Chinese realised that their economic growth has slowed down and they desperately needed projects which can keep the Chinese economy performing well. So, they looked for economic projects with multiple objectives. One Belt, One Road is just one among them…Dr Shabir Choudhry looks into the Chinese strategy to revive their economy at others costs
“One Belt, One Road” is a mega project; and rather ambitious plan of China to influence the world politics through economic dominance. It is not simple and it may encounter many obstacles. The plan aims to integrate China’s trading partners in such a way that they all help China to advance its international agenda. The plan involves building infrastructure — ports, roads, airports, power plants, gas pipelines and railways in a way that complements Beijing’s own interests.
Chinese realised that their economic growth has slowed down and they desperately needed projects which can keep the Chinese economy performing well. So, they looked for economic projects with multiple objectives. Some of them are:
1 Search for new markets; even if that means building their infrastructure and enabling them to become future clients of the Chinese goods;
2 Sustain and promote the Chinese economy; especially when demand from America and Europe slows down;
3 On the back of these ‘economic projects’ advance the Chinese agenda of dominating the world politics;
4 Under the cover of various economic projects establish military and economic pockets in strategically important areas – string of pearls; and find strategic allies to protect and advance the Chinese plan for world dominance.
It remains to be seen if OBOR becomes a reality and produce the desired outcome; however, one can say the Chinese leadership has a great vision; and they do not lack ambitions. While embarking on these ambitious projects, China has to bear in mind that these projects could prove disastrous; and white elephants for some countries, because some countries which are part of the OBOR are prone to economic and political instability and corruption.
China is rightly regarded as an economic and military giant, with potential to call shots in the world politics. China is the second largest economy with GDP of 11 trillion dollars. Its economic strength could be measured by huge foreign exchange reserves – 3 trillion dollars, which is the largest in the world. With this kind of economic strength, they can initiate mega economic projects to help others and also boost Chinese economic, political and military domination. Military and economic muscle is prerequisite to any empire building.
Some people call OBOR a Capitalist expansion plan, even though China is a ‘Communist’ country. In name of economic projects, China is influencing politics, economics and social structure of ‘client’ states like Pakistan. Some countries have become under their influence by financial and economic help; and without sending any army. Pakistan, on the other hand, heavily relies on Chinese help in military equipment, economic, financial and strategic matters. They even rely on China’s Veto in the UN Security Council and support in international relations.
It is believed that the Chinese investment in OBOR related projects is more than $500 billion. Even the reputable international financial institutions like Asia Development Bank, IMF and the World Bank do not have this kind of amount at their disposal to spend. This fact explains China’s strength and clout in the world affairs. China’s ‘business diplomacy’; and ability to buy or neutralise other countries or threats from opponents has proved to be effective over the years. Because of the economic muscle, the Chinese President on the opening day of the OBOR Conference proudly said that China was ‘investing $124 billion on infrastructure projects in 60 countries’.
After the Second World War, America dominated the world affairs with combination of economic and military help; and at times, using its military muscle resulting in stationing troops, occupations, military interventions, building military alliances and overthrowing governments. China, on the other hand, avoid using military muscle and prefers to use economic muscle to win friends and advance its agenda of dominating world politics.
It is interesting that many countries now look towards Beijing for help and support rather than the Western dominated institutions like World Bank and IMF. Question arises, will America and the West remain quiet and let their dominance and influence fade away; and let China call the shots in the international arena.
To the Pakistani government and the military establishment, the CPEC is a national security matter. They feel when the Chinese are in Pakistan with all paraphernalia and military might, no country will dare to look towards Pakistan with evil eye. In other words, the CPEC will not only provide economic boost and build infrastructure for energy and transport, it will also act as an insurance policy whereby China will have to protect its investment and its much-needed the CPEC route and Gwadar.
No matter what the Pakistani government and the military elite think of the CPEC, people of Pakistan have a right to know what is going on; and why there is so much secrecy associated with these projects. People need to know why should they be paying billions of dollars in high interest rates for building roads which China needs to transport their goods to Gwadar and beyond? Infrastructure is important, if that is required to transport the domestic goods to the markets. Shouldn’t Pakistan be investing in education and technical institutes that people of Pakistan can alleviate poverty and meet the challenges of the 21st century?
