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CPEC: Is there cause for alarm?

Updated Apr 25, 2017 07:22am


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A number of articles in the past week have created some undue anxiety about the China-Pakistan Economic Corridor. Let us put it in plain English at the outset: CPEC is not another East India Company. That comparison is specious and entirely unhelpful, even if some find it useful purely as a metaphor.

There are two reasons why the comparison is unhelpful. First, the East India Company had an element of force, something totally absent in the present case. Second, the East India Company gradually shed its trading activity and acquired governance responsibilities, taking on the administration of land revenue and justice, as well as education and the maintenance of an armed force. CPEC is moving in an entirely different direction.

The only area where the comparison might work is in the extraction of a surplus from Pakistan and its transmittal to China. But, even here, it must be kept in mind that the surplus is not being extracted through the use of force or from land revenue (or taxation in the present case), but purely from debt servicing and the repatriation of profits. All foreign investment involves these elements, not just the one coming from China. So at the same time that we are hearing about the arrival of Chinese investment under CPEC, we also have auto makers entering the Pakistani market from Korea and Europe, as well as a Dutch company acquiring stakes in the food sector. This is not necessarily a ‘creeping colonisation’.

The short answer is no. The long answer is not yet.

News about a research report put out by Topline Securities, which claimed that Pakistan will repay $90 billion on CPEC investments of $50bn, sparked a new round of anxiety-laden commentary on social media and television. The report itself is sound, and the figure of $3bn per year as repayment obligations is similar to what others have calculated. My own calculation on CPEC repayments, published in this column a few weeks earlier, gave me a figure of $3.5bn, while former State Bank governor Dr Ishrat Husain calculated $3bn.

But that is not a colonial level of surplus transfer. It certainly means that the projects being set up under CPEC are not for free, nor should they be seen as ‘concessional’. This is not a ‘gift horse’ that we are dealing with. The most that this figure ought to tell us is that we need to be careful in negotiating the terms, and ensuring that appropriate reforms to boost the economy’s productivity and competitiveness accompany the implementation of the project.

CPEC is best seen as an opportunity, not as some sort of manna from heaven that will come and solve all our problems. The worst mistake is to view CPEC as some sort of self-paying enterprise, as if the investments will somehow generate the required level of economic activity to automatically fulfil all the repayment obligations that they bring. This is a mistake because it cannot be taken for granted, and since it appears the government is indeed proceeding under this assumption, it is imperative for us to ask how they have calculated the returns from the investment.

The important question to ask is what will be the impact on domestic industry of the special incentives being given to Chinese investors. And connected with this question is the larger question of transparency. Thus far, too much of the project is shrouded in secrecy, and whatever information is being released appears to be carefully vetted.

Take as an example the question of repayment obligations. Thus far the only figures we are seeing are rough calculations produced by independent observers. The State Bank has told us nothing about the projected burden on the foreign exchange reserves due to CPEC outflows, and the IMF has given us a rough estimate that the total could add up to 0.4pc of GDP per year. It appears the government is not sharing the requisite project details with either of the two institutions, nor is it saying anything meaningful about how it has calculated the repayment obligations connected with the projects. All we have is a misleading statement from Sartaj Aziz that CPEC project loans will be serviced at 2pc, which is true for about a quarter of the total projects at best.

Minister for Planning and Development Ahsan Iqbal put up an indignant Facebook post saying he is “amazed at baseless and myopic propaganda against CPEC” by those who are asking “why special zones for Chinese companies” are being created. He points out that China is relocating much of its industry to other countries due to rising wages in China. “If those companies are being attracted to come to Pakistan what is the harm?”

The harm, Mr Minister, is when your own government is putting out mixed messages. In one place we hear that the zones are for the Chinese companies, and in another we are reassured that they will be open to all. So what exactly is ‘baseless’ here, the ‘propaganda’ of those who are asking this simple question or the assurances being put out by your own government? And who is more myopic, the one gorging himself on foreign debt comfortable in the assurance that the future will pay for itself, or the one asking what repayment obligations come with these inflows and what is the plan for meeting them?

We don’t need more anxiety concerning CPEC, but we do need answers. When we frame our understanding of the enterprise in terms like ‘East India Company’, it warps our perception of the whole thing, and does not help in framing the right questions. The government can help allay some of this growing scepticism and anxiety by being more forthcoming with the details, and certainly a lot straighter with its answers. Snapping at the questioner is no way for a government minister to behave.

The writer is a member of staff.

