International

CHINA PAKISTAN ECONOMIC CORRIDOR –OR– A FAILED INVESTMENT

June 15, 2020 07:57 AM

 Analysing with Dr Ajay Kumar Chairman Fox Petroleum Group of Companies. by - Dr Manju Dagar Chaudhary International Journalist.

?CPEC (China Pakistan Economic Corridor) – what is your understanding about this project, in a turbulence situation of this current time, when the world is suffering from Chinese Virus attack and world is under lock-down?

-As per my knowledge, China Pakistan Economic Corridor is journey towards economic regionalization or a failure in the globalized world with a big disputed route which will blast as soon as the Prime Minister of India recognizes “The Republic of Baluchistan” and taking of POK under Indian Administrative Service. For China, China Pakistan Economic Corridor is hope of better region of the future with peace, development and growth of economy, but it will come as the disaster from 2021 March onwards.

 The China-Pakistan Economic Corridor (CPEC), China’s vision to channelise its financial outreach as well as its strategic and political influence, has secured terrific attention in the international community since its launch in 2013, that too in terror heaven. Symbolic of the close affiliation between Pakistan and China, the project will undeniably influence regional and geopolitical equations within the countries of South Asia and Eurasia. At the same time, it will be always an unsecured route, and very dicey investment, as India has many options to block it. It has valid reason as India owns Jammu and Kashmir including Kashmir illegally occupied by Pakistan. 

 ?Dr Ajay Kumar, Why Pakistani Industrialists are not happy with China Pakistan Economic Corridor? What is there fear, according to you?

-Why Pakistan Businessman’s are not happy, with CPEC because, the major disadvantage of CPEC is expected decline in Pakistan's Export market. This entire route will kill Pakistan Business, which is already on ventilators. The debates on strategic impact and substantial deliverables under CPEC are a dominant part of Pakistani media and academic discourse, with numerous events held to promote CPEC. There are also various arguments over the alignment of the economic corridor in Pakistan with regional differences, the sustainability of the projects, as well as the employment generation potential for local communities.

As, China investment will be led by Chinese not Pakistanis. For that China making big colonies in Pakistan, and teaching Pakistanis the Chinese language so that they will be forced to work in their house as maid or servant or security guard.

?For my readers, Dr Ajay Kumar, will you elaborate the idea of this China Pakistan Economic Corridor and its purpose?

-From the Chinese outlook, the consolidation of political power after the 19th National Congress of the Communist Party of China under President Xi Jinping will only increase the importance of flagship proposals like CPEC as part of the Belt and Road Initiative (BRI) in the 21st century. And Vacuum created by United States in Pakistan is one of the reason, for China to join Pakistan. USA got fed up with the double dealing of Pakistan and stopped much of its aid and became more and weary Pakistani moves. China steps in. Whereas, Chinese GDP. In particular, the growth rate combined with a population of over 1.5 billion has caused serious environmental problems. Hence, they planned to dilute populace in different regions leading the Belt Road Project, CPEC is one example. It will change demographic profile of some countries. I have seen United Kingdom people crying – China Go Back since 2018.

CPEC is intended to endorse the China-Pakistan strategic relationship in Asia, but will increase the list of differences between India and China, in future it will lead to head ache for China and Pakistan, as Pakistan’s division cannot be out rightly rejected seeing US and India against China and Pakistan. And, China’s role in South Asia and the Indian Ocean Region (IOR) is a major Indian concern and CPEC further promotes an expanding Chinese dominance in the area, as well as military cooperation between China and other countries in the region. That is unacceptable for India, and it is not in American Interest. Baluchistan coming up as a Country will solve major problem, and solve, many problems, without hitting a “Bullet”. 

