Analysis: Pakistan and the Chinese century

Published December 14, 2014
Pakistan, China flags - .— Reuters/File
Pakistan, China flags - .— Reuters/File

Writing in Vanity Fair magazine recently, Nobel Prize-winning economist and one of the world’s top intellectuals Joseph E. Stiglitz highlighted a fact that marks the end of an era in world history and holds immense promise and benefits for Pakistan and its citizens.

According to Stiglitz, at the turn of new year, China will become the world’s largest and most powerful economy — overtaking the US and thus launching an era which he says “will last for a very long time, if not forever”.

How this has been established and why it has escaped the attention of the world’s news media is not the subject here and is best explained by the Nobel Prize-winning professor and the fourth most influential economist by academic citation himself.

What is important for Pakistan is that this rise in its ‘greatest friend’s’ stature could be the most fortunate event in what has so far been a rather forgettable new millennium for Islamabad. From the fallout of the 9/11 attacks to the growth of internal insurgencies and an increasingly beleaguered economy, the country has been dragging itself along with predictions of doom and disaster hanging over its head.

But China’s ascendancy — coinciding with the end of the Afghan conflict — means a new dawn could be approaching. It’s not all conjecture: between them, Pakistan’s past two governments have managed to inveigle a $43.5 billion investment deal from Beijing. What is needed now is the proper management and planning of the resulting schemes.

“Pakistan must be more transactional in its relationship with China,” said Dr Akbar Zaidi, a senior economist. “Over the years a lot of MoUs have been signed but rarely have these been translated into actual projects.”

Dr Zaidi cited the example of the Thar Coal project, launched with much fanfare in 2011 but which has since run into financial trouble. While the government insists that it’s still on, he says that past history suggests that it is highly unlikely to be completed on time, and may never actually get operational.

“China has seen enough of Pakistan’s troubled governance to know that what is set in stone today may well all have melted away tomorrow,” he said.

“They may put in amounts as seed money which may seem enormous, but which is peanuts for them — and then wait and see what sort of response comes from the national government in question. They have done this in Africa and Latin America, and have walked away when things got stuck in a rut.”

Dr Zaidi’s hypothesis certainly remains true for most bilateral civilian projects. But it appears to lose weight when tested on defence cooperation between the two sides. Technology transfer for initial weapons development from China for the M-11 / HATF 3, or the co-production of weapons systems such as the F-7P jet have resulted in a Pakistani weapons production industry that now looks set to prosper.

According to the ministry of defence production, military exports have doubled in the past year. This was clear at the recent IDEAS arms fair with greater interest shown in Pakistani defence goods than in those being displayed by renowned international firms.

One reason for the weapons industry’s success in comparison to the civilian sector is the predominance of the Pakistan military in relations with any foreign power. However, if that was actually the case here, it would still not account for the number of MoUs signed or the fewer number of agreements reached in spheres that are purely civilian and where the grants given cannot be re-allocated to defence needs.

Debate on investment

The biggest current example is of course the Pakistan-China trade corridor, seen as a game changer for the country. It also remains a top priority for the current government, something emphasised by Prime Minister Nawaz Sharif himself. Yet the project, which envisages the construction of a vast transport and communications infrastructure to connect Chinese Kashgar to the Gwadar port, is already in dispute.

“Our problem is that our priorities remain narrowly confined to political and provincial domains,” said Daud Khan Achakzai, head of the Pakistan senate subcommittee on communications and transport. “This project will be developed over a period of at least 15 years and it needs long-term vision and planning, whereas each new government has been trying to amend it to best benefit its constituency.”

In such a move recently, the PML-N led government has diverted the original route through Khyber-Pakhtunkhwa and Balochistan, to include Punjab and parts of Sindh. This has resulted in an uproar from the benches, especially from KP and Balochistan MNAs.

Achakzai, who is from Zhob, says that while he agrees that Punjab and Sindh should also derive benefits from the project, this should not be at the cost of an already greatly discriminated Balochistan.

“Each province should get its just share; as should Pakistan,” he contends.

“We must have a greater debate over the investment from China, as they stand to gain over 10 days in transport time for goods and energy. Currently, it takes them 12 days to ship goods and fuel from the Middle East, whereas the corridor would cut this down to 24 to 36 hours.”

This is particularly important, as Stiglitz points out. He says that while China may have moved into the number one economy slot, that does not mean its pace of growth is going to slow down anytime soon. In particular, experts agree, this means a growth in its demand for fuel and oil will increase, the largest proven deposits of which lie around the Persian Gulf.

As such, almost all indicators suggest that Beijing’s best years lie ahead. That’s something that its adversaries are well aware of and want to control as much as they can. None perhaps as much as the US, as is evident with current American President Barack Obama’s pivot to Asia policy which experts like Stiglitz maintain is nothing less than the encirclement and containment of the Chinese Dragon, preying on the fears of its smaller neighbours over territorial disputes.

The only exception to this appears to be Pakistan. In a recent conversation with this reporter at a defence seminar, Chinese officials described the relationship between the two countries by clasping their hands together and calling the two nations “brothers”. While some of this may be rhetoric, there is also a strong element of truth in it. As such it puts Pakistan in an enviable position to propel itself through the 21st century. The only obstacles in the way appear to be self constructed; their timely removal could help propel Pakistan into a new league of economic success.

Published in Dawn December 14th , 2014


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