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CPEC will facilitate regional integration

Muhammad Javaid
PRIME Minister Imran Khan’s recent visit to China brings to an end the chaotic eight months in the economic sector. He was accompanied by a high-powered ministerial delegation. He attended the 2nd Belt and Road Forum (BRF) and the Opening Ceremony of the Beijing International Horticulture Exhibition 2019. He also participated in Leaders’ Roundtable, the theme of the Roundtable was: “Boosting Connectivity to Explore New Sources of Growth.” He had an opportunity to interact with President Xi Jinping and Premier Li Keqiangand as well as other leaders from Tajikistan, Uzbekistan, Egypt, Malaysia, Ethiopia and Kyrgyz Republic. The Prime Minister and his delegation attended various side meetings and shown intense interest to participate in the activities of this Forum. During these meetings, the two sides reviewed the regional and international issues as well as entire range of bilateral relations including the CPEC. Leadership of the two countries reiterated the determination to further strengthen the economic relations in all dimensions. Pakistani delegation also interacted with their Chinese counterparts and Ministers from the BRF participating countries. Following the meeting with Chinese leadership a number of MoUs and agreements were signed between the two sides, including the conclusion of the 2nd Phase of the China-Pakistan Free Trade Agreement – 313 items and an agreement on ML-1.

Prime Minister Imran Khan emphasized the importance of BRF for Pakistan and proposed four new areas for Belt and Road cooperation: (i) digital connectivity; (ii) mobility of labour; (iii) cultural connectivity; and (iv) sharing best practices in knowledge and innovation. The Premier also held meetings with Managing Director of IMF and the CEO of the World Bank which may be helpful for the forthcoming negotiations in Islamabad. Another important highlight of the visit was a meeting of China-Pakistan Trade and Investment Forum planned to bring together a large number of Pakistani and Chinese entrepreneurs. The Forum, which was attended by Vice-Chairman of National People’s Congress Mr. Zhang Chunxian, provided a platform for the participants to explore the immense business and investment potential of Pakistan. The business-to-business meetings on the sidelines of the Forum resulted in signing of 14 agreements/contracts. The current visit to China provided an important opportunity to exchange views with the Chinese leadership on bilateral and regional issues; to coordinate on the implementation of Phase-II of CPEC that includes industrial cooperation and socio-economic development; and to invite Chinese businessmen and investors to explore the immense potential of Pakistani market.

China’s all these economic activities have to be seen in the scenario that China is rebalancing its economy—from manufacturing to services, from investment to consumption and from exports to domestic services means a slower but more sustainable growth path. Pakistan is third largest trading partner of China—accounting for close to 20 percent of overall trade. So clearly, a slowing Chinese economy means fewer exports from Pakistan. The free trade agreement is one of steps towards it. China is moving up towards value added chain, so it will reduce its production of some labour-intensive goods. This is an opportunity for Pakistan, but Pakistan needs to retool its economy and train its people to capitalize this opportunity. This is an important time—“a moment of opportunity”—for Pakistan, a country undergoing an economic transformation that can place it well among the ranks of emerging market economies. Over the past few years, economic dynamism in the world economy has gradually been shifting—from advanced economies to emerging markets.

Every year, more than two million young people enter the job market in the country. This could be a tremendous opportunity for growth. However it also presents challenges to absorb so many new job seekers when the global economy is growing slowly. In this environment, Pakistan needs to rely on the strength of its own policies to generate more growth and jobs, and to join the group of dynamic emerging markets. Indeed, putting in place strong policies to boost growth is an urgent task. This can be done by promoting private investment, strengthening exports and raising productivity. Private investment in Pakistan today accounts for only 10 percent of the economy. In emerging markets however, the average is about 18 percent. Pakistan’s exports are about 10 per cent of GDP; emerging markets’ exports are nearly four times high. Pakistan can do better. For instance, continuing support for projects under the China-Pakistan Economic Corridor will not only promote growth and job creation, but will also facilitate regional integration. Increasing transparency and accountability and removing red tape can help. Simplifying procedures to open new businesses, enforce contracts and pay taxes can go a long way in promoting growth. The extensive exchange of views with the Chinese leadership during this visit, once again, affirmed the vitality of the time-tested, all-weather strategic cooperative partnership, which remains unaffected by any adverse regional and international development and continues to move from strength to strength.