Monday June 17, 2024

Opposition to CPEC

By Abdul Sattar
March 28, 2017

It has been claimed once again that CPEC will benefit both Islamabad and Beijing and that the dividends and benefits brought by CPEC will be shared by both China and Pakistan and will positively affect the region.

But it appears that CPEC’s detractors – which include the leaders of various nationalist parties, progressive political workers, left-leaning intellectuals and a few analysts – are not ready to buy this claim. There has been a barrage of criticism and a sustained campaign by some columnists to create the impression that Pakistan stands to gain nothing from this project. Some nationalists have even gone to the extent of declaring China an imperialist power bent on exploiting “our natural resources for the gargantuan appetite of economic growth”.

Industrialists fear that the Pakistani market will be flooded with cheap Chinese products while sections of the business community question the rationale of giving preferential treatment to Chinese companies. A recent report by a brokerage house claims that Pakistan will end up paying $90 billion to China over a span of 30 years against the loan and investment portfolio worth $50 billion under CPEC. This has stoked further speculations about the utility of this project for the country.

One would be naive to assume that capitalists are altruistic souls and benevolent factory owners and want to make paternalistic improvements in the lives of their employees. In fact, they are only interested in profit and, consequently, ruthless economic exploitation. The history of capitalism is replete with wars, occupations, conquests, slavery, genocides, extermination of nations, brutal exploitation and environmental degradation.

While up for debate, China does not fit into this category. It is easy to claim that China is an imperialist power or colonial master but difficult to back it up with evidence. For instance, around 35 percent of the world was already colonised by Western powers prior to the Industrial Revolution. This period of colonisation peaked in the 1940s, leaving 85 percent of the world in the hands of colonial powers. The Western powers had trampled on the sovereignty of these nations. But Beijing’s stated policy to respect this sovereignty of nations makes it different from these colonial powers. In fact, China is the only industrial power with global clout that has not colonised any country. Japan, Russia, German, Portugal, Spain, the UK, the US, Belgium, Netherland and Italy have all occupied various countries at some point in history.

Detractors claim that Beijing is after our natural resources. It may be mentioned that China is among the top 10 states that have the largest numbers of natural resources in the world. It has monopoly over rare earth elements which are crucial for the manufacturing of smartphones and other gadgets. This claim flies in the face of reality because a large section of Chinese investment is in infrastructural development. Beijing, along with other states, is pumping around $960 billion into the One Belt One Road project – which covers over 60 countries and a population of more than four billion. Can any critic point out the massive exploitation of natural resources of these countries in this project?

China and Russia inked a $400-billion gas deal in 2014 in addition to signing several other deals. But Moscow never pointed out even an iota of unfairness in these deals. Beijing’s trade with Africa has already hit a $200-billion figure but no strong complaints of exploitation have been heard so far. The second economic power in the world has also enhanced trade with Indonesia, Malaysia, India, Brazil, South Africa, Central Asia, Venezuela and a number of other countries. But slogans against imperialism or ruthless exploitation have not been chanted in any of these countries.

It may be argued that the communist state has a surplus of machinery related to infrastructure development and is launching projects to absorb this surplus. But this is what any other country would also do. According to the World Economic Forum, global spending on basic infrastructure – transport, power, water and communications –currently amounts to $2.7 trillion a year when it ought to be $3.7 trillion. If China – with one of the highest GDP growth rates and vast foreign and gold reserves – is stepping in to fill the gap in infrastructure development, what is the point of raising an objections?

Western analysts have lambasted China for having close ties with repressive regimes. This may be true to some extent. But over the last few years, the UK – the mother of democracy – supplied arms to 16 African states with the worst human rights record. London struck two large export deals with Riyadh while Washington also signed an agreement with Saudi Arabia. It’s not rocket science to trace human rights violations in the conservative kingdom. Just run a Google search on Pinochet, Mobutu, Suharto, Trujillo, Franco or any other brutal dictator of the modern times – from the Shah of Iran to the Arab monarchs and the military junta of Latin America to the warlords of Africa and Afghanistan. Within no time, you will discover who pampered them. It is interesting to note that no objection is raised when Western capitalists come up with investment plans.

As far as the preferential treatment of Chinese companies is concerned, that is not a unique phenomenon in the world of investment and business. To attract investment, states can go to any extent. For instance, in the 1830s, millions of acres of land taken from Native Indian tribes were put up for sale by the US. This vast privatisation of the public domain touched off one of the greatest economic booms. Large swaths of land were given to private companies in the US to lay railway tracks at throwaway prices. In recent decades, countries in the global south put between 32 million to 82 million hectares of global farmland in the hands of foreign companies. Most of this land lies in Africa and was leased to Western and non-Western countries at throwaway prices.

China itself accorded preferential treatment to attract investment. From 1994 to 2007, firms that received foreign investment were subject to a 15 percent income tax while domestic companies were paying taxes worth 33 percent. Beijing spent billions of dollars producing an educated and skilled working class that could be employed on Western capital upon the liberalisation of economy after 1979. The country has the largest higher education system in the world – both in terms of overall enrolment and the number of PhDs awarded

 It is not only the Chinese state alone that is benefiting from this system but a myriad of foreign companies as well. In Zhengzhou, a city in one of China’s impoverished regions, the authorities doled out $1.5 billion to a Taiwanese company to attract foreign investment, offer discounted transport and energy costs and pledge to spend another $10 billion     on the expansion of an airport. China offered money and favourable investment terms on foreign companies. But today a number of famous brands are closing shop in China, citing difficulties in competing with local Chinese firms as one of the main reasons for the closure.

Industrialisation and economic growth come at a price. Marx wrote a heart-wrenching account of the conditions of the working class. But did he oppose industrialisation? He wrote about the startling productive capacity unleashed by capitalism. It needs to be decided whether we want a stagnant economy or an abundance of wealth through rapid industrialisation that may also create a large working class and conditions for social change. Government officials claim CPEC is likely to create between five million to eight million jobs over the decades and trigger large-scale economic activity in the region.

One may take this with a pinch of salt. But to assume that a whopping investment of $46 billion or more in Pakistan, of over $600 billion in Russia and more than $200 billion in Central Asia, Iran and Afghanistan will not bring any change is unrealistic.

Cash-starved Pakistan – which has witnessed no major investment in industries since 1979 – could revitalise its moribund industrial sector by tackling power outages through CPEC projects and promoting trade and investment. This will add millions of workers to both the formal and informal sectors of the economy. Providing employment on such a scale will not only help combat the menace of extremism but could also pave the way for a large working class party with a mission to bring about social change.

The writer is a Karachi-based freelancejournalist.