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Engine to Prosperity
CPEC is proving critics wrong as it improves Pakistani people's lives
By Yu Lintao | NO.38 SEPTEMBER 20, 2018

A worker monitors a power generator at the Port Qasim Coal-Fired Power Plant in Sindh Province, Pakistan, on November 28, 2017 (XINHUA)

Mahnoor Fatima studies sociology at the Shaheed Zulfikar Ali Bhutto Institute of Science and Technology in Karachi, but she hopes to work at a Chinese company after graduation so as to participate in the construction of the China-Pakistan Economic Corridor (CPEC). The 21-year-old said that CPEC has been helping improve people's living conditions around her and is of great significance for the future of her country.

Since it was initiated five years ago, CPEC, a flagship project of the China-proposed Belt and Road Initiative—with billions in investment money and dozens of infrastructure and energy projects currently under construction throughout Pakistan—has become the talk of the town.

"CPEC projects are creating a large number of job opportunities, and power failures are becoming less and less frequent thanks to CPEC," said Fatima. She told Beijing Review that she is also studying Chinese in order to seize opportunities to study in China or land a job at a Chinese enterprise.

Profound changes

For Kaishif Shaikh, CEO of Aiza Exports, CPEC means more opportunities for his export business with China, which mainly sells rice to the Chinese market.

"China has a huge market. When land transportation between Pakistan and China under the framework of CPEC becomes more convenient, delivery expenses will drop considerably and more and more Pakistani products can be sold to China," Shaikh said.

"There is consensus across the board in Pakistan on the importance of CPEC," said Tehmina Janjua, Foreign Secretary of Pakistan, in an interview with Beijing Review.

According to Janjua, CPEC has achieved significant success and enjoys cross-border political support and will be a priority of the new government in her country.

When meeting with Chinese Foreign Minister Wang Yi in Islamabad in early September, Pakistani Prime Minister Imran Khan said that his government is firmly committed to further promoting the development of Pakistan-China relations and stands ready to work with China on CPEC.

China has an important place in Pakistan's foreign policy and the new government will work toward the swift completion of CPEC and its related projects, Khan added.

According to Muhammad Zubair Umar, who served as governor of Sindh Province from February 2017 to August this year, the improvement of transportation facilities and the increasing power supply in his province has been obvious since the construction of CPEC projects. Power shortages—previously a heated topic in election campaigns—were not a major issue in the latest general election that took place in July.

Shaukat Khattak, Deputy Director of Media for CPEC at Pakistan's Ministry of Planning, Development and Reforms (MPDR), pointed out that CPEC projects have helped significantly alleviate power shortages in Pakistan and are estimated to create as many as 1 million jobs. For instance, the 1,320MW Port Qasim Coal-Fired Power Plant, the second major energy project under CPEC, will be able to provide power to about 4 million local families a year when it is in full operation.

Official data showed that CPEC has been driving up the annual economic growth of Pakistan by 1 to 2 percentage points in recent years, creating 70,000 jobs, while in the long run, the figure will be much bigger.

"What should be particularly noted is the rise of the Pakistani people's confidence in the future of their country. Along with the advancement of CPEC construction, Pakistan has maintained moderately high growth in recent years, potentially making it another promising emerging economy," said Cheng Xizhong, a researcher with the Charhar Institute, a Beijing-based think tank.

Helmut von Struve, Managing Director of Siemens (Pakistan) Engineering Co., who has worked in Karachi for more than three years, has personally experienced the improvement of the security and investment environment in the country. He said that he has now brought his whole family to live in Karachi, something that was hard to imagine three years ago due to security concerns.

In a symposium with Chinese journalists in early August, Abdul Aleem, Secretary General of Pakistan's Overseas Investors Chamber of Commerce and Industry (OICCI), said that some Western reports mislead readers by saying that CPEC only benefits Chinese companies, but many opportunities are available for non-Chinese companies as well. OICCI represents over 200 companies from outside of Pakistan.