Also, it is not clear what is the strategy or contingency plan, if a Chinese funded project or projects fail. Won’t that have a serious negative impact on the CPEC and OBOR, as most of the projects are interlinked and rely on each other. Furthermore, China’s overseas investment record is not brilliant, especially in Sri Lanka, Mynamar, Venezuela and Africa. One economic expert warned that OBOR may leave “huge white elephant that left an enormous amount of wasted resources strewn along its path.”
Tom Miller, author of “China’s Asian Dream: Empire Building Along the New Silk Road,” said OBOR is part of Chinese plan to restore ‘its historical status as Asia’s dominant power. China’s new ’empire’ will be an informal and largely economic one, posited on cash and held together by hard infrastructure’.
Another expert, Christopher Balding, said the project is “more like a diplomatic effort for China to win friends and influence people,” rather than a strictly economic program.
China claims that more than 65 countries may join the OBOR; and that it is open to everyone. China and other 64 countries identified for the project have aggregate population of 62% of the world population. They also produce 30% of the economic output. It is interesting to note that only 20 Heads of these countries participated in the Conference; and most of them were small Asian countries which are heavily dependent on the Chinese support
Nick Marro, an analyst with Economist Intelligence Unit says: “China is looking to use OBOR as a way to ship its own domestic overproduction offshore.” The Chinese State media claims that ‘some $1 trillion has already been invested in OBOR, with another several trillion due to be invested over the next decade. There are two main benefits for Beijing from this: economic, and political – both with their own significant risks’.
It is intriguing to many people that very little is known about OBOR projects, which is ‘a collection of interlinking trade deals and infrastructure projects throughout Eurasia and the Pacific, but the definition of what exactly qualifies as an OBOR project or which countries are even involved in the initiative is incredibly fuzzy’.
In reality it means, “everything and it means nothing at the same time,” asserted Christopher Balding, a professor of economics at Peking University. This means projects could be added or taken out as the situation demands; and strategies could be planned to resolve issue and obstacles. This vagueness allows China to ‘bundle anything it wants into it’. Around 50 leading state – owned companies have invested in nearly 1700 OBOR projects since 2013.
World leaders and their representatives from various countries attended the Beijing Conference to hear details of China’s One Belt One Road initiative. The next gathering on this topic will be in 2019; however, at the end of the Conference on 15 May 2017, many participants and the OBOR or the CPEC watchers note with dismay that still there is insufficient information given out about these projects. During his speech, Chinese President Xi Jinping pledged 113 billion dollars extra funding; and urged countries across the globe to join hands with him in pursuit of globalization. He said:
“We have no intention to form a small group detrimental to stability. What we hope to create is a big family of harmonious co-existence.”
China claims that more than 65 countries may join the OBOR; and that it is open to everyone. China and other 64 countries identified for the project have aggregate population of 62% of the world population. They also produce 30% of the economic output. It is interesting to note that only 20 Heads of these countries participated in the Conference; and most of them were small Asian countries which are heavily dependent on the Chinese support. However, in total 52 countries had some level of participation in the Beijing Conference; and that included representatives from America and North Korea. Compared to the US and North Korea, Britain, Germany and France sent lower level representatives.
After the successful conference on One Belt One Road – OBOR, China presented itself as a country at the heart of the world with a New World Order. However, a big question is, can China afford all the economic ventures they have announced or those which or already on the way?
China claims that 900 billion dollars’ worth of projects are already underway, and with 4 to 8 trillion more to be spent according to some estimates. The Chinese President Xi Jipping announced another 78 billion to be spent on infrastructure to link China to Europe via Asia, Middle East and Africa. 6
As mentioned earlier, the CPEC and OBOR are designed to assert China’s influence in the world politics. In other words, China wants to start a new era of globalisation and a New World Order; and write new rules that can help China to dictate its terms, especially to future client states.
It must be remembered that Malacca Straits is important sea route through which 80 percent of Chinese energy needs pass through. It is also China’s route to Europe, Africa and the Middle East. Over the years, Chinese strategic experts felt that this route is vulnerable due to activities of America and their allies. In the event of hostilities, the Chinese economy could be paralysed.
