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Pakistani students show keen interest in learning Chinese language

ISLAMABAD, Aug. 28 (Xinhua) — The first ever “Chinese Bridge” Chinese Proficiency Competition for Foreign Secondary School Students was held in Pakistan on Wednesday where nine middle school students participated in Chinese language debate and cultural performance.

A student of Roots Millennium School Flagship Campus Abeeha Shoaib secured the first position, and won a fully-funded plan to visit China to participate in the final round of the competition to be held in Beijing where she will compete with other students winning the competition from the world over.

Pakistani students are developing more and more interest in the Chinese language, and to provide them opportunity to learn the language, many local educational institutes have started Chinese language classes at primary and university level.

Presently, many top-rated universities and schools of the country including the National University of Science and Technology, Comsats University Islamabad and Roots School System are offering Chinese language classes in their curriculum, and over 25,000 students across the country are learning the language in these institutes.

Besides the “Chinese Bridge,” competitions are also frequently held in schools where students actively participate to show their fluency of Chinese language and their love for Chinese culture.

Head of the Chinese Language Department at Roots Millennium Education Mona Kanwal told Xinhua that the commencement of the Chinese proficiency event in Pakistan will encourage more students to learn the language and participate in the event in the future.

She said that in her school system, which has campuses across the country, over 8,000 students are learning Chinese language, and the trend is on rise.

“We started Chinese classes a decade ago, and at that time it was very hard to convince parents to let their kids learn Chinese, but now after the initiation of the China-Pakistan Economic Corridor, more and more students are showing keen interest to learn the language.”

Source: Xinhua

Dated on: 28/8/2019

CPEC: what’s stopping Pakistan Railways?

The world’s second-longest train route connects Yiwu, a trading centre near Shanghai, to London. The 12,000-plus kilometer-long railway track which opened in 2017 has made possible hauling millions of tons of goods within 18 days, which once took 30 to 45 days of sailing to reach the shores of Great Britain. The China-Europe rail now connects 108 cities across 16 countries, ushering in new opportunities for trade and prosperity and unfolding a new economic world order.

In Pakistan however, we have yet to initiate the up-gradation and doubling of ML-1 from Karachi to Peshawar. The track will ultimately extend to Kashghar, providing access to the BRI railway grid.

For now, the ML-1 up-gradation project remains limited to neatly-ribboned blue files, prominently displaying the Government of Pakistan’s emblem, slowly moving from one ministry to another. Ministers and their ministries are bickering over approval processes; feasibility studies are taking forever to complete; while the intimidating $8 billion price tag keeps on haunting those who dare to touch these files.

Irrespective of these political scuffles, turf wars and blame games that characterise the usual business of government, there are three fundamental reasons behind this inaction.

First is the prevailing economic crisis and the ongoing IMF programme. Not only has the IMF raised serious concerns about Pakistan’s debt sustainability, but it has also placed a tight limit on the number of government guarantees. In the absence of any government guarantees the ML-1 financing may have to be undertaken by the Pakistan Railways itself, which would need other guarantee mechanisms.

Moreover, the fiscal constraints leave little room for any significant co-contribution. The total cost of the project is $8.2 billion, with 85% financing coming from China with a grace period of 8 to 10 years. Although this would mean no immediate outflows on account of repayment, the remaining 15% which translates into a whopping Rs193 billion would have to be contributed by Pakistan. Even for the first phase of $2.3 billion, we would need to pitch in Rs54 billion. If the government is serious about ML-1 up-gradation, now is the time to figure out these issues and find workable solutions.

Secondly, the newly formed debt commission is looking into past mega projects, while NAB and provincial anti-corruption authorities are actively sniffing for corruption everywhere. A suspect is treated as a convict and before he could prove his innocence (or be proven guilty) he would have served years in prison already. In this situation, it is not easy to find a bureaucrat who is willing to sign on this multibillion-dollar framework agreement.

Thirdly comes the pricing of the project. The project is likely to follow the CPEC procurement modality, with limited competition amongst Chinese contractors. This should be fine as long as the pricing remains competitive. But international benchmarks suggest that this price is probably on the higher side. The 1,214-kilometre long Chinese Geku Railway due to be completed in 2019, for instance, costs $5.4 billion to build from scratch. Considering that ML-1 is an upgrade the price tag of $8.2 billion for 1,872 kilometres looks a little steep.

But such comparison could also be misleading, as project specificities could sometimes cause large cost variations. An alternative approach could be to limit the CPEC framework agreement to two of the three project components and undertake one component through international competitive bidding. This could help the government in real price discovery and can support in price negotiations with the Chinese.

If handled right, the ML-1 could become Prime Minister Imran Khan’s legacy that could get him political dividends for years, like the Motorway did for Mian Nawaz Sharif, or else it could easily turn into political baggage.

Published in The Express Tribune, September 3rd, 2019.

What’s next to CPEC

It has been almost six years now, since CPEC was first conceived and approximately four years since the mega project became a ground reality. So far, the project has ushered long lasting and positive results for both, Pakistan and China. Its first phase of early harvest projects worth USD 18.9 billion is almost complete as you read this now and the results are in front of all. The long-prevailing energy has been resolved to a very large extent and there are just a few lagging now and then. In fact, it was this energy short fall that Pakistan had been facing for almost a decade now and which caused industries to avert Pakistan land and flee to neighboring countries.

