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ISLAMABAD: Pakistan and China on Tuesday agreed to

elevate the memorandum of understanding on industrial
cooperation to the framework agreement under the
China-Pakistan Economic Corridor to realise the vision
for development of special economic zones (SEZs).
Speaking at a consultative forum on draft framework
agreement on industrial cooperation on Tuesday, Board of
Investment Chairman Atif R. Bokhari said that the first
phase of CPEC required leading role of the government,
while the second phase requires a 180-degree shift in
management and roles.
“It calls for enhanced role of industrialists, private sector,
and business community, while the government’s role
would only be that of a facilitator by devising effective
policies, laws and efficient infrastructure, to facilitate
business-to-business and people-to-people linkages”,
Bokhari said.
He explained that the draft framework agreement on
industrial cooperation is being aligned with the long-term
CPEC framework. “A world of opportunities will open up
by setting the fundamentals of industrial cooperation
under the CPEC and it is high time for all of us to tap the
right opportunities at the right time,” he affirmed.
Bokhari said significant progress has been achieved on

development and colonization of the SEZs in the last few
months wherein four CPEC SEZs at Rashakai in Khyber-
Pakhtunkhwa, Dhabeji in Sindh, M-3 Allama Iqbal in
Punjab, and Bostan in Balochistan are now in advance
stage of development.
The geographic proximity between China and Pakistan will
allow these zones to foster economic interdependence for
mutual economic advantage, he added.
The framework is being developed with a special focus to
enhance industrial competitiveness of Pakistan, ensure
technology transfer, relocate Chinese businesses and skill
development and labour productivity.
The modus operandi of the cooperation would likely
enhance business-to-business and project-to-project ties
ensuring projectised mode of medium- and long-term
projects in industrial cooperation, balance and modernise
existing industry, make joint efforts to expedite SEZ
development and promotion, seek technical and financial
assistance from China, enhance production capacity,
facilitate businesses by financial institutions from both
sides and ensure joint marketing and media efforts to
promote industrial cooperation and SEZs.
BOI Secretary Fareena Mazhar, while highlighting board’s
role as lead agency for industrial cooperation under CPEC,
shared the corridor’s journey and its future action plan,
conceived for its second phase that includes development
of SEZs, agricultural cooperation, relocation of Chinese
industries into Pakistan, public private partnerships for
business prospects and creation of vocational training and
employment opportunities.
She said that Pakistan and China have agreed to elevate
the MoU on industrial cooperation into a framework
agreement focusing on SEZs development of SEZs and B2B
joint ventures as core elements of industrial cooperation
under CPEC. Serious efforts for provision of gas and
electricity are underway to ensure these basic utilities are
provided at zones, she said.
Published in Dawn, August 26th, 2020

A HOST of geopolitical developments may breathe new
life into the China-Pakistan Economic Corridor (CPEC)
that was perceived to be running out of steam since the
PTI government assumed power in 2018.
Covid-19 has caused disruptions around the world this

year, but CPEC-related activities appeared tepid even
before the pandemic struck.
CPEC-watchers see the launch of two hydel power
projects in quick succession in Azad Kashmir and a special
economic zone (SEZ) in Faisalabad this month as early
signs of the rejuvenation of the multi-billion-dollar
programme. To remove roadblocks and ensure timely
progress, the government is also working on the CPEC
Authority Bill 2020 that will further empower the
dedicated authority created last year.
Regional realignments and the changing dynamics in the
Middle East, West and South Asia may work in Pakistan’s
favour. The oil shock and greater realisation in the Arab
world of a shared future seem to be drawing even the
hostile nations closer. Iran under US sanctions has drifted
closer to China vis-à-vis India for being undeterred by an
aggressive US stance. The Afghan peace process is moving
despite minor setbacks. The pandemic and border tension
with China have compromised India’s capacity to irritate
Pakistan. All these developments are said to be conducive
for CPEC progress.
Talking to Dawn earlier, PTI leaders dismissed the
perception about Chinese reluctance, insisting that it is
peddled by its political opponents and the forces hostile
to Pakistan. Chinese diplomats in Pakistan repeated the
official position of being committed to the Belt and Road
Initiative of which CPEC is a key component.
Independent experts found the assumption that the
Chinese prefer a particular political party in Pakistan
baseless
Despite official positioning, the visibility of Chinese
nationals in Pakistan is not the same as it was in 2016–18.
The circulation of Chinese officials, experts and staff was
noticeable in government departments and ministries,
hotels, airports, shopping malls, etc. Chinese sources
admit that the inflow of visitors from China has declined,
but they insist that about 13,000 Chinese working on CPEC
projects are still in Pakistan. It is also true that the pace of
Chinese investment did wane after the initial injection of
about $40 billion in multiple power and infrastructure
projects and Gwadar Port. China intended to invest $62bn
in Pakistan over 15 years under CPEC that was launched in
April 2015.
“There might be some glitches here and there, but broadly
the work on the first phase progressed smoothly. The exit
of the PML-N or the entry of the PTI in Islamabad did not
affect it. The first phase targeted to close the logistic and
energy gaps in Pakistan that blunted development efforts.
Many projects of the first phase have completed and the
rest are in different stages of development.
“The graduation to the second phase may not be swift, but
the interaction between the two sides started in 2019. It
spanned industrial, trade and social development sectors,
involving a greater participation of the private sector and
civil society organisations in both Pakistan and China. The
second phase may be less capital-intensive, but it is
definitely more complex. Besides, the IMF and FATF affairs
did consume the PTI government’s attention in 2018-19
and the health emergency sapped its energy and
resources in the first half of 2020. Still we were not off
course on CPEC,” a top official associated with CPEC
shared his views on the condition of anonymity.
Independent experts admitted that China reacted to the

demand of revisiting the agreed-upon deals by some PTI
leaders. But they found the assumption of Chinese
preference for a particular political party in Pakistan
baseless. “Historically, China has been supportive of the
country irrespective of the internal power dynamics,”
commented one. Others attributed Chinese coldness after
the initial euphoria to the challenges that China
encountered in Pakistan while dealing with a fractured
system. Some blamed the downward swing in the
economy that took the sheen off the shiny multi-billion-
dollar CPEC programme for Chinese annoyance.
“Compared with the past, there is a notable decline in
enthusiasm amongst nations for extraterritorial port
projects. In particular, entering the second phase of the
One Belt One Road, China has been served a rude dose of
reality. Managing trade flows through an offshore port,
they are realising it is not just a one-time engineering
challenge. It involves constant political gymnastics with
stakeholders from across the spectrum.
“While India promoted Chabahar as a competitor to
Gwadar, they built it with a narrow goal in mind: winning
reconstruction projects in Afghanistan. Since President
Trump rescinded the Joint Comprehensive Plan of Action
(JCPOA) or the Iran nuclear deal and tightened sanctions,
the Chabahar post has been a big question mark. Despite
exception granted to India for using Iran as a conduit, no
major contractor in Afghanistan, fearful of getting
blacklisted by the United States, was willing to risk using
Chabahar. Unless Iran is brought back into the economic
mainstream, it is unlikely that the port will pick up steam
again.
“With Chabahar now officially on hold, Gwadar has
emerged as the only viable supply point for Central Asia.
CPEC future depends significantly on the success of
various foreign-funded infrastructure projects in this
landlocked region, and continued enthusiasm of leaders
of Central Asian States for opening their economies to the
world,” said Dr Ameem Lutfi, a post-doctoral research
fellow at the Middle East Institute, National University of
Singapore.
“The evolving geopolitical situation is a plus for CPEC. The
Afghan peace process, China’s entry into Iran and India’s
exit from Chabahar will help secure our borders and
strengthen CPEC.
“Regarding suspicions over China’s enthusiasm for CPEC,
the assumption is factually incorrect. In fact, there is
renewed vigour in CPEC with two new hydel projects
announced in Azad Kashmir. As for the Gwadar Port, it is a
centrepiece of CPEC. Its development is transformative for
Balochistan. The reservations of Baloch insurgents stem
from suspicions, failed and flawed policies of the past and
propaganda of hostile external forces,” commented
Mushahid Hussain Syed, chairman of the Senate foreign
relations committee.
Attempts by Dawn to get comments from CPEC Authority
Chairman Asim Saleem Bajwa did not succeed.
Published in Dawn, The Business and Finance Weekly, July
27th, 2020
As Pakistan navigates changing power equations in the

world, and the crisis in Kashmir, the China Pakistan
Economic Corridor (CPEC) stands out as the one possible
silver lining for Pakistan. However, while CPEC is still one
of the largest bilateral investment projects underway
anywhere in the world, today its momentum in Pakistan is
being regularly questioned. The scale of the promise is so
large that it invites anxiety as well as awe in its sweep.
With early harvest projects worth 18.9 billion dollars
already underway in Pakistan in its first leg, the planning
by Islamabad should bring much higher infows than
timelined right now. Yet it simultaneously tests the
Pakistan government’s capacity to use the opportunity to
its advantage.
China’s ability to pull 800 million people out of poverty in

