KARACHI: The government’s reliance on China will only grow in the coming years as private sector investment continues to decline in the country despite improvements in security conditions, rise in power production and better infrastructure, said Fitch Solutions in a report released on Wednesday.
“The Belt and Road Initiative (BRI) will continue to play an important role in driving infrastructure growth in developing economies in Asia,” highlights the report.
Pakistan has failed to attract private sector investment despite better security conditions, increasing power capacity and strengthening infrastructure. The lack of investment from other countries will only increase the country’s reliance on Chinese BRI.
The BRI-related funding comes with its own political risks. The report points out that “the rise in the number of populist candidates around the world has increased the risk of major infrastructure policy shift in countries with upcoming elections.” In a worrying trend around Asia, “National governments embracing Chinese investment and taking on Chinese government loans has led to the opposition parties using it as an attractive campaigning tool to rally the electorate.”
However, despite underlying risks, Fitch expects “a continued reliance on Beijing and the BRI for the financing and construction of infrastructure projects, regardless of who is in power.”
BRI projects have been criticised for the over-reliance on Chinese labour and equipment at the cost of local population where construction sites are located. But, “with the passage of time, as technology is transferred and the required framework for the development of complex infrastructure projects have been set up, we expect the involvement of more local companies in BRI projects, shifting the competitive landscape from Chinese-dominated to a joint-partnership model”, adds the report.
Published in Dawn, December 20th, 2018