Daily Times

A perception is built in Pakistan that the economic supremacy of China in the world will be a great support for Pakistan and strengthen the Pakistan — China relations. The economic relationship between both the countries is becoming mature continuously. The bilateral trade and ties shift into a new epoch with the coordination in different sectors i.e. power and energy projects, strategic fields and telecommunication and infrastructural development. The opinion about the China Pakistan Economic Corridor (CPEC) is that it will boost Pakistan’s economy and will be the best project for the infrastructural development in Pakistan. CPEC will enhance China’s trade with Pakistan and will also have a sound impact on the rest of the world. CPEC saves the cost of transportation and shipment with the safe and shortest route replacing the Strait of Malacca.

Now let’s analyze the realities of CPEC in a different perspective. The Gwadar port is the key of the CPEC project and China is depending on it to transport their products to the Persian Gulf and the Indian Ocean. This means that Pakistan and China both will directly benefit from Gwadar port and this port will expand the socio-economic activities of both the countries through their intensifying bilateral trade. If we quote the example of Dubai and Singapore ports, we’ll come to know their ports are regulated and owned by the countries themselves. Those countries have the strategic planning to get the benefits from their ports. But if we analyze the CPEC deal, it is more beneficial for China rather than Pakistan.

CPEC is a 66 billion dollars project and Pakistan has taken this amount as a loan from China under the guarantee of State Sovereignty. The 11 Billion dollars out of the loan is for infrastructure development, 35 billion dollars is for the power industry. It is really startling for Pakistan that infrastructure investment offered by China will have be paid as equity at the rate 17 percent to 20 percent.

The top priority of all the countries is always their national and strategic interests. Similarly, China is seeking to further its own national and strategic interests from CPEC. A reasonable portion of the total amount of the project is for power projects, the practicability of the project has been intimately scrutinized based on the rate of interests that is charged by the China Development Bank (CBD) and EXIM Bank of China. The official documents have revealed that the predictable debt and equity ratio is up to 20 percent to 80 percent. China will recover all its investment and Pakistan will bleed profusely for 25 years, the length of the contract period. Ultimately, the expensive electricity will cripple Pakistan’s economy and make Pakistan a wheelchair case.

Pakistan has almost 72 Billion dollars debt that is almost 72 percent of our GDP. Even our leaders have elevated loan at the interest rate of 8.75 percent from the International Monetary Fund (IMF) by pledging the Radio station, motorway, PTV and the air ports

It is very interesting to know that no one really knows the exact amount of loan that has been taken from China and what is the exact interest rate to be paid back for CPEC.

Sri Lanka took a loan from China to tackle its economy issues but they didn’t pay back. Sri Lanka was unable to repay its debt so ultimately it was forced to hand over its power plant, Hambantota port and even the air port to China in a debt-equity swap. Sri Lanka has to pay 90 percent of all government revenues to China for service debt.

Pakistan has almost 72 Billion dollars debt that is almost 72 percent of our GDP. Even our leaders have elevated loan at the interest rate of 8.75 percent from the International Monetary Fund (IMF) by pledging the Radio station, motorway, PTV and the air ports. Debit is the worst form of economy. For an economy to pay interest is awful, our government always needs to take more loans which will ultimately lead to bankruptcy.

China has an underutilized capacity of industrial production and even workforce. The majority of labors, engineers, workers, goods and materials are from China for CPEC. Most of Pakistani workers are deprived of jobs in the CPEC project. China is concentrating on providing jobs to its own people. Moreover, China is constructing quarters and flats for its workers in Pakistan. There is no assurance that the Pakistani’s workforce is going to be recruited. It is meant that money invested by the China in this project will get back to China with interest.

In Pakistan, the Chinese vehicles and trucks are not liable to paying tax, in other words they are exempted to pay the road tax. Our exports to China are very low, so we will definitely get less profit out of it. Pakistan needs to look after the maintenance, safety and security of the whole belt on its own expenses.

China is securing and protecting its strategic interests. It is quite possible that Pakistan will wind up giving up the control of Gwadar port to China. In this scenario, military sovereignty is also at stake. China has already lodged its military and naval ships in Pakistan to protect and safeguard its investments. Pakistan setup an agreement with good intentions but failed to get a fair and win — win deal.

Pakistan and China verbalize their ‘all weather friendship’, but China always aims to seek its own advantage. China tried to cultivate Pakistan as a client through the provision of military assistance, diplomatic and political wrap in UN and ‘aid’ in the form of loans to counter American influence.

Pakistan must prioritize its strategies for CPEC to get maximum benefits, otherwise, there will be no hope to recover from this economic set back.

The writer is PhD Scholar, Media and Crime and author of different books on International Relations, Criminology and Gender Studies. He can be reached at fastian.mentor@gmail.com

Published in Daily Times, November 18^th 2018.