four decades through economic reforms has presented a
compelling model for Pakistan to follow. However, given a
tough series of IMF-induced measures for stabilisation,
economic growth in Pakistan seems to have slowed down
even more. Even though the centre is adamant that there
has been no slowdown on CPEC goals, the sense in the
provincial capitals is different.
Among the big signature projects, infrastructure and

energy top the wishlist. While Thar coal has generated
power that now feeds into the national energy grid,
officials claim that Islamabad’s full-throttle drive on CPEC
has been eased up and work on the projects pushed down
the priority list. Yet at the same time, the economic impact
of CPEC is seen as potentially so game-changing, that it
cannot be ignored. With the precipitous slide of an
overvalued rupee, and public finances straining at
crippling deficits, the prospect of Chinese-led investment
growth is the only rainbow on a horizon clouded by high
economic stresses for a fast-growing population. In best-
case estimates, in fact, it is believed that Chinese
investment can potentially stimulate an eight to 10
percent increase in Pakistan’s GDP by 2030. In worst-case
futures, that number may well be unreachable, given
Islamabad’s current inability to operationalise promised
reform.
Furthermore, even though Pakistan’s new economic

policy focus seems to be geared towards operationalising
these promised reforms, the goals that it has espoused
have remained blurry and do not align with parliamentary
and public reporting. Separating myth from reality and
setting clear goals for inclusive planning at the federal,
provincial and grassroot levels should be a top priority for
the government. As a democratic country with multiple
languages and ethnicities that find expression in a huge
traditional and social media, even small confusions or
communication gaps can create severe cascades of
backlash at all tiers of governance. For example,
community level politics is critical to navigating trade
union tensions. In Gwadar, the lack of consultations with
the local fishermen in the building process of terminals
and jetties that displace their livelihoods and boats has
been a major cause for tensions. It is precisely this
ambivalence that has hampered the transfer of
knowledge and caused the failure in connecting nodes at
the downstream institutional level.
The scale of Chinese investment in the China Pakistan

Economic Corridor is so large that it invites global awe. But
as CPEC moves into its second phase, there is also anxiety
that the project is deliberately being slowed down and
that its promise may not be fulfilled. What needs to be
done to put it back on track?
Moreover, while some of the Pakistani concerns pivot

around transparency, repayment terms and capacities,
most of them do not question the intent of the embrace.
Provinces within Pakistan that voice complaints either do
so because of Islamabad’s growing institutional opacity or
simply because they want more of the pie.
As with all such big platforms, the challenges to CPEC 2.0
are legion. Understanding that the real challenges to
realising the maximum potential from CPEC are internal is
a crucial step towards successfully benefitting from it.
These are embedded in three Cs’ of capacity, coordination
and consensus. Pakistan, undeniably, has to scale up its
capacity and coordination while building consensus in
identifying policy frameworks for the opportunity this
platform offers.
Consensus
Chinese trucks are parked at the Gwadar port, some 700

kilometres west of Karachi | White Star
One of the foremost roadblocks in effective consensus-
building on CPEC has been the divergence in processes
between a centralised Chinese communist party
government and Pakistan’s nascent democratic parties
and governance structures.
With CPEC envisioned as a cross-Pakistan project that

involves all of four provinces, navigating Pakistan’s multi-
party provincial structures and building bridges with all
political parties has been a challenge. However, China has
sought to overcome the Pakistani government’s own
inability to build consensus and manage the political
centre-field by engaging directly with several political
parties at the provincial and federal level, to cultivate a
better understanding of CPEC’s vision and priorities. This
process has culminated in the establishment of a CPEC
Political Parties Joint Consultation Mechanism, which has
seen the Communist Party of China engage with a broad
spectrum of Pakistan’s political parties.
Since CPEC is not a parochial one-party or one-province

ambition, it requires strategic levels of consensus-building
to ensure each province’s stake in the project is protected
and that Pakistan’s government moves forward
collaboratively. Given the clear multi-party buy-in and
commitment to CPEC, building consensus between
Pakistan’s political parties should not be as arduous of a
project as it seems. However, the federal government’s
attempts for building political consensus between political
parties has been poor because of the lack of transparency
about CPEC between the different wings of government.
The parliament is not brought into the fold by the federal
government and has also consistently lacked an
appreciation of the need to build stakes in parliamentary
leadership at the highest level. This failure has led to
political instability hampering the path to consensus and
in ensuring that CPEC is implemented at optimum
capacity. The federal government is often seen as absent
or dismissive of this crucial process of political coalition-
building.
Since CPEC is not a parochial one-party or one-province

ambition, it requires strategic levels of consensus-building
to ensure each province’s stake in the project is
protected…
Capacity
Source: Ministry of Planning, Development & Reform

Another major challenge to Pakistan has been the

government’s capacity deficit to absorb concessionary
loans and grants which has been only worsened by their
inability to plan how these will be absorbed in the future.
Given the multiplicity of project designs under CPEC, both
in the government and the private sector, it is clear that
the Planning Commission, in which CPEC is nested, is both
under-resourced and under-powered.
In terms of doing business reforms, most of the

improvements have come at the provincial level from
Punjab and Sindh, limiting the development only to
Karachi and Lahore. Even though these efforts are
commendable, they are insufficient for the country in the
longer run as they give the impression that the
government is only fixing what can be measured. It is the
responsibility of the federal government to effectively
disseminate information about the economic impact of
CPEC that provides a blueprint to the rest of the provinces
to implement business reforms that can equip them with
the right tools to benefit from CPEC.
Furthermore, as Morial Shah wrote in an oped Pakistan’s

current Special Economic Zone (SEZ) law, instead of
decentralising and curbing bureaucratic controls to create
elbow room for private enterprises, adds impediments
such as approvals, areas of overlapping jurisdiction and
poorly allocated regulatory authority. Recent reports
suggest that while authorities are still busy with
evaluations and land acquisition, work on any of the nine
special economic zones is yet to begin.
The Chinese ambassador to Pakistan, Yao Jing, has

repeatedly asserted that Pakistan has the potential to
attract huge Chinese investments only if they can develop
better trade policies, offer tax incentives and foster an
investment-friendly climate. Currently, investors are
required to get multiple No Objection Certificates (NOCs)
before investments can begin. Hence, while SEZs in other
countries such as China, UAE, Thailand and Georgia offer
a one-stop-service for all regulatory matters, in Pakistan,
the Board of Investment (BOI) serves that purpose which,
due to the lack of a tailor-made framework for SEZs, leads
to bureaucratic red tape. Reforms should be aimed at
empowering the provincial governments to process the
application of SEZs to save time and money instead of
being dependent on Islamabad.

Another significant hurdle in Pakistan’s ability to generate
employability under CPEC initiatives has been the capacity
of our human resources. While Pakistan boasts the ninth-
largest labour force, lack of investments in technical and
vocational training have seriously affected labour skills. As
a result, while infrastructure projects under CPEC
continue to employ over 90 percent domestic labour, the
percentages shrink dramatically in technical projects such
as energy and digital connectivity. Presently, several
Chinese companies are undertaking specific on-the-job
training programmes for semi-skilled workers, both in
China and in collaboration with universities in Pakistan
that are partnering in dedicated short training courses.
CPEC has so far created nearly 68,382 direct jobs,

according to the Ministry of Planning, Development and
Reform. The China-Pakistan Economic Corridor
Committee Meeting on June 13, 2019, discussed that
CPEC has the potential to further generate anywhere from
800,000 to 1,500,000 jobs till 2030. For Pakistan,
investments such as CPEC are valuable for their spillover
impact on local firms and labour in terms of transferring
technology, boosting skills and improving the quality and
quantity of employment. The availability of productive,
skilled and reasonably priced labour is an important
determinant of the location for foreign investment. For
Pakistan’s demographic structure, with a burgeoning
young labour force, the opportunity to generate high-
value jobs from CPEC investments is not one that Pakistan
can afford to miss.
Coordination

