By Masood Khalid Former Ambassador of Pakistan to China
While Pakistan and China have achieved several milestones in over seventy years of relationship, China-Pakistan Economic Corridor or CPEC stands out as a shining example of breaking new ground in their bilateral relations. CPEC, which is a signature project of President Xi Jinping’s visionary Belt and Road Initiative or BRI, has become synonymous with the symbolism characterising the proverbial Pakistan-China friendship.
The history of Pakistan-China economic cooperation predates CPEC. China extended significant financial assistance to Pakistan in the sixties, although it was not a rich country at that time. China helped Pakistan in establishing its industrial base in Taxila. HMC, HRF, PAC Kamra, Chashma Nuclear Power Plants, etc., are testimony to this cooperation, not to talk of vital military assistance it extended in the wake of the 1965 war with India. The construction of Karakoram Highway or KKH was another landmark and manifested both countries’ desire for physical connectivity surpassing the challenges of the formidable mountain range that separates the two countries. In the early fifties, Chairman Mao Tse Tung spoke of Pakistan as a “southwest window for China,” and in the mid-sixties, when President Ayub Khan visited China, Chairman Mao initiated the proposal of construction of KKH, reflecting Chinese vision for its westward connectivity with Pakistan as a bridgehead. CPEC is a dream come true of that vision. Today, Pakistan-China cooperation is multi-domain and goes beyond the traditional parameters of a typical bilateral relationship.
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Here, a brief account of history is necessary. Diplomatic relations between the two countries were established in May 1951. Pakistan was the first Muslim country to recognise ‘New China.’ After a tentative start, both countries began their journey of friendship after the two Prime Ministers met for the first time in Bandung in 1955. This was followed by the first-ever exchange of high-level visits. Prime Minister Husain Shaheed Suharwardy became the first Pakistani Prime Minister to visit China in October 1956, and barely two months later, Premier Zhou En Lai paid his maiden visit to Pakistan in December. He was given a red carpet welcome during his ten-day trip. Although Pakistan had by then joined the western alliances of SEATO and CENTO, the two Premiers meeting in Bandung and the exchange of visits in 1956 helped allay Chinese concerns over Pakistan’s foreign policy direction. Premier Zhou En Lai felt assured that Pakistan’s membership in western pacts was not against China. China decided to promote its relations with Pakistan independently of its ties with India. Although China and India were close to each other at the time, Premier Zhou made a friendly gesture towards Pakistan by politely declining Prime Minister Nehru’s invitation to visit Srinagar, in deference to our sensitivities on the issue of Kashmir. The healthy evolution of Pakistan-China relations culminated in the historic signing of the border treaty in 1963 and the commencement of PIA flights in 1964, when China was faced with a western blockade. These two steps were major CBMs in laying the foundation of bilateral mutual trust. Then, in 1971, Pakistan played a key role in facilitating Dr. Henry Kissinger’s secret visit to China, leading to the unfreezing of Sino-US relations. Pakistan was also instrumental in China regaining its rightful place at the United Nations in 1971. China supported Pakistan in the 1965 and 1971 wars and cast its first veto in the UN Security Council in 1972, linking the question of Bangladesh’s entry as a UN member with the repatriation of Pakistani POWs.
Pakistan and China have traversed this journey of friendship together with poise and confidence, surmounting several challenges. Today, Pakistan-China friendship is cited as a model for inter-state relationships. The beauty of this relationship is its resilience and natural propensity to grow, as both countries do not have any conflict of interest. Both countries support each other on core issues of their national interest. In the fast-changing regional and international environment beset with great uncertainties, this relationship has not only been a ‘constant’ but also become increasingly important.
The BRI has attained global traction due to its delivery and tangible benefits. It has become a popular public good and the biggest cooperation platform of the 21st Century, subscribed to by nearly 150 countries. It seeks an inclusive and integrated growth model for the international community. BRI has now entered into the phase of solid progress and sustained growth. It aims to build regional networks of rail and roads, oil and gas pipelines, power grids, bridges, dams, and tunnels. This initiative is integrating China with South Asia, Central Asia, South East Asia, and the Eurasian region. It is a model for win-win outcomes on the basis of give and take. BRI offers an opportunity to developing countries like Pakistan to develop cooperation with China and other interested parties in trade and technology, overcome development deficit, and carve an independent and self-reliant path.
