CPEC has been acknowledged worldwide as an unprecedented economic initiative by China for a participative development and sharing of prosperity in the region as well as a historic opportunity for Pakistan to embark on a perennial process of sustainable economic growth. The CPEC being the pivot of the OBOR and one of the three components of the grand economic initiative holds a great promise for the participating countries which has tempted even the European countries like the UK to become part of it. Conceptually speaking, it is an unprecedented and unique economic initiative ever taken at the global level. The CPEC, according to the financial experts, offers a win-win situation for China and Pakistan as well as other countries in the region.
However, it is not without its detractors and critics who are relentlessly engaged in creating misgivings and apprehensions about the long-term impacts of the initiative and the future nature of relations between China and Pakistan. It has something to do with the global politics as well as political dynamics within the region as well certain lobbies within Pakistan who have agendas of their own. We often see articles in the local as well as the international media trying to paint CPEC in dismal colours and denigrating its likely economic benefits and also attempting to affect relations between the two countries.
A report in the Financial Times on 5th July filed from Islamabad claimed “Pakistan has asked China to keep lending it money to avert a foreign currency crisis, warning that Beijing’s planned $60bn investment in the South Asian country was at risk if it failed to do so. Officials in Islamabad have warned their Chinese counterparts that if the lending dries up, it could threaten the future of the China-Pakistan Economic Corridor, the cornerstone of President Xi Jinping’s Belt and Road Initiative. The report also quotes an official source as having said “We had a detailed discussion with the Chinese and we shared our concern. The main issue is that once we are locked in an IMF programme, we will have to make full disclosure of the terms on which China has agreed to build the CPEC.”
The report published in the backdrop of the mounting debt and massive repayments in the future conveniently neglects the nature and strength of relations between China and Pakistan and the role that the former has played during the last six decades in the economic development of the country and strengthening its defence besides supporting its causes at the international level. It gives the impression that the Pakistan government is trying to arm-twist the Chinese for maintaining the flow of financial resources to boost the deteriorating economic situation failing which it will have perforce to fall back to the IMF which may jeopardise some of the projects of CPEC.
The insinuation made in the report sounds preposterous in the backdrop of the infallible bonds between the two countries. China has always been forthcoming in helping Pakistan under challenging situations, and a friend like her cannot be treated like that. It is perhaps pertinent to note that significant chunk of $60 billion to be invested under CPEC pertain to direct Chinese investment of $34 billion on energy-producing projects, and the rest is based on loans that have been advanced at the lowest rates as compared to other international lending agencies like the World Bank. An authentic official source has confirmed that the rate of interest on these loans was 1.6%.
As far as Pakistan is concerned, it has always maintained a balance in her relations with the world powers and in its financial transaction and borrowings the same pattern has been followed. It has never been found wanting in fulfilling its financial obligations. If the economic situation does demand seeking loans or raising money to avoid a critical situation, Pakistan has multiple options available to it like seeking help from friends like China, the World Bank and the IMF as well as resorting to initiatives like issuance of Euro and Sakuk Bonds. Pakistan is mindful of the role that the World Bank and IMF have played in its development.
The article in regards to increased dependency on money from Chinese state-backed banks insinuates that the close economic and military ties with China have started worrying some people who fear that it runs the risk of turning Pakistan into a de facto client state. Here again, the authors of the report rely on the presumptive element rather than the ground realities and the past relationship between the two countries besides complete disregard to the geographical and strategic realities that lock the two countries into eternal bonds.
Pakistan surely needs additional resources to deal with repayments on loans and to tide over other pressing needs, a situation which has arisen due to a host of factors including the fluid political situation in the country. The stocks of foreign reserves have been falling for the past two years due to rise in imports and a slight decline in the exports however the foreign remittances have not been a contributory factor as maintained in the Financial Times report. The foreign remittances during 11 months of the financial year 2018 amounted to $18 billion, which represented 3 per cent overall increase over the same period of 2017. It indicates that some of the presumptions made by the report are not factually correct.
The apprehensions and misgivings being created regarding CPEC, particularly in the Financial Times report deliberately neglect the resources which would be generated through the implementation of the projects under it. The economists estimate that the implementation of CPEC would lead to a quantum jump of 2-3% in the GDP growth rate of Pakistan. That would be more than enough not only to cater for loan repayments and other liabilities but also for the future sustained economic development of the country.
CPEC is a nationally owned initiative, and the civilian and military leadership is unswervingly committed to ensuring timely implementation of all the projects under it, and there is no possibility of showing any slackness on that account. That commitment is amply demonstrated by the fact that Pakistan has raised a particular division for the security of the Chinese personnel working on the CPEC projects as well as the installations. The caretaker finance minister rightly remarked that the detractors and critics of CPEC could not dent the resolve for its timely implementation. Our Chinese friends are also firmly committed to successful implementation of CPEC.
The writer is a freelance columnist.