This fear resulted in China desperately looking for an alternative route; and the CPEC brings China to the Arabian Sea, which is strategically important as it provides safe route for trade to the Indian Ocean, Pacific, Atlantic and the Gulf. It also enables the Chinese navy to block or endanger supplies from Gulf of Oman, if and when needed.
The CPEC route to Gwadar is around 3,000 Kilometres long. The Sea route which China is currently using is around 12,000 Kilometres. So apart from many other benefits for China, they also see this as a short and safer route. It provides China an opportunity to avoid problems of the Malacca Straits, and if the situation warrants, to strike back at the enemies by disrupting the sea transport. So, one can see, for China, it is a big game changer.
The CPEC and fundamental rights
It is also worth noting that, while Pakistan will be paying the costs of the CPEC projects, China will benefit most; and icing on the cake is that nearly all big and important projects are awarded to the Chinese companies without any bidding. What else can China expect when all five fingers are in the pie; and their investment is safeguarded by sovereign guarantees. Blinded with greed, ambitions and hatred, the Pakistani rulers are not even prepared to learn any lessons from the Chinese investments in Sri Lanka and in the African countries.
Nawaz Sharif government, and especially those few involved in the CPEC projects know very well that Pakistan will not pay back anything until 2020. These projects will not only benefit them financially, but they will also help them politically as the N League can win the next elections on the back of the CPEC. Before the people of Pakistan even begin to comprehend what has happened to them; and how badly they are trapped in web of the CPEC, the next government will be in the process of completing their term.
The Pakistani leaders and the establishment believes it is not too difficult to fool people of Pakistan. They can use name of religion or a bogey of a threat from India to discipline people. In any case, if it becomes politically too hot for them to tolerate the heat, they will say goodbye to Pakistan, and fly abroad to live like kings. The wealth they have accumulated is surely sufficient for them and the next few generations to live in peace and prosperity.
Apart from Punjab, all provinces and areas under control of Pakistan are complaining about the CPEC. Instead of listening to complaints of these concerned people the relevant authorities try to harass them and present them as anti – state elements
It is debatable if the CPEC will help to boost the Pakistani economy, however, it will surely help Pakistani rulers and the establishment to curb fundamental rights of the people and to silence dissent. China can only give what they have; and what they practise. They have one party system in China. They do not tolerate dissent and freedom of expression or other fundamental rights of citizens. What we will have in Pakistan and in parts of Jammu and Kashmir State occupied by Pakistan is intolerance, curb on rights of individuals; and a move towards one political party dominating politics of the country with help of the establishment.
It looks that with China at its back, the Pakistani authorities do not care if curbing free speech and arresting social media activists will further tarnish its bad reputation; and many analysts feel it is precisely the effect of the CPEC. Haroon Riaz , in his article ‘CPEC marks the end of free speech in Pakistan’ asserted that:
‘It is very hard, and almost feels immoral, to remain silent at the Interior Minister’s crusade against dissenting bloggers and social media activists. Since Zia’s period, we have not seen the Pakistani state practice such blunt and open crackdown against free speech and dissent in the countries. What are you to say of authorities who treat their own citizens, whose taxes pay for their livelihood, like the enemy? It is deeply disappointing’.
People who pay taxes and are citizens of Pakistan have every right to question what their rulers in civilian and uniform do in name of democracy and national interest. They must see if the civil rights enshrined in the Constitution are available to the ordinary citizens of Pakistan? Pakistan is not considered among those countries which champion cause of freedom and fundamental rights of all citizens. However, since the inception of the CPEC, the Pakistani governments and secret agencies have been very pro – active in curbing fundamental rights and silencing dissent by imposing draconian laws.
The government and secret agencies are not even prepared to listen or look at the counter narrative and see if the criticism is valid or not. Worst sufferers are in Pakistani Occupied Jammu and Kashmir, Pakistani Occupied Gilgit Baltistan and in Balochistan, where people are even charged with sedition just because they opposed the CPEC or arranged a seminar to educate people on this topic.