Let us know more history to understand better. Diplomatic conferences for CPEC started in May 2013, after the handover of the Gwadar Port to China during the visit of Chinese Premier Li Keqiang to Pakistan, it can be said as Pakistan sold his territory, I mean disputed territory, despite that Pakistan knows, they can’t hold Baluchistan for long run. Both sides signed the Memorandum of Understanding (MoU) on the long term plan for CPEC, and the agreement has some clause which is not even disclosed to Pakistan People and World Bank, is major point of concern for Chinese people. And, whomsoever, comes in power, in Pakistan turns London Billionaire. Chinese Premier Li Keqiang painted the focus on construction of connectivity projects, power generation and energy development under CPEC. A Joint Cooperation Committee (JCC) was set up under the National Development and Reform Commission (NDRC) of China and the Development Ministry of Pakistan to oversee CPEC. But that is eaten up the infrastructure project by Chinese. CPEC is wished-for to rapidly promote Pakistan's required infrastructure and strengthen its economy by the construction of modern transportation networks, numerous energy projects, and special economic zones. All will be owned by China.

?Dr Ajay Kumar, China Pakistan Economic Corridor has to many folds of investment, it is not only a export route, what is your take on this?

-It is dangerous planning to kill others job, in other country in the name of investment. I read in so many news papers, articles and blogs and found the rea of investment, which was shocking. In April 2015, both the countries signed 51 agreements and Memorandums of Understanding (MoUs) for cooperation in different fields as part of the USD 45 billion CPEC. Agreements worth USD 28 billion were for initiating ‘early harvest’ projects, while the remaining USD 17 billion are for later phases. In addition, China approved another USD 8.5 billionas added investment in Pakistan’s railways to upgrade tracks and signaling (USD 4.5 billion) and Liquified Natural Gas (LNG) terminal (USD 4 billion), increasing the project cost to USD 53.5 billion. In April 2017, China approved additional financing for establishment of industrial zones, raising the overall cost of CPEC to USD 62 billion. The entire investment for CPEC projects comes from China. However, estimates of the total vlaue of CPEC vary according to the inclusion and exclusion of various projects. Some infrastructure projects were considered and later dropped as part of CPEC. These include five, mostly thermal power projects, with a combined capacity of 3470 MW: Muzaffargarh Coal Power Project (1,320MW), Salt Range Mine Mouth Power Project (300MW), Gaddani Power Park (1,320MW), Sunnec WindFarm (50MW), and Chichoki Mallian Combined-cycle Power Plant (525MW).These were considered technically unfeasible and therefore, removed from CPEC projects in February 2017. But these projects were in the interest of Pakistan. All of them dropped because China wants to sell power to Pakistan from its own grid at higher prices. Killing the job of Pakistani Citizen.

?In the name of China Pakistan Economic Corridor they are Building Power Plants and dams, are you talking about this Dr Ajay Kumar? Also tell us the funding sources?

-Let us know more the phases manner of CPEC. The current CPEC will be executed in three phases. In the first phase, 12 energy projects generating 5000 MegaWatt (MW) of electricity were to be completed over the 2017-18 period not commenced yet with Chinese Equipment Supply, and it has to be purchased from China by Pakistan. The medium term projects would be completed by 2025, while the longterm projects of CPEC would be completed by the year 2030. However, as reported on March 31, 2018, Pakistan’s Interior Minister, Ahsan Iqbal has already announced the revision of the deadline for the first phase to 2020 (which is over), adding that USD 35 billion are to be invested in the power sector out of a total of USD 46 billion allocated for the CPEC projects in the first phase.10 China will finance the larger part of CPEC through soft loans, grants, commercial loans and and private equity investment. CPEC energy projects are funded with Foreign Direct Investment (FDI) by Chinese firms and commercial loans at the rate of six to seven percent from Chinese banks. Whereas, in India average FDI or ECB is at the maximum rate of 2 to 3%. This will increase the burden on Pakistan and it will make Pakistan’s economy the slave of Chinese Economy, so was the plan of China, once economy is slave the Country will be slave. And, the transportation projects’ finance is provided by the Chinese Government and the state-owned Chinese banks mostly as concessional loans at 2 to 2.4 percent of interest rate. 