Coordination and communication is critical to connecting
institutional dots. Effective communication is the
overarching element of power in the 21st century, and
CPEC’s scale and ambition must best be addressed with
clarity. Provinces have to be given the confidence that
CPEC will be transparent and equitable. Unfortunately, to
this day, little is known about the government contracts
signed under CPEC.
When it comes to a discussion of provincial stakes, it is fair
to start with Balochistan — the home of Gwadar, which is
the centrepiece of the CPEC maritime Silk Road linkage. It
goes without saying that the province has several
deprived regions that need development and
connectivity. The people of Balochistan and their public
representatives have their hopes pinned on CPEC as much
as the rest of Pakistan, if not more. For years, the mineral-
rich province has provided resources like natural gas. But,
at home, it has witnessed scarcity of resource and even
gas at multiple levels. Its only consolation has come in the
form of the 18th Amendment which ensures them
ownership of their own resources through the National
Finance Commission award.
It has already been indicated that the Balochistan

government has repeatedly displayed confusion about the
lack of progress on the Western Route. They have also
raised questions about the province’s share in the
multibillion project remaining at a meagre two to three
percent. In the absence of transparency and provincial
coordination, several voices suggest that the provinces
aligning with the Eastern Route will be the larger
beneficiaries of CPEC investments. In parliamentary
committee meetings, members from both Balochistan
and Khyber Pakhtunkhwa have protested against the lack
of groundwork on CPEC in their respective provinces.
Additionally, lack of water infrastructure is a major
roadblock to development in Gwadar as well as other
parts. These are areas that beg the government’s
attention but little of substance has been communicated
during the Senate Special Committee meetings to date.
Nonetheless, the main political parties of Balochistan have

been on the record to offer their full support to the central
government — as have other political and opposition
parties from Sindh, Khyber Pakhtunkhwa and Punjab — on
all CPEC projects.
Now, as CPEC drives into the next phase, the flow of

substantive informational exchanges between various
provincial and central departments as well as the private
and public sector should not remain ambiguous anymore.
There are obvious fault lines in communication as various
members of the Senate CPEC Committee, who are also
representatives of their provinces, have raised questions
about timelines and priorities. Most recently, the
increasing scrutiny of CPEC projects by the National
Accountability Bureau (NAB) has stalled the process of
approval for the ML-1 railway line — a project of immense
strategic importance to CPEC. The federal government will
have to demystify these details and, for that, it needs to
make use of the parliament.
It is clear that in order to be functional, the most effective

means of communicating across the federation would be
to use parliamentary committees (CPEC committees are
fully functional in the Senate) to ensure transparency and
build a narrative that has a buy-in from all parties and
provinces. The fact remains that, as representatives of
their communities, all parliamentarians and political
parties do see the benefits of CPEC and the potential for
their own communities, once clear timelines and
execution of projects becomes visible.
The Way Forward

PM Imran Khan and Chinese Premier Li Keqiang on the

PM’s visit to China last year – cpec.gov.pk
Going forward, here is what the government needs to do
urgently in order not to miss this opportunity. Future
development may be less arduous if a one-window
autonomous CPEC Authority is set up, which may already
be on its way as recommended by the Senate Special
Committee on CPEC. This would manage the internal
challenges of planning, financing and coordinating
between institutions, provinces and agencies to build
momentum on speedy outcomes. Furthermore, tax
regimes would have to be rationalised, infrastructure and
energy provisions need to be ensured, transparency of
contracts have to be addressed to avoid controversy and
sovereign guarantees to provinces where needed made
available. Flexible financing for private joint ventures and
structural reforms also need to be planned and
undertaken if any of the promised gains are to materialise.
Additionally, tax incentives can be conditioned on training

labour and tax breaks can be conditioned on sourcing
components from local firms, which also translates, albeit
more indirectly, into local employment gains. In a bizarre
and rather sharp contrast to this, the current service sales
tax regime imposes a tax on business trainings, thereby
increasing the costs of private training. Business-friendly
measures can directly address the market failure that
plagues the labour market; by compensating firms that
invest in labour, the government can plug in the gap
between private and social benefits.
Finally, amendments to the SEZs Act of 2012, which are

currently being debated in parliament, must ensure that
SEZs provide Chinese and other companies, at a minimum,
the same incentives that other South East Asian and
African SEZs are currently providing. In addition, to deter
rent-seeking and to guarantee that industries are market-
driven, SEZs must ensure devolved decision-making that
takes the private sector on board. With the majority of SEZ
companies expected to be from the private sector,
ensuring that market dynamics determine SEZ policies will
be essential for long-term viability of SEZ companies. A
clear ‘rules of engagement’ agreed upon by both China
and Pakistan would also prove beneficial in terms of
expected outcomes.
Ultimately then, the ball is squarely in Islamabad’s court.

The Chinese have done what they mostly need to. If
urgent reforms are not undertaken for coordination and
planning, there is a clear danger of the big CPEC
opportunity shrinking to a much smaller platform than its
initially conceived big-scale and transformational
potential. History will judge all actors poorly —
particularly the current PTI government — if they don’t
seize the moment and the options for what they are.
Debt Diplomacy
Riding a global trend, a symptom of Western anxiety is the

new narrative of CPEC and the Belt and Road Initiative
(BRI) being bloated, unplanned and predatory initiatives.
The spectre of swamping Chinese indebtedness is cited by
Western powers as a critical neo-imperial gambit that
cannibalises developing, weaker economies, while
ignoring their own debt profiles and structural lending to
countries like Pakistan. This public conversation naturally
stokes real fears in Pakistan, where the opacity of Chinese
contracts with government are cited as troubling for good
governance and debt-ratio metrics.
The fact is that 90 percent of developing country debt,

including Pakistan’s, is owed to Western countries or
institutions. Servicing this debt consumes about 30
percent of hard currency outflows from these developing
countries, notwithstanding examples of Sri Lanka or
Malaysia. At the Second BRI Summit in April 2019, China
has sought to realign its investments in large-scale
projects by addressing concerns of exclusivity,
sustainability and standards. The launch of the new Debt
Sustainability Framework under the Chinese Ministry of
Finance, coupled with the Multilateral Cooperation Center
for Development Financing are meant to address concerns
of debt sustainability, and build multilateral cooperation
mechanisms to help share financing for infrastructure
projects, largely restricted to policy banks such as the
China Development Bank, EXIM Bank of China and other
state-owned banks.
As Pakistan enters the second phase of CPEC, it is

important to understand the measures and projections
surrounding the arguments over debt risk to inform policy
behaviour. One of the main concerns is that CPEC is adding
on to Pakistan’s already ballooning public debt. This is not
entirely true.
According to the official Chinese statement, the early

harvest projects are worth18.9 billion dollars in
investments which is made up of six billion dollars in
government loans with a two percent interest rate and
private investments in the form of equity worth three
billion dollars, and 9.8 billion dollars in commercial loans
with a five percent interest rate. So far, the government
of Pakistan only needs to repay six billion dollars over the
span of 20-25 years. It is important to note that, although
commercial loans figure in the country’s total external
debt and liabilities, it is in fact not guaranteed by the
government. This is proven by the State Bank’s official
figures that do not show any guaranteed private-sector
external debt. CPEC makes up for six percent of Pakistan’s
total external debt worth 105.84 billion dollars whereas
other multilateral loans run about four to five times more,
dwarfing CPEC loans in comparison.
Aside from the debt question, some worry about the risk
of asset seizure in case Pakistan fails to repay its Chinese
loans. Sri Lanka is often cited as a cautionary tale in this
regard. However, the circumstances that led Sri Lanka to
lease its port to China point to a much more pervasive
balance of payment crisis that goes well and beyond its
Chinese loans. The Rhodium Group, in a recent study,
looked at 40 cases of Chinese debt renegotiations. Their
findings reveal that asset seizure is indeed a very rare
occurrence. In fact, deferment, change of loan terms and
deadlines, refinancing or even write-offs or debt
forgiveness are more common outcomes. The refinancing
and renegotiation given to Angola, Ecuador, Ethiopia,
Mongolia and Ukraine support this claim. Altogether,
China has renegotiated around 50 billion dollars worth of
debt.
With its ballooning external debt, questions surrounding

the country’s capability to repay its loans without risking
its assets are not unfounded. The real risk lies in Pakistan’s
ability to stabilise its balance of payments. Pakistan must,
therefore, focus on building cooperation frameworks and
reducing the opacity of CPEC finances.
Sherry Rehman is the Parliamentary Leader of the

Pakistan Peoples Party in Senate and President of the
Jinnah Institute. She is also currently serving as the
Chairperson of the Senate Special Committee on CPEC.
Published in Dawn, EOS, September 1st, 2019
This version of the online article has been amended to

include citations from the original article.
The staff report released by the International Monetary

