The Belt and Road Initiative (BRI) which aims to revive the ancient Silk Road, is a centrepiece of Chinese foreign policy. As of now, more than 150 countries, with 75 per cent of the world’s population and half of the world’s GDP, have signed up to the BRI. CPEC, a principal component of BRI, aims to connect Pakistan’s Gwadar port city to China’s Xinjiang region through a network of roads, railways, and pipelines.
From Gwadar to Kashgar, a near-2,500km corridor has been partially completed. Nearly $50 billion is required for the complete operationalization of this corridor including the extension and modernization of the railway tracks.
According to the government estimates, the $25 billion that CPEC has invested in Pakistan so far has contributed a lot to maintaining the economy. It is claimed that CPEC projects have created almost 200,000 job opportunities and have helped Pakistan overcome its economic troubles.
During the Chinese Vice Premier’s recent visit, the government announced that the first phase of CPEC is coming to an end, which involved the development of infrastructure such as roads, motorways, metros, and power projects. The first phase helped to increase connectivity and mobility in the country, thus increasing economic activities in the country. Also, the development of power plants helped overcome the acute power outages which were plaguing Pakistan. It is another story that majority of the Pakistan cannot afford the expensive electricity being generated in Pakistan. During the Chinese Vice PM’s visit, it was further stated that now we are entering the second phase of CPEC, with a focus on industry and Special Economic Zones (SEZs).
However, if a more objective view of the progress and achievements of CPEC projects is taken, there is much to be desired. With $25 billion of economic investment, why are our exports still stagnant and imports rising, so much so that the government had to curtail all the imports which led to the closure of major industries in Pakistan. In fact, even factories producing essential medicines faced closures as they could not import the necessary raw material for manufacturing medicines.
Also, it was trumpeted that with CPEC, our industries’ collaborations with Pakistan will provide access to state-of-the-art technology, machinery, and expertise, enabling local manufacturers to produce goods that meet global standards, consequently strengthening industrial capabilities, reducing their reliance on imported machinery and saving foreign reserves. However, ten years down the road and devoid of any promised transfer of technology, we still rely on obsolete technology to produce low-value-added products with poor quality; even simplest of technological item is imported, and our ‘manufacturing industry’ is more of an assembling industry.
Furthermore, many SEZs have been inaugurated such as Rashakai, Allama Iqbal Industrial City, Dhabeji, and Bostan. However, while the departing government is on a ribbon cutting/ inauguration spree of SEZs, it is not clear which sort of firms, if any, have or would populate these new SEZs and how much Chinese firms are investing in these SEZs in collaboration with local investors and firms. Further, with the most expensive utilities in the region, how can any local industry compete with regional competitors? Also, with ever-dwindling gas reserves, what resources will be tapped for running would-be industries in the proposed SEZs?
Moreover, the Pakistan government has a poor history of running projects and industries such as Pakistan Steel Mills, Heavy Mechanical Complex, PIA, and Pakistan Railways, all of which are sick units and many on the privatization list. Therefore, it is confusing why, at least, operations of CPEC projects are not handed over to the private sector to run these projects in a productive, transparent and profitable manner. Finally, political and social stability is the lynchpin of attracting foreign investment along with attractive investment policies, ease of doing business and requisite infrastructure and manpower. However, given the present political, economic and social chaos in the country, one wonders if international investors would be willing to put their money in such a risk-prone and volatile environment.