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Chinese influence outpaces influx

January 22, 2018

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GWADAR: Chinese workers after arriving at Gwadar airport in this Oct 3, 2017 photo.—Reuters
GWADAR: Chinese workers after arriving at Gwadar airport in this Oct 3, 2017 photo.—Reuters

No one denies a surge in Chinese nationals in Pakistan post CPEC but the perception of the influx far exceeds the reality. For Pakistani businessmen grown on Western ways, the inrush turned out to be challenging.

In a sharp contrast to the projected 400,000 Chinese in Pakistan, the actual presence, according to officials in the planning and interior ministries, is around 60,000. The biggest concentration was said to be in Karachi, Islamabad and Lahore.

According to relevant sources in Islamabad, there were about 20,000 Chinese living in Pakistan before 2013. These included Chinese nationals engaged in public projects in mining and energy, such as Saindak, nuclear energy plants, etc. Other businesses where Chinese had visible presence included grooming, dental care and restaurants.

Five years back in 2013 when Pakistan and China launched CPEC there was some scepticism in business circles but the market was mostly optimistic.

It was read by many as the first serious signal of revised economic diplomacy and a sign of readjustment to the changing geopolitical situation. Pakistan clearly committed itself to China’s ‘One Belt One Road’ vision to revive its own flagging economy.

There were several other factors that converged but there is little denying the fact that the change paid off and the Pakistani economy did recover. As a matter of fact GDP growth has been gaining momentum since. From 3.6pc in 2013 growth surged to over 5.5pc in 2017 and is expected to be over 6pc during the ongoing fiscal year.

The market of construction-related materials, including cement, improved significantly but businesses counting on ready gains with the arrival of the very first wave of Chinese were disappointed. The expansion in the hospitality and allied sectors (hotels, guest houses, rent a car/taxi and airlines) was said to be less than expected.

To their surprise Chinese visitors proved to be different. Unlike Westerners the guests from the East were found to be hard bargainers, holding their purse strings by their teeth.

“Yes, our occupancy level did improve. The number of live-in guests, dinners and hall booking for business meetings shot up. The rise, however, is a fraction of what we anticipated”, the managing director of a five-star hotel said on condition of anonymity.

“Even top Chinese executives, here for a few months, book hotel rooms for merely days. They pounce on the first opportunity of a more economical option.”

“Chinese companies build workers colonies at breakneck speed near project sites. They add a few VIP houses in every colony to cut on their budget of hosting consultants”, lamented a hotel owner.

Lashley Pulsipher, Chief Marketing Sales and Revenue Officer, Hashoo Group, (owners of Pearl Continental Chain of hotels in Pakistan), was diplomatic. She responded to a Dawn query thus: “While we haven’t seen a surge in business that we can relate specifically to CPEC, the occupancy rates in our hotels continue to grow every year. The economic optimism that was boosted by CPEC has had a positive impact on our businesses and we see that trend continuing as long as the country remains stable and secure”.

The group has hotels near Chinese project sites at Muzaffarabad and Gwadar besides in other major cities.

Government officials were particularly cautious. Many corporate executives were also reluctant to go on record on the subject. Sources in the Ministry of Interior said that Chinese presence in the country has increased about fourfold but the majority is that of short-term visitors.

A high-ranking official at the Planning Commission mentioned and shared the results of a survey carried out in November 2017 by the ministry to calm what it called “misplaced concerns” about the job market in the wake of CPEC.

The said survey revealed that all CPEC related projects collectively engage 28,000 people at varied levels. About 30pc (7,000) of the workforce was Chinese the rest 21,000 were occupied by locals.

“To ensure the early completion of projects in the energy and logistic sector, the Pakistan government opted for EPC (engineering, procurement and construction) mode in the deal.

“This meant that we had to forego the control on the employment policy in exchange for the company being responsible for any cost overrun in case of delay,” a senior member of the government’s economic team said by phone from Islamabad.

The media coordinator of the Ministry of Interior did not confirm issuance of 27,000 visas to Chinese in 2016 or disclosed the total number of visas issued in 2017. An insider said that the number of visas actually fell somewhat in 2017 without quoting a number. He attributed it to the political uncertainty and higher risk perception last year.

Dr Nadeem Javed, chief economist at the Planning Commission, saw the interest of private Chinese companies in Pakistan picking up as closer government to government ties manifest in tangible progress on CPEC projects.

“There is a visible spike in the two-way traffic between the two nations to a point where we are discussing proposals to facilitate visitors by revising visa policies and information sharing, exploring options to increase the number of weekly flights and destinations”, he said.

When reached over phone Mashood Tajwar, spokesperson PIA, was caught unawares. “If the Chinese desire a greater access for their airlines it is up to the Civil Aviation Authority to decide. PIA, at one point, had three flights but currently operates two flights from Islamabad to Beijing. Yes, we have fleet limitation issues, but the decision ultimately depends on the economic viability of a rout”.

“The number of flights can increase but the access to more cities will be difficult as PIA lacks the capacity to avail the facility.

Offering unilateral access to Chinese airlines will not be acceptable”, said an expert in know of things.

Published in Dawn, The Business and Finance Weekly, January 22nd,2018