Fund (IMF) last week must have provided some measure
of comfort to the champions of the China-Pakistan
Economic Corridor (CPEC) as well as China that chose
Pakistan to be the first key destination for the Belt and
Road Initiative (BRI), which aims to sustain its economic
triumph and realise future ambitions.
If this is just a coincidence, it is intriguing. After a long lull,
there is light blipping again on the CPEC drawing board.
Last Friday, a 55-member Chinese delegation of business
executives met Prime Minister Imran Khan and reportedly
committed to ploughing $5 billion investment over the
next five years. “Probably the interaction with the Chinese
delegations was already planned, but the fact that it did
materialise as soon as details of the IMF deal were made
public kindled new hope for the future,” commented a top
leader of the government’s economic team.
In its staff report following the approval of a three-year
$6bn bailout programme, the IMF mentions the
repayment of $14.68bn due for $21.8bn bilateral and
commercial loans that Pakistan owes to China. This is
almost 24pc of the country’s total $85.8bn external debt
and liabilities. The document states that the Chinese
commercial debt will be fully retired by the end of the
programme in 2022 while the bilateral debt ($15.5bn) will
be almost half of what the country owes at this point to
$7.9bn.
There is no official word from China on the apparent slow
pace of CPEC projects. Its enthusiasm somewhat waned
for want of clarity on the post-election economic direction
Sometime back, the United States explicitly expressed its
dismay over the possibility that Pakistan could use the
Fund’s money to pay back Chinese loans. The US stance
exasperated the anxieties surrounding the multibillion-
dollar China’s investment plan. The CPEC did stimulate
growth and motivated economic drivers by removing
infrastructure bottlenecks before the start of the current
tumultuous phase in May last year.
There is no formal word on the issue from China. The
enthusiasm of the dependable friendly nation did
somewhat wane for want of clarity on the post-election
economic direction. There were concerns about the intent
of the new set of rulers on the pledges by the PML-N
government regarding CPEC-related projects. The initial
statements by members of Prime Minister Khan’s
economic dream team where they questioned the sealed
deals must have added to the confusion. How far the visit
helped to allay China’s reservations is anyone’s guess. But
the optics are lacking if China is still as upbeat on the CPEC
as before.
China prefers to speak with its silence most of the times.
However, people in the know of things in Islamabad said
that China did remind the current government, at some
point, of the grave consequences of reneging on the
earlier signed contractual obligations.
Approaching the relevant Chinese officers supervising the
CPEC was a vain exercise as earlier efforts proved useless.
It became apparent quickly that China feels neither keen
nor obligated to share the details of its multiple deals. It
sees no value in entertaining the prying journalists.
Sometime back, a senior Chinese diplomat told this writer
that whatever they wish to be known is put up on the
CPEC website. He said their system does not allow free
flow of information. “We need clearance from Beijing
before sharing our opinion. It takes time and does not
serve the calls of fast-paced media based in democratic
traditions.”
The relevant people in the federal government dismissed
the perception that the ruling party knocks the wind out
of the CPEC sail as being a figment of someone’s
imagination. All provinces, except Khyber Pakhtunkhwa,
endorsed the counter-narrative — the movement on the
CPEC agenda has indeed slowed down under the watch of
the current government.
The focal person on the CPEC, Hasan Dawood Butt, sees
the project progressing at the expected pace. He termed
Pakistan “the buckle of the Chinese belt initiative”. “Prime
Minister Khan is as much devoted and committed to the
CPEC as anyone else. His successful meetings with the
leadership in China hold testimony to his recognition of
the project’s value to the country and its people. We are
moving ahead in the next phase of economic cooperation
that focuses on development of the social sector and
economic cooperation,” he said over the phone from
Islamabad.
“We host Chinese experts and business delegations every

other day. Recently, a delegation of the petroleum sector
was in Islamabad to explore the avenues of joint ventures
in special industrial zones,” he said. There are nine sites
identified across Pakistan for special zones.
Mr Butt attributed the relative lack of visibility of the
Chinese in Pakistan to the completion of several early-
harvest programmes in the first phase. “We are
commencing the second phase of the CPEC where there
are no big-ticket infrastructure projects that require
Chinese technicians in big numbers. Instead, the focus
now is on improving health, education and agriculture.
There is discussion over agriculture co-branding etc. Once
special zones become operational, perhaps the optics will
improve,” he told Dawn.
The sense in the provincial capitals was different.
Generally, officers were reluctant to come on record, but
said that if the progress on the CPEC is not halted
altogether, it is too slow to be seen as moving at all.
“Be it transport or industrial zones, I do not remember
when it was last even mentioned in a high-level meeting.
I don’t have a shred of doubt in my mind that the lack of
interest right now is mutually shared between both
partners. It could be the preoccupation of China with sour
trade relations with the United States or the obsession of
Prime Minister Khan’s team with the demands of the IMF.
Whatever it is, it has pushed the CPEC down on the
priority list on both sides,” a senior member of the
hierarchy in Sindh said.
“At long last, the Punjab government has identified and
started the process of acquiring land for the planned
industrial zones. If all goes as planned, it will take another
two years to fix the infrastructure and arrange for basic
utilities before gates are opened to investors,” a senior
officer from Punjab told Dawn.
Not everyone agrees. Dr Muhammad Amanullah, a senior
officer from Punjab, defended the government. “In the
second phase under the new government, the focus of the
CPEC has moved towards industrial development,
agriculture and socio-economic development. The
perception of a slowdown, therefore, is wrong as
currently provincial governments are working towards
identifying and proposing projects for special economic
zones. The exercise needs research and spadework with
eyes on realising the full potential of this opportunity,” he
said.
KP Planning and Development Secretary Atif Rehman
sounded optimistic. He said the work is in progress on the
Rashakai Economic Zone. He was happy with the pace of
progress.
According to insiders, not all of the 22 projects in the first
phase of the CPEC worth about $29bn have been
completed yet. Some eight projects in the power sector
that are completed are said to be in financial troubles for
the non-payment of dues.
Published in Dawn, The Business and Finance Weekly, July

15th, 2019
OVER the past year, the Western media, echoed by many

in India and some in Pakistan, has conducted an
extensive campaign of criticism against the China-
Pakistan Economic Corridor (CPEC) project. It has been
variously asserted that the project is building roads that
are not needed; it will only facilitate China’s trade and
bring little benefit to Pakistan; it will burden Pakistan
with enormous foreign debt, and so on.
This campaign gained momentum after US Defence

Secretary James Mattis remarked that CPEC would
traverse ‘disputed territory’ (meaning Gilgit- Baltistan)
and former US Secretary of State Rex Tillerson questioned
the financial structure of projects under China’s Belt and
Road Initiative. US opposition to CPEC seemed to be
confirmed when in July the current Secretary of State
Mike Pompeo argued that an IMF financing programme
for Pakistan should not be used to repay Chinese ‘bond
holders’ and banks.
The US stance was interpreted widely as part of its
strategic confrontation with China (spanning trade,
technology, the South China Sea) and an additional point
of pressure to secure Pakistan’s compliance with
American demands on Afghanistan.
The US has several tactical and strategic reasons to
cooperate with China and support CPEC.
The state secretary’s remarks redoubled the doubts
within the incoming Pakistani government about the
wisdom of approaching the IMF to achieve the urgently
required stabilisation of Pakistan’s economy, especially its
external imbalances. In an interview, Finance Minister
Asad Umar stated that ‘if we choose not to go to the IMF’,
it will not be because of the expected ‘economic pain’ but
because of ‘non-economic’ and ‘national security’
considerations.
Prior to the elections, PTI leaders had spoken of the need
to review some of the CPEC projects and to prioritise the
social objectives espoused by the party. China was
naturally anxious that between this desire for a review by
the new government and the Western media onslaught,
the CPEC project, which is the flagship of President Xi
Jinping’s Belt and Road Initiative, may be derailed.
CPEC was a major item on Chinese Foreign Minister Wang
Yi’s agenda for his recent visit and talks with the new
Pakistani government. Any doubts regarding Pakistan’s
position on CPEC were laid to rest in the public and private
assurances conveyed by the prime minister, foreign
minister and the COAS to the Chinese foreign minister.
But the Western media has persisted in its campaign. The
Financial Times published an article entitled ‘Pakistan
rethinks its role in Xi’s Belt and Road plan’, printed the day
after the Chinese foreign minister’s visit. It quoted
purported remarks by Pakistan’s trade adviser expressing
disquiet about the ‘disadvantages’ of some CPEC
agreements which Pakistan intends to ‘renegotiate’. The
commerce ministry immediately issued a strong rebuttal
stating that there was “complete unanimity” between
China and Pakistan on CPEC’s future direction and
affirmed the Pakistani government’s commitment to
CPEC.
Even after this, the Wall Street Journal offered an article
asserting that Pakistan is ‘pressing’ China ‘to realign the
goals’ of CPEC ‘to take on poverty-alleviating initiatives
and build factories’.
In fact, the projects included under CPEC were those

identified by the previous PML-N government. China has
consistently expressed readiness to reflect the priorities of
the new government for social infrastructure and poverty
alleviation projects. An agreement to make these and
other adjustments was in fact reached a day ago by
Pakistan’s planning minister and deputy head of China’s
National Development and Reform Commission.
Meanwhile, Pakistan’s information minister told the press
that during his talks in Islamabad, the US secretary of state
had assured that the US will not block an IMF financing
programme for Pakistan. This implies a lifting of US
objections to the servicing of Chinese debt (which is a
fraction of debt to Western financial sources).
A video, circulating on the internet, evidently sponsored
by the Wall Street Journal, projects Pakistan and CPEC as
the fulcrum of US-China strategic competition. Yet, the
Western media may be ‘more royal than the king’ if not
dead wrong. Rather than being the focus of competition,
Pakistan and Afghanistan may be one area where the US
and China could cooperate rather than compete.
The US has several tactical and strategic reasons to
cooperate with China and support CPEC.
First, the US needs China’s support to realise a political
settlement in Afghanistan. The US and China are both
working in parallel to improve Pakistan-Afghanistan
relations. China also has close contacts with the Afghan
Taliban. It desires, like the US, to eliminate all terrorism
emanating from Afghanistan. It can make large
investments in Afghanistan. And it can moderate any
disruption of a political settlement by Iran, Pakistan and
even Russia.
Second, the extension of CPEC to Afghanistan would
contribute to its ‘connectivity’ to Central Asia, China and
beyond, and foster its development and stability.
Moreover, if India joins CPEC (eventually), it will gain
access to Afghanistan and Central Asia (which Pakistan has
staunchly resisted so far). Both objectives are part of the
US strategy for South Asia. While noting the new Pakistan
government’s commitment to CPEC, the Chinese foreign
ministry spokesman significantly added that the
construction of CPEC “can absorb third party participation
and benefit the entire region”.
Third, CPEC is essential for the stabilisation and growth of
the Pakistani economy. The US will no doubt pressure
Pakistan to do its bidding on Afghanistan. It will push
Pakistan to bend, not break. In the ultimate analysis, a
‘failed’ nuclear Pakistan is not a palatable prospect for
either the US or China. China’s assumption of the onus for
Pakistan’s economic stabilisation is not a bad bargain for
the US.
These considerations may not be accepted at present by
vengeful US generals, intelligence operatives and
ideologues, smarting from their failure in Afghanistan.
They are better understood by US foreign policy
professionals. Indeed, the Obama administration
expressed support for CPEC.
The major opposition to CPEC, going forward, will
emanate from a chauvinistic Indian regime which sees the
sponsorship of terrorism in Balochistan and unrest in
Gilgit-Baltistan as a smart strategy to restrain Pakistan’s
support for the Kashmiri freedom struggle. Yet, given the
tectonic shifts in strategic alignments in the entire Asian
heartland, and the opportunities for an economy-led
normalisation across the region, India may be shooting
itself in the foot.
The writer is a former Pakistan ambassador to the UN.
Published in Dawn, September 16th, 2018

