The Chinese model and CPEC

The government should engage with people who understand the development and governance model of China

The life history of Yellow Emperor, the father of China, teaches one very important lesson to its followers. There is no glory without hard work and looking for new means of well-being for the people. He believed in action, not rhetoric. He taught his men the art of agriculture, taming wild animals and building shelters. The wife of emperor taught the people the art of sericulture and paved the way for modern-day silk industry.

The emperor presented himself as a father figure for his people, not a ruler. He devised systems of governance and development which keep the people’s well-being and prosperity at the centre. A similar strategy is visible today in the policies of the Communist Party of China (CPC).

The CPC manifesto is not merely a policy document; it is a rigorous plan of action. The modern China which emerged in 1949 launched a comprehensive reform programme in 1978.

The reform programme is built on two pillars, 1) attract investment and promote trade, and 2) ensure well-being of the people through resource distribution. For attracting investment, it introduced the extra country incentives system for investors and companies to invest in special economic zones in China, in addition to quality infrastructure and cheap labour. It helped China attract huge investment and turned China into world’s factory. It also led to enhancement in trade and now China is a leading trader of the world.

Simultaneously, China introduced a comprehensive system and programme to achieve prosperity for everyone. It launched programmes which were focused on providing food security, education and health care. China has kept changing the structure of the programme according to its needs. The objective meanwhile has remained unchanged - the prosperity of people. Its success is evident from the sharp decrease in poverty during the recent decades. Now Chinese President Xi has made it the prime objective of the state. He is striving hard to eliminate poverty and achieve prosperity for all.

The brief narration of two periods, specifically the two-pillar strategy, carries very important lessons for Pakistan. The China-Pakistan Economic Corridor (CPEC), which is steering the development agenda, makes it even more relevant for Pakistan. Thus, it is necessary to heed the lessons from China’s experience. It will help Pakistan understand China better and develop the right instruments for cooperation under the CPEC umbrella.

The first lesson is that mere rhetoric does not pay. We need to learn from China that only practical steps matter. From Yellow Emperor to the CPC, Chinese leadership has led the way through action and kept a low profile otherwise. For example, since 1978 China is tirelessly working to change the fate of the country but still, they say China will be a moderately developed country in 2021. Some of Pakistan’s leaders however have tried to lead with rhetoric. We have just entered the second phase of the CPEC but some of our leaders have started making big claims. This can be counterproductive and create hurdles in the way of CPEC.

The first lesson is that rhetoric does not work. We need to learn from China that only practical steps matter. From Yellow Emperor to CPC, Chinese leadership led the way through action.

The second lesson is, attract investment by offering extra-country benefits but maintain the focus on local needs. China started the journey by applying this principle in Shenzhen. International investors rushed to China and FDI in Shenzhen paved the way for further investment in the country. However, China kept a balance between private investment and role of Chinese state-owned industry and enterprises.

Pakistan, on the other hand, is still unclear about what benefits to offer and to whom. The most alarming part is that the announcement of any incentive policy for attracting investment has always been met with opposition. When the government recently announced incentives for investment in Gwadar, there was a lot of it on display. We need to realize that this is hampering the investment potential of Pakistan and, more specifically, the development of SEZs.

Pakistan needs to come out of this and draw a clear policy. Besides, Pakistan should focus on the role of state-owned enterprises and not entirely depend on the private sector.

The third lesson is the economic governance and development model, which in China’s case is based on the concept of people’s well-being. Pakistan should redefine its model of economic governance and development which has been built on the concept of profit and trickle-down.

The fourth lesson is that local wisdom is the key and prime factor for bringing change. This has been proved from the experience of many countries, but Pakistan has yet to focus on it. We need to learn that there is a difference between learning from best practices and importing business models.

Pakistan must bring fundamental changes in its economic model to avoid the past mistakes and make the CPEC a success story. First of all, Pakistan has to focus on local wisdom. This will help it at two fronts, first, it will help it plan CPEC projects according to the actual situation and needs of the country. For example, at this point of time Pakistan needs investment in sectors which can create a large number of jobs. Agriculture and industrial sectors are perfect choices on this front. We also need investment in science and technology, but that is a long-term project. Second, it will infuse confidence in people as participants in the system. They will try to learn new ways of doing business with China.

The government should engage with people who understand the development and governance model of China. It is necessary because Chinese model is based on a mix of private and state enterprises, and distribution of resources not trickle-down and privatization.

Lastly, the most important intervention needed is consolidation of work through consolidation of institutional framework. It is good to note that the government has started taking the right steps to streamline the CPEC-related work.

The Ministry of Planning, Development and Special Initiatives is the focal body, the Board of Investment (BOI) makes decisions on investment rules and regulations, SEZs are also dealt with at the BOI and now execution is under the CPEC Authority. On top of that there are provincial governments, which have their own agendas for investment and development. There is a need to make a central point and ask all institutions and stakeholders to follow.

The writer is the Asia Study Centre director at the SDPI

The Chinese model and CPEC