WITH its reservations over project priorities, the newly elected government decided to review the country’s CPEC strategy and launch an action plan within its first 100 days to transform the project into ‘a real game changer’ for Pakistan.

In its view Pakistan was not fully benefiting from CPEC-related investments due to insufficient transfer of knowledge and capabilities, lesser partnerships with local businesses and high dependence on imports of goods and services from China.

The PTI manifesto had pledged to: ‘Create a two-way linkage with China and promote an indigenous-focused growth strategy and leverage trade infrastructure, and utilise Chinese expertise, latest technologies and efficient methods to supplement domestic manufacturing capabilities and enhance yield in agriculture.’

It also promised to: ‘Promote local value addition through joint ventures and value added exports, facilitate the integration of Pakistani manufactures with the global value chain, and ensure that Pakistani businessmen are fully involved in CPEC policy and project implementation.’

The joint statement and the continuing dialogue do not indicate a shift in CPEC strategy

A nine-member committee was set up to suggest ways to create space for the PTI agenda in the CPEC programme with marked preference for social and human resource development, investment, uplift of agriculture, industrial parks and export-oriented industrialisation.

Prime Minister Imran Khan was keen to expedite the stipulated programme scheduled for the second phase of the CPEC.

The minister for planning and economic reforms instructed the relevant authorities to fast track the process of establishing Special Economic Zones so as to achieve groundbreaking within three months.

Nine such CPEC zones are to be set across the country to attract foreign industrial investment.

Board of Investment Chairman Haroon Sharif says Pakistan will have to develop an ‘island’(s) on the pattern of Dubai International Financial Centre where the country’s laws do not apply.

“We have to insulate foreign investors from the jurisdiction of state institutions, courts and laws to give them a ‘sense of security’ in order to attract foreign direct investment,” he said.

Thus Prime Minister Khan went to China with a heavy agenda, the centrepiece of which was an integrated trade, investment and financial package.

Prime Minister Imran Khan was keen to expedite the stipulated programme scheduled for the second phase of the CPEC

The hope was that Chinese aid could help Islamabad reduce the size of the International Monetary Fund (IMF) bailout and enhance the possibility of minimising the Fund’s conditions related to the stabilisation programme.

But, apart from a stipulated doubling of Pakistan’s exports to China with in the near-term, the package is still under discussion with no timelines set for the negotiations.

While expressing in a joint statement their satisfaction with the ‘operationalisation of the currency swap arrangements’, both sides agreed to ‘strengthen cooperative ties in financial and banking sectors’.

The currency arrangement has yet to make any meaningful dent in bilateral trade which continues to be conducted mainly in dollars, and Beijing has supported Pakistan’s move to access the IMF credit facility to resolve its unfavourable balance of payments problem.

While the prime minister’s visit has been billed as a success by both sides — given the stipulated widening of bilateral economic cooperation — it is difficult to speculate about the outcome of continuing opaque bilateral discussions on specifics.

The joint statement appears more to be an expression of vision and mission about a strategic partnership and shaping of common destiny without any deviation from the CPEC course already set.

Thus, following the premier’s visit, some analysts are of the view that Pakistan’s expectations from China should be realistic, based on an understanding of CPEC’s status and role in Chinese President Xi Jinping’s Belt and Road initiative (BRI).

After all, to quote an expert with intimate knowledge, “CPEC is a mere cog in a giant wheel” as CPEC projects have the potential to feed into the larger BRI structure embracing 60 countries located in different continents.

The view has found support in the joint statement in which leaders: ‘Affirmed their compete consensus on the future CPEC trajectory’ and ‘agreed to protect all (CPEC) projects from all threats.’

Since CPEC ’s original guidelines and principles have laid down four priorities: Gwadar port, energy, transport infrastructure and industrial cooperation. This means infrastructure projects cannot simply be wished away.

And non-commercial projects on social and economic development are also part of the original CPEC programme, although Mr Khan did succeed in getting a part of the PTI agenda included in the joint statement for early initiation and implementation.

Both countries agreed to set up a working group on socio-economic development and China has agreed to support Pakistan in establishing poverty alleviation demonstration projects.

But the joint statement and the continuing dialogue do not indicate a shift in CPEC strategy.

jawaidbohari2016@gmail.com

Published in Dawn, The Business and Finance Weekly, November 26th, 2018