I am also a victim of the Pakistani secret agencies, just because I write on the CPEC; and have addressed a number of conferences on the topic. Because the Pakistani secret agencies do not like my political activities, they have blocked issuance of my Identity Card (every citizen of Pakistan and territories of Jammu and Kashmir under Pakistani occupation must have an identity card. It is evidence of individual’s existence and is absolutely essential to live there. Without the ID card one cannot buy or sell anything, cannot open a bank account or operate it, book a hotel room, apply for a job or apply for a passport etc.). While blocking issuance of my ID card, they said they wanted to ensure that I do not travel to my home village in so called Azad Kashmir, or enter Pakistan. My bank accounts are frozen. I cannot visit my relatives and friends. I cannot visit a grave of my beloved father. I cannot sell my property. I could not inherit anything when my father passed away, just because I did not have an ID card.
This is democracy of Pakistan. Readers can comprehend what kind of life people of Pakistan, and especially people of Gilgit Baltistan, people of POJK and people of Balochistan enjoy? It is sad that we people of so called Azad Kashmir and Gilgit Baltistan cannot even say that we are occupied by Pakistan, because that is tantamount to inviting wrath of the Pakistani secret agencies and their foot soldiers, many of them have close links with the fanatic groups, known as non – state actors.
Apart from Punjab, all provinces and areas under control of Pakistan are complaining about the CPEC. Instead of listening to complaints of these concerned people the relevant authorities try to harass them and present them as anti – state elements. In sheer frustration, some Pakistanis have taken up guns to, what they call, defend their rights and privileges. This, of course, results in violence and loss of innocent lives; and that surely is not the way forward as use of gun creates more problems.
One Pakistani writer thinks the CPEC can become a ‘causality’ because of ‘non- transparency’. He writes: ‘It is not the dreadful violence and the devastating acts of terror. It is not the heinous designs of hostile powers – regional and extra-regional – against Pakistan and Pak-China relationship, either. And it is by no means the pity politicking rooted in Pakistan’s ethnonational political edifice. The single largest threat to once-in-a-century kind of an opportunity that is CPEC comes from an aura of unwarranted secrecy surrounding the whole concept – from its overall plan to the implementation of its various components, the projects that it entails. 8
If everything is in black and white, and there is no hidden agenda or clandestine aspect of the CPEC, then why on earth both China and Pakistan are hiding details. Each time they share some details their contradictions become more apparent; and it adds to suspicions of the critics. Is it not the responsibility of the N League government and those who manage this mega project to ensure everything is transparent; and that all Provinces and people belonging to all sections of the Pakistani society are on board, and feel part of it.
Moreover, is it not essential that people of occupied Gilgit Baltistan, Occupied Jammu and Kashmir and rebels of Balochistan are taken in to confidence. Or is it that the government is determined to crush all the rebels, and silence all the critics because the CPEC has attained a status of a holy cow. Perhaps the authorities have taken this position that any criticism and opposition, no matter how valid, is tantamount to attack on national security and must be treated as a treason.
This attitude and narrative will have very serious consequences for Pakistan. I believe they still have time to rectify the problems, and take all the stake holders in to confidence. If, on other hand, the rulers and secret agencies continue to exhibit obstinacy, intolerance, lack of care and vision, then sadly it will be regarded as a China Punjab Economic Corridor with extremely serious consequences for the CPEC and future of Pakistan
Health of Pakistani economy
Pakistani government and especially Finance Minister, Ishaq Dar, can boast many economic achievements, but in reality, economy is not doing as well as it is claimed. The Pakistani Think Tank, Institute for Policy Reforms, which is headed by Dr Hafiz Pasha, a former Finance Minister, is not impressed by the Economic Survey 2016-17, unveiled by Ishaq Dar on Thursday. In IPR’s opinion, there are ‘serious concerns over balance of payments, weak export capacity, low savings and investments, and a fragile macro economy have been the key highlights from this year’s economic survey’. 9
Some Pakistani critics feel that underneath this account of Economic Survey lay a ‘story of lack of reforms, overreliance on borrowing, and a persistent lack of competitiveness’.
