coordination and executive director research wing, the committee was informed. Under these executive directors, there would be six members to deal with the issues of energy, transport, investment, social and economic development, finance and media.

The committee members questioned the rationale and objective of the authority that according to them would duplicate the work being undertaken by the Ministry of Energy, Board of Investment and National Highway Authority.

The committee was informed that the CPEC Authority would also be responsible for holding meetings of joint working groups, expert groups and Joint Cooperation Committee (JCC) of CPEC.

Another member of the committee argued that the CPEC Authority would disrupt the normal functioning of government departments that, according to the rules of business, are responsible to execute these projects.

Work on CPEC projects has significantly slowed down after the PTI government came into power. Last month, Railways Minister Sheikh Rasheed Ahmad accused the PTI government of abandoning the Mainline-I project of the CPEC worth $9 billion under IMF pressure.

The committee was informed that the authority would be set up by promulgation of the presidential ordinance. The committee recommended that the government should introduce a bill in the parliament if it wanted to create the authority. During the past year, PTI government has promulgated 15 presidential ordinances, as it lacks a majority in the Senate and cannot get bills passed. But the ordinance can be issued only for four months and can be further extended for four more months.

The planning ministry additional secretary claimed in the meeting that the CPEC Authority would work to promote business-to-business connections between Chinese and Pakistani businessmen.

Due to the government’s decision to set up an authority, about 50 people would lose their jobs who are currently working under the CPEC Secretariat project and CPEC Centre of Excellence. Their fates hang in the balance after the government decided to set up a CPEC authority.

Published in The Express Tribune, September 6th, 2019.

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Yuan’s fall may increase Pakistan’s trade deficit with China

ISLAMABAD: 

The recent currency devaluation by China, which has brought the yuan-dollar parity to the lowest level since 2008, as part of its efforts to offset the impact of its tariff war with the United States, doesn’t augur well for Pakistan.

The yuan’s sharp devaluation means that, all else equal, Pakistan’s exports to China will become less competitive, while imports from China will become cheaper. The devaluation, combined with slowdown of the Chinese economy, is likely to exacerbate Pakistan’s trade imbalance with its single largest trading partner.

Exchange rate movements by themselves have a limited impact on competitiveness, which is essentially a function of productivity of the factors of production and technological and managerial efficiency with which the resources are combined. In the absence of productivity and efficiency, currency depreciation or devaluation normally doesn’t significantly shore up exports.

Thus during FY19, the rupee was allowed to shed its value drastically but exports remained stagnant.

However, as in the case of China, if exports are otherwise competitive, the downward movement of the exchange rate can be an effective response to an increase in tariffs (US) or imposition of regulatory duties (Pakistan). Hence, the currency depreciation may hit the bull’s eye for one economy and may come a cropper for another.

In recent years, Pakistan’s massive trade deficit relative to the size of the economy has been a major cause of concern for both the government and businesses.

From $22.16 billion in FY15, the trade deficit went up to $23.9 billion in FY16. The next two years saw the trade imbalance balloon to $32.58 billion and $37.58 billion. In FY19, the trade deficit was brought down to $31.82 billion.

However, the $5.76 billion reduction in the trade deficit was undergirded by the deceleration of economic growth from 5.5% to 3.3% and imposition of regulatory duties, resulting in a $6 billion fall in imports. As a percentage of gross domestic product (GDP), the trade deficit came marginally down from 11.9% in FY18 to 11.2% in FY19.

China has been the principal source of Pakistan’s trade deficit. In FY15, the trade deficit with China was $8.05 billion, which made up 36.31% of Pakistan’s total trade deficit. In FY16, the trade imbalance rose to $10.44 billion or 43.67% of the total trade imbalance.

The following two years saw the trade deficit enhance to $12.67 billion (38.39% of the total deficit) and $14 billion (37.26% of the total deficit). In FY19, the trade deficit with China came down to $10.89 billion, which accounted for 34.22% of the country’s total trade deficit.

Thus, between FY15 and FY18, Pakistan’s trade deficit with China cumulatively increased 74%. During the same period, Pakistan’s overall trade imbalance registered a cumulative growth of 69.58%. Thus, the growth in deficit with China outpaced that in the total deficit. In FY19, the trade deficit with China went down 22.23% while the overall deficit fell 15.32%. This means in both expansion and contraction the trade deficit with China outpaced the overall deficit.

The foregoing makes it abundantly clear that attempts to slash the total trade deficit need to focus on substantially improving the trade balance with China. As always, there are only two ways to reduce the trade imbalance – one is to increase exports while the other is to curtail imports.

Free trade

Since the conclusion of a free trade agreement (FTA) with China – signed in 2006 and became operational in 2007, Pakistan’s imports have gone up at a gallop. As per Pakistan Bureau of Statistics (PBS) data, in 2006-07, the last pre-FTA implementation year, Pakistan’s imports from China were $3.52 billion, which accounted for 11.52% of total global imports of $30.54 billion. At the close of 2017-18, Pakistan’s imports from China had gone up to $15.74 billion, which accounted for 25.89% of total global imports of $60.79 billion. In 2018-19, a contracting pace of economic growth together with trade restrictive measures, such as imposition of regulatory duties, saw a decline in imports from China to $12.70 billion, which made up 23.17% of Pakistan’s total imports of $54.79 billion.

Thus, between 2006-07 and 2017-18, Pakistan’s imports from China increased cumulatively 347%, while during the same period its global imports registered a much weaker cumulative growth of 99%. Not surprisingly, the share of China in Pakistan’s global imports more than doubled.

During FY19, Pakistan’s global imports and those from China contracted 9.8% and 19.31%. Thus, China holds the key to Pakistan’s import growth or contraction.

