Can China’s economic model be compatible with Pakistan’s Structure? | By Dr Abdul Wahid


Can China’s economic model be compatible with Pakistan’s Structure?

The history of well established, principled and long-standing partnership based on mutual cooperation between China and Pakistan dates back to the earliest years when Pakistan was one of the first major countries to recognize the People’s Republic of China. This‘time-tested and all-weather’ friendship is built on the strong pillars of bilateral cooperation on socio-economic grounds. Continuing the harmonious legacy of trust and collaboration, China has become the largest trade partner of Pakistan after Free Trade Agreement (FTA) signed in 2006 where both countries have agreed to eliminate tariffs on a number of products.

Similarly, China-Pakistan Economic Corridor (CPEC) is a multi-billion-dollar infrastructure- development project consisting of a network of highways, railways, pipelines, special economic zones, power plants and multiple other ventures. A consortium of Chinese investors have purchased up to 40% stake in the Pakistan Stock Exchange (PSX). In spite of these developments, Pakistan has not achieved a substantiate success in translating these endeavors into sustainable partnership programs which might further bring FDI, portfolio investment, transfer of technology and knowledge exchange schemes between the two nations.

Several multilayered challenges are observed at state to state, business to business and people to people levels which have affected the full groom of economic cooperation between the two countries. Regarding the state to state structural crisis, infrastructure gaps are of the preliminary concern for the economic policy makers of Pakistan. The country needs to become more resourceful in terms of transportation, energy, technical and knowledge expertise and communication framework. Bureaucratic hurdles have also contributed to hindering economic cooperation. Additionally, the two states have different legal systems, business cultures and regulatory frameworks which have made it challenging to navigate the business environment in respective countries.

The colonial nature of Pakistan’s administrative structure and the western orientations of the majority of bureaucrats (with their dual western nationalities and academic degrees from Western universities) are also among the significant challenging factors. On the other hand, Deng Xiaoping’s revolutionary reforms of 1978 completely transformed the nature of Chinese bureaucracy. A famous quote of Deng Xiaoping reflects this transformation as he said “Buguanheimaobaimao, zhuodaolaoshujiushihaomaowhich is translated as no matter if it is a white cat or a black cat; as long as it can catch mice, it is a good cat. Consequently, Chinese have become result-oriented regardless of the socialist or capitalist nature of their counterpart. Delay in the implementation of some of the joint projects under CPEC by Pakistan’s administrative and legal institutions annoyed these result-oriented Chinese.

On the political front, political parties, through proper channels of communication, can facilitate the diplomatic relations between the two countries. It can lead to the greater understanding of these nations on subject matters and hence enhance their level of cooperation. Unfortunately, no one major political party in Pakistan has any formulations of socialist traditions, values and principles. On the contrary, the Chinese Communist Party (CCP), because of its central role in the decision making, is the ultimate socialist platform to deal with. Historically, Pakistan, as a member of South Asia Treaty Organization, has always acted as a frontline state for capitalist powers against communist regimes of Asia. Pakistan has also a long history of military coups and authoritarian regimes which always suppressed the left-leaning political parties and their agendas. Poverty, inequality, corruption, mismanagement and underdevelopment have also made Pakistan a fertile ground for populist leaders and their movements. These leaders and parties, through popular slogans of being the only solution for all the prevalent issues, manipulate the sentiments of masses. History has proven that these leaders have failed to provide concrete solutions to the country’s socio-economic problems. Through the knowledge of this historic reality, one can conclude that Pakistan needs to engage China on the political front as this is the only pragmatic solution.

On the business front, China has two developmental platforms in the form of State-Owned Enterprises (SOEs) and the private sector. Former are the government-controlled organizations, with their national goals and objectives, and which play a key role in a country’s economic growth and social stability. SOEs have a stronghold in the sectors like energy, transportation, and telecommunications but have yet to make considerable progress in digital technology and e-commerce. On the other hand, Pakistan’s IT industry and academia are facing a significant crisis in terms of lacking the necessary equipment and talented manpower. Consequently, Pakistan lacks in terms of generating a digital economy. China’s private sector comprises companies which are particularly entrenched in electronics, electricity, textile, tech and e-commerce. Comparatively, Pakistan’s private sector cannot offer a valued contribution through product and process innovation. Contrastively, India has attracted a considerable amount of FDI from China over the period of time.

Last but not the least, it is important to discuss the issues of people-people contact. In terms of establishing such a contact between the people of two countries, language difference acts as a major barrier. Though English can act as a mediating mode of communication, meaningful communication of ideas for developing mutual understanding is still an issue.  China and Pakistan have different cultural traditions and practices which makes it difficult for people to understand each other. For example, the concept of individualism is highly valued in China, while Pakistan is more collectivistic in its social approach.

Because of the direct impact of these hurdles, Pakistan has failed to advance valuable achievements with a more than 17.73 trillion USD economy in terms of sustainable economic relations. This time period can turn out to be historic for Pakistan if it decides to enhance its economic cooperation with rising China. This cooperation can help Pakistan escape from a conventional economic structure that depends mainly on foreign aids and debts. Both countries can explore new areas of cooperation such as cultural industry and religious tourism by streamlining legal procedures and removing unnecessary barriers for investment. In this domain, the state, its academia, civil society and the corporate sector have to play their respective enabling roles by understanding China’s political and administrative structure, its investment policies, and the state philosophies. This is how we can synchronize with them for long-lasting and sustainable cooperation.