Pakistan is fortunate to be amongst the first countries to join this mega-initiative. CPEC offers a unique window of opportunity for Pakistan to join the ranks of middle-income countries in a relatively shorter period of time. Its dovetailing with “geo-economics” as the fulcrum of Pakistan’s Foreign Policy can help Pakistan realise its objective of becoming a hub of regional connectivity and economic cooperation. The newly constituted Special Investment Facilitation Council (SIFC) is meant to optimise Pakistan’s hidden potential, using CPEC as a vehicle for transnational cooperation with investment and trade as the main instruments. The interest shown by our friends in the Middle East to be partners in steering SIFC in a collaborative mode should be welcomed wholeheartedly. Pakistan badly needs investment and technology to revamp its debilitating infrastructure and to galvanise its agriculture, manufacturing and services sectors. Pakistan can be a granary for the Middle East and Central Asia by applying modern agriculture technology. The SIFC reportedly approved a project for corporate farming. This is a step in the right direction. We should develop demonstration pilot projects and replicate as per the needs of our friends for food security. Similarly, in the field of mining, Pakistan should invite China and other interested countries. Joint ventures and trilateral cooperative models can be considered. With CPEC well-grounded and political ties between China and our Middle East friends on the ascent, Pakistan can leverage its geography and rich resource endowment to break the shackles of poverty and backwardness.
The Prime Minister has described SIFC as a move to “foster synergy between the federal and provincial governments to facilitate timely decision-making; avoid duplication of efforts, enhance investor confidence, and ensure swift project implementation.” This is a pledge that would be welcomed by international investors. However, challenges will arise at the execution stage as in CPEC. We have to overcome delays and red tape which has become entrenched in our system and is a disincentive for investors. An efficient administrative apparatus with clear demarcation of responsibilities and adequate legal backup support will be indispensable for SIFC’s success.
In reviewing CPEC, we should be objective and rational. The question to be asked is where was Pakistan before CPEC started. We were facing a horrific security situation, power shortage had crippled our economy, and infrastructure was crumbling. According to some estimates, Pakistan was losing about $4 billion annually on account of electricity shortfall. The economy was in a state of stagnation. When CPEC was discussed between Pakistan and China, our side requested China to help in overcoming the electricity deficit. Chinese leadership directed its companies to construct power projects as per our IPPs policy. Chinese companies completed big power projects like Sahiwal and Port Qasim in record time. Thar coal deposits, which were lying unexploited for decades, were energised, not only adding a new source of energy generation but also bringing about a social transformation of the area. The power sector benefited immensely from Chinese investment. Today, we have over 8000 MW added to the national grid with several new projects in the pipeline. An 800 km long state-of-the-art transmission line was installed by China State Grid from Matiari to Lahore. Pakistan no longer suffers from power shortages. Power disruptions in urban and rural areas are due to faults in our transmission and distribution system.
Another redeeming feature of CPEC is the completion of some major transportation projects. Multan-Sukkur 400 km long motorway has been built by a leading Chinese construction company, and it is a state-of-the-art road. Similarly, the upgrade of KKH, Lahore Orange Line, Urban metro bus systems, link roads on eastern, central, and western routes, 800 km Optic Fibre cable linking Islamabad with Kashgar, and a host of other projects are attributable to CPEC. Pakistan and China have agreed to start the ML-1 project, which will revolutionise our decaying railway and logistic infrastructure. With landlocked Central Asian states keen to utilise our ports of Gwadar and Karachi for their overseas trade, an efficient and modern railway transportation infrastructure is a prerequisite and is a cost-effective means for regional trade. It is unfortunate that this vital project, which is envisaged to link Pakistan with Afghanistan, CARs, Turkey, and Europe through Russia and also facilitating our military logistics, was put on the back burner. China is using cargo trains for commodity trade between its cities and Europe. Almost 10,000 trains were plying, adding to China’s export revenue. Pakistan’s revenue generation can increase exponentially through the free flow of trade, transit fees, and royalties. Given the huge cost of this project, it is prudent to complete it in phases. Also, we need to keep in mind that KKH passes through an extremely difficult terrain and faces natural hazards, so a robust railway network is necessary as an alternative.