Twitter: @khurramhusain

Published in Dawn, March 16th, 2017


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The views expressed by this writer and commenters below do not necessarily reflect the views and policies of the Dawn Media Group.

Comments (105) Closed

mazhar memon Mar 16, 2017 02:30am

Very well articulated by writer, however his queries are too nice, too democratic and too rational for our governments to answer. Our worthy minister of planning is believed to be highly educated and his name has not surfaced yet in any major corruption case, that should garner enough confidence in him to answer the questions,but probably he can not afford to be that open as it will go against his party policies, who believes in hoodwinking people and political quackery. Responding to questions with verifiable data is an obligation and right of people of Pakistan to know, whether our minister realize this and whether if he will come forward is another matter.This is matter of credibility and accountability, which has not taken roots in our political system yet.

Akil Akhtar Mar 16, 2017 04:35am

India has a big issue with CPEC as it goes against its policy to destabilise and eventually dismember Pakistan....

Feroz Mar 16, 2017 05:20am

Very good attempt at damage control, sing a different tune everyday to maintain ambivalence.

rahul Mar 16, 2017 05:28am

This is absolutely fantastic. How on earth can a democratically elected government keep an entire nation in dark about such a humongous project and the entire country goes on business as usual? Let me quickly sum up what has happened till now. China feels the need for an alternative route for its trade bypassing indian ocean through Malacca strait. Pakistan offers land and othe export oriented concessions to Chinese companies. Pakistan agrees to fund the road and associated infrastructure
In order to ensure security of Chinese a special force is created. In order to manufacture china sets up power plants also funded by pakistan. Till now Pakistani industry is not in picture. End result is that for the foreseeable future China keeps exporting from these enclaves without paying a penny in duty and Pakistan keeps serving the debt without having any revenues. Only hope is iron brother waiving of debts. Brilliant investment masterstroke by China at the cost of poors of Pakistan.

Varun Mar 16, 2017 05:29am

Probably the ministers and the government is trying to get by till the next elections. Long term debt servicing is not their immediate worry. That is for the analysts and the tax-payers to fret over :-).

my Comments Mar 16, 2017 06:10am

Overall CPEC is a positive venture with a win-win outcome. However, people is Pakistan will always ask for years to come as how it benefits average Pakistani in terms of economic gains, creation of employment and revenue for the country. After all people of Pakistan are the land owners that CPEC is to be built upon. Hence any mixed-up messages to general public will cause confusion and doubt. No need to cause confusion with statements like 'Chinese factories only' at CPEC route. Such statements are nothing but an insults to Pakistani businessmen. Lets hope all is clearly stated and clearly understood between Pakistan and China, two best friends and trusting friends in the region.

haris Mar 16, 2017 06:41am

Well written article. Asking very important questions and framing a constructive debate on CPEC.

fakim khan Mar 16, 2017 06:42am

Well written article. Thank you DAWN and the author.

Vrpatil Mar 16, 2017 07:38am

Was it not possible for Govt to finance the CPEC cost through a mix of internal financing with a partial external debt...?.What might have been the benefits in that case comparing to this debt burden....?

Rajat P Deshpande Mar 16, 2017 08:16am

History does not repeat itself but it rhymes with the future. The CPEC might not exactly be like the east india company in terms or revenue etc but the colossal manufacturing engine of the chinese can use the little concessions provided by CPEC to overwhelm Pakistani manufacturing and industry, curtailing indigenous investment, innovation and entrepreneurship. If the chinese were bringing high technology and knowledge with them, then it would have been very good for pakistan but right now the future looks bleak. Also there are examples like hambantota in Srilanka where the chinese investment started on a revenue repatriation basis but quickly became administrative

®pot_belly dancer ω Mar 16, 2017 08:31am

Honestly need to think whether The worst mistake is to view CPEC as some sort of self-paying enterprise, as if the investments will somehow generate the required level of economic activity to automatically fulfil all the repayment obligations

SAM Mar 16, 2017 08:45am

Very good article this will make our Indian readers understand the difference between the what East India company and CPEC is.

IFTIKHAR KHAN Mar 16, 2017 08:47am

When an investor loses, nobody wins. However, investor can absorb the loses due to hedging, insurance and re-insurance but others involved are grounded. CPEC is like a corporation with Chinese investment and it is absolutely Pakistani responsibility to make it a success, despite the shared success benefiting investor more than the corporation.