Back in 2015,Woodrow Wilson international center for scholars had issued a book in which the growing energy crisis of that time was addressed. The report had clearly stated that energy shortfall had already soared up to as much as 8,000 MW. However, according to the recent release of information by the power division of energy, presently, the country is facing zero energy shortfall. Moreover, it also informed that in the present times, the power demand in the country is around 19,000 MW while the generation capacity is as much as 20,300 MW approximately.

Initially, when multi-billion dollars project started with USD 46billion, keeping in view then energy crisis, around USD 35 billion was primarily allocated to the energy sector. The early harvest projects were mostly energy aimed at producing more than 17,000 MW which they did and so Pakistani nation is no more suffering more intense blackouts. This somehow has cushioned the reservations of the industrialists.

Masses in Pakistan have already been witnessing the benefits of CPEC whether it is their daily life or in their economic cycle yet there is more to come

Apart from energy sector infrastructural development was also one of key aspects of CPEC. Early harvest projects also focused on infrastructural development. Fruits of CPEC also has brought major infrastructural developments to Pakistan. Development of road and rail network has been going on with full pace. Sukhar- Multan section of Karachi-Lahore motorway has been completed whereas Havelian-Thakot section of KKH Phase-II is near to its completion. Moreover, upgradation of ML-1 is also underway. Within the time span of around 5 years, infrastructural development has provided more than 51,000 job opportunities out of which 48,000 were reserved for the locals. Gwadar port has altogether taken a new look with port roads, storage yards, equipment for loading and unloading, oil supply and port monitoring systems have improved a lot. The Gwadar- Middle East Express is already functional.

Despite what the propaganda states, CPEC today is in its full swing, co-operations in almost all possible sphere of lives are done, be it energy, infrastructure, agriculture, industry or any other. Recently the second Free Trade Agreement Phase II signed between the two countries has opened new avenues of prosperity for Pakistan. Not just that, Pakistani goods are offered to be exhibited free of cost at international fair by Chinese supply chain companies. This will once again give boost to Pakistan’s imports. Industrial cooperation is also on the rise as Chinese city Xuzhao has signed an MoU with KP government for strengthening industrial assistance. The Board of Investment and national Development and Reform Commission is also playing their part.

Recently Consul general of china Wang Yu said that there will be 27 new projects in the second phase of China -Pakistan Economic Corridor (CPEC). Work on these new projects will begin by the end of this year. Consul general added that “agriculture, education, vocational training, industry, increase in water supply, etc, are all part of our plans for the next phase.” This is a perfect response to all such narratives which were surfacing as CPEC is no more. The truth is CPEC is more and there is more to come. As the CPEC grows it vows to strengthen the bond between iron brothers.

The ending of first phase of CPEC is just a beginning of renaissance for Pakistan. There is more to come. Dawn of second phase of CPEC is just around the corner and it will be focused on socio-economic development. Masses in Pakistan have already been witnessing the benefits of CPEC whether it is their daily life or in their economic cycle yet there is more to come. CPEC no doubt is the game changer and with peace prevailing will play a very vital role in putting Pakistan to the road of progress.

The writer is the Founder & Executive Director of Islamabad Institute of Conflict Resolution (IICR)

Source: Daily Times
Dated on: 9/3/2019

Rajnath Singh to urge Seoul to stay away from CPEC

NEW DELHI: For defence minister Rajnath Singh, the immediate tasks at hand include blocking Korean funds from flowing into Pakistan.

Singh will convey to his South Korean counterpart in Seoul on September 4 that the China Pakistan Economic Corridor (CPEC) violates India’s sovereignty by running through Pakistan-occupied Kashmir. Islamabad has been trying to woo Korean corporates to invest in CPEC-related projects, promising various economic opportunities.

In his interactions with the South Korean authorities including political, Singh will also share the rationale behind the government’s decision to scrap Article 370 and the subsequent benefits to Kashmir, besides Pakistan’s constant efforts to push cross-border terror.

Pre-empting New Delhi’s move, Pakistan foreign minister Shah Mehmood Qureshi had called his South Korean counterpart Kang Kyung-wha last Friday to brief her about Islamabad’s narrative on Kashmir. Kyung-wha is understood  ..

Singh will also seek to boost South Korean investments in India across sectors and push for joint development of defence equipment, sources said. “The focus of the visit will be to explore new areas of defence cooperation, including co-development of military hardware,” an official said.

The defence minister will be in Tokyo on September 2-3 before flying off to Seoul. Tokyo has assured New Delhi that it has no interest in CPEC because it violates India’s sovereignty.

South Korea has remained one of the top investors in India since the economy was liberalised with investments nearing a cumulative figure of $6 billion. India features among the top 10 trade partners of the country and is the sixth largest export destination for its goods with the trade volume reaching $21.5 billion in 2018. Prime Minister Narendra Modi had three rounds of interactions with Korean business leaders in the past one year.

During his visit to Seoul last month, Abdul Razak Dawood, who advises Pakistan Prime Minister Imran Khan on commerce, textile, industries, production and investments, offered to set up an exclusive economic zone for Korean companies as part of CPEC-related projects.

