GLOBALIZATION emerged as a prominent western endeavour, driven by financial integration, cohesive trade and economic convergence. Its purpose was to foster worldwide interconnectedness and cooperation. Some developing nations embraced these principles in the 1980-90s, leading to sustainable development. However, despite Pakistan’s status as a strategic ally of the United States, it struggled to keep pace with advancing economies due to its reluctance to adopt these approaches. Our alliance with US persisted as long as our interests aligned, but their shift in intentions and relations became evident after the end of the Afghan war.
China, on the other hand, introduced the BRI as an alternative to prevailing globalization narratives. The BRI echoes globalization’s goals by promoting trade and financial integration, with initiatives like the Asian Infrastructure Investment Bank and strategic investment in allied nations’ stock markets. Additionally, China aims to elevate the international status of its currency, the Yuan, to enhance its global influence and economic presence. Based on over a decade-long experience as a partner in BRI, it appears that still we are only limited to infrastructure related projects and debt finance. To establish a sustainable and enduring relationship with China beyond mere transactional in nature, we must devise a cohesive model based on business-to-business, people-to-people and state-to-state interactions.
To enhance state-to-state cooperation, we must overhaul our governance model, moving away from debt reliance and embracing a business-oriented approach. Rather than solely borrowing from China, we should focus on involving them in our country’s business development. This entails integrating our industrial cities and zones with China’s value chain and presenting appealing opportunities to their private sector. We should also shift from exporting raw material to collaborating with Chinese private sector and SEOs to add value before export. For instance, converting textile raw material into finished products. This strategic approach is expected to cultivate mutually advantageous partnership, leading to a reduction in trade balance deficits and promoting economic growth.
China is currently encountering difficulties in recruiting young individuals who are willing to take on blue-collar and labour-intensive roles within factories. Furthermore, their salary expectations have increased in response to the changing dynamics of Chinese society. However, considering that China’s production model heavily relies on skilled labor at a lower cost, it is crucial to establish specialized technical institutes in Pakistan. These institutes should provide comprehensive technical and communication skills, including Chinese language and cultural understanding, facilitated by the Confucius Institute and in collaboration with Chinese technical institutions that focus on the necessary skills and expertise demanded in China. The creation of such institutes will play a crucial role in preparing a highly qualified workforce capable of effectively meeting China’s production demands.
On the matter of knowledge community networking, we faced challenges in engaging with Chinese universities to foster a meaningful exchange of knowledge on various dimensions. To address this, we have to establish knowledge based associations and literary societies dedicated to various disciplines. Through these entities, we can organize joint sessions, facilitate faculty and scholars exchange programs, promote collaborative research and publications and encourage literary clubs that focus on our shared socio-cultural narratives and ideologies. Regrettably, neither any university in Pakistan nor any program initiated by HEC possesses the necessary capabilities to undertake such ambitious initiatives. While HEC introduced the CPEC-collaborative grants, they are limited to only three to four projects and do not offer a viable solution for establishing long-term partnerships between both academic worlds.
On the flip side, our business ecosystem faces challenges due to the lack of strong business associations, sector associations and industry bodies for connecting with Chinese counterparts. Our business environment has become increasingly complex for both local and foreign firms due to the presence of unnecessary NOCs, legal complications and delays. Despite the Chinese consortium acquiring 40% of shares of PSX, it hasn’t led to substantial financial growth or market inclusion. The stock market has experienced a decline in listed companies over the past thirteen years, going from 650 to just 524. Moreover, 23 companies were removed from the listing, while only 13 new companies were added in last five years. A significant 80% of companies chose to delist voluntarily, highlighting the current stock market ecosystem’s inadequacy. To attract offshore listings and promote cross-border trading, we must enhance our stock market competitiveness while considering the cost-benefit trade-off. Without these improvements, we may lose its appeal to both local and foreign firms.
At the community level, our delegation exchanges are limited. Historically, the first official delegation from Beijing (formerly Peking) was the women’s goodwill delegation led by Li Teh-chuanin in November 1955. The first-ever Chinese cultural troupe of 54 members visited Lahore, Peshawar and Dhaka in January-February 1968. During the Bhutto regime, ties with socialist countries, including China, grew stronger. Now, we have to foster strong connections with Chinese civil society, the Communist Party and local governments to boost tourism, enhance social bonds and preserve Buddha’s heritage. The Communist Party can play a crucial role in facilitating collaboration, enabling effective partnerships at both the county and municipal levels. Additionally, the Party can also serve as a lobbying firm for advocating and attracting FDI and portfolio investment in Pakistan. To achieve these goals, our political parties need to establish both strong relationships with the Communist Party.
Unfortunately, currently, our relationship remains transactional, similar to our past relations with the US, relying heavily on aid and IMF financing. Transactional relationships only last until the completion of the transaction. Once the transaction is finished, the relations often fade and weaken. Our game changer project’s potential is at risk of being limited to foreign aid-based transactions. As a consequence, there exists a potential risk of failing to harness the opportunities for mutual future expansion and comprehensive prosperity, stemming from an economy valued at 18.9 trillion USD and a well-established neighbouring relationship with a history of reliability.
—The writer is an Assistant Professor (PhD Financial Economics) at the National University of Modern Languages, Islamabad.
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