Masood Mar 16, 2017 08:45am

The project has not started and we have these 'negative-thinkers' trying to sink it. At least give it about 10 years, before giving out comments.

Alba Mar 16, 2017 08:59am

In my opinion half of China's profits in trading with and doing business with Pakistan will come from Baluchistan's mineral wealth. Special zones are being created for Pakistani jobs not Chinese jobs. The Chinese are used to an organized economy.

FAZ Mar 16, 2017 09:26am

Majority of the investment other than road infrastructure is in the power sector. Ask any industrial body in Pakistan about what their main issue is at present. And that is,both non availability of electricity and gas. Both these issues will be addressed by investments in CPEC. Those comparing it with East India Company should give a better alternative with sound facts and figures

Irfan Husain Mar 16, 2017 09:27am

Excellent questions the government needs to answer.

tRUTHSEEKER Mar 16, 2017 09:35am

by far the best article on CPEC

AHA Mar 16, 2017 09:44am

Hope it is not another East India. However no one knows T&C of the project including key MNAs. Have anyone done math of income and outgoing at least, because if not East India CPEC may become biggest white elephant in the history.

Tan Mar 16, 2017 09:51am

Loan is only fruitful if it is managed well for repayment and the earning is more than the percentage of interest paid on loan. If the progress is more than the loan then Pakistan is on the benefiting side, else it is going to lose like Sri Lanka.

Mujahid hussain Mar 16, 2017 09:51am

do we have a team of financial analyest to calculate the exact cast of CEPEC projects. and do we have a think tank who advise this govt, how to deal with these future projects.

shakaibul Hassan Mar 16, 2017 09:57am

Very good questions put up at the end from those who consider themselves the only patriots and consider the questioners about the trasparency the enemy of Pakistan.Everyone knows that in hard times their leadership make deals and run away from the country.They also threaten and attack the honorable institutions when they know the possible decision is coming against them.

adeeb Mar 16, 2017 10:13am

Great article

Mohajir Mar 16, 2017 10:22am

Chinese companies are using Chinese machines and Chinese labour to build various CPEC projects which are financed by Chinese banks.

The roads that Chinese are building will transport Chinese goods, the Chinese built power stations will power new economic zones which will be given only to Chinese companies.

Now please tell me how CPEC will actually benefit Pakistan.

D.K. PAMNANI Mar 16, 2017 10:29am

Accept it or not, in a decade time, it will be accepted by every Pakistani that it is another East India Company which has captured Pakistan.

SADAF Mar 16, 2017 10:31am

Come on you cannot expect the history to repeat exactly as it did before.There are changes due to change in demographics.Staying positive is a good habit,but complete denial of the adverse possibilities is just ignorance.

Mohajir Mar 16, 2017 10:29am

In matter of 2-3 years, Chinese own Gwadar port, several power plants, KSE, K-Electric, CPEC roads and railway network.

This is just the starting Pakistan steel Mills, PIA etc. are next on Chinese shopping list and already huge chunks of lands are being purchased by Chinese companies.

Nadeem Mar 16, 2017 10:35am

"We don’t need more anxiety concerning CPEC, but we do need answers". I second that. The government, and the minister should clearly divulge the debt repayment obligations

eyesonfuture Mar 16, 2017 10:46am

Success of CEPEC depends how best Pakistan exploits it. Chinese ambition to shift growth westward will be motivating factor, however extra cost incurred by land vis-a-vis by sea will be limiting factor. China itself losing export volumes will be another challenge. Benefits of CEPEC trickling down to all societies and peace in Afghanistan will be other challenge. You cannot have permanent Army unit to protect. Chinese investment brings lots of excitement.

salman Mar 16, 2017 10:57am

Paying 3 billion dollars debt per year for 30 years is nothing since by then Pakistani economy will be 3-4 times bigger than now. Its indeed a game changer and why people are having problem with Chinese investment in Pakistan at first place ? like who in the world were coming here to invest anyways other than them ? even if some others are here would had look for their profits as well just like the Chinese. Its upto Pakistan now, how to utilize this economy activity.

Honestly Mar 16, 2017 11:06am

CPEC is a real game changer and it will benefit China, its people and its economy to a flourish very great extent for sure. Long live Iron brothers !

N.S Mar 16, 2017 11:10am

First create a hypothetical and concocted scenario of east India company...and then start scrutinizing it, debating it about the pros and cons.

CPEC a game changer for Pakistan hypothesis can be debatable and time will tell...but certainly has aroused a lot of debate, created a new hype which is actually good.