He also invited Korean investors at the Pak-Korea CEO Forum held in Seoul. He cited Pakistan’s 11-point rise in global ranking on the ease of doing business index to attract Korean investments. He also offered the early harvest programme to his Korean counterpart, which may lead to a free trade agreement (FTA) between the two countries.

The Korean side, according to Pakistan, assured investments and technology. The country will also send a buying mission of importers to Pakistan soon, it said.

Dated on: 2/9/2019

Work on 27 new CPEC projects may begin this year, says Chinese CG

KARACHI: “There will be 27 new projects in the second phase of the China-Pakistan Economic Corridor (CPEC),” said Consul General of China Wang Yu during a dialogue on the subject organised by the Karachi Council on Foreign Relations (KCFR) at a local hotel here on Thursday.

He said that following the signing of the memorandum of understanding between China and Pakistan for the second phase of CPEC earlier this year, work on these 27 new projects was expected to begin by the end of the year.

“Agriculture, education, vocational training, industry, increase in water supply, etc, are all part of our plans for the next phase,” he added.

He also said that because of the good diplomatic relations and close friendship enjoyed by China and Pakistan, many Pakistani students were going to China for their higher studies while many Chinese students are studying in universities in Pakistan. “The Chinese Consulate in Pakistan also sends some 20 Pakistani journalists to China on an annual basis. These journalists then pen articles about China and prepare documentaries about our country, which helps others here know China better,” he said.

‘Kashmir is a historic issue which should be resolved through talks’

“Likewise, China also invites and hosts artists and painters from Pakistan for the exchange of cultures of both countries. Our doctors and surgeons also visit Pakistan regularly and they perform several complicated surgeries for free here. In Karachi alone, our ophthalmologists have performed over 500 cataract surgeries. And this relationship should grow further with the efforts of people from all walks of life on both sides, be they businessmen, politicians or other professionals. We need to be focusing together on positive outlooks,” he said.

Regarding the situation in India-occupied Kashmir, the CG said that China stood with Pakistan. “Kashmir is a historic issue which should be resolved through talks,” he added.

KCFR chairman Ikram ul Majeed Sehgal said that the current situation with India and what they were doing in Kashmir made China’s friendship with Pakistan and its stance particularly important.

Answering a question about security, Consul General Yu said there was no economic development without security. “Education and employment is also affected by a lack of security,” he said.

About the nuclear power plants in Karachi, he said he was aware that they were to come online by next year. “Power plants are needed as soon as possible in order to address the issue of energy shortage. Nuclear power plants will address this country’s long-term needs,” he said.

“There is also severe water shortage here but hopefully things would improve after heavy rainfall in Balochistan,” he added.

In reply to another question about garbage and waste disposal and how the contract with the Chinese company that was going to do the work here was cancelled, he explained that there were two sides to the story. “The Chinese side is that the Sindh government didn’t fulfil its part of the deal and the money was not paid to the company on time and they were left to work on their own resources. Meanwhile, the Pakistan side is that the Chinese company did not fulfil its agreement. But the contract was mainly cancelled due to commercial reasons,” he said.

In reply to a question about investment from China, he said the last two to three months had seen more Chinese investors coming here. “They are eager to invest here but they also need to know that the investments they make are sound and that they will also earn money here and for this there is a need for a fine transport system for the transportation of goods, new airports, etc. We are here for business and trade, but we are not in a decision-making position,” he cleared.

Published in Dawn, August 30th, 2019

CPEC 2.0: THE PROMISE AND THE PERIL

As Pakistan navigates changing power equations in the world, and the crisis in Kashmir, the China Pakistan Economic Corridor (CPEC) stands out as the one possible silver lining for Pakistan. However, while CPEC is still one of the largest bilateral investment projects underway anywhere in the world, today its momentum in Pakistan is being regularly questioned. The scale of the promise is so large that it invites anxiety as well as awe in its sweep. With early harvest projects worth 18.9 billion dollars already underway in Pakistan in its first leg, the planning by Islamabad should bring much higher infows than timelined right now. Yet it simultaneously tests the Pakistan government’s capacity to use the opportunity to its advantage.

China’s ability to pull 800 million people out of poverty in four decades through economic reforms has presented a compelling model for Pakistan to follow. However, given a tough series of IMF-induced measures for stabilisation, economic growth in Pakistan seems to have slowed down even more. Even though the centre is adamant that there has been no slowdown on CPEC goals, the sense in the provincial capitals is different.

Among the big signature projects, infrastructure and energy top the wishlist. While Thar coal has generated power that now feeds into the national energy grid, officials claim that Islamabad’s full-throttle drive on CPEC has been eased up and work on the projects pushed down the priority list. Yet at the same time, the economic impact of CPEC is seen as potentially so game-changing, that it cannot be ignored. With the precipitous slide of an overvalued rupee, and public finances straining at crippling deficits, the prospect of Chinese-led investment growth is the only rainbow on a horizon clouded by high economic stresses for a fast-growing population. In best-case estimates, in fact, it is believed that Chinese investment can potentially stimulate an eight to 10 percent increase in Pakistan’s GDP by 2030. In worst-case futures, that number may well be unreachable, given Islamabad’s current inability to operationalise promised reform.