IPR report further stated that: “The economy stands on weak pillars… It is no surprise that the economy missed most targets, what is surprising is that this happens each year and no one draws a lesson…On the expenditure side, foreign debt servicing has reached Rs85 billion in 2016-17 and will almost certainly exceed this year’s target of Rs113 billion.”10
I have pointed out in my articles some months ago that Pakistani exports are declining; and that remittance from the Pakistani and Azad Kashmiri Diaspora is also declining. IPR report notes these points in the following words:‘Export performance and weak workers’ remittance are a special concern. Exports are expected to be $21.5 billion compared to the target of $24.75 billion’. In 2014 – 15 ‘exports were 25.1 billion. Remittances from the Diaspora are ‘2% below last year, instead of the targeted growth of 5%.’ 11
What people say about the CPEC
It is interesting to note what different people say about the CPEC, especially when there is a debate between Pakistanis and Indians. When Pakistani writers, thinkers and social media activists oppose the CPEC and how it will affect Pakistan and the politics of South Asia, Pakistani officials and their foot soldiers take this as an ‘anti Pakistan’ position; and in worst case scenario the opposing person is an agent of hostile powers.
However, when an India person criticises the CPEC, the Pakistanis take that as a plus point and justification of the CPEC, because in their perception if the CPEC was bad for Pakistan and the Pakistani economy, then Indians should have been happy. They don’t think that the Indian critics may have environmental issues in mind, which will affect Pakistan’s neighbours and the entire South Asia. They also don’t think that some Indians could be concerned about the instability and violence which may ensue as the direct result of the CPEC; and that will also affect Pakistan’s neighbours and South Asia. Furthermore, some Indians may be concerned about the political and economic meltdown, extremism, terrorism and insurgency which will ultimately hurt India too.
I find this debate between Indians and Pakistanis fascinating; and some readers will find it interesting.
One Indian critic said: ‘Basically, china is doing what England did to India’.
Another Indian, SHYAMA, wrote: ‘If one looks at the facts of OBOR/CPEC – Chinese banks lend money at high interest rate, Chinese workers would build the infrastructure, and the new companies in host countries would be Chinese owned. India sees this as a win-lose and hence she opted out. I think she did a service to other countries by articulating the reasons. which are – Local people are not participating, local industries would be affected and the participating countries face a huge debt burden’.
GHAZNAVI, a Pakistani replied: ‘Given the number of Indians on this forum (Dawn comments section), mostly posting negative comments, would, I say is a good barometer to judge whether this is a good deal for Pakistan or not. The more negative the Indians are about this project the better is the deal for Pakistan.’
RANA EHTASHAM UL HASSAN, a Pakistani said: ‘CPEC – Chinese are guarding their interests and they have every right to do it, the big question is what we, the Pakistanis, are doing and hoping for, ‘keeping our fingers crossed and anticipating miracles to happen for us’, that’s not the way, a nation rises!’
Another Indian said: ‘This master plan reminds one of an ancient story ‘The Arab, camel and his tent’. China is putting its stamp in almost all fields covering the entire country which has all the hall marks of the above story turning into reality one day’.
‘Will Washington and London accommodate the Pakistani elite’?
A Pakistan critic, ZAMEER, said: “All Pakistani people will be in DEBT, and Chinese will take over them; and rich politicians will run away to developed countries. Why Don’t we understand”?
NARADA MUNI, an Indian critic said: ‘Most important things that Pakistan needs right now are Health care and Education. Not a single school or Hospital in grand CPEC plan. What a shame? SPAs and Jacuzzis don’t help common man’.
Another Indian critic said: ‘CPEC has little to do with India, OBOR has little to do with India – it is all about China desperately want to make other countries borrow its money, build roads using Chinese companies and employees, and agree to have Chinese products dumped in its market. Given that, India’s current position is intelligent. So please be glad you have become a Chinese colony, enjoy your ride.
Ali, a Pakistani critic wrote: ‘We handover own country to China. Next 20 year we will be part of China’.
Khalid, a Pakistani who lives in Japan said:
‘As professional engineer who participated in the feasibility for multi-billion dollar projects, I am not against this project but I am completely against the way it has been executing. Believe me this will destroy Pakistan economy completely. Pakistani Engineering companies are on the edge of dyeing in due to awarding projects to Chinese Companies. I had biggest engineering company in Pakistan – had around 1400 engineers five years back now reduced to around 500’.