GRAPPLING with a crippling economic crisis at home,

Pakistan is compelled to tread slowly and carefully in the
emerging geoeconomics and politics of the region.
Although financial help and support from China, Saudi
Arabia and the UAE have contributed to partially
resolving the country’s balance of payments crisis, yet an
IMF bailout seems inevitable. Some would translate it as
a return to old partners in the West — or the US to be
more precise.
The outgoing government used the investment under the

China-Pakistan Economic Corridor (CPEC) not only to
overcome the energy crisis and infrastructure-building but
also to counter pressure from the US, which was growing
with the resurgence of the Taliban in Afghanistan. The
previous government also tried to maintain Pakistan’s
traditional policy of keeping a balance in its relationship
with Saudi Arabia and Iran and, therefore, withstood
pressure to send Pakistani troops into Yemen.
The government of Prime Minister Imran Khan has

apparently completely revised Pakistan’s Middle East
policy. There is an impression in national and international
policy circles that, in the process of economic recovery,
Pakistan has lost its geopolitical equilibrium as well.
There is an impression that Pakistan has lost its
geopolitical equilibrium.
CPEC, which was until recently being projected as a game-
changer for the country and the region, has lost its
attraction in policy discourse.
In the process of rationalisation of CPEC projects, Pakistan
has put many projects on hold, thus discouraging private
Chinese companies and individuals from investing in the
special economic zones (SEZs). Beijing has supported Mr
Khan’s idea of rationalising CPEC projects for two major
reasons. First, the aggravating economic situation in
Pakistan has made China concerned about the repayment
of the loans it has provided for CPEC projects. Second,
China wanted to give time to Pakistan’s new government
to overcome its economic challenges, for which it also
provided a couple of bailout packages. The government
also tried very hard to diversify its options for the foreign
investment, and succeeded to a certain extent — but with
a heavy price.
Pakistan is fast losing balance in its relationship with Iran
and Saudi Arabia. The $10 billion Saudi pledge for a
refinery and petrochemicals complex in Gwadar has not
only come as cause for caution for Iran, but also China. The
latter has concerns that it may lead to Saudi-Iranian proxy
warfare in the coastal region, at the bottleneck of CPEC.
The Baloch in Gwadar also see the refinery in the context
of Iran-Saudi Arabia rivalry. They believe it will bring in US
influence due to the common strategic objectives of the
Saudis and Americans against Iran. Though the refinery
would be set up about 100 kilometres away from the
Pakistan-Iran border, it will continue to perturb China.
Pakistan’s support for talks between the Afghan Taliban
and the US is widely welcomed. It could become a hugely
positive contribution to regional peace if reconciliation is
achieved. But many in Pakistan are also arguing about
what this country has achieved so far through the
facilitation of a peace process. An IMF bailout package
could be one but, at the same time, the US is not willing
to reduce pressure on Pakistan on multiple strategic
fronts. It is believed Pakistan could have gained much
more had it extended its support for the peace process a
few years ago, when the Obama administration was
desperate to achieve a peaceful resolution in Afghanistan.
It is not the economy alone that has pushed Pakistan to a
restricted geopolitical position but also the militant
groups. Some analysts even suspect that the Afghan
Taliban will remain a reliable ally of Pakistan after entering
into a peace agreement in Afghanistan. Certainly, by
bringing the Taliban to the table, Pakistan has done what
it had been avoiding for several years. Internal security
and economic challenges notwithstanding, international
compulsions and obligations are also bearing upon
Pakistan’s policy responses.
Looking ahead, Pakistan needs to develop a geoeconomics
framework of engagement with its neighbours and allies.
This country can make sure that Saudi investment is
coming with no geostrategic strings attached, and that it
would be for economic purposes only under the
compulsion of the Saudi Vision 2030. Pakistan must not
allow any proxy group to use its soil against neighbours.
Though it would be difficult to maintain such a
relationship with an assertive Saudi regime, Pakistan can
maintain a balance through a China-Pakistan-Iran
economic partnership.
To balance the Iran-Afghanistan-India bond of Chabahar
port, China and Pakistan can work towards connecting
Chabahar and Gwadar ports. China and Iran have both
hinted at the ports’ connectivity through joint initiatives.
Chinese academics consider a trade relationship with Iran
via Gwadar as one of the major outcomes of CPEC.
Pakistan also needs to speed up transnational energy
projects with Afghanistan, apart from taking initiatives to
boost bilateral trade.
Though CPEC has not fulfilled the expectations of the
common man, especially in Balochistan – where it has not
generated the expected economic activities and
employment opportunities for the local people – yet
speedy development on the SEZs in Gwadar can address
their many grievances. The Balochistan government is
inviting domestic and foreign donors and investors for
infrastructure projects, which can attract private Chinese
investors, who are moving towards East and Central Asia.
New Chinese investors are desperately looking for
investment avenues across the world, mainly in Asia.
The US role in the region is not expected to subside even
after a peace agreement with the Taliban is reached.
Pakistan will remain an important working partner, if not
strategic ally, for the US in the Indian Ocean and in
neighbouring regions. For that, the relationship has to be
taken out of the shadows of mistrust and non-state actors.
It is often heard in strategic policy discussions in the
federal capital that Pakistan is changing its focus from
geostrategic to geoeconomics, but this transition needs a
clear direction. Pakistan has to set out priorities of a
traditional zero-sum game to ensure that its relationship
with one nation do not come at the cost of its relationship
with another. This country does not have a multiplicity of
options to attract foreign investment, and those that are
available need to be fully harnessed.
The writer is a security analyst.
Published in Dawn, April 7th, 2019
THE Belt and Road Initiative has attracted praise and

critique since its inception in 2013. The response is not
unnatural for the transnational endeavour that could
mobilise an investment of $1.3 trillion by 2027 and will
potentially change the geo-economics of partner
countries and regions. It remains to be seen, however, if
BRI’s architects will follow in the footsteps of Western
hegemons or seek mutually beneficial partnerships.
The West, led by the US, is becoming more wary of China’s
bolstering economic muscle with every passing day. The
country has faced more intense scrutiny since 2015 when
it announced ‘Made in China 2025’, a plan to spearhead
high-tech industrial development. Beijing presents it as an
effort to circumvent the middle-income trap, but Western
countries accuse it of mercantilism and subsidising
Chinese firms heavily for a competitive edge over their
Western rivals.
On the political front, Western strategists equate BRI with

debt-trap diplomacy to sow the seeds of distrust. The
accusation is ironically levelled by the architects and
custodians of the Bretton Woods system. Besides, it
emanates from a policy to limit China from playing an
assertive role in the developing world, which may
undermine the West’s contemporary dominance.
Pakistan — the host of BRI’s crown jewel, the China-
Pakistan Economic Corridor — has strategic ties with
China, which both countries are striving to deepen
further. Our analysts argue CPEC is a historic opportunity
for Pakistan to leapfrog into the 21st century.
The success of CPEC is crucial for Beijing to place itself as

a trusted partner for the Global South.
In this backdrop, it’s barely noted that the corridor is now

a test case for Beijing too to demonstrate its ability of
becoming a trusted partner for the Global South. It is
nonetheless incumbent on the Pakistani government to
remain cognisant of channelling the benefits of CPEC
towards our youth and poorer population. No matter how
sincerely Beijing pursues CPEC, we cannot discount the
fact that its own economic interests, not inherently
exploitative though, would hold supreme, and we must
realise that sooner rather than later.
As President Xi presses ahead with his flagship initiative

and presents BRI as a common development goal, our
decision-makers should aim to nurture a long-term
partnership that yields equitable dividends. This
necessitates an understanding of the needs of our
economy for today and for tomorrow and prioritising the
areas that hold all-out benefits. Likewise, Beijing must
pursue economic ties with Islamabad based on the
principles of transparency and shared prosperity,
regardless of our much weaker economic might.
Despite some politicking regarding CPEC’s initial priorities,

it was carefully crafted because the provision of energy
and transport infrastructure is a prerequisite for economic
advancement. The second phase prioritises agriculture,
digital connectivity, industry, tourism etc. As this
economic integration accelerates, future collaboration,
CPEC 3.0, should be manoeuvred towards high-tech
sectors — namely telecom, electric mobility and
renewables, where China is an emerging global leader —
to optimise CPEC’s benefits.
In the telecom industry, China’s Huawei has become a

leading equipment supplier and is among the world’s most
innovative companies with nearly 88,000 patents as of
December 2018. Analysts believe it is set to lead the world
in the rollout of the future’s most promising, and critical,
technology: fifth-generation (5G) mobile telecom
infrastructure. As of April 2019, Huawei had signed more
than 40 5G contracts globally, proving that the firm can
commercialise its solutions faster than its Western and
Asian rivals.
Many Chinese tech giants are already present in Pakistan.