Furthermore, even though Pakistan’s new economic policy focus seems to be geared towards operationalising these promised reforms, the goals that it has espoused have remained blurry and do not align with parliamentary and public reporting. Separating myth from reality and setting clear goals for inclusive planning at the federal, provincial and grassroot levels should be a top priority for the government. As a democratic country with multiple languages and ethnicities that find expression in a huge traditional and social media, even small confusions or communication gaps can create severe cascades of backlash at all tiers of governance. For example, community level politics is critical to navigating trade union tensions. In Gwadar, the lack of consultations with the local fishermen in the building process of terminals and jetties that displace their livelihoods and boats has been a major cause for tensions. It is precisely this ambivalence that has hampered the transfer of knowledge and caused the failure in connecting nodes at the downstream institutional level.

The scale of Chinese investment in the China Pakistan Economic Corridor is so large that it invites global awe. But as CPEC moves into its second phase, there is also anxiety that the project is deliberately being slowed down and that its promise may not be fulfilled. What needs to be done to put it back on track?

Moreover, while some of the Pakistani concerns pivot around transparency, repayment terms and capacities, most of them do not question the intent of the embrace. Provinces within Pakistan that voice complaints either do so because of Islamabad’s growing institutional opacity or simply because they want more of the pie.

As with all such big platforms, the challenges to CPEC 2.0 are legion. Understanding that the real challenges to realising the maximum potential from CPEC are internal is a crucial step towards successfully benefitting from it. These are embedded in three Cs’ of capacity, coordination and consensus. Pakistan, undeniably, has to scale up its capacity and coordination while building consensus in identifying policy frameworks for the opportunity this platform offers.

Consensus

Chinese trucks are parked at the Gwadar port, some 700 kilometres west of Karachi | White Star
Chinese trucks are parked at the Gwadar port, some 700 kilometres west of Karachi | White Star

One of the foremost roadblocks in effective consensus-building on CPEC has been the divergence in processes between a centralised Chinese communist party government and Pakistan’s nascent democratic parties and governance structures.

With CPEC envisioned as a cross-Pakistan project that involves all of four provinces, navigating Pakistan’s multi-party provincial structures and building bridges with all political parties has been a challenge. However, China has sought to overcome the Pakistani government’s own inability to build consensus and manage the political centre-field by engaging directly with several political parties at the provincial and federal level, to cultivate a better understanding of CPEC’s vision and priorities. This process has culminated in the establishment of a CPEC Political Parties Joint Consultation Mechanism, which has seen the Communist Party of China engage with a broad spectrum of Pakistan’s political parties.

Since CPEC is not a parochial one-party or one-province ambition, it requires strategic levels of consensus-building to ensure each province’s stake in the project is protected and that Pakistan’s government moves forward collaboratively. Given the clear multi-party buy-in and commitment to CPEC, building consensus between Pakistan’s political parties should not be as arduous of a project as it seems. However, the federal government’s attempts for building political consensus between political parties has been poor because of the lack of transparency about CPEC between the different wings of government. The parliament is not brought into the fold by the federal government and has also consistently lacked an appreciation of the need to build stakes in parliamentary leadership at the highest level. This failure has led to political instability hampering the path to consensus and in ensuring that CPEC is implemented at optimum capacity. The federal government is often seen as absent or dismissive of this crucial process of political coalition-building.

Since CPEC is not a parochial one-party or one-province ambition, it requires strategic levels of consensus-building to ensure each province’s stake in the project is protected…

Capacity

Source: Ministry of Planning, Development & Reform
Source: Ministry of Planning, Development & Reform

Another major challenge to Pakistan has been the government’s capacity deficit to absorb concessionary loans and grants which has been only worsened by their inability to plan how these will be absorbed in the future. Given the multiplicity of project designs under CPEC, both in the government and the private sector, it is clear that the Planning Commission, in which CPEC is nested, is both under-resourced and under-powered.

In terms of doing business reforms, most of the improvements have come at the provincial level from Punjab and Sindh, limiting the development only to Karachi and Lahore. Even though these efforts are commendable, they are insufficient for the country in the longer run as they give the impression that the government is only fixing what can be measured. It is the responsibility of the federal government to effectively disseminate information about the economic impact of CPEC that provides a blueprint to the rest of the provinces to implement business reforms that can equip them with the right tools to benefit from CPEC.

Furthermore, Pakistan’s current Special Economic Zone (SEZ) law, instead of decentralising and curbing bureaucratic controls to create elbow room for private enterprises, adds impediments such as approvals, areas of overlapping jurisdiction and poorly allocated regulatory authority. Recent reports suggest that while authorities are still busy with evaluations and land acquisition, work on any of the nine special economic zones is yet to begin.

The former Chinese ambassador to Pakistan, Yao Jing, has repeatedly asserted that Pakistan has the potential to attract huge Chinese investments only if they can develop better trade policies, offer tax incentives and foster an investment-friendly climate. Currently, investors are required to get multiple No Objection Certificates (NOCs) before investments can begin. Hence, while SEZs in other countries such as China, UAE, Thailand and Georgia offer a one-stop-service for all regulatory matters, in Pakistan, the Board of Investment (BOI) serves that purpose which, due to the lack of a tailor-made framework for SEZs, leads to bureaucratic red tape. Reforms should be aimed at empowering the provincial governments to process the application of SEZs to save time and money instead of being dependent on Islamabad.