The Long Term Plan prepared by China Development Bank includes provisions for financial guarantees for credit enhancement support in the funding of infrastructure projects, increasing supporting capacity, and protection of the interests of creditors of CPEC. But how It is possible, when Pakistan can’t afford such loan. So, what is hidden in the agreement CPEC is something fishy, and hidden by Pakistani Aawaam, but it is milking opportunity for Politicians in Pakistan and Media Houses. See, the measures taken by China Development Bank will protect the investments of Chinese investors and promote their interests.

The LTP states that China’s maximum annual direct investment in Pakistan is expected to be around USD 1 billion. Pakistan’s ceiling for preferential loans should be USD 1 billion, and for non preferential loans no more than USD 1.5 billion per year. However, Pakistan received USD 4.4 billion in first ten months in the financial year (July 2017-April 2018) as bilateral and commercial loans from China. And the loot starts. Only 30% money is used rest are diverted in the name of security, where China is not happy. The Chinese dream will fall short and may lead to a problem, in long run with China and Pakistan, and India will be only Country to help China to overcome this problem. 

Another setback to Pakistan is having no dollar, only RMB(Chinese Currency Payment) will be paid to Pakistan. It will stop them to move to west, but have to depend on China only. Why? Let me explain. Increasing the role of Chinese currency, Renminbi (RMB) in the economy of Pakistan is a major objective of CPEC. The LTP published on CPEC’s official website on December 18, 2017, jointly by Ministry of Planning, Development and Reform, Government of Pakistan and National Development and Reform Commission (NDRC), People’s Republic of China, lacks complete information on the projects and does not include recommendations of the China Developmental Bank’s conditionalities related to the projects’ finances. The document provides no information on reaching of targets or goals under CPEC, working of the bidding system, terms of the project, employment policies, and the measures to preserve and protect heritage, ecology, wildlife and local livelihoods. Prior to CPEC, various developmental and economic investment documents, including International Monetary Fund (IMF) agreements, were open for public viewing in Pakistan. The absence of comprehensive details of CPEC projects and their financing patterns creates ambiguity and even the projected value at USD 62 billion is uncertain.

?Dr Ajay Kumar, Please summaries, what is expectation and prospect of China from this China Pakistan Economic Corridor? Your final comments.

-Expectations and Prospects and Conclusions on this is very simple, China wants to overpower United States of America having economic and military ties in Asia and Europe. China’s global image has changed after four decades of rapid economic growth with massive infrastructure and industrial development in the fields of transportation, energy generation, irrigation and urbanization but that all are quality wise inferior. China’s economic growth led to millions of its population emerging from poverty. According to a January, 2018 report, 55.6 million people were brought out of from poverty in China in just the three years between 2014 and 2017. China’s export-oriented growth model has increased prosperity and foreign exchange reserves, the latter by nearly four times in twelve years (2005-2017), as reflected in the People’s Bank of China data of the foreign exchange reserves from 2005 to2017:

But, after Wuhan Virus attack by China on World, the prospects of China is down, even with closest allies like Pakistan. Pakistan may call off, CPEC in some certain conditions. Pakistan loves dollar more than yuan. Another problem is Baluchistan rise. Third is India at any cost will cover Gilgit and Baltistan in India along with Pak Occupied Kashmir. It will start, in winter 2021, as per preparation. Pakistan sold India land to China, and China having no consultation with India, has led this project to a big failure. And post Covid-19 it is “Impossible for China to Complete”. Or may be lose any relevance due to turbulence in Pakistan.

Thank You Dr Ajay Kumar for these wonderful inputs. Talking to you on the Global Subjects connected with Geopolitics is enlightening. Once again thank you. And still my Interview will be on next subject with same intensity and gravity – The Turkmenistan Afghanistan Pakistan and India Pipeline.

 
Have something to say? Post your comment
Copyright © 2017, Face 2 News, All rights reserved. Terms & Conditions Privacy Policy Disclaimers