Since digital connectivity and infrastructure are essential
for tomorrow’s economies, future cooperation in this area
should form a major pillar of CPEC. Regardless of the US
government’s fierce opposition, Chinese tech giants will
be at the forefront of advancements in the telecom
industry. Therefore, B2B partnerships could help
Pakistan’s budding ICT sector to develop capacities by
engaging with Chinese partners. Meanwhile, Chinese
firms can target the vast untapped potential of Pakistani
market.
Concerned chiefly about its soaring dependence on

imported fuels and worsening urban pollution —
challenges we can relate with — the Chinese government
implemented several corrective measures. Since taking
the reins in 2013, President Xi has stressed the need for
sustainability more than his predecessors. Resultantly,
China is a leader in the renewables industry and the
largest market for electric vehicles (EVs). According to
Wood Mackenzie, a consultancy, by December 2018 China
had 181 gigawatt of wind and 175GW of solar PV capacity
— a whopping one-third of installations worldwide.
Although Western original equipment manufacturers

(OEMs) dominate the global wind turbine value chain,
Chinese PV suppliers are rivalled by none, albeit facing
anti-dumping duties by many countries. Chinese turbine
OEMs have struggled to lure investors outside their
domestic market, but thanks to CPEC, they hold a 30pc
share in Pakistan’s nascent wind energy market. Chinese
turbine OEMs are willing to localise production for future
installations, which can lay the foundation for tech
transfer — yet another incentive that sets renewables
apart from thermal power.
China leads the world in emerging trends in e-mobility. It

has over 200 million electric two-wheelers and recorded
sales of 1m EVs in 2018 — more than the rest of the world
combined. According to McKinsey, a consultancy, the
success of Chinese OEMs is more pronounced in the e-bus
segment — of the 97,000 urban buses sold in China in
2018, 87,000 were electric.
Beijing has a goal that one-fifth of vehicles sold in China by

2025 should be electric, which will catalyse exponential
growth in EV sales and help Chinese manufacturers
consolidate their strengths. Advancements in these
sectors will create further synergies. For instance, 5G
connectivity is necessary to commercialise autonomous
EVs and robo-taxis, which will rely on artificial intelligence
and fuelled (ideally) through renewables.
This is not to suggest that China will help us become an

important player in these futuristic technologies. That
thought is far-fetched. Nevertheless, by aiding Islamabad
in these areas to address the economic and environmental
challenges it faces, Beijing will vindicate President Xi’s
stated vision of BRI and legitimise its leadership in the
developing world. Or else we must tone down the
enthusiasm that encircles CPEC and reassess the
allocation of our scarce institutional resources for better
outcomes.
The writer is an analyst specialising in energy policy and

political economy.
Twitter: @sohaibrmalik
Published in Dawn, May 27th, 2019
A NATIONAL Assembly panel rightly postponed the

clearance of the proposed China-Pakistan Economic
Corridor Authority (Amendment) Bill, 2020, for
discussion and voting by the lower house till the
government satisfies its members on the authority’s
legal status months after the lapse of the ordinance that
created it.
The panel wanted the planning officials to explain the

legal basis for the authority to continue to exist and for its
chairman to keep his job after the ordinance’s expiry in
May. The officials couldn’t come up with any plausible
explanation for the existence of the authority or the
expense incurred on running it without any law to protect
its operations. Among other things, the bill seeks to
indemnify the actions of the authority since the expiry of
the ordinance that had been promulgated a year ago and
later extended in January.
The officials said that the authority did not have a

chairman at the moment. But the panel could not be
convinced when informed that the ‘incumbent chairman’
of the technically defunct authority was just ‘coordinating’
without drawing any salary or perks since the expiry of the
ordinance. Some members demanded that the planning
ministry issue a written clarification that there was no
chairman of the CPEC Authority, and also explain as to
how it was functioning when the ordinance had lapsed, as
a precondition for the clearance of the proposed bill by
the panel. This is a fair demand for greater transparency
in the affairs of the authority.
It is ironic that an agency that was created to inject

momentum into CPEC projects and streamline the
initiative’s policymaking process is caught up in a storm
because the government didn’t put in the effort required
for the timely passage of legislation. That is not all. The
government’s refusal to address questions regarding the
financial probity of the authority head have also led to
transparency concerns.
The delay in the passage of the bill required to give legal

cover to the authority will not send positive signals to
China at a time when the multibillion-dollar CPEC
initiative, hit by a sharp slowdown for the last three years,
is expected to pick up momentum. With the tenth Joint
Cooperation Committee meeting scheduled for later this
month, Pakistan and China are expected to take important
decisions about infrastructure projects like the ML-1 and
hydropower schemes, as well as review progress on the
SEZs being developed to facilitate Chinese/local
investment in the manufacturing sector in the second
phase of CPEC.
It is crucial that the government allays the concerns of the

parliamentarians. Moreover, the government must
ensure that the authority is staffed by the most qualified
people for the job and untainted by financial controversy.
Only by addressing such concerns can the authority
become effective and expedite work on the CPEC projects.
Published in Dawn, November 12th, 2020

HIGH-level engagements between the US and Pakistan

on Tuesday resulted in some interesting outcomes.
Meeting Prime Minister Imran Khan in Davos, President
Donald Trump, who called Mr Khan his “friend”, said that
Pakistan and the US had never been as close as they were
now.
But though this camaraderie is welcome, speaking in

Islamabad, Alice Wells, the State Department’s senior
official looking after the South Asia file, delivered yet
another critique of CPEC. Ms Wells made some very
serious allegations, claiming that firms blacklisted by the
World Bank had got CPEC contracts, adding that Pakistan
was walking into a debt trap laid by China.
She also urged the government to be more “transparent”

about the flagship scheme, described as a game changer
by the state.
On Wednesday, the Chinese embassy in Pakistan released

a rejoinder to the American official’s criticism. While
observing that Beijing would be “more than glad” to see
the deepening of Pakistan-US ties, it dismissed the
American criticism as “negative propaganda”. It also
pointedly asked what Washington had done for Pakistan.
Some background is necessary here. During the Trump

administration, ties between China and the US have been
especially frosty, and Ms Wells’s critique of CPEC must be
seen in this geopolitical perspective.
However, while good advice from our foreign friends is

always welcome, they should avoid giving Pakistan
lectures on how to conduct its foreign policy. True, there
are some concerns regarding CPEC, and this paper has
always called for all projects under the scheme to be made
more transparent, and to benefit Pakistan in the long run.
But for the Americans to wholly dismiss this giant
collaborative effort between Pakistan and China is
unacceptable.
Also, the relationship between Islamabad and Beijing is

decades old and has a strategic dimension, and Pakistan
can ill afford to ditch an ally simply to please another
foreign friend. This country values its relationship with the
US, but as the Chinese have rightly pointed out, what has
Washington done of recent to help uplift Pakistan
economically, and stand by it in international forums?
Concerning Mr Trump’s comments, while the US

president is prone to making hyperbolic statements, his
newfound fondness for Pakistan should be appreciated.
As for ties between the states being at an all-time high,
this claim is debatable.
After all, the US and Pakistan were quite close when it
came to dislodging the Soviets from Afghanistan under
Gen Zia’s watch — though history will judge whether that
endeavour was the wisest move to make for this country.
Moreover, in the aftermath of 9/11, Gen Musharraf was
walking in lockstep with Washington in the ‘war on terror’.
If Mr Trump really wants to take the bilateral relationship

to new heights, then let the US offer this country trade,
investment and assistance. Moreover, if Washington
values Pakistan’s friendship, let it publicly back this
country’s stance on India-held Kashmir, FATF and other
critical matters.
Published in Dawn, January 23rd, 2020