Source: Ministry of Planning, Development & Reform
Source: Ministry of Planning, Development & Reform

Another significant hurdle in Pakistan’s ability to generate employability under CPEC initiatives has been the capacity of our human resources. While Pakistan boasts the ninth-largest labour force, lack of investments in technical and vocational training have seriously affected labour skills. As a result, while infrastructure projects under CPEC continue to employ over 90 percent domestic labour, the percentages shrink dramatically in technical projects such as energy and digital connectivity. Presently, several Chinese companies are undertaking specific on-the-job training programmes for semi-skilled workers, both in China and in collaboration with universities in Pakistan that are partnering in dedicated short training courses.

CPEC has so far created nearly 68,382 direct jobs, according to the Ministry of Planning, Development and Reform. The China-Pakistan Economic Corridor Committee Meeting on June 13, 2019, discussed that CPEC has the potential to further generate anywhere from 800,000 to 1,500,000 jobs till 2030. For Pakistan, investments such as CPEC are valuable for their spillover impact on local firms and labour in terms of transferring technology, boosting skills and improving the quality and quantity of employment. The availability of productive, skilled and reasonably priced labour is an important determinant of the location for foreign investment. For Pakistan’s demographic structure, with a burgeoning young labour force, the opportunity to generate high-value jobs from CPEC investments is not one that Pakistan can afford to miss.

Coordination

Source: Ministry of Planning, Development & Reform
Source: Ministry of Planning, Development & Reform

Coordination and communication is critical to connecting institutional dots. Effective communication is the overarching element of power in the 21st century, and CPEC’s scale and ambition must best be addressed with clarity. Provinces have to be given the confidence that CPEC will be transparent and equitable. Unfortunately, to this day, little is known about the government contracts signed under CPEC.

When it comes to a discussion of provincial stakes, it is fair to start with Balochistan — the home of Gwadar, which is the centrepiece of the CPEC maritime Silk Road linkage. It goes without saying that the province has several deprived regions that need development and connectivity. The people of Balochistan and their public representatives have their hopes pinned on CPEC as much as the rest of Pakistan, if not more. For years, the mineral-rich province has provided resources like natural gas. But, at home, it has witnessed scarcity of resource and even gas at multiple levels. Its only consolation has come in the form of the 18th Amendment which ensures them ownership of their own resources through the National Finance Commission award.

It has already been indicated that the Balochistan government has repeatedly displayed confusion about the lack of progress on the Western Route. They have also raised questions about the province’s share in the multibillion project remaining at a meagre two to three percent. In the absence of transparency and provincial coordination, several voices suggest that the provinces aligning with the Eastern Route will be the larger beneficiaries of CPEC investments. In parliamentary committee meetings, members from both Balochistan and Khyber Pakhtunkhwa have protested against the lack of groundwork on CPEC in their respective provinces. Additionally, lack of water infrastructure is a major roadblock to development in Gwadar as well as other parts. These are areas that beg the government’s attention but little of substance has been communicated during the Senate Special Committee meetings to date.

Nonetheless, the main political parties of Balochistan have been on the record to offer their full support to the central government — as have other political and opposition parties from Sindh, Khyber Pakhtunkhwa and Punjab — on all CPEC projects.

Now, as CPEC drives into the next phase, the flow of substantive informational exchanges between various provincial and central departments as well as the private and public sector should not remain ambiguous anymore. There are obvious fault lines in communication as various members of the Senate CPEC Committee, who are also representatives of their provinces, have raised questions about timelines and priorities. Most recently, the increasing scrutiny of CPEC projects by the National Accountability Bureau (NAB) has stalled the process of approval for the ML-1 railway line — a project of immense strategic importance to CPEC. The federal government will have to demystify these details and, for that, it needs to make use of the parliament.

It is clear that in order to be functional, the most effective means of communicating across the federation would be to use parliamentary committees (CPEC committees are fully functional in the Senate) to ensure transparency and build a narrative that has a buy-in from all parties and provinces. The fact remains that, as representatives of their communities, all parliamentarians and political parties do see the benefits of CPEC and the potential for their own communities, once clear timelines and execution of projects becomes visible.

The Way Forward

PM Imran Khan and Chinese Premier Li Keqiang on the PM’s visit to China last year - cpec.gov.pk
PM Imran Khan and Chinese Premier Li Keqiang on the PM’s visit to China last year – cpec.gov.pk

Going forward, here is what the government needs to do urgently in order not to miss this opportunity. Future development may be less arduous if a one-window autonomous CPEC Authority is set up, which may already be on its way as recommended by the Senate Special Committee on CPEC. This would manage the internal challenges of planning, financing and coordinating between institutions, provinces and agencies to build momentum on speedy outcomes. Furthermore, tax regimes would have to be rationalised, infrastructure and energy provisions need to be ensured, transparency of contracts have to be addressed to avoid controversy and sovereign guarantees to provinces where needed made available. Flexible financing for private joint ventures and structural reforms also need to be planned and undertaken if any of the promised gains are to materialise.