SID Mar 16, 2017 11:27am

@Alba The writer says " China is relocating much of its industry to other countries due to rising wages in China." Yes there will be job for Pakistani youth. But how much ?? In the same time there will be pressure on Chinese company to absorb more Chinese employee .

SID Mar 16, 2017 11:34am

@salman Yes $ 3 billion for 30 years not big deal for $280 billion economy. However there are also other loans for the federal Govt & loan from IMF/ WB / ADB which need to be repaid . Also it excludes security & infrastructure maintenance cost ( 20,000 armed force personal are employed . Pakistan will bear all the cost.) The CPEC project needs to generate at least $ 5-6 billion PROFIT annually to repay $ 3 billion loan.

Anonymous Mar 16, 2017 11:37am

All Chinese Industries are located to the east of China, if India wanted it could have provided an easier and shorter option to China than CPEC. India didn't go for it, the reason is not just political, there is an economic reason too. Such a passage to China would have flooded the country with Chinese goods and in turn would have crippled the local industry. India would have got some money as transit fee in the bargain but would have been an overall looser. Lets see what Pakistan gains overall from CPEC, it is widely expected whatever political backing which Pakistan is getting on various political issues like NSG from China is not for free; atleast Chinese don't work that way.

PRO Mar 16, 2017 11:42am

@Rajat P Deshpande

I can see where exactly it hurts. China extending its manufacturing belt (One Road, One Belt) to Pakistan will actually affect India's manufacturing sector and exports adversely.

All the best to India for competing with Chinese manufacturing sector, along with their diplomacy.

Athar sherwani Mar 16, 2017 12:09pm

@rahul I can understand your perceived anxiety with Chinese investments in Pakistan. Both for economical & political reasons, Pakistan has no option other than CPEC for it to grow economically and provide infrastructure for future generations. Without Electricity and roads, we are unable to generate enough resources to fund these mega projects. America & the west are not prepared to fund a nuclear Muslim country to become economically viable. What we need is a stable political environment to allow our entrepreneurial abilities to compete with Chinese owned businesses which may set up plants here who will also employ Pakistani labor force. It is a win win situation for both countries.

viv Mar 16, 2017 12:33pm

@SAM it should be looked keeping Pakistan interests in mind and not to satisfy others.The author raised valid questions about repayment of loans and transparency which should be addressed before any success of this project.

IMTIAZ ALI KHAN Mar 16, 2017 12:36pm

@Athar sherwani. CPEC has to continue. Love to China always and always.

Satyam Mar 16, 2017 12:55pm

@salman All this is a sham. China giving out loans, on condition that chinese companies will be given contracts, chinese workers will be given jobs, the cost of security will be paid by Pakistan, special zones for chinese companies etc. So basically all the money($46 billion ) will go from chinese government banks to Chinese companies and its people via CPEC(Pakistan) and Pakistan will be reimbursing the money to Chinese banks with intrest.

Now when i think about it, I realize that chinese are really a smart bunch of people and this is exactly the reason of china's meteoric rise in last 2 decades.

ARUN Mar 16, 2017 12:57pm

@SAM Frankly, my dear, we Indians don't give two hoots. All we know is unlike the Americans, the Chinese give nothing for free. And that is what this article is all about.

Just Someone Mar 16, 2017 01:15pm

Excellent article.

Anony Mar 16, 2017 01:20pm

@salman Pakistan economy 30yrs back was just 23 bln USD. It has grown 10 times in the past 30yrs. But what has changed? Ask yourself? Still huge debt and biting more than she could chew. Pakistan needs to build capacity not borrow capacity. Education and Healthcare can create capacity, dont need to borrow.

AW Mar 16, 2017 01:26pm

CPEC Agreements need to be made public. They also need to be presented in the parliament for discussion and ratification. The government has no right to obligate the nation to any agreement/s without the consent of the nation.

Navayana Mar 16, 2017 01:35pm

Just imagine trade corridor between CPEC and Delhi-Mumbai Industrial Corridor !! Win-Win for Pakistan, India & China ... We could easily multiply South Asian GDP per capita

Akram Mar 16, 2017 01:53pm

good questions, though I suspect the reason why the government has not responded is because they don't have the details hammered out, these type of projects takes years to settle, to organise and give enough information to investors before they make a decision to invest for their businesses. Without such concrete decisions much of what the author is looking for answers to will not be answered for some time. However that does not mean we should not ask the question.

sanjeev Mar 16, 2017 01:59pm

@PRO : India has sea routes where China has to use land routes incurring 8 to 10 times more cost in transportation just to come to Gwadar port. Pls see the comparison and tell how China can compete with any one.

sanjeev Mar 16, 2017 02:01pm

How come opposition parties in Pakistan do not ask questions in the parliament ? It is possible to keep the general public in the dark but they have to inform the parliament about the correct status.