‘Our leaders have one more silver bullet to woo, the general public ahead of an election. I wish plan would be successful, but is unlikely. Pakistan has no economic plan of its own, no bureaucracy to effectively monitor or implement the basic agenda of the state – Law and order, development and implementation of policies, no basic infra-structure – Power, water, highways, ports etc. Everything she ever does ends up being a big sink hole and this will be no different’.
PROF ALI SHAFA, a man from Gilgit Baltistan wrote:
China and Pakistan have ignored gateway to this mega project, I mean Gilgit Baltistan, I want to know without GB share or partnership how sustainability will meet as youth of the GB and leadership, even GB provincial government accepted GB not getting due share, as more than 400km GB land will be utilized in CPEC road link?
Students and political activists, despite iron fist control of Pakistan call the CPEC an illegal attempt to grab Gilgit Baltistan. They said this road is not a road of economic progress; but a road of ‘slavery for Gilgit Baltistan’. The Protestors strongly feel that the Project is a ploy by China to advance its agenda; and in collusion with Pakistan, to take over their land and homes. 12
Although, I can’t see much good coming for Pakistan and for the people from what we know about the CPEC, still, in conclusion, I can wish people of Pakistan all the best with this adventure. I know for sure that my people in Gilgit Baltistan and Azad Kashmir will suffer; and our natural resources will be exploited with new enthusiasm. The CPEC can have a negative impact on the Jammu and Kashmir dispute as well.
Despite that, I hope my apprehensions about Balochistan and rest of Pakistan prove to be wrong. However, just to refresh memory of my readers, especially Pakistanis, I can summarise some of the forthcoming problems:
- China is only interested in the development of the region to the extent that the infrastructure built by the Chinese loan could be used to transport the Chinese goods;
- Also, that the ‘client countries’ remain in a position to buy the Chinese goods; and keep on borrowing money from the Chinese banks and government.
- There is no plan to make these countries self – sufficient in anything. Countries like Pakistan can act as a laboratory to test various Chinese products in agriculture and many other fields.
- No intention to help and resolve political, regional or territorial disputes countries like Pakistan have; and which cause instability and endanger the future of the country. Presence of these disputes make them subservient to Beijing.
- China also uses its military and economic might to intimidate and harass smaller and weak neighbours, as evidenced in the South China Sea.
- There will be a sharp increase in human rights violations in various parts of Pakistan, especially in Balochistan and areas of occupied Gilgit Baltistan and Pakistani Occupied Jammu and Kashmir.
- Pakistan’s reliance on China will increase substantially; and Pakistan will become more subservient to Beijing; and many aspects of the Pakistani life and culture will be dominated by the Chinese.
- There will be a big demand for people with ability to communicate in Chinese; and colleges and universities will run special courses to meet this demand.
- The Pakistani economy may see initial signs of improvement, but since it is not going in the right direction, and government is misleading people, there will soon be very serious economic, political and social problems.
- Although China has made this huge investment, but there is a little joy over this in many circles in Pakistan, more and more thinking people are expressing anguish and resentment, which will multiply with time.
- The CPEC and OBOR will help China to assert itself as a New Imperial power in the region and beyond. This mission of China, although camouflaged by economic projects, will not be allowed to proceed unchallenged. This has potential to make the region a battleground for competing interests of powerful nations.
- China will use its influence and financial muscle to export its extra manpower and goods to other countries, which will help China to export culture and influence.
- High interest rates on the loans will enrich the Chinese banks. The CPEC will also produce some more Pakistani billionaires, however, Pakistan, as a country, will suffer enormously; and its sovereignty will be compromised in certain areas.
- Trade deficit with China will increase sharply, and Pakistan will have serious problems in paying back instalments; and Pakistan may end up giving away some of its territory to China, or leasing it to them for many years.
- Pakistan may hand over some more territory from Gilgit Baltistan to China, as they did in 1963. Gilgit Baltistan is legally not part of Pakistan; and is still part of the erstwhile State of Jammu and Kashmir.
- Because almost all the major projects were given to the Chinese companies without any bidding, that will enhance their reputation and make them strong and richer.
- That means bad news for the