Additionally, tax incentives can be conditioned on training labour and tax breaks can be conditioned on sourcing components from local firms, which also translates, albeit more indirectly, into local employment gains. In a bizarre and rather sharp contrast to this, the current service sales tax regime imposes a tax on business trainings, thereby increasing the costs of private training. Business-friendly measures can directly address the market failure that plagues the labour market; by compensating firms that invest in labour, the government can plug in the gap between private and social benefits.

Finally, amendments to the SEZs Act of 2012, which are currently being debated in parliament, must ensure that SEZs provide Chinese and other companies, at a minimum, the same incentives that other South East Asian and African SEZs are currently providing. In addition, to deter rent-seeking and to guarantee that industries are market-driven, SEZs must ensure devolved decision-making that takes the private sector on board. With the majority of SEZ companies expected to be from the private sector, ensuring that market dynamics determine SEZ policies will be essential for long-term viability of SEZ companies. A clear ‘rules of engagement’ agreed upon by both China and Pakistan would also prove beneficial in terms of expected outcomes.

Ultimately then, the ball is squarely in Islamabad’s court. The Chinese have done what they mostly need to. If urgent reforms are not undertaken for coordination and planning, there is a clear danger of the big CPEC opportunity shrinking to a much smaller platform than its initially conceived big-scale and transformational potential. History will judge all actors poorly — particularly the current PTI government — if they don’t seize the moment and the options for what they are.

 


Debt Diplomacy

Riding a global trend, a symptom of Western anxiety is the new narrative of CPEC and the Belt and Road Initiative (BRI) being bloated, unplanned and predatory initiatives. The spectre of swamping Chinese indebtedness is cited by Western powers as a critical neo-imperial gambit that cannibalises developing, weaker economies, while ignoring their own debt profiles and structural lending to countries like Pakistan. This public conversation naturally stokes real fears in Pakistan, where the opacity of Chinese contracts with government are cited as troubling for good governance and debt-ratio metrics.

The fact is that 90 percent of developing country debt, including Pakistan’s, is owed to Western countries or institutions. Servicing this debt consumes about 30 percent of hard currency outflows from these developing countries, notwithstanding examples of Sri Lanka or Malaysia. At the Second BRI Summit in April 2019, China has sought to realign its investments in large-scale projects by addressing concerns of exclusivity, sustainability and standards. The launch of the new Debt Sustainability Framework under the Chinese Ministry of Finance, coupled with the Multilateral Cooperation Center for Development Financing are meant to address concerns of debt sustainability, and build multilateral cooperation mechanisms to help share financing for infrastructure projects, largely restricted to policy banks such as the China Development Bank, EXIM Bank of China and other state-owned banks.

As Pakistan enters the second phase of CPEC, it is important to understand the measures and projections surrounding the arguments over debt risk to inform policy behaviour. One of the main concerns is that CPEC is adding on to Pakistan’s already ballooning public debt. This is not entirely true.

According to the official Chinese statement, the early harvest projects are worth18.9 billion dollars in investments which is made up of six billion dollars in government loans with a two percent interest rate and private investments in the form of equity worth three billion dollars, and 9.8 billion dollars in commercial loans with a five percent interest rate. So far, the government of Pakistan only needs to repay six billion dollars over the span of 20-25 years. It is important to note that, although commercial loans figure in the country’s total external debt and liabilities, it is in fact not guaranteed by the government. This is proven by the State Bank’s official figures that do not show any guaranteed private-sector external debt. CPEC makes up for six percent of Pakistan’s total external debt worth 105.84 billion dollars whereas other multilateral loans run about four to five times more, dwarfing CPEC loans in comparison.

Aside from the debt question, some worry about the risk of asset seizure in case Pakistan fails to repay its Chinese loans. Sri Lanka is often cited as a cautionary tale in this regard. However, the circumstances that led Sri Lanka to lease its port to China point to a much more pervasive balance of payment crisis that goes well and beyond its Chinese loans. The Rhodium Group, in a recent study, looked at 40 cases of Chinese debt renegotiations. Their findings reveal that asset seizure is indeed a very rare occurrence. In fact, deferment, change of loan terms and deadlines, refinancing or even write-offs or debt forgiveness are more common outcomes. The refinancing and renegotiation given to Angola, Ecuador, Ethiopia, Mongolia and Ukraine support this claim. Altogether, China has renegotiated around 50 billion dollars worth of debt.

With its ballooning external debt, questions surrounding the country’s capability to repay its loans without risking its assets are not unfounded. The real risk lies in Pakistan’s ability to stabilise its balance of payments. Pakistan must, therefore, focus on building cooperation frameworks and reducing the opacity of CPEC finances.

Published in Dawn, EOS, September 1st, 2019

Author: Sherry Rehman

Sherry Rehman is the Parliamentary Leader of the Pakistan Peoples Party in Senate and President of the Jinnah Institute. She is also currently serving as the Chairperson of the Senate Special Committee on CPEC.