Tariff concessions

What caused so drastic import growth under the FTA with China? To answer this question, we need to look at the tariff concessions offered to China.

Pakistan gave China concessions on 5,686 tariff lines, of which tariffs were eliminated on 2,423 tariff lines. The concession covered 59% of Pakistan’s imports from China.

Giving such a substantial concession to a much bigger, diversified and much more efficient an economy without preparing the domestic industry to cope with the competition was always a recipe for a massive import influx.

It is argued that implementation of the China-Pakistan Economic Corridor (CPEC) drove up imports heavily from China in the form of machinery and other capital goods. Is it so?

CPEC agreements were signed in April 2015. Therefore, the impact of CPEC on Pakistan’s trade with China began in FY16. In three years, FY16-18, Pakistan’s imports from China increased 30% at 10% per annum from $12.10 billion to $15.74 billion.

In the three years (FY13-15) preceding CPEC, Pakistan’s imports from China had increased 53% at 17.79% per annum from $6.63 billion to $10.17 billion. Thus, it is primarily the enormous difference in productivity and competitiveness, widened by the FTA, between the two countries that underlie Pakistan’s heavy import bill, and by implication the enormous trade deficit with China.

While it imports massively from China, Pakistan’s exports to China are only $1.86 billion. Generally, two reasons are given for Pakistan’s inability to take advantage of the FTA and thus a highly skewed bilateral trade.

One, although Pakistan received concessions on 6,418 tariff lines under the FTA, these tariff lines covered only 5% of China’s imports from Pakistan. Thus, in effect Pakistan was given a meagre market access by China.

Two, the products of Pakistan’s export interest suffered preference erosion in the wake of China’s FTA with Asean member countries. The tariff faced by Pakistan’s rice was 65% while the average tariff for home textiles, knitted garments and woven garments was 4%, 7% and 9% respectively.

On the other hand, Asean countries received duty-free market access in China for home textiles, knitted garments and woven garments, while for rice the applied Chinese tariff was 35%.

This obviously placed Pakistan’s star products in a relatively disadvantageous position in the Chinese market. In the second phase of the Pakistan-China FTA, which is likely to kick-start soon, Pakistan has been given market access for these products at an even kneel with Asean.

The increased market access in the second phase of the FTA is important but given Pakistan’s severe productivity constraints viz-a-viz its competitors in the Chinese market, it may not be sufficient to rack up exports. In fact, such constraints should have been addressed before going into the second phase of the FTA.

Moreover, since the FTA is not a free lunch, China will also get enhanced market access and being more productive and efficient than Pakistan head and shoulder, it is likely to remain the bigger beneficiary. The yuan’s devaluation will, for sure, give a leg-up to the Chinese competitiveness.

The writer is an Islamabad-based columnist

Published in The Express Tribune, Septembert 2nd, 2019.

India wants to sabotage CPEC: Dr Alvi

ISLAMABAD: President Dr Arif Alvi said on Sunday India wanted to damage the China Pakistan Economic Corridor (CPEC) but all its designs would be thwarted.

He said this while inaugurating the opening session of Pakistan Navy war game Shamsheer-e-Bahr VII and logistic exercise Tarseel-e-Bahr II in Karachi.

He said that Pakistan is facing multitude of internal and external challenges which necessitate a ‘Whole of Nation Approach’. The chief guest also underlined the significance of war games in military planning process and expressed his desire to see valuable lessons and recommendations at the end of War Game. The president appreciated the realistic stocktaking and thought provoking presentations by force commanders, which would help in crystallising plans for maritime security and seaward defence of Pakistan. The chief guest particularly emphasised Pakistan’s increasing relevance in the backdrop of CPEC and operationalisation of Gwadar port. While underscoring the fact that economic well-being of Pakistan is linked with the freedom of navigation through seas, the chief guest said that prosperity of our people is intrinsically linked to the security of our Sea Lines of Communication, which would add to the responsibilities of Pakistan Navy in ensuring unhindered flow of traffic in our waters.

The chief guest highlighted that the illegitimate revocation of articles 370 and 35-A from Indian constitution by BJP government has engendered massive unrest in Indian Held Kashmir and raised serious concerns in Pakistan.

Indian attempt to enforced fascist control over IHK has serious implications towards internal security situation in IHK and resultantly on the security in South Asia and the world at large. Pakistan will continue to fiercely contest and expose Indian atrocities in IHK politically and diplomatically at all possible levels till resolution of Kashmir issue in the light of UNSC resolutions.

President Dr Arif Alvi was received by Chief of the Naval Staff, Admiral Zafar Mahmood Abbasi.

Later, Deputy Chief of the Naval Staff (Operations), Rear Admiral Faisal Rasul Lodhi, presented an overview of the war game outlining objectives set forth and concepts to be tried. He highlighted that being a tri-service event with representation of relevant ministries Shamsheer-e-Bahr VII is the Flagship war game of Pakistan Navy that is held biennially to try various concepts which are then validated in subsequent Navy-wide field exercises before being incorporated into naval strategy.

The event was attended by large number of high ranking Armed Forces officers besides bureaucrats and reps of Federal Ministries.

Source: The News

Dated on: 3/9/2019

Gov’t releases Rs360 million for CPEC ML-1 railway project

(APP) – The federal government has released Rs360 million for preliminary design for up-gradation and rehabilitation of main line (ML-1) railway project and establishment of dry-port, near Havelian under Public Sector Development Programme (PSDP) 2019-120.

The railway project is an important strategic part of China Pakistan Economic Corridor (CPEC) and the government had allocated Rs 1.8 billion for its preliminary design during the year 2019-20, according to latest data issued by the Planning Ministry.

Source: Duniya News

Dated on: 9/4/2019