WITH the geopolitical landscape of our region changing

fast, many optimists say they are able to see a shift in
Pakistan’s geostrategic approach. Some believe this shift
is largely oriented towards geo-economics, and if
established, it would be a major doctrinal shift. But so far,
state institutions have not hinted at that in their
statements. Or perhaps, this is merely an issue of a
different reading of their actions.
Pakistan’s faltering economic indicators do not lend

weight to such notions that the state is making some
expedient efforts to strengthen its geostrategic or geo-
economic approach. For one, even the China-Pakistan
Economic Corridor (CPEC), which was until recently
projected as a game-changer for the country’s weak
economy, has become a victim of the short-sightedness of
state institutions. However, those seeing a shift in
Pakistan’s geostrategic approach do not use economy-
related arguments only; they also highlight the changing
geopolitical behaviour of the state, specifically towards
Afghanistan.
Pakistan’s role in the Afghan peace process is vital. It was

widely appreciated as being instrumental in sealing the
US-Afghan Taliban deal of Feb 29. But this does not reflect
any change in Pakistan’s strategic approach. Instead, it
supports its long-standing position; it has long been
advocating that a negotiated settlement between the
Taliban and other Afghan stakeholders is a viable solution
for Afghanistan.
Pakistan has facilitated talks between the US and the

Taliban because of several reasons. First, the US has
acknowledged Pakistan’s stance of negotiated settlement.
Secondly, the Belt and Road Initiative and CPEC were also
factors because China does not want a major, protracted
conflict near a key belt of its ambitious connectivity
initiative. Similarly, Pakistan’s internal security concerns
as well as its urge to correct its global image have proved
to be critical reasons.
Pakistan’s cooperation on Afghanistan has not generated

support for its stance on India-held Kashmir.
It requires an in-depth inquiry to examine how effectively

Pakistan used these factors and to what extent they have
influenced the country. However, Pakistan’s strategic
doctrine appears to have remained unchanged in the
process mainly because the geopolitical and strategic
challenges facing the country have still not been resolved.
Nevertheless, these challenges have become more
complicated after India revoked the special status of India-
held Kashmir last year on Aug 5, which was granted under
Article 370 of the Indian constitution.
Pakistan tried hard to raise the issue before the

international community and on the relevant platforms —
especially focusing on human rights abuses in held
Kashmir. These efforts yielded results, and international
media and rights groups took the atrocities in Kashmir
seriously. However, Pakistan has not cultivated enough
political and diplomatic support to force India to review its
brutal practices in Kashmir. China supported Pakistan’s
stance at the UN Security Council but that was not enough
to pressurise India. However, a real setback was
experienced when the Muslim bloc led by Saudi Arabia
and the UAE obstructed all Pakistani efforts to use the
Organisation of the Islamic Conference platform for
Kashmir. It showed that the religious bond is relevant in
international relations only when coupled with a strong
economy. South Asia is the region Pakistan considers the
least essential, or perhaps it does not fit in well with the
state’s ideological framework. Pakistan’s close bilateral
relations with South Asian nations would have generated
political capital to pursue its geo-economic and political
interests in the region.
Despite introducing structural and stabilisation reforms,

Pakistan is desperately looking for economic revival. The
power elites’ continuing practices reflect that they are
mainly capitalising on the strategic importance of the
country, which they believe can perform miracles time
and again by diverting international investment and aid
towards Pakistan. The nuclear arsenal and strong military
forces have contributed to this confidence. Afghanistan is
central to this approach, from where the country can
extract global support. Afghanistan is important for
Pakistan not only in the context of the Indian presence in
its backyard but also for strategic reasons, and the US has
exploited it very well.
Pakistan’s cooperation in the Afghan peace process

facilitated the improvement of its global image, reduced
the trust deficit in its relations with the US, and helped it
get loans from international financial institutions. But
Pakistan’s cooperation on Afghanistan has not generated
support for its stance on Kashmir. Second, in its efforts to
balance its relationship with the US and China, Pakistan
has significantly lost focus on CPEC, which was a rare
opportunity for the revival and strengthening of its
economy. However, Pakistan has not used the
Afghanistan factor effectively. Some say the fear of being
blacklisted by the FATF, the international financial
watchdog, has forced it to extend more support to the US
in Afghanistan. The FATF has proved a lethal factor,
neutralising Pakistan’s efforts to take advantage of its
cooperation in Afghanistan.
Maintaining an equilibrium in its relationship with China

and the US is another challenge for Pakistan. The country
has a history of ups and downs in its relationship with the
US, but it cannot afford a standstill with China, as the
relationship has an altogether different nature in the
geopolitical, geo-economic, and geostrategic contexts.
The impression, which has developed during the last two
years, that Pakistan is eager to restore its relationship with
Washington has created resentment in Beijing. The
slowdown of CPEC has strengthened suspicions.
In a nutshell, Pakistan is struggling to adjust its geopolitical

priorities, and nothing substantive has changed in its
geostrategic doctrine. A geostrategic shift should have
manifested itself in better trade and political relations
with neighbours and aggressive pursuit of implementation
of transnational energy and infrastructure megaprojects,
which have already been agreed upon and just need a
little push. CPEC and its connectivity with Afghanistan, as
well as structural economic reforms would have
substantiated such a shift. All these efforts need-out-of-
the-box thinking and courageous leadership.
Fixing the economy through a geostrategic lens cannot be

called a doctrinal shift.
The writer is a security analyst.

MOST discussions and analyses with regard to the China-

Pakistan Economic Corridor (CPEC) have a Pakistan-
driven perspective, and rightly so. After all, we have to
safeguard our national interests and ensure maximum
benefits for the country. These discussions and writings
have evoked a lot of interest in China. This article
attempts to present a limited cross section of the views
articulated by Chinese scholars, academics, companies
engaged in CPEC, retired officials and other friends of
Pakistan.
My past association with China as the region’s chief

economist for the World Bank as well as visits to China
practically every year since then has allowed me to gather
these points of view. This year I also had the privilege of
attending two international conferences on CPEC, one in
Beijing in March and the second in Shanghai in August and
listening to the candid views of the Chinese participants
from various sections of the society. The goodwill that
Pakistan enjoys among the Chinese is perhaps
unparalleled and therefore we have to pay heed to their
concerns and suggestions. The gist presented here is a
composite sketch of diverse views.
The Chinese have voiced concerns regarding negative
CPEC talk, security and red tape.
Under its One Belt One Road Initiative announced in 2013,

China is planning to invest more than $1 trillion in 60
countries all over the world to establish six different
corridors. The receptivity in other countries to this
proposal has been anything but enthusiastic; however,
some Chinese friends are puzzled by the sceptical and
negative reactions from certain quarters in Pakistan
expressed in the media, particularly on social media. This
comes to them as a surprise because of the long
uninterrupted record of strong bilateral relations between
the two countries that were not even affected by changes
in political leadership in either country. CPEC is the first
project of its kind to foster economic cooperation on a
massive scale for building large infrastructural projects in
Pakistan.
Although realising that there are some external forces

hostile to this initiative, Chinese analysts and participants
are concerned about what they see as the
misrepresentation of facts by many Pakistanis. It is not
obvious to them as to what purpose is served by raising
doubts and fears about CPEC in the minds of the Pakistani
population. The aspersions being cast on the motives of
the Chinese, such as the analogy with the East India
Company or Pakistan becoming a satellite of China, are
very unnerving: external detractors of CPEC pick up these
reports and after bundling them as ‘risks’ of CPEC to
Pakistan, disseminate them widely.
The Chinese argue that the IPPs have been a policy

instrument for investment in Pakistan’s energy sector for
a very long time. When the country was facing serious
energy shortages no one else came to Pakistan’s rescue
and invested in the sector. Now that China has come
forward with a planned investment of $35 billion or 70 per
cent of the total CPEC allocation under the same policy,
questions are being raised.
Had it involved extraction of natural resources from

Pakistan for the benefit of the Chinese, this criticism
would have been justifiable. On the contrary, the benefits
of this investment would be exclusively appropriated by
Pakistan’s industries and households that would no longer
face load-shedding while the country would record a 2pc
annual rise in GDP growth.
Chinese state-owned companies, designated by the

Chinese government based on their expertise and
experience, are executing the projects with loans
provided by government-owned banks on concessional
terms both in tenor and pricing. In several projects,
Chinese and Pakistani companies have entered into joint
ventures. The repatriation of profits and debt-servicing in
foreign exchange arising out of these obligations would
become possible after an increase in the volume of
exports as a result of the Chinese-Pakistani joint ventures
relocating their industries to the Gwadar Free Economic
Zone and the nine industrial zones to be established under
CPEC.
In the opinion of some, the negative feelings can have

unintended adverse consequences for the personal
security of Chinese nationals working on these projects,
particularly in some sensitive areas of Balochistan. Some
elements unhappy with the Pakistani state and
government and possibly acting at the behest of foreign
powers hostile to CPEC appear to have created conditions
in which the murders and kidnappings of Chinese
nationals that were almost non-existent have begun to
take place. Our interlocutors were grateful for the new
division being raised by the Pakistan Army for protection
of the Chinese; but the security risk is raising premiums for
relocation to some of the vulnerable areas.
The other area which bothered CPEC’s project managers

was the red tape and cumbersome decision-making within
the Pakistani government. Too many agencies are
involved in the clearance and approval process, each one
taking its own time. These delays cost them money and
disrupt the schedule of activities and completion time
table. Power tariffs, according to them, should be
reasonable, predictable, sustainable, valid for a multi-year
period and not subject to frequent changes. They request
that a focal point in the government be established and
empowered to secure all approvals and decisions.
The next point raised was to have a high-level joint

coordination committee to redress the grievances and
complaints of the Chinese companies. The existing joint
working groups operate at the government-to-
government level but there is no platform available for the
Chinese companies or their Pakistani joint venture
partners to approach. Continuous federal-provincial-local
government coordination is essential to move the projects
along till completion. Land acquisition is a provincial local
subject and the process takes too much time.
When questioned about the Pakistani private-sector

companies partnering with them, the Chinese executives
told us that the dearth of qualified and experienced
Pakistani entities was an acute problem. Their own cost of
production would be lowered if they were able to deploy
Pakistani managers, skilled workers, equipment operators
and labour as part of their deal with the local companies.
These perceptions may be right or misplaced but we have
to investigate and take measures to resolve some of the
genuine problems faced by our Chinese partners.
The writer is former governor of the State Bank of