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China coherently moving Africa’s tech to the next level

China is currently Africa’s largest trade partner, a title they reached about 10 years ago. There is no doubt that the economic relationship between these two partners has received some criticisms, particularly from the West, but for the African leaders, China is their ally of choice. This is not only because Beijing has the funds to finance infrastructure projects in the region, but also because of the Chinese non-interference policy which suits African governments very well.

If you look all over Africa, you will see signs of Chinese businesses everywhere; as of 2018, it was estimated that over 10,000 Chinese companies were operating in Africa.

The introduction of the Belt and Road Initiative (BRI) about six years ago has broadened trade and investment horizons between China and Africa and was well received by the continent as another layer to an already flourishing cooperation. The BRI, which includes investments by private Chinese firms not only in Africa but around the world, has already witnessed successes in some parts of Africa.

China has consistently been involved in infrastructure projects in Africa, particularly in the construction of road networks, seaports and railways, among others. With a teeming population – one which is expected to double by 2050 – the Chinese have recognized the need to stay close to their African allies for better economic dividends. The creation of the BRI is to realize this ambition.

More and more African countries have recognized the relevance and significance of the BRI for Africa’s growth and are willing to push China into expanding the program, particularly in the areas where results would be felt quicker and can be easily indexed.

Research and Development (R&D) has been on the rise in China and the country is earnestly closing up the gap between it and the US. China’s total spending on R&D increased astronomically to 12.3 percent in 2017, which is about $250 billion.

For China’s engagement with Africa, R&D has been the benchmark for improved and sustainable relations. The need to invest more in education, technology and agriculture under R&D is top on China’s agenda under the BRI.

Technology, in particular, has been one field China has leveraged in Africa due to the continent’s slow start when compared to countries outside the region. China has found little or no rivalry in this line of business, and Huawei’s huge presence in so many African countries is testament to that. Huawei has successfully built about half of the 4G networks in Africa and most of the 2G and 3G networks.

One would easily posit that the Chinese technology companies yearning for expansion are moving into the less technologically developed Africa, where countries are striving to attain a double-digit economic progression. At the moment, a lot of Chinese companies operating on the continent have found new opportunities in mobile technology, and have introduced forms of a product to the local market.

With such domination, China would like to go even further through BRI projects to capture the market of over 1 billion people in the region.

Huawei’s operational strategy revolves around the transfer of technology. This is one area where Africa is in serious need of assistance. Huawei sees it as a corporate social responsibility to get the locals trained in SciTech. One of the most prominent programs by the firm was what it dubbed the “Seeds for the Future” initiative.

This is an idea designed to help young telecom talents on the continent. In 2017, it sponsored 10 African students to travel to China to have direct knowledge of innovative technology including 5G.

Analyzing mobile technology and internet connectivity, one successfully experimented digital project of the BRI is the PEACE cable, which is a fiber network that connects Asia to Africa and sprawls to Europe at a speed of over 16 terabytes per second. Huawei is also making this technology possible and has made provisions, for any telecommunications company interested in the invention, to connect and use the cable to increase its local network service.

Another side of technology that has not been discussed at length is digital technology. That is where one private Chinese firm, StarTimes, is doing a good job. The firm started its operations in Africa in 2012, and has been able to serve tens of millions of Africans with satellite television access, not only in cities but equally in rural and suburban areas. StarTimes has created roughly 50,000 jobs for locals. This effort serves as a prototype for new players that want to do business in digital television in Africa.

The BRI has many investment opportunities and is still in its infant stage – just like the current phase of technology in Africa. What this means is that the potential for growth is there, and the space for greater business cooperation between Africa and China is calling.

One area of major concern, however, is the lack of any serious push by African leaders to take control of the market. This will no doubt affect overall economic performance at the end of the day. At the moment, there are no ongoing discussions about how to take charge of this industry. African policymakers should engage their Chinese counterparts more in the area of technology transfers, which is key for any meaningful technological rise on the continent.

Source: Global Times

Dated on: 22/8/2019

The author is a PhD International Law student, a published author and a commentator on Sino-African relations. He currently studies at the University of International Business and Economics in Beijing.

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Pakistan, China trade volume jumps to $15.6b under FTA

ISLAMABAD: China, Pakistan Free Trade Agreement (CPFTA) appeared to be a milestone in the two countries’ bilateral economic cooperation, as their bilateral trade has jumped to dollar 15. 6 billion in the recent years,

China Economic Net, quoting official sources reported on Friday that within the first phase of CPFTA, Pakistan’s exports to China have increased to US$1.85 billion (FY19) from US$575 million (FY07), and the bilateral trade volume has jumped from around US$4 billion to US$15.6 billion accordingly.

The CPFTA was signed in 2006 and came into effect in 2007. It is the first FTA China signed with South Asian countries.

The signing and implementation of the CPFTA has led to the rapid development of bilateral economic and trade relations. According to the statistics of Pakistani customs, so far, China has been Pakistan’s largest trade partner and the second export destination country for 5 consecutive years, and topping the FDI original country for 6 consecutive years.

Along with the constant upward trend of China-Pakistan trade, a rising concern on trade deficit with China has been echoing in the Pakistani business communities. It is pertinent to mention that the main reason behind the trade imbalance has to be the structural problems in nature between industries of two countries.

