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March 31, 2019

CPEC’s effects on Pakistan’s economy analysed


March 31, 2019

The China-Pakistan Economic Corridor (CPEC) will have a positive effect on Pakistan but certainly not a transformative one.

These views were expressed by Dr Matthew McCartney, associate professor of political economy and human development in South Asia, Oxford School of Global and Area Studies, University of Oxford, UK, while addressing the members of the Pakistan Institute of International Affairs (PIIA) and the media on Saturday evening.

He said one of the reasons for this was that the economies of Pakistan and China were not complementary. He said that the economies of China and Pakistan looked more competitive than complementary and the textile industry in Sinkiang which was highly advanced would capture the Pakistani market in no time.

McCartney said China was viewing CPEC not as a means to economic development but as a means to free trade. He also talked of Pakistan’s widening trade deficit with China.

He said he refused to believe that Pakistan was a failed state or a failed economy. By the 1990s, he said, 80 per cent of Pakistan’s exports were manufactured goods.

“Pakistan is a highly resilient and stable economy, maintaining an average growth rate of five per cent,” McCartney said.

There had been no lost decade. According to the World Bank, he said, Pakistan had not faced a recession since after 1960. The GDP, he said, had been recorded at $320 billion.

The first trade accord between China and Pakistan was in 1963. CPEC, he said, represented a long cooperation between Pakistan and China.

He said that lots of concerns had been voiced about CPEC, but Pakistan had signed 12 agreements with the IMF of which only one had been implemented.

“One of the problems is that many CPEC projects are being implemented in places which are marked by instability, like Balochistan,” he said.

Another problem, McCartney said, was that while many projects had been completed, communications systems were still to take off.

Comparing the two countries, he said Shanghai had the world’s largest metro system.

He illustrated the communication systems through video slides and one of the slides was that of the railway train in the Indo-Pak subcontinent after 1854, which was built by the British for the transportation of materials and produce which benefited manufacturing in the UK only.

He also showed a photo of Japan’s bullet train which was instrumental in spurring trade and commerce in Japan and north Asia.

The talk was followed by an animated question-answer session. One of the questioners strongly asserted that what really was central to Pakistan’s economic woes was not CPEC but the Washington DC-based IMF.