There is at present a lot of blame game going on in Islamabad about the postponement of the anticipated state visit of the President of China, Mr. Xi Jingping. The government is holding the opposition parties PTI and PAT responsible for this set back, citing reason for this postponement being the general law and order situation created by the long march and dharna, thereby creating an environment of political uncertainty, which as we know is never conducive for visits by foreign heads of states or high level dignitaries. Whereas, the protesting parties are claiming that his visit’s schedule was never confirmed in the first place and even it had been why would any foreign leader want to sign future agreements on bilateral and regional economic cooperation with an out-going prime minister? Either way this is bad news for Pakistan. China is our most steadfast and sincere friend and the void created by President Xi’s skipping Pakistan during his upcoming South Asian tour program will be hard to fill, especially when his visit to India will take place as planned.

The real tragedy though is that this is no time for us to be playing games. Pakistan’s relationship with China is serious business but sadly like in all other spheres of governance the government here also has failed in grasping the real underlying requirements on wooing the ‘new’ China. It is not the first time that this new Chinese leadership is seen to stutter in its historic relationship with Pakistan. Earlier, after assuming power, even the new prime minister, Mr. Li Keqiang’s first overseas trip was to India and only from there he came to Pakistan.

What our government needs to understand is that the present Chinese government is significantly different to the two previous ones (each government has a tenure ranging a decade). President Xi is not only fighting the battle of China’s economic progress’s sustainability but also that of the revival of his communist party. Anyone who has followed the man should know that he is a strong and committed person who will go to any length to achieve his stated goal: “China’s economic progress should not get derailed”. Also, he is neither new to political dissent nor to governance issues such as being raised by the Dharna parties. China has its own serious issues with mounting protests in Hong Kong and Mr. Xi is currently fighting a fierce battle within China against endemic corruption and gross anti-trust cum ethical violations committed by the western MNCs (multinational corporations). At the end of the day it will only be his perception, that he will not accomplish much (owing to our government’s incompetence) by visiting Pakistan at this stage, that can make him put-off his visit and not any protest or dharna. What we need to remember is that China’s relationship is with the state of Pakistan and not with any specific leadership – Even Prime Minister Li Keqiang’s visit in 2013 took place during a period when there was no elected government in Pakistan but just an interim set up with the sole mandate of holding elections. Meaning, a failure to convince the Chinese President to also visit Pakistan when going to India is in fact the failure of the government itself and not of anyone else.

Further, to properly understand and appreciate the present Chinese leadership, we need to in-turn understand not only its renewed economic focus, but also its mindset. Internally, a revised reforms’ agenda has been unleashed by it aimed at combining economic rebalancing, industrial upgrading, sustaining growth and eliminating corruption. On one hand is the aim to channel resources to new growing sectors, products and services and on the other hand to increase the role of the government in healthcare, education and social security. The government will support more migration to cities in order to foster more labor-intensive, service oriented and consumer based growth. The reforms also include fixing inter-governmental fiscal relations and an independent performance evaluation system of government officials. Externally, the reformed foreign policy will focus on countries that not only have economic potential but can also ‘responsibly’ engage China to help achieve its long-term economic vision. And it is here we seem to be failing while India by passes us to cement its rapidly growing ties with China; BRICS, OAOF and the new joint development bank as an answer to IMF/World Bank, all tend to be a part of a common economic endeavor.

So why is China economically preferring India over Pakistan? A simple answer: Size. And also true to a certain extent but in reality there is more to it than the mere quantum of economic potential or volumes of trade. There is this fundamental difference between how India is approaching economic engagement with China as against the way our government is endeavoring to do business with the Chinese. India’s approach is that of strengthening state to state relationship where broad macro economic cooperation takes place both on bilateral and global levels. For example, there are four broad parameters that today spell China-India cooperation. First, is an increase in currency-cooperation. The Chiang Mai Initiative Multilateralization (CMIM) is one such positive outcome of enhanced cooperation between China and India (now also Russia - On a separate note, it is ironic that nearly 75 percent of cross-border trade between China and Russia was settled in US dollar before Europe and the USA slapped sanctions against Russia. These sanctions will in-effect only speed up ‘de-dollarization’ process of these two large global economies). Second, both countries will complement each others infrastructure development through joint channels of financing. China in the next decade is focusing on consumption, whereas, India instead plans to concentrate on industrial investment and infrastructure development. Third, the two countries are set to sign a landmark agreement where they will help each other in improving their respective capital markets. The Chinese believe that India has done a lot to reform its financial industry and they can learn and benefit from India’s experience. The joint collaboration calls for direct financing to support each others real economy, improve the use of capital in both markets and reduce systemic risks in financial markets, opening and or improving cross-border financial transactions and clearance mechanisms, increasing financial regulatory cooperation and enhancing connectivity between their capital markets. And, Fourth, they want to expand the use of their local currencies when dealing with each other.

The idea being that once an overall environment of strategic cooperation is established at the state level it can serve as the umbrella underneath which the private sectors of both countries can then flourish by creating their own direct linkages or by becoming a part of the larger governmental efforts. Such a model not only creates the desired synergies for private-public partnerships but also ensures transparency, equal opportunity and an oversight that aligns private goals with that of the state.

Pakistan on the other hand has been trying to do the reverse. Our efforts over the last 15 months have instead bordered on promoting economic cooperation through hand-picked individuals/corporations and then promoting their linkages with Chinese companies (private or state owned) by providing them state’s support. Needless to say that such a route is full of dangers from possible corruption, nepotism and naturally prone to finger pointing. Given Mr. Xi’s struggle of ridding the Chinese economy of graft and re-establishing the image of the Chinese Communist Party it will be quite understandable if he comes across as being reluctant to endorsing our way of doing business in his ‘new’ China!

The writer is an entrepreneur and economic analyst.

kamal.monnoo@gmail.com