China has a strong manufacturing base to export goods as compared to import. Up to now, China turns to be the largest trading partner of more than 120 countries and regions in the world, and China has never intentionally pursued the trade surplus, not with any trade partner.

To address the major concern of Pakistani side, China has proactively taken a lot of measures to maintain a balanced trade relation with Pakistan. According minister counselor, Economic and Commercial Section, Chinese Embassy in Pakistan, in cooperation with Pakistani counterpart, China is keen to expand more market access for Pakistani products and organizes varieties of trade promotion activities in Pakistan and China every year.

In the meanwhile, in pursuit of a higher level of trade liberalization, the second phase of negotiations of CPFTA was launched in 2011, and successfully concluded after 11 rounds of talks.

Witnessed by the two countries’ leaders this April, the protocol of the CPFTA Phase II was signed at the second Belt and Road Forum for International Cooperation held in Beijing and will take effect in due course.

The second phase of CPFTA is a substantial upgrade of the original one and is expected to be a milestone in the history of the two countries’ economic and trade development. The two sides will, based on the original FTA, significantly reduce the tariff between the two countries and further expand the liberalization of trade in goods. After the Protocol takes effect, the level of bilateral trade liberalization will increase from the previous 35% to 75% in terms of tariff lines elimination.

Source: The News

Date: 26/8/2019

Chinese team takes up CPEC security with minister

ISLAMABAD – A Chinese delegation comprising of 12 members headed by Ambassador of China to Pakistan Yao Jing met with Interior Minister Brigadier (Retd) Ijaz Ahmad Shah to discuss security matters pertaining to China Pakistan Economic Corridor (CPEC). “To further strengthen cooperation with China in all aspects of our bilateral relations, the security of economic development is very vital,” said the minister.

Ministry of Interior is playing a lead role in CPEC security and has established multiple operational and working mechanisms to achieve the desired objectives, he added. It is important to note here that the Joint Technical Expert Working has offered technological assistance on security management of CPEC. The Chinese ambassador put emphasis on increased use of technology in operational matters to ensure efficiency and smooth functioning of projects.

Beijing says ready to further expand CPEC

The delegation shared their ideas and future prospects with the minister that were positively welcomed and both sides agreed on mutual cooperation to make sure that CPEC becomes a success. The security matters pertaining to Gwadar Port and surrounding areas were also discussed and possible measures were proposed. “I feel pleased to have talks with Chinese delegation and look forward to even stronger relations between the two countries,” The minister said and concluded with the promise to ensure effective execution of decided matters for protection and successful completion of CPEC.

APP adds: Terming the China-Pakistan Economic Corridor (CPEC) a symbol of cooperation between the two neighbourly countries, the spokesperson for the Chinese Foreign Ministry on Tuesday said that his country would like to work with Pakistan to enrich and expand the corridor in order to achieve high quality growth so that more benefits could be delivered to peoples of the two countries and the region. While responding to a question about the completion of CPEC in Balochistan in Beijing, Geng Shuang said that recently the trial of China Power Hub Generation Company’s 1,320 MW coal-fired project was over, and it was now put into commercial operation in Balochistan.

“This is an important energy project under the CPEC, and it would meet the power needs of millions of Pakistani households,” the foreign ministry spokesperson added. The spokesperson reiterated that both China and Pakistan were all-weather strategic partners and the CPEC was a symbol of practical cooperation between the two countries.

The Hub Power Company Ltd (HUBCO) and China Power International Holding had announced Commercial Operational Date (COD) of their 1,320MW imported coal power plant and integrated jetty with coal transshipment capacity of 4.2 million tonnes per annum (MTPA). Developed in record time, as per the schedule and within projected costs, the CPHGC project is a part of the early harvest energy projects under the CPEC framework, making it truly a project of national and strategic significance. The plant will add 9 billion kWh of electricity to the national grid every year, meeting power needs of four million households in the country.

Source: The Nation

Date: 21/8/2019

Author: Imran Mukhthar

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Revised FTA with China ‘silver lining’ for Pakistan

ISLAMABAD: 

Experts have urged the government to build the country’s export capacity in order to cater to the demand from Chinese markets at competitive prices, amid finalisation of second phase of the free trade deal between Pakistan and China.

At a seminar on ‘Pakistan-China Free Trade Agreement (FTA): Where we are and where we are going?’ on Monday, they termed the FTA a silver lining for Pakistan’s economy and a splendid opportunity for both countries.

Speaking on the occasion, Chinese Embassy Economic and Commercial Section Minister Counsellor Wang Zhihua said though the trade volume between Pakistan and China had increased over the years, the trade imbalance remained the biggest challenge. “The main reason behind the trade imbalance between the two countries is of structural nature, where China has a strong manufacturing base to export goods as compared to imports,” he remarked.

Wang said the finalisation of the second phase of FTA between the two countries on the sidelines of the second Belt and Road Forum would help resolve such issues and further strengthen bilateral trade ties.

He argued that as per FTA phase two, China had agreed to eliminate duties on more than 300 products, especially in the agriculture sector, where Pakistan had the potential to expand its export basket. “We hope that the government will adopt a new industrial policy at the earliest to help improve business environment and ease of doing business,” he said, adding that it would also help Chinese investors bring more investment.

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