Akram Mar 16, 2017 02:03pm

@Mohajir Pakistan estimate it will create 700, 000 jobs in Pakistan. On chinese news paper estimated 2000, 000 jobs. The investment (75% which is in energy) is already greatly reducing the power shortage that has held back Pakistan's economy for the last decade. So already just the energy investment will restore an estimated 2% to GDP growth. This is before we calculate the change in the infrastructure that is being built.

The economic zones and Gwadar will be tax free for decades, but eventually these areas will highly built infrastructure will revert to Pakistani ownership at the end of the lease generating more tax receipts for the state. This is just off the top of my head.

Shakil Mar 16, 2017 02:02pm

Ambiguity persist!

Akhand Bharat Mar 16, 2017 02:27pm

Do whatever, but dont let them buy your lands.

TechScribe Mar 16, 2017 02:34pm

@PRO CPEC only gives China a trade route. If you were to see manufacturing in India, every company including auto majors like Suzuki, Ford, Volkswagen are manufacturing and exporting out of India. The same holds good for other sectors. Most companies will manufacture in India as there is a huge domestic market. They will export the surpluses. I doubt CPEC will have any impact over manufacturing in India.

TechScribe Mar 16, 2017 02:31pm

@Athar sherwani I get your point. But Pakistan is putting all its eggs in one basket when it has the option of creating an atmosphere conducive for investment that can draw investments from everywhere.

Satyameva Jayate Mar 16, 2017 02:36pm

How can anyone calculate the impact of CPEC repayments when the details have not been even shared with anyone - not even with NA or Senate?

harris Mar 16, 2017 02:49pm

@rahul We will end up like Dubai.. all the chinese industries will be supported by Pakistan... so our electricity, water, labour, housing, school, roads, food, etc........ what's wrong with that... More investment into all the support industries...

PRO Mar 16, 2017 03:02pm


You are certainly looking inwards. Toyota, Honda, Suzuki, Hyundai, Renault and MNCs ranging from auto to telecom to rig exploration are also here in Pakistan but that's not the point.

Where does India stand in competition with China if a large and unsaturated market in Africa is to be explored? China will be doing the same by basing their manufacturing chain in Balochistan, and working in Y-axis to explore African markets. In X-axis they already have silk-route and a railway line right from Beijing to London.

riz Mar 16, 2017 03:12pm

good one sir,, also how the labor rights working in these companies are secured? also what percentage of labor will be taken from Pak? these days around 90% skilled labor is coming from china, this should not be the case as we are not an skilled shortage African country,, the priority must be given to Pakistanis,, these jobs are for paksitanis first then for anyone,, even after the 2030 we Pakistanis have to run these mega projects than we must train our people for that,,

SJ Mar 16, 2017 03:15pm

Certainly, China want to move it's manufacturing industry to keep it's price advantage which is degrading due to higher wages at home. But keep in mind that these industries will mostly be low skills and environment polluting. China will keep management and high skill jobs with Han Chinese only.

AK Mar 16, 2017 03:31pm

Not a supporter of pmln government . Most of the investment is in power sector and the financial factors involved in it, e.g. the price set in PPA and the cost involved in setting up, are available. In the area of govt awarded contracts for dams and roads etc, yes there could be more visibility, but that is a generic problem true for all govt contracts and not just under CPEC. Separately, it is amazing how even educated people can get misled by randomly thrown figures in news reports. The $90Bn repatriation that is shocking people so much is over 30 years on the assumption of 3Bn being repaid through dividends and loan repayments every year. Compared to the original investment of $50Bn, this is only an IRR of 4% per annum, which is virtually nothing.

Well Meaning Mar 16, 2017 04:03pm

@Mohajir you can tax these companies they will generate trade and jobs in the economy big game changer

Pradip Mar 16, 2017 04:14pm

@AK Dear sir, Have you taken into account the factor for Rupee Devaluation, Inflation, etc. The actual repayment would be much higher; unless the y-o-y GDP growth rate is consistently higher than the inflation.

