Karachi: Two years ago, Chinese President Xi Jinping had first proposed the “One Belt, One Road”, essentially an economic vision for China. In an editorial HK’s South China Morning Post has described it as the most significant project the nation has ever put forward.
It seeks to expand the Chinese economy by first creating mega project construction opportunities for Chinese firms and then by spreading out markets for its manufactured goods. The plan is to accelerate growth in China’s western regions and then integrate China’s markets with Eurasia, West Asia and Africa. Its one component, the Silk Road Economic Belt would connect Western China to Central Asia and Europe overland, while the other, the 21st-century Maritime Silk Road would strengthen the link between Chinese seaports and West Asia, Africa and the Mediterranean. The Chinese then developed a blueprint to translate this into an action plan.
Days before President Xi’s arrival in Pakistan the blueprint was revealed. “The Belt and Road run through Asia, Europe and Africa, connecting the vibrant East Asia economic circle at one end and the developed European economic circle at the other.” The editorial captured its essence: “Chinese companies (helping) to build the roads, railway lines, ports and power grids that are sorely needed in Asia, Africa and West Asia. That, in turn, will involve loans and deals aimed at making the yuan a global currency.” It aims for “financial integration with the 65 Belt and Road countries across three continents”. A Silk Road Fund and an Asian Infrastructure Investment Bank have been established to help finance these projects.
That China has chosen to begin the implementation of this big bang template with Pakistan is not surprising. It is being described as a significant opening move on the “Belt and Road initiative” chessboard. The China-Pakistan Economic Corridor (CPEC) is, in fact, a trunk passageway connecting the Silk Road Economic Belt in the north with the 21st-century Maritime Silk Road in the south.
Additionally, branches from this trunk are also expected to connect Afghanistan, India and Iran with the Chinese “Belt and Road” system. The blueprint urges, “respecting each other’s sovereignty, countries along the Belt and Road should improve the connectivity of their infrastructure… and form an infrastructure network connecting all sub-regions in Asia, and between Asia, Europe and Africa step by step”.
One can expect to see China urging Pakistan, India, Afghanistan and Iran to interconnect their road, grid and pipeline infrastructures with the CPEC trunk. The possible network effects this would create could conceivably be an even bigger economic bonanza for the region than the CPEC itself as the blueprint contemplates removal of “trade barriers for the creation of a sound business environment within the region.” The Iran-Pakistan-India pipeline could be just one small example of this.
Explaining the modalities, the document states that “China will work with countries along the Belt and Road to advance demonstration projects to ensure early harvest”. That for now most of the money has been allocated to coal-fired power plants reflects China’s assessment of Pakistan’s bottleneck — shortage of affordable energy. It is also where Chinese companies could provide the quickest assistance. Rest of the money will ease Pakistan’s transport bottlenecks. Other components are integrating industrial chains and parks so that countries can build their comparative advantage and entire industrial sectors can develop together. The document contemplates other forms of collaboration such as policy coordination and removal of non-tariff barriers. Most importantly, the Chinese cannot afford the CPEC to flounder because most of the future success of the Belt and Road initiative may depend on its successful demonstration.
People have asked me what the catch is. Frankly, on combing the document I could not find one except to say that China may be projecting its economic power. On the other hand, there are two likely hazards for Pakistan. One is the route controversy and the need is to urgently build political consensus. The other is bureaucratic incapacity and lethargy to execute the Pakistani side of the bargain. Islamabad needs to address both of these on a war footing.
The writer is a business strategist and entrepreneur
By arrangement with Dawn