Pakistan.
Published in Dawn, September 12th, 2017

IN a country where negativity and cynicism reign

supreme, critics and detractors of all kinds are revered,
and emotional outbursts and fabricated stories
dominate the air waves and social media, it is difficult to
present a dispassionate analysis of national issues.
Since China announced the China Pakistan Economic

Corridor (CPEC), more time and energy has been spent in
finding faults, poking holes and raising doubts based on
speculation and conjecture. Had this investment been
announced in another developing country, the national
reaction would be: how do we plan to ensure
maximisation of benefits to the economy? What are the
weaknesses and deficiencies in the existing set-up we
need to overcome? But this type of thinking is not in our
DNA. We are either in a mood for celebration and self-
congratulations or outright condemnation and depiction
of exaggerated pitfalls.
There are three types of reservations against CPEC. First,

those who believe that this whole endeavour is designed
to benefit Punjab to the neglect of the three smaller
provinces. Fanning parochial and ethnic prejudices,
doubts are created about the narrow impact of these
projects. Second, that the country would be saddled with
costly external loans and outflows forcing Pakistan to go
for another bailout. Frightening numbers such as totals of
$110 billion are floating around. Third, some Baloch youth
believe that they would become a minority in their own
province. Mistrust and not perceived economic gains
underlies such anxiety.
The government has not helped matters as it has not

placed all the data and information about capital
structure, detailed sources of financing, project sponsors
etc pertaining to CPEC, in the public domain.
There are three types of reservations against CPEC. How

can we address them?
This article, to allay some of the reservations, proposes
that the Planning Commission and PIDE use the well-
established framework of cost-benefit analysis to evaluate
and monitor the net benefits of CPEC projects. Benefits
can be of three kinds: (a) direct, measured by incremental
contribution to gross value added in energy and
infrastructure. Assuming energy elasticity of greater than
one, a two per cent growth in energy production and
usage would increase GDP by more than 2pc from the
current level (b) indirect, measured by the multiplier
effect of activities resulting from the direct demand of
goods and services and (c) induced effects or externalities:
eg bringing in roads and electricity may make some
economic activities feasible and reduce outmigration of
skilled labour from those areas. Costs can be of four types:
(a) direct costs associated with investment in electricity
generation , transmission and distribution or construction
of roads; (b) indirect costs: large scale investment projects
create scarcity premiums and domestic prices of some
goods and services are bid up. These premiums get
reduced when competition sets in; (c) unavoidable
incremental costs: in the absence of the required amount
of domestic supplies of quality and specifications, imports
have to make up the shortfall; and (d) avoidable
incremental costs: proper planning, coordination and
active management can substitute high-cost inputs by
low-cost inputs keeping quality intact.
Net benefits are thus estimated as the difference between

the discounted flow of aggregated benefits and the
discounted flow of all types of costs over the given time
horizon. This calculation is not straightforward and is
beset with many conceptual, empirical and measurement
difficulties. The most problematic area is the aggregation
of easily quantifiable direct benefits or costs with
estimated indirect and induced benefits and costs. The
latter are sensitive to the assumptions on which they are
based. Economists, by setting up monitoring experiments,
discover new data that helps in fine-tuning and refining
the original estimates. The outcomes therefore depend
upon minimisation of avoidable costs and expansion of
induced benefits thus enlarging the quantum of net
benefits.
The avoidable costs phenomenon can be illustrated with

the help of two examples. If the Chinese managers, skilled
and technical staff continue to be deployed throughout
the duration of the project, the unit cost of labour after
taking into account the expatriate wage premium,
security, housing and mobility expenses would be
relatively much higher compared to a situation where
preponderantly Pakistanis were employed. If the
government makes advance plans for these positions to
be transferred to Pakistanis over a staggered period
through training, on the job apprenticeship, attachments
and under study assignments supervised by Chinese
trainers, cost savings would be substantial and net
benefits much larger. This requires coordination, target
setting, monitoring and outsourcing to vocational and
technical training institutes, private providers and the
provincial governments.
Similarly, it is guesstimated that at least 100,000

additional trucks would be needed to transport
construction materials, movement of export-import trade
and increased volume of goods. If investment in the sub
sector is not carried out well ahead of the CPEC projects’
peak load demand, the prices of trucking would escalate,
putting Pakistani exports at a competitive disadvantage.
The cost matrix of CPEC projects would also move
upwards thus increasing the indirect costs. However, if
Pakistani truck manufacturers are provided ballpark
figures they can invest in expansion of existing capacity in
tandem with the suppliers of parts and components.
Indirect benefits would increase through creation of new
jobs in the industry and efficiency gains from the
economies of scale.
On the benefit side, it must be ensured that the most

dynamic and enduring benefits from CPEC accrue to the
people living in the deprived districts of Balochistan and
southern KP. The opening up and integration of these
districts with the unified national market of goods and
services would make their fisheries, mining, livestock,
horticulture and other activities economically feasible,
creating incomes and jobs and helping lift them out of
poverty. Roads and electricity are precursors for broad-
based development as they minimise post harvest losses,
waste and spoilage of perishable agriculture commodities,
reduce the cost of delivery to market towns, and confer
purchasing power in the hands of farmers who then use it
to buy consumer goods, generating a second round of
economic activities in these districts
By playing a more active role in maximising the benefits to

the people of deprived districts and containing avoidable
costs, the government would be able to allay a lot of
misapprehensions and doubts.
The writer is a public policy fellow at the Woodrow Wilson
Centre, Washington, D.C.
Published in Dawn, January 3rd, 2017

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MADE BY N&M wGroup, To Join +923235093530

ISLAMABAD: Pakistan and China on Tuesday agreed to

Bokhari said significant progress has been achieved on

Published in Dawn, August 26th, 2020

Covid-19 has caused disruptions around the world this

Independent experts admitted that China reacted to the

As Pakistan navigates changing power equations in the

China’s ability to pull 800 million people out of poverty in

Among the big signature projects, infrastructure and

Furthermore, even though Pakistan’s new economic

The scale of Chinese investment in the China Pakistan

Moreover, while some of the Pakistani concerns pivot

Chinese trucks are parked at the Gwadar port, some 700

With CPEC envisioned as a cross-Pakistan project that

Since CPEC is not a parochial one-party or one-province

Since CPEC is not a parochial one-party or one-province

Source: Ministry of Planning, Development & Reform

Another major challenge to Pakistan has been the

In terms of doing business reforms, most of the

Furthermore, as Morial Shah wrote in an oped Pakistan’s

The Chinese ambassador to Pakistan, Yao Jing, has

Source: Ministry of Planning, Development & Reform

CPEC has so far created nearly 68,382 direct jobs,

Source: Ministry of Planning, Development & Reform

It has already been indicated that the Balochistan

Nonetheless, the main political parties of Balochistan have

Now, as CPEC drives into the next phase, the flow of

It is clear that in order to be functional, the most effective

The Way Forward

PM Imran Khan and Chinese Premier Li Keqiang on the

Additionally, tax incentives can be conditioned on training

Finally, amendments to the SEZs Act of 2012, which are

Ultimately then, the ball is squarely in Islamabad’s court.

Riding a global trend, a symptom of Western anxiety is the

The fact is that 90 percent of developing country debt,

As Pakistan enters the second phase of CPEC, it is

According to the official Chinese statement, the early

With its ballooning external debt, questions surrounding

Sherry Rehman is the Parliamentary Leader of the

Published in Dawn, EOS, September 1st, 2019

This version of the online article has been amended to

The staff report released by the International Monetary

“We host Chinese experts and business delegations every

Published in Dawn, The Business and Finance Weekly, July

OVER the past year, the Western media, echoed by many

This campaign gained momentum after US Defence

In fact, the projects included under CPEC were those

The writer is a former Pakistan ambassador to the UN.

Published in Dawn, September 16th, 2018

GRAPPLING with a crippling economic crisis at home,

The outgoing government used the investment under the

The government of Prime Minister Imran Khan has

THE Belt and Road Initiative has attracted praise and

On the political front, Western strategists equate BRI with

The success of CPEC is crucial for Beijing to place itself as

In this backdrop, it’s barely noted that the corridor is now

As President Xi presses ahead with his flagship initiative

Despite some politicking regarding CPEC’s initial priorities,

In the telecom industry, China’s Huawei has become a

Many Chinese tech giants are already present in Pakistan.

Concerned chiefly about its soaring dependence on

Although Western original equipment manufacturers