Will the China-Pakistan-Economic Corridor (CPEC) benefit both countries, or only China? A number of aspects of the project are only beginning to attract scrutiny, and some of them indicate Pakistan may not benefit at all.
A note of caution was registered recently by the International Monetary Fund. The organization observed in a report that CPEC projects are expected to generate balance of payment outflows to the tune of US$3.5-4.5 billion for Pakistan by 2024. However, the report also warned that enhancing exports poses a real policy challenge for Pakistan and that failure in the endeavor will considerably diminish CPEC’s benefits.
One of the imperatives facing Pakistan is to increase revenues and build up its foreign exchange reserves. CPEC will cause an increase in yuan inflows to the country for both payment and settlement purposes, which may be welcome but will further damage Pakistan’s already yawning trade deficit. Moreover, most of Pakistan’s external trade is currently done using the US dollar, and CPEC will do nothing for its US dollar reserves. Further adding to the sense of insecurity is the government’s complete silence on these issues.
Over the past few months, I have spoken to several Pakistani industrialists and many of them expressed an expectation that CPEC will do damage to the local economy, in both the agricultural and industrial sectors.
Truck convoys coming from China via the mighty Karakoram Highway (KKH) have already begun to flood Pakistan’s domestic market with cheaper, made-in-China goods. The cost of production in Pakistan remains relatively high – partly due to the high costs inflicted by the country’s seemingly never-ending energy crisis. This also hampers the viability of Pakistan’s own exports. The corridor will, additionally, assist China to flood external markets which might otherwise have been receptive to Pakistani goods.
One industrialist summarized the situation thus: while made-in-China goods are already relatively cheap, the shorter route afforded Chinese exports via Gwadar will further reduce import costs in markets that have so far been export destinations for Pakistan.
CPEC appears more and more to be a master plan for deep Chinese penetration into Pakistan’s economy, with long term economic and political consequences
Investments are being made to resolve the energy crisis in Pakistan through building more power plants; however, the roots of the problem go much deeper than a simple production shortfall. Indeed, another IMF report mentions that in the absence of a robust distribution sector, Pakistan’s added generation capacity will have little effect. The report notes that “routing the increased generation capacity through a loss-making distribution sector could result in faster accumulation of circular debt and fiscal costs, as well as undermine long-term financial sustainability of the new energy projects.” No investment has so far been made in improving distribution.
Another potential pitfall for Pakistan is the way Chinese companies are likely to emerge as new “middle-men” in Pakistan’s economy, particularly in the agricultural sector.
Pakistan’s “national food security policy“ mentions the potential of enhancing the country’s agricultural exports to China and perceives opportunities through CPEC to achieve, among other things, “food sovereignty.” The policy measures outlined, however, indicate an increased role for Chinese companies in facilitating exports of produce from Pakistan to China – despite such private sector middle-men also being identified, in the same document, as presenting a major obstacle to producers getting a fair price. It is unclear as to how this enhanced interaction between local producers and Chinese companies will benefit Pakistan.
When one considers this proposed co-operation in agriculture, along with Chinese development of road, rail and energy projects in Pakistan, CPEC appears more and more to be a master plan for deep Chinese penetration into Pakistan’s economy, with long term economic and political consequences. All too few in Pakistan are raising objections but CPEC may turn out to be more of a liability than a golden opportunity for the country.
I don’t think so, CPEC is no doubt a great project and it will be great beneficial for both Pakistan and China and it will be really helpful for the development of Pakistan. Although we believe somehow it’s more beneficial for China but we can’t regret and say its not good for Pakistan. I’ve read out lot of benefits and ongoing improvement and development of CPEC projects at here: http://cpecbulletin.com/
I suggest kindly visit the website if you’ve any doubt about CPEC or OBOR. Hope it will help you to clearly understand and you can get easily get the latest updates about Pak China Economic Corridor.
Shanmukha Rao CH read https://thewire.in/157293/india-china-doklam-real-problem-bhutan/ to see how India suckered Bhutan
India is better at sucking blood see P, Stobdan piece on India handiwork in Bhutan : A 2012 study by Medha Bisht for the Institute for Defence Studies and Analyses found that India’s limitless budgetary support loans, grants and lines of credit in billions of crore including the setting up of hydropower-plants have been useful for Bhutan, but have also helped India capture the benefits. Bhutan’s merchandise exports (95%) and imports (75%) to and from India reflect this dependency. A comment cited by the study said, “90 to 95% of what Bhutan borrows from India goes back to India.” Even India’s investment in hydropower industry was squeezing the space for domestic stakeholders thus creating “jobless growth” for Bhutan. Moreover, over-dependency caused a disparity i.e., the grants inflow did not match up the rupee outflow leading to “rupee” crunch as witnessed in 2012.
