Daily Times

Pakistan’s interactions with China will be greatly related to economic situation of the latter. If the Chinese market looks prosperous and innovative, the expected collection of projects China has included in the CPEC investment program will yield rewards. Latest information published by the Chinese authorities shows a GDP growth rate of 2.3% in 2020, making China the only major global economy to show a positive year-over-year rise. In 2020, the GDP of the nation reached a landmark, topping ¥100 trillion or around $15 trillion.

” The Chinese economy was able to record an extraordinary achievement in an extraordinary year,’ Ning Jizhe, head of the Chinese statistics bureau, told journalists. The Chinese Academy of Social Sciences anticipated this month that China could grow 7.8 percent in 2021, as it fully swung back, a pace that would be reflective of previous decades. It is a performance that is adequate to the people, witnessed by the world, and can be transcribed in the annals of history. But they did not promise it.

While most other major economies struggled from the spread of Covid-19, during the first quarter of 2020, in China, where the disease emerged, the economy sunk into negative territory only once. That was when Hubei province and its capital, Wuhan, were shut down by the authorities. Chinese senior leaders, including its globe-trotting foreign minister, Wang Yi, assured the world that his country’s rapid recovery could lift the rest of the globe. A significant component will be foreign trade. Chinese officials said exports in 2020 had reached an all-time high of $2.6 trillion. China’s trade surplus with the United States, amid a bitter trade war with Trump’s America, hit a record $13.6 billion for the year. China’s share of world exports increased to a record 14.3% .

The strong economic success of China has been expressed in the value of its currency, the yuan or the renminbi. The US dollar was worth ¥6.47 as of January 11, 2021, compared with ¥7.16 in May 2020. Beijing kept its currency on a good trajectory; it seemed to be a part of government policy to enhance its value. These are some of the reasons for the appreciation of the Chinese currency’s value is that its central bank has maintained a higher level of interest rates than other major world currencies. This has drawn investments of international capital into the financial system. A strong currency, according to one assessment, also has advantages for China. Chinese customers will purchase imported items more easily, helping Beijing nurture a younger breed of shoppers. It looks nice to economists and policymakers who have been urging China to relax its strict control of the financial system of the country for a long time.

In order to remain strong and robust, Pakistan should rely on at least one economy within its borders. It is suggested for Pakistan to first become self-sufficient by focusing on the basic necessities that is food, shelter and clothing

Even serious economists do not find it strange to look at the same economy from many different perspectives. During the transition process in Russia, for example, t he Soviet leadership that undertook this transformation needed the picture of the West to reshape the Russian economy. Russia registered for and obtained membership of the World Bank and the International Monetary Fund shortly after the end of the USSR. At that time, under the broad heading of the Washington Consensus, both organizations had formed a deep confidence in the sets of policies that came to be recognized. The role of the state in economic management has been reduced by this approach to public policy. In attempt to discover their own way into the economy, the private sector and the companies that operated in it had to be left alone. Moscow was encouraged to shift rapidly into this economic management style with the Washington Consensus being the driving principle. This rapid transition to aligning the former socialist economies with those in the West was termed the “big bang approach.” The magazine, The Economist, wrote a few powerful editorials indicating that in pursuing the big bang approach to making the transition, Beijing should obey Moscow.

But I would not recommend the Chinese to follow the Russian example, based on the current circumstances and looking at Chinese growth and development after reform and opening up. In the experiences of humans, they should reduce the reach of the state, but do so cautiously and bring in the private sector to perform the services that it would be easier to handle.In conclusion, a number of critics have speculated that the emergence of the Covid-19 virus and the Chinese authorities’ reaction to it could have adverse economic consequences. Chinese leaders, for example, cancelled public events linked to the Chinese New Year. The first quarter was hampered by reduced confidence and travel during the Chinese New Year holidays in February. However, with better planning and management Chinese economy is efficient enough to combat with unforeseen situations.  It is guiding line for Pakistan to take gradual steps just as Chinese economy have evolved over time not overnight. But for now, given China’s track record of controlling outbreaks, I believe the risk of significant economic impact is low. In order to remain strong and robust, Pakistan should rely on at least one economy within its borders. It is suggested for Pakistan to first become self-sufficient by focusing on the basic necessities that is food, shelter and clothing. It requires timely and accurate market information to avoid market failures and promote efficient supply chain. It is worth to remember that it takes the most of the project time to develop the grey structure than the construction, installation and final finishes. Pakistan needs to develop a solid baseline to build concrete empire.

Special Advisor (Pakistan Institute of Management, Lahore operated under Federal Ministry of Industries and Production, Islamabad) and Foreign Research Associate (Centre of Excellence, China Pakistan Economic Corridor, Islamabad)