Waqar Mar 16, 2017 04:28pm

Dependency is better or Domestic fulfillment by production and local investment? what South Korea, Germany, china done for themselves out country needs to be done for ourselves. through this Pakistan may be able to invest in other countries of world unlike current situation.

Sachin Mar 16, 2017 05:55pm

China provides diplomatic cover to pakistan in UN and world forums. In exchange Pakistan has to give many many concessions to China in many many agreements. Pakistan cannot negotiate from a position of equal strength

Khalid Irfan Rahman Mar 16, 2017 06:01pm

A good article.

Amjad Mar 16, 2017 06:32pm

A good analysis but this is not an investment but loans. Investment benefits both the parties but here case is different. We are getting loans against nothing. Millions of Chinese will be moving to Pakistan in next years and they will not pay any tax. However they will use all the facilities in the country includes those they are providing. Our generations will return these loans. I am agreed that nothing is free in this world and we have to pay back but why? How a common person will get any benefit? Is it increase employment ratio and decrease poverty in the country? Will we get more energy? So there are many speculations. We need answer.

LL Mar 16, 2017 07:28pm

CPEC is problematic for all Indian loving Pakistanis

dev Mar 16, 2017 07:33pm

“If those companies are being attracted to come to Pakistan what is the harm?” If the china industries coming by competing with other countries then fine, if not only monopoly conditions will prevail.

Honestly Mar 16, 2017 07:50pm

I urge the intellectuals, please name a single benefit CPEC has provided post its inception to Pakistan. Sure, I can name several of them for China alone.

Imtiaz faruqui Mar 16, 2017 08:07pm

Chinese Leaders are very smart I hope Pakistani Leaders can make a smart deal with them , which I doubt.

gp65 Mar 16, 2017 08:17pm

@FAZ "And that is,both non availability of electricity and gas. Both these issues will be addressed by investments in CPEC. "

Wrong. The issue is that the power is too high priced for ordinary people to pay. See this article reported in Dawn on the same day.

Building more power pants when the existing ones do not produce at full capacity is foolish and 75% of your CPEC investments are on power plants producing very expensive power. Good luck with that.

TROLLROLL Mar 16, 2017 08:30pm

Look at the Indians here....can't hide their excitement. The slightest of criticism on CPEC, and they join the bandwagon of critics....

Masood Hussain Mar 16, 2017 08:33pm

CPEC and East India company,bah what a comparison,

N.Sid Mar 16, 2017 09:19pm

@gp65 This circular debt in power sector is for a number of reasons, the main reason is that many of the IPP's, the independent power plants now runs on expensive furnace oil and as per the NEPRA/government fixed cost of buying power is low they can't run it to extended capacity, hardly running on 30%-35% capacity. Also there is a shortage of natural gas so no option.

The new power plants under CPEC has a mix of RLNG run, imported, 3 of them with 1280 MW capacity each, much cheaper and efficient than furnace run. Coal base power plants again 2 on imported coal and two on local coal from Thar. Fairly large with 1260 MW capacity each.

Than there is a mix of nuclear, 3rd plant at Chashma inaugurated last month, one more at the same site of 360 MW. Two 1100x2 MW nuclear plants near Karachi. 2000 MW of wind power, already reached capacity of 600 MW. And solar plant of 1000 MW at Bahawalpur. Smaller plants also there. Many Hydel power projects as well. Can be searched.

Gurpreet Singh Mar 16, 2017 09:20pm

As a well wisher of Pakistan, I hope that Pakistan & its people prosper but I feel that way too much noise has been made about the CPEC by Pakistani leaders and the expectations of returns from the project are unrealistically sky high. The author has asked some very valid points about the CPEC which every Pakistani must ask from the government. So far I've only seen platitudes such as "game changer" & "fate changer" related to the CPEC but there are no details as to how will there be enough economic activity due to the project which will make it profitable for Pakistan after paying the principal & interest to the chinese.

jamshed Mar 16, 2017 10:01pm

@Anonymous India's balance of trade with China has already reached whopping $50.00 billion . Please look at the itemized items and the picture will be crystal clear: No value-add products to China (from India) and every product value-add from China to India from microwave oscillator kit that goes into $50.00 Godrej microwave ("Make In India") oven to Industrial and electrical machinery, power plants industrial equipment and every thing in between. This is the story of China's trade with rest of the world and it is has not flattened out yet as there are (still )many untapped markets (South America, Africa part of power ME countries)...and that includes India as well !!

