CHINA has been a steadfast friend of Pakistan. No two views about that. Our northern neighbour came up with a multibillion-dollar project, the China Pakistan Economic Corridor, at a time when Pakistan was in the throes of terrorism, and no country was willing to invest in it. However, has Pakistan optimally availed the enormous opportunities that CPEC could have yielded? The jury is still out.

Pakistan did manage to generate enough electric power to say goodbye to the brutal 16-hour-long daily load-shedding. Thousands of kilometres of highways were also built, bringing into the mainstream far-flung parts of the country. But alongside these two priority areas under CPEC, Pakistan was expected to build nine Special Economic Zones. That did not happen. So, the Chinese industries started shifting to countries where they could establish and operate seamlessly. Pakistan missed the train. Besides the delay in making SEZs, Covid-19, political and policy instability, and non-ease of doing business were responsible for CPEC’s slowdown.

The moot point is whether CPEC can regain the momentum it had generated in the first few years since its launch in 2015. The visit of our prime minister to China this month has certainly provided a timely fillip to CPEC’s ongoing projects and potentially new investments. The joint statement after the visit reaffirmed the “all-weather strategic cooperative partnership” between the two countries. It was also agreed to “continue the momentum of CPEC’s high quality development”. It was a clear signal from both countries’ leadership that the implementation of CPEC projects must be revitalised.

Can CPEC regain the momentum it had first generated?

Notwithstanding this reassuring message, there is a degree of curiosity as to why there was no clear announcement to start any major projects, such as the proposed multibillion-dollar ML-1 railway line project. The joint statement only “appreciated” the project and called for its earliest implementation. Likewise, the leaders agreed to “speed up progress” on Gwadar port and Khunjerab border port. However, no specific projects were announced. On some level, it is felt that China might be waiting for clarity regarding the next government in Pakistan. However, it can be argued that leaders provide only broader guidance, and work is to be done at the working level. If that is the case, it falls on the Planning Commission and concerned authorities to pursue a results-oriented approach lest the political goodwill generated by the “leadership consensus” dissipates. Another relevant factor is the high concern the Chinese have about safety and security of all Chinese personnel, projects and institutions in Pakistan. Unless we adequately address these concerns, attempts to reinvigorate CPEC could run aground.

One notable outcome of the PM’s visit was that CPEC was highlighted as an “open and inclusive” platform, and “welcomed interested third parties” to benefit from investment opportunities in the priority areas of CPEC. Since CPEC was largely treated as a bilateral project, the statement to make it “inclusive” is a welcome development.

Bilateral trade between China and Pakistan has risen sharply since the signing of the first free trade agreement in 2006. However, the balance of trade is heavily in China’s favour. During the PM’s visit, the Chinese side agreed to encourage investments in the export-oriented sectors of Pakistan to achieve “sustainable bilateral trade growth”. Our traders and investors need to use this offer to integrate some of our products into China’s supply chains.

China has succeeded in lifting 800 million of its nationals out of absolute poverty. Indeed, a remarkable feat. During the PM’s visit, the Chinese expressed willingness to extend “relevant practical” cooperation to contribute to poverty reduction in Pakistan. One wonders what that would actually mean. At present, Pakistan is trying to reduce poverty through subsidies, langar-khanas, shelter homes, and income support programmes. This is clearly not a sustainable way. Pakistan should learn how China has effectively used its local government systems to lift people out of poverty.

One day after the PM’s recent visit to China, the central banks of the two countries signed a memorandum of cooperation on yuan clearing in Pakistan. If this is followed through, there could be implications vis-à-vis the US dollar. However, this would be a major step forward towards an alternative payment system for Pakistan, at least for cross-border transactions with Chinese enterprises and possibly with other countries like Iran and Russia that might accept yuan for clearing payments.

All in all, Pakistan-China relations are on course with a renewed zeal. If we can sustain the momentum, no investment can serve our people better than the invigorated CPEC.

The writer, a former foreign secretary, is director general of the Institute of Strategic Studies Islamabad, and author of Diplomatic Footprints.

Published in Dawn, November 13th, 2022