Sindh Engro Coal Co. (SECC) is a joint venture between the provincial government of Sindh and Pakistani conglomerate Engro Corp. It is developing the Thar Engro Coal Power Project, one of the country's largest coal-mining projects under CPEC. Syed Abul Fazal Rizvi, chief operating officer of SECC, told Beijing Review that there is hearsay that most of the CPEC projects are majority-owned by Chinese companies and that Chinese investors are getting all the revenue. That is not the case for the Thar coal project, where 95 percent of the entire equity in mining is owned by Pakistani companies with more than 4,000 jobs created for local people, he said.

Struve told Beijing Review that Siemens has also been expanding its market on CPEC projects in Pakistan, benefiting from the improvement of the local investment environment brought about by CPEC.

Aleem said that many multinationals are reinvesting in Pakistan because they see a lot of opportunities for growth thanks to CPEC, pointing out that members of the OICCI are expected to invest about $2.7 billion in 2018 alone.

Clarifying misunderstanding

For the past few months, Pakistan's economy has come under pressure and foreign exchange reserves are declining due to a current account deficit. Some foreign media, particularly from the West, hinted in reports that it was CPEC that had caused Pakistan's debt problem. They also dismissed the future of the project.

In response to those reports, Janjua told Beijing Review, "Obviously because of the very close relationship between Pakistan and China, there are many people out there who don't like this closeness or this relationship."

Aizaz Ahmad Chaudhry, Director General of the Institute of Strategic Studies in Islamabad (ISSI), shared Janjua's view. "Not every country is happy about Pakistan-China cooperation, so they keep spreading negative news about [CPEC]," he told Beijing Review. "All the projects are basically for energy and infrastructure. How will that not help the local people?"

In a statement in early August, the MPDR declared that CPEC projects have not imposed any immediate debt burden on the government of Pakistan since these projects are financed through a composite financing package comprising long-term, government-to-government concessional and preferential loans, as well as grants from the government of China.

The MPDR said that media reports questioning the viability of CPEC "are often one-sided, distort facts and are based on irresponsible statements by individuals who either have no understanding of CPEC or are driven by ulterior motives."

For years, international financial institutions such as the International Monetary Fund and the Asian Development Bank have offered loans to Pakistan. Statistics from the Chinese Ministry of Foreign Affairs show that, at present, 47 percent of the foreign debt held by Pakistan comes from multilateral financial institutions. China, for its part, has directly invested in or provided assistance for 18 out of the 22 CPEC projects, while offering concessional loans for the remaining four.

According to Khattak, since the start of CPEC projects, Pakistan has obtained about $6 billion in government concessional loans with a five-year grace period before a 25-year repayment plan begins.

Khalid Mahmood, ISSI Chairman, said that following the construction of CPEC projects from energy and infrastructure projects to ports—economic activity will be stimulated, enabling Pakistan to pay back its loans and meet other financial obligations.

Future prospects

Cooperation between China and Pakistan under CPEC is not limited to infrastructure and energy-related projects.

Wheat is a major crop in Pakistan, as 80 percent of its people rely on it as a staple food. However, Pakistan's wheat yield was in rapid decline 10 years ago.

Against this backdrop, Sinochem Group Co., one of China's major providers of agricultural technologies, conducted field trials of Chinese hybrid wheat varieties together with its Pakistani partners. After years of experiments, the trials have realized an average 24.4-percent increase in crop yields.

According to Zhang Shengquan, a senior researcher with Sinochem's hybrid wheat seed research department, wide cultivation of high-yielding hybrid wheat varieties will provide more options for Pakistan to secure its food supply.

After CPEC takes shape, China-Pakistan cooperation will be even more comprehensive, expanding to all aspects in the future, Cheng told Beijing Review.

Javed Jabbar, a former federal minister in the Pakistani Government and renowned scholar, told Beijing Review that most people in Pakistan welcome CPEC. The real challenge for Pakistan to better build CPEC is to improve the efficiency and speed of administrative services.

"We have to do a lot better. We have to coordinate among the local and federal governments. If that improvement takes place, the projects can be implemented on time to the satisfaction of both China and Pakistan," Jabbar said.

Copyedited by Rebeca Toledo

Comments to yulintao@bjreview.com

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