INFRASTRUCTURE
I was recently in Frankfurt to participate in the Annual Meeting of the Asian Development Bank. On the sidelines of the conference, several seminars on extremely interesting and economics related subjects were organised. I attended a few. Amongst them was the most relevant to Pakistan, ie One Belt, One Road, seminar. The panellists included economic experts from China, India, Kazakhstan and Australia. The most prominent amongst them was President Jin Liqun of Asia Infrastructure Investment Bank (AIIB).
The opinion that Asia suffers from infrastructure deficit was unanimous. Coupled with the significant issue, what was deliberated in detail was the slowdown of the Chinese economy. In consequence of which, China’s trading partners are looking at ways, means and opportunities, for greater economic collaboration between themselves. But the unavailability of the requisite infrastructure makes the task daunting and challenging for it involves heavy cost and financing arrangements that are far and few.
For the adequate movement of goods and products, the need for modern transportation facilities is an imperative. The Chinese nation, farsighted, as they are, have been foreseeing this emergence and hence have brought to the table the concept of “One Belt, One Road”. What does the concept entail? What are its challenges and what opportunities does it hold for the countries of the region?
Napoleon had said that when China wakes up, the world would tremble. Little did Napoleon know that once awakened, even a short snooze or nap by China would also cause the world markets to tremble. The economic slowdown inside China is having a severe negative impact on global markets. The steel production in China has reduced to 50 million tons from a once high of 800 million tons. Generally, China has been vacating the lower end of the value of chain, of several industries and economic segments. The countries that have successfully capitalised on this opportunity are Vietnam, Cambodia and Laos, not to forget, Bangladesh. The original Silk Road is the edifice upon which China has formulated the concept of “One Belt, One Road”. The significance of transportation and communication cannot be understated. The emerging integration of Europe and Asia, through the Eurasian land mass, comprises from the shores of Atlantic in the West to the Pacific in the East. It is an 81,000 kilometric stretch that will be connected through rail and road link.
China currently, under the concept is engaged in building up three corridors, the South Western corridor or more popularly known, “China-Pakistan Economic Corridor (CPEC); the Western Corridor, called the Kazakh Road Project and the Eastern Corridor, that goes through the Greater Mekong Region, into Singapore.
At the seminar, the Indian panellist expressed concerns about the corridor that passes in to Pakistan (CPEC). He said there should be more openness and transparency from China about CPEC. Typical of Indian stance, it was argued that concerns arise because the major beneficiary besides China would be Pakistan.
To the delight of the Indian panellist and to my personal chagrin as an attendee, the panellist from China said that China and other countries of NE Asia have an ageing population and with the Indian need to create up to one million job opportunities for its youth, he remarked there is great opportunity for movement of labour, skill and technology from India, Bangladesh, and Indonesia.
If mention of Pakistan’s potential was amiss it is understandable but if it was well thought out, then it doesn’t augur well. To learn that trade between India and China is growing every year by substantial margins did not go down well with this scribe. I have been lamenting through the columns of various newspapers that Pakistan has been very slow in converting its political friendship with China to a strong economic bondage. CPEC is the only ray of hope.
The CPEC corridor envisages in its blueprint bye-lanes to Turkey and South Eastern Europe. CPEC investments are quoted at $46 billion, of which $34 billion would go towards energy and power sector; the remaining $12 billion will find its way into roads, railroads, power, transmission lines, filter optic cables, and oil and gas pipelines.
The Eurasian land mass accounts for 25 percent of world oil reserves; 36 percent of oil production, and 55 percent of oil consumption.
Natural gas accounts for 57 percent of reserves; 50 percent of production, and 57 percent of world consumption. Within the region is the huge potential to harness the water resources for hydropower generation. It is believed that China envisages a target of 2.5 trillion US dollars in trade only with the Silk route countries by 2025.
The Kazakh Road project or the Western Corridor again within the ambit of the concept is meant to link China directly with sixteen central European countries. This corridor would facilitate the movement of even agri-products from China into the heartland of Europe. The 16 nations plus one (China) would lead to China’s diplomatic strength and success.
With these economic and diplomatic targets in mind, it is no wonder that the Chinese led AIIB has come into existence. It heralds a challenge to other multi-lateral organisations. Today, there are 57 countries that are involved in AIIB. There is likelihood of Japan joining in too.
The European Union took several decades to arrive where it is today – the Asian economic integration is much faster. However, the integration is on a bi-lateral basis; China has 57 different bi-lateral agreements, as against a sign agreement like the European Union.
It is more economically binding, less politically and possibly even less, legally. It may take some time to evolve towards a formal multi-lateral agreement. It has to be borne in mind that the corridors pass through several countries that do not enjoy great reputation for peace, stability or even good governance.
As things progress, we would witness cooperation in railways, use of each other’s ports and the involvement of the public and private sector. I foresee an integration of Europe and Asia that will be inclusive of Russia.
The economic financial and legal integration through One Belt, One Road, is quite a possibility; but what about political and cultural integration? It is presumed that economic interdependence will intimately lead to better political cooperation and peaceful coexistence. A decade or so from now, the world will witness a transcontinental integrated economy.
Valerie Eugammare and Prof Jean Pierre Lehmann, in their joint article titled “Beyond EC Integration” European Lessons for Asia – Pacific ?” have quoted the following: “well over a century ago John Hay, who served as Secretary of State from 1898 to 1905, wrote, “The Mediterranean is the ocean of the past, the Atlantic, the ocean of the present and the Pacific , the ocean of the future….”. Hay’s vision took some time to materialise”. “But it is in Asia – Pacific that the main narrative of the 21st century will be written.”
The visionary and pragmatic Chinese leadership will make happen the economic corridors, it helps them and it helps the global village.
The writer is a senior banker and freelance columnist