Vijay B. Mar 16, 2017 11:05pm

@Navayana India has no need or use for CPEC or any part of it. Delhi and Mumbai are already well connected to the rest of the world through its vast coast line and the ports of Mumbai, Kandla , Mundra, Okha and many others on the Arabian Sea.

Kris Mar 16, 2017 11:23pm

I truly wish this project ends up being a success. After all, the aspirations of a whole nation is pinned on it. Also as a moderate person, I believe defeating terror in all its forms hinges on Pakistan growing economically.

That said there are a couple of things that should bother every Pakistani.

1/ The financial terms of this deal are not publicly available. China is not known to write-off loans like the west. What happens if/when Pakistan doesn't repay its debt obligations?

2/ No country has grown economically by building a road. You need industries to utilize those roads to export products to other countries. Otherwise, Pakistan will be flooded with cheap Chinese goods soon at the detriment of domestic industries.

Is somebody thinking about these things? Or is the entire country on a sugar high?

Azhar hussain Mar 16, 2017 11:28pm

Natural movement of industry and business where they can save in not just tranportion cost but manufacturing costs. Bottomline is profit margin. Since our friends from India are concerned, let me put it in a very simplistic terms so that it is easy for them to understand (if they want to) it. Information technology has greatly benfited India, lots of companies have relocated to Bangalore. I am sure they know the companies relocted for two reasons, educated manpower and political statbility backed by English speaking quality graduates. Now cost of doing backoffice business is going up, because salaries are rising hence the slow but gradual move else where. That elsewhere is Philipine and China in this sector. It is noted next couple of years largest English speaking graduates will be Chinese. Coming back to CPEC yes it is goingt o benefit us long as far infrastructure goes with these projects, which force our companies to become competitive thus create jobs.

R S Chakravarti Mar 17, 2017 12:03am

@rahul But Pakistani labour will get jobs and this will help in developing the economy.

Akram Mar 17, 2017 01:46am

@Anonymous .Too many coulds and woulds in your theory.

Akram Mar 17, 2017 01:45am

@ARUN "Frankly, my dear, we Indians don't give two hoots" Obviously. That's why you flock here in your droves to comment on our CPEC.

secularist Mar 17, 2017 02:09am

The word one can use is neocolonialism. China's interest is multifold - economic, political and big daddy of them all security. Gulf is a strategic flashpoint that needs to be managed with strategic access. CPEC provides that. Of course, with the GDP growth leveling off, China has to maintain internal security and political peace by ensuring jobs and incomes for all Chinese.

RAJAB SATHIO Mar 17, 2017 02:44am

Valid concerns raised. Information flow is not streamline the way it must have to be.

Ji Mar 17, 2017 03:20am

@Kris At the beginning of the development, Chinese government was lack of fund, and private companies was used to jointly funded infrastructure projects. At the time, it cost a lot money to use the road (toll). However, because of the modern roads, the areas used to take more than 2 days to get to, became less than a day of easy ride. People can move around, industry goods can move in, farming products can easily move out. Factories were built, Farmers got rich as well. At the time, There was often used expression: If an area want to get off poverty (get rich), build the road first. So yes, you can say the reason Chinese can lift majority of population out of poverty in such a short time is because rapid development of infrastructure at very beginning and afterwords. The poor area left now are mostly hard to get area, in need of good roads.

JAMIL SOOMRO, NEW YORK CITY Mar 17, 2017 07:43am

Whether British East India Company or not the fact still remains that Pakistani Nation has to pay in return $ 90 Billion to China by 2047 on a Loan of $50 Billion on this Mega Project called CPEC.

Gunjan Mar 17, 2017 08:45am

@FAZ - Did you check the power tariff that is agreed upon? Its an impossible number to pay....get more details brother

Sameer Mar 17, 2017 10:09am

You are a gem here Sir.

Sameer Mar 17, 2017 10:10am

@ Masood For heaven's sake...3 Billion dollars per year repayments; taxes will be extracted from our blood.

RAVEENDRA NATH Mar 17, 2017 02:56pm

CPEC, if implemented properly, could be a game changer, but it seems the authorities are leaving everything to their iron friend, whose goal is firstly to have a foothold in the region in order to counter India and secondly commercial for the benefits of China and Chinese business.

jamal Mar 17, 2017 03:10pm

Khurram Sb, how do you distinguish Hambantota from Gwadar, or Chinese activities in Africa from CPEC? Some fear that Gwadar may meet the same fate as Hambantota in days to come.

