Daily Times

Scenario analysis is a bit like science fiction, whereby probable future events are analysed to create multiple possible outcomes with the objective of preparing for and mitigating deemed impossible eventualities, resulting in actions that otherwise may have been considered unnecessary. And generally, as in the case of ancient prophecies from the times of the Oracles, probable scenarios are deliberately kept vague, with interpretations left to the inquisitor’s acumen in entirety. This may have to do with protecting the Oracle’s reputation, or the fact that sometimes the predictions are so astounding they are unpalatable to the less imaginative minds. But either way, in order not to be fooled by randomness, as Mr Taleb suggests, it is prudent to be prepared for the uncertain, however impossible. This is one particular scenario, perhaps hinging on the worst, left to the logical minds of the readers.

Pakistan’s economy, depending on which economic indicators you are biased towards, is either doing amazingly well or is on uncertain grounds. Irrespective of data reliability — which in any case is a challenge for any developing, and for some indicators, even a developed economy — according to the GDP growth rate, fiscal deficit, stock exchange index and foreign exchange reserves we are faring in a remarkable manner. On the other hand, high level of foreign and total national debt, quantum of debt servicing costs, insurmountable trade deficits and declining agricultural sector paint a worrisomely dark picture. Regardless, however, of the school of thought, there is a strong likelihood of unanimity over the conclusion that Pakistan needs a major breakthrough, the size of an elephant, for a stable and strong economic future. Perhaps in the form of huge oil reserves that supposedly have been sitting underneath Balochistan forever, with nobody being able to do anything about it up until now. Mountains of gold reserve, like the ones said to have existed in Saindak but as the story goes gifted to the Chinese to which we will come to later, and also like the ones existing in Riko Deq, which apparently till now have also been royally mismanaged. Large coal reserves, like in Thar, which were discovered in the 1990s and are still being negotiated for commercialisation. Or CPEC.

Let’s be clear of one thing; debt or equity, CPEC is not about free money, and China will want all this money back, whether that is with interest or profit is hardly relevant. And until such time we have not paid back all their money, they will own the underlying assets in Pakistan, which include highways covering the length and breadth of the country to which they will have unrestrained access, power projects, orange lines, and that is not the end of it. As our friends, and knights in shining armour, they are on a buying spree: picking, choosing and acquiring profitable businesses and/or joint ventures across the country. And only profitable ones since obviously it makes no sense for foreign investors, even if they are great friends, to buy loss-making units or invest in public utility projects unless the return is guaranteed by Pakistan.

Pretty soon they will be altogether relocating some of their manufacturing together with lots of Chinese to Pakistan as well. The trend now, as per an unconfirmed and unverifiable source, is that Chinese prefer to bring at least 60 percent of labour, and almost all of the required material from China for every project they take up. According to even more unreliable sources, there might be one Chinese for every four Pakistanis in less than five years in Pakistan, and there are more than enough Chinese in China for their government to want to export them to Pakistan. There already are horror stories about more than 30 Chinese living in one house in posh neighbourhoods of the capital, and golf courses being flooded by the Chinese on weekends.

And that is not all. While the understanding is that under the law foreigners cannot directly buy land in Pakistan, they can buy land through domestic companies that in turn can be completely owned by foreigners. Going forward, there is also a good possibility that government may facilitate owning of land directly by our Chinese friends, and let us be under no illusions: Chinese have a lot more money than Pakistanis to buy land and businesses in Pakistan.

The critics will point out that the Chinese are buying lands and businesses in America too, which is definitely true. In fact, Chinese acquisitions of businesses and land in America have gained momentum in recent years, and according to a report published by the non-profit Asia Society and the Rosen Consulting Group, “By the end of 2015, China was the source of at least $350 billion in US real estate holdings and investments.” These include financial institution as well as a stock exchange, and for the record, there are rumours that Pakistan Stock Exchange might be up for sale to Chinese investors as well.

Notwithstanding, there are already concerns in America that these acquisitions will adversely impact employment in America with more Chinese taking over their jobs, and that allowing Chinese access to American research and, most importantly, acquired corporations may result in them becoming net importers, contrary to being net exporters today. And wherever Chinese money goes, Chinese follow; Chinese immigrants are now the largest group of new arrivals to the USA. And which is why they now have Donald Trump!

Irrespective, if we really think that we can compare ourselves with the only superpower in the world and the only country in the world that can print dollars, that would be the height of stupidity. If China was to invest even one third of the above amount in Pakistan, they will end up owning, by a rough estimate, mostly about everything of value in terms of land and businesses. So is privatising everything to pay off the debt the plan?

This brings to mind another incident from history when rich Arabs sold the land from under the poor Bedouins to the JNF, which eventually facilitated the British designs in the region and resulted in endless conflict. Do a Google search. Surely the rich Arabs made money, but at what cost to the Arab nations.

As pointed out earlier, this is not about beating the doomsday drum, this is a worst-case scenario analysis. As of today Chinese investors own a port, are investing in airports, building a network of roads across the country on which Pakistanis would probably be paying toll to them, will be owning power generation facilities, and probably be investing in the rail networks. They are also apparently interested, if the grapevine can be trusted, cherry picking and buying manufacturing units in Pakistan; and even if they were not, the country is already flooded with Chinese manufacture starting from food items all the way to furniture and trucks. The Chinese remain the largest foreign contractors in Pakistan, and have now invested in the services sector, banks and telecommunications. We also love to eat Chinese foods, and may probably soon have all Chinese hotels to enjoy. And the very worst-case scenario is that they will end up owning golf clubs where Pakistanis would have to pay green fees as foreigners!

Perhaps we can do nothing about all of this, considering the options we have. Maybe the worst-case scenario is too fantastic, and the Chinese are our real friends interested in helping us out without any return expectations. Conceivably, we would be able to balance our relationships in the west and the east, notwithstanding that no other nation has ever done that before. But in spite of all this optimism, what is the harm in thinking about, and considering options to defend against the coming invasion?

The writer is a chartered accountant based in Islamabad, and can be reached at syed.bakhtiyarkazmi@gmail.com