Despite All The Negative Propaganda By Indian Lobbies, CPEC Is Not A ‘Debt-Trap’
Osama Rizvi in this article explains how CPEC helped create an impression of Pakistan as a pro-investment country before the world. Claims where CPEC is juxtaposed with British East India Company, which had its own army, are utterly fictitious, he writes.
A recent article in Wall Street Journal talks about a “squeeze” on Pakistan by CPEC. This is not the first case, CPEC has caused much controversy from its transparency to return on investment. The claim that the said project is dangerous undertaking, politically and economically, is, however, totally unfounded.
China-Pakistan Economic Corridor (CPEC), as we all know is part of a world-engulfing ambitious trade and diplomatic effort by Xi, aptly named as Belt and Road Initiative (BRI). According to different estimates, said the above article, Pakistan will have to pay back China a total of $40 billion over the next 20 years. Till now different infrastructure projects worth $19 billion have been completed, the article mentioned. It also highlighted that this has been built by Chinese owned companies with little or no benefit for our local organizations. Referring to the upcoming forum in Beijing it further stated that Pakistan will sign few “aid projects” with China of worth almost $500 million (this is in any case a good addition).
Pointing to other South-East Asian countries like Malaysia and Sri Lanka and their grumbling about rising debt levels and the supposedly secret nature of the projects the article, like umpteen others, subtly signaled an unpromising future if we are to rely on CPEC a savior for our debilitating economy and weak soft image around the world.
While it is a fact that a single project even if of titanic proportions, which CPEC certainly isn’t, cannot save a country at the same time one cannot outright deny or overlook its significance especially when assessed in the context of a country having such an unstable profile.
Claims where CPEC is juxtaposed with British East India Company, which had its own army, are utterly fictitious. Also, history bears witness to the fact that what is known as Foreign Direct Investment played a momentous role in the ascendancy of our donor country itself, China. However, as FDI is always welcomed, the caveats that naturally and evidently come along with are not and this is where our government can play its part.
We can use Stiglitz approach here as written in his book Globalization and its Discontents. Given the recent rise in protectionist and populist sentiments he explains that the process of globalization itself, inherently is not harmful but it is the way it is being managed that renders it so.
The same logic can be applied to projects like CPEC where-in our government can negotiate better terms for instance, using loans form our local banks and hiring more local workers and involving domestic firms.
However, it is equally important to note our country’s current national and international standing. In dire need of funds and diplomatic support China’s friendship is time tested. The support in a way prevents the shadow of isolation from drawing completely on our country.
Also not everything is too bad for us. According to a report CPEC has provided up to 60,000 jobs since 2015 with the number rising to 800,000 by 2030. After the completion of energy projects country’s electricity production is expected to touch 16,400 megawatts.
A process of urbanization in Gwadar will, in near future, add up people to the middle class who will then spend and increase share of consumption in GDP.
As we move from “magnate” (where new factories and economic zones will attract people from all parts of the country) to “building binge” (as infrastructure will have to build in order to support the incoming masses) those areas may eye to reach the third stage of urbanization (as defined by Kroeber in China’s Economy), “smart city” where “specialization and innovation” becomes the main focus.
CPEC is and will not remain limited to trade but its offshoots will run into technology transfer, financial services and new markets for our own products. Of course for the last one to be fulfilled our companies have to become competitive enough.
Yasir Masood, Deputy Director Media and Publications for Centre for Excellence for CPEC (the first think tank that works under Ministry of Planning and Development and Reform) and an academic with special focus on China and BRI shared his thoughts on positive aspects of CPEC as follows:
“There are two sorts of anti-CPEC narratives: internal and external. At our think tank one of the prime foci is to counter both the nativities as the external one works in tandem with the internal. India has played a key role in introducing and associating terms like ‘debt trap, colonization’ with CPEC.
“However, it is pertinent to note the long term and immediate benefits of the initiative. Before 2013 Pakistan was considered to be an investment dry country due to energy shortfall, industry relocation and above all terrorism. But now we can see a huge influx of investment, for instance, KSA recently pledged to invest $20 billion in Pakistan in different fields. Other countries like Turkey, Malaysia and Russia are cozying up to Pakistan and CPEC has played a huge role in our transition from the aforesaid title to a pro-investment country!
Socio-economic development, trade and market access through CPEC, and especially coastal tourism under the umbrella of “blue economy”, will flourish.
“Caution, however, should be applied in utilizing the true potential of SEZs and to learn from failures in other countries. Backward linkages need to be built and SMEs need to be integrated. Another important question would be how the forward linkages have to be formed.
There are many other benefits that will come gradually, e.g, CPEC has helped create an environment of economic activity which, as the developed world shows, is a prerequisite for economic success. Interaction between business communities and entrepreneurs will result in an economic accentuation while Pakistan aims to shun its energy deficit by 2021.”
Doesn’t sound bad, does it?