Gruham Mar 17, 2017 03:11pm

China will build a road to the arabian sea to enhance its reach and reduce it trade expenses. They will setup trade zones in raw material rich regions along this road, which will employ chinese people who will transfer profits to china. Pakistan will pay for it with interest, and will also provide security for the chinese "investment". This what the chinese have made pakistan believe what is known as the CPEC.

Harish Khanna Mar 17, 2017 05:04pm

Another East India Company in the making. Wake up Pakistanis !

Shiv Gautam Mar 17, 2017 08:29pm

I will just like to ask ,cpec has now been operational for a couple of years,how has it improved the lives of common Pakistanis,apart from hike in taxes.

Azhar Mar 18, 2017 12:35am

@Akil Akhtar India is also building own corridor project.project name is Delhi Mumbai industrial corridor ( DMIC).

Ramesh Dembla Mar 18, 2017 04:59am

We the people of Pakistan are always suspected our government whatever it does. Chinese are building the CPEC with their own money which will be counted as a loan we repay from the revenue we earn from Chinese imports and exports. We are not spending any money now which means it is available for other projects. We allow the Chinese to built the roads through Azad Kashmir which India claims theirs. The biggest advantage is when we talk or fight with India Chinese are automatically involved. Iran and other countries are not fools the want to be part of CPEC. Please stop to bash over government. It is doing the right and intelligent thing.

Mian M Amin(Old Ravian) Mar 18, 2017 08:11am

Fair and expert evaluation .Economic transactions have to be seen as mutually beneficial or why else would these be done ? well done ,sir.

Alan Jameson Mar 18, 2017 08:16am

All the best pakistan for the cpec project. From India.

ENIGMA Mar 18, 2017 09:07am

As long as India keeps its paws off of CPEC, and PML-N dares not try to engage India in this historic China-Pakistan venture - all will be just fine.

Irfan uk Mar 18, 2017 05:46pm

Very well written article. You asked some very valid questions which the government must answer. I think this CPEC project really is a game changer but we have to play our cards right and work professionally. I see a very prosperous Pakistan within the next five years. Remember the more countries invest their money in Pakistan the safer Pakistan will become and there shall be no terrorism because other countries interests would be in a safer Pakistan so they will all work together because business is always first for businessmen.

Afzaal Mar 18, 2017 09:50pm

@Anonymous Based on your reasoning, opening up trade with India also means it could harm our local industry. At least Chinese are supporting us on international fora in return for benefitting from their projects in Pakistan. What the Indians are saying about CPEC is not based on their love for Pakistan but to try and cause confusion to Pakistanis. What is wrong with China being a beneficiary from CPEC, after all they are always happy to transfer their latest technology to Pakistan which would be too costly which will be either denied or too costly from the West.

Peacetime Mar 18, 2017 10:08pm

@sanjeev China, if nothing, is creating a much shorter route via CPEC which comparing long sea route will be cheaper. And let us not forget the major benefit case of blockade of sea lanes China's oil import will continue via an alternative CPEC route. One can understand Indian anxiety about China's build up of maritime power in the Indian Ocean.

Peacetime Mar 18, 2017 10:07pm

@ARUN Good...there being nothing free from China, at least you would stop mocking us for living on US aid!!

Peacetime Mar 18, 2017 10:16pm

@Gurpreet Singh

You sound a real well wisher of Pakistan!!!!

Sanjay Mar 18, 2017 10:33pm

Very unfortunately, what most Pakistani people think, is wrong. Let me make myself clear, nobody cares. Nobody cares about Pakistan and how its going to affect your economy. Its your internal matter and you guys should deal with it. But what we do care about, is China. China is the sort of country that doesn't like it when other countries do well, like India, and hence all this Indian sentiment hurting actions. But unfortunately, what Pakistan doesn't see, is China's true nature in consistently trying to be the best(as said above). So irrespective of how beneficial the CPEC is to Pakistan, remember, it will always be one step more beneficial to China. Regards.

Riaz Ahmed Apr 25, 2017 10:07am

The crux of the article is " The worst mistake is to view CPEC as some sort of self-paying enterprise, as if the investments will somehow generate the required level of economic activity to automatically fulfill all the repayment obligations that they bring." That's what I have been advocating that our govt investment priorities are not in order that will eventually ruin the entire initiative. How can subsidized project help improve the GDP? If not where from the repayments will come? Half the energy investment already down the drain with no improvement in distribution system? Massive circular debit building up resulting negative impact on already crippled GP?