Gwadar, which is the crown jewel of CPEC, suffered from hiccups in the recent past, but the present government has revived the project. An international airport, fully funded by China, is expected to become operational by year-end. This would enhance business activity and boost the local economy. Due credit should be given to our Chinese friends for completing East Bay expressway, water desalination plant, hospital, school, and a vocational training institute despite several impediments. The Free Zone for setting up factories is also ready. The government has accelerated work on the stalled desilting of the port. Also, a 300 MW power plant has been approved as the people of Gwadar suffer from chronic water and electricity shortages. A university will also be opened. It is hoped that if the current pace of development is maintained, Gwadar will be a thriving transshipment port in a few years. An extremely good news is the plan for a petrochemical complex to be established by Saudi Arabia. Combined with mining of Rekodik, Gwadar, and Baluchistan will be a changed region. A false propaganda is going on to pollute the minds of our Baluchi brothers against CPEC by the vested interests, which needs to be countered.
With early harvest projects of the first phase of CPEC nearing fruition, the next or second phase has been broadened in scope to include Agriculture, Oil and Gas, Education, Science and Technology, Health, IT, Industry, Tourism, and socio-economic projects. SIFC is expected to give a nudge to agriculture focusing on food security needs of Gulf countries.
In the context of industrial cooperation, the establishment and early operationalisation of SEZs are important. The government is giving priority now to start SEZs, which will lead to an increase in exports, improved infrastructure, and a new skill set. Chinese companies would be keen to invest and relocate their industry as the cost of production is rising in China. They are going in a significant number to other countries, and there is no reason that they would miss out on Pakistan, which offers good business prospects. The only precondition is security and adequate policy incentives. Pakistan has been exporting unskilled and semi-skilled manpower for decades. We can overcome this deficit once SEZs are operational, and technology transfer begins. All Southeast Asian economies and China itself have progressed on the strength of Industrial parks and technology incubators. China offers to Pakistan a large training and scholarship program. We can establish vocational institutes and training centres with Chinese help under CPEC. Pakistan can only leapfrog its development if it invests in education and technology to mainstream itself with the global supply chain. With shifting demographics in Europe and East Asia, there will be a greater demand for our skilled manpower. Pakistan should take full advantage of this upcoming opportunity.
CPEC’s second phase marks a new beginning in Pakistan-China economic cooperation. While making a course correction and addressing our systemic gaps, Pakistan needs to expand its knowledge base on the strength and advice available in China. Pakistan has two distinct advantages which have not been effectively utilised. First is the presence of over 28,000 students in China who are a ready talent pool and can contribute to CPEC projects. Chinese send thousands of students abroad and offer them employment on return. Those who were sent by Deng Xiao Peng are now at the decision-making and policy-making levels in China. Secondly, Pakistan and China have concluded nearly two dozen sister-city and sister-province twinning arrangements. The Chinese government has tasked its provinces to “Go Global” and conclude mutually beneficial arrangements in diverse sectors with foreign counterparts. In our case, this unique arrangement is in a state of dormancy. Our cities and provinces need to be proactive in reaching out to Chinese counterparts in establishing trade, business, investment, educational, and tourism-related linkages. The consortium of universities set up by HEC can supplement this process. Our provincial governments should seriously look at this avenue for cooperation with China.
The example of China is before us. Its progress was achieved through sound and integrated planning, the vision of its leadership, and the hard work of its people. The whole of government and the whole of nation approach are pursued in fulfilment of national priorities. Since 1949, the Communist Party of China has followed pragmatic and people-centric policies. While retaining its own unique system of governance, China has not shied away from adopting the best practices of other systems. When Deng Xiao Peng started SEZs, he sought the help of Singapore. Foreign investment and technology and the Chinese diaspora have contributed immensely to China’s progress. China has also been successful in creating a nexus between the industry and academia. Our industrial tycoons need to follow this example and establish research and design institutes focusing on their own line of production. China accords high priority to education and R&D. More than 6% of GDP is spent on these sectors compared to ours, which is barely 2%. All big Chinese companies allocate a substantial portion of their revenue to research. Consequently, China has succeeded in lifting 800 million people out of absolute poverty, developing a human resource which is highly skilled and productive while following a strict work ethic. Discipline and a system of rewards and punishment define Chinese work culture.
One is intrigued by the criticism at home of roads and transport infrastructure under CPEC. For sustained economic development, one needs good roads and a link between farms and roads. Chinese emphasise that without good transport infrastructure, a country’s development is not possible. That is why today China has one of the most efficient transport infrastructures. In 2007, China had no high-speed railways. The World Bank refused to give a loan to China for the Shanghai underground metro. Today, practically all big cities of China are connected with a network of fast trains running at a speed of 300 Km per hour. According to the World Bank, China invested about $600 billion in infrastructure construction between 1990 and 2015.