The other detrimental aspects highlighted by the study include illegal cross border trade, under-invoicing, tax evasions, illegal bank transaction and unfair, exploitative, monopolistic commercial practices by Indian contractors especially in the mining and construction sectors. Heavy dependency on imports of materials, machineries, labours and the practice of profit contracts by sub-contractors were squeezing the local stakeholders. In addition, decades of subsidy system promoted imports of even essential food products from India with severe consequences that led to neglect of Bhutan’s own agriculture sector, the share of which declined in GDP to 14%. Moreover, the subsidy benefits only helped India captivate the Bhutanese market and the latter’s economy remained highly susceptible to Indian inflationary trends with financial distortions that Bhutan was unable to withstand. Such practices led to continual accretion of public debt, i.e. over 80% of country’s GDP in 2011, as noted in the study. The huge amount of loan and grants rendered to Bhutan ultimately benefited India. Consequently, even the small cut in the fuels subsidy and the delay of currency supply by India led to Bhutan’s economy going into disarray.
And what about the childern, men and women who àre regularly killed by indian ocupied forces? Kashmir’s people hate you, they have stood against you. For how long you can hold the Kashmir? Don’t blame pakistan army, try to win thier hearts.
One has to just see the Pakistani TV shows on CPEC, and the way their experts are riled at the financial, economic, industrial, political and social mess Pakistan has gotten into with CPEC. 20 Million Chinese will come and settle in Pakistan to setup factories and work there. They will enjoy 25 years of tax free holidays, where as the Pakistani industries – the one that is left – will become incompetitive, hitting their exports badly…Only raw material will be sourced from Pakistan, where as finished goods will be produced by Chinese factories and workers in Pakistan. What a way to commit National suicide…
Pakistan has now turned into a Chinese concubine, a prostitute….it used to take money from USA and sleep with China. Their double game is exposed. Good for them, soon you will see Pakistanis with Mongolian feathres/features in hoards…
India has opposed teh CPEC for it runs through our sovereign territory of Kashmir, Gilgit and Baltsutan occupied by the Pakistani Army. We could’nt care any less if CPEC works or not works. India has enough of her own headaches to worry if CPEC succeeds or not.
The Chinese have made the best suckers out of a gullible Pakistan. They have perfected the age old saying, " The risk is all yours, the profits are all ours" into perfection.
The math is obvious to anyone who can do simple additions and subtractions.
1. Loans can be borrowed only from Chinese Banks always at a rate that is well above what is available in the world financial markets.
2. The tenders are No Bid Tenders.
3. No Global Tenders here. Only Chinese companies can bid and there will be no external competitors, Pakistani or otherwise.
4. Chinese companies involved in this so called "Milking or rather Bilking Scheme" will get a Tax Holiday on their profits for 20 years.
5. Chinese companies will bring Chinese labour to build and manage the project.
6. The biggest customer for the project would be of course the Chinese. And they will be allowed to pay in Yuan while Pakistan’s debt mounts in US $s.
This is the best Ponzi scheme I have come across. Pakistanis borrowing from the Chinse, so the Chinese could generate millions of jobs in China and Pakistanis will pay for these jobs in China with their (Pakistan’s) money.
20 years from now, we will be hearing Pakistanis curse the Chinese exactly like they are cursing the Americans and Saudis today. And the Chinese will be smiling all the way to their banks.
You bet. They would be in China. Most of the jobs in Punjab would be fixing punctures, washing the trucks or carring their load on their backs.
It means that it will not boost Pakistan economy. Then India should be happy for it. But she is opposing cpec. Why?
China can make Pakistan a global pig farm
Hahahah Its really a great relief and moment for joy…
the day I was waiting for has come
…I used to think always that whatever our gov does in economic side the iMF would always praise it…but it always ends up with loss and no benefit…only increases the debet burdan…..Today it’s opposit and it seems the result will also be opposite. …..hehehe
Randian spotted….lok
This sold media would come up with any thing! CPEC world 30% trade would through this route Pakistan only city which provide 70% tax revenue is Karachi. Adding 70% more would be Gawader. Every buddy is worried because they want want Pakistan be poor especially India. China can invest 45 Billion what india can do with Pakistan? spliting Pakistan into two… running proxy war via Afghanistan killing so many innocent Pakistanis… defaming Pakistan in each world capital.. India is biggest land graber of south Asia, still we believe on indian propaganda.
well indian are flith of the world you can find them every where save Indian loser jobs which they are losing in Qatar, and in Saudi and ask them to go to Israel or American your new father
Indrajeet Narayan this is not ABC of knowledge
Job for the Chinese, not for the Pakistanis!!
sixty billion USD investment would create millions of jobs.
Ashok Parimi , Go back to school and learn how to read.
Btw, 2 trillions in a nation of 1.3 billion people and with growing population is not very encouraging, and only a growing disposal income on the lower strata of working class can be a better indication of overall economic progress.