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Deputy Chief of the Chinese mission in Pakistan Lijian Zhao while addressing a seminar titled "China Pakistan Economic Corridor (CPEC) - separating facts from misperceptions" stated that the idea of CPEC was initiated during the tenure of former President Asif Ali Zardari in 2013 who then introduced the concept to the then Prime Minister in waiting Nawaz Sharif. Some may regard this as a diplomatic statement that gives credit to both the PPP and the PML-N for launching CPEC envisaging over 50 billion dollar proposed Chinese investment in Pakistan's severely inadequate physical infrastructure sector, particularly in energy and roads.

However, undoubtedly the One Belt One Road (OBOR) vision of China's Premier Xi Jinping, of which CPEC is a small component, was the spark that provided the critical fuel. Be that as it may, the Nawaz Sharif administration played a critical role in identifying some projects. Zhao further stated that the principal guideline followed in identifying CPEC projects was scientific planning and acknowledged that projects were identified through consultations and implementation began only after a consensus was achieved. There is little doubt that in some projects adherence to the principle of scientific planning was held hostage to 'consultations' with the federal and provincial governments an example being the ill-advised decision to set up a coal-fired plant in Punjab instead of locating it near the source of the fuel, i.e., either near the domestic supply of coal or near the point of import given the increased cost and massive health issues involved in transporting coal long distances.

Zhao also clarified that the use of Chinese prisoners to provide unskilled labour for the projects is a myth, the fact is that due to security considerations they were housed in camps near their work site "worked hard at the site, there was not much time for them to move in other areas and whenever their work tenure ended they were taken to the airport under security." Unfortunately, Zhao did not address the real issue raised with respect to the use of Chinese labour on these projects notably that the use of Chinese labour preempted the use of Pakistani labour and therefore the PML-N claims that the CPEC would generate employment opportunities for Pakistanis and particularly for the people of the area where construction was ongoing was inaccurate. In this context, it is relevant to note that complaints about using Chinese labour on OBOR projects has been voiced in several countries, including Vietnam, Malaysia and Sri Lanka and a change in administration in some countries has led to the abandonment of the approved OBOR projects that were under implementation.

The OBOR projects including the CPEC projects are funded through borrowed funds from China and are expected to considerably raise indebtedness which is, at present 70 percent of Pakistan's GDP. Zhao claimed that only 10 percent of Pakistan's government-to-government debt was from China. True but the actual disbursement for the CPEC projects to date is under 5 billion dollars which is expected to rise as more CPEC projects begin implementation. It is relevant to note that several countries are already revisiting specific OBOR projects. The recently elected Mahathir Muhammad challenged the 55 billion ringgit (13.82 billion dollars) East Coast Rail Link, a major part of Beijing's OBOR infrastructure push, envisaging 688 kilometres (430 miles) connecting the South China Sea at the Thai border in the east with the strategic shipping routes of the Straits of Malacca in the west. He recently stated that "we are renegotiating the terms...the terms are very damaging to our economy." And later added that, "he (former Prime Minister Najib) knew very well that the ECRL, for example, is not something we could afford. It is not going to serve any purpose it is not going to give us any returns." And reports indicate that Sri Lanka's strategic port of Hambantota, constructed by Chinese firms, was handed over to China on a 99-year lease as the country struggled to pay the debt owed to Chinese firms.

There is no doubt that CPEC has the potential to fuel Pakistan's GDP and given the lack of interest by other countries in investing in Pakistan's deficient infrastructure at present it does provide a unique opportunity to the country to grow at a much faster pace than would otherwise have been possible. However, this does not preclude the next elected government from revisiting some borrowing costs and reevaluating some projects that may require a revisit.

Copyright Business Recorder, 2018


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