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September 14, 2018

Real questions


September 14, 2018

Questions over the potential impact of the China-Pakistan Economic Corridor (CPEC) have been around from the beginning of the project. With a new government in power, the whispers once again made it into the foreign press when The Financial Times quoted Economic Adviser Abdul Razzaq Dawood as suggesting that the project should be reviewed since it ‘unfairly benefits Chinese companies.’ The FT report came the same day Chinese and Pakistani representatives sat together and mulled broadening the agreement to include other countries. While Dawood immediately disputed the FT report, serious apprehensions about the project – or any such large project – should not be much of a surprise. Given the sheer scale of the project, there would be more than a few internal voices questioning how much of a boon it will be for the Pakistani economy. What is a bit troubling for those asking the questions, though, is that every time the ‘all is well’ reply’ becomes louder.

It should be reiterated that the potential of CPEC as a project is not under dispute. It is the terms under which the project is being implemented that can and maybe ought to be discussed. Some wonder whether it is wise to put all of Pakistan’s eggs in the CPEC basket. There are also two crucial questions: will CPEC allow the development of Pakistan’s own industrial base? Will Pakistan be able to handle the burden of CPEC-related loans? There are few signs that the response to either of these questions is a positive one. The need for greater transparency with respect to each project has also continued to be highlighted, but received little credence. The more there is secrecy around the actual agreements, the more one can expect the dissenting voices to get louder. Economic agreements signed behind closed doors rarely improve public confidence.

What is important going forward is to take these dissenting voices into account. There is no doubt that CPEC has improved Pakistan’s power-generation capacity. However, no one from the government has openly talked about how these projects have impacted Pakistan’s out of control import bill. The biggest fiscal crisis facing the country is caused by its current account deficit. Pakistan needs to limit its import bill and improve its exports, and there has been little impact of CPEC on Pakistan’s export sector, where the benefits ideally should have accrued. Local businesses and multinationals operating in Pakistan have raised their concerns with senior officials. It is time that those in power show that these words of caution are taken on board when negotiating the future of economic cooperation with China. The undisputed potential of greater economic cooperation with China can only be realised if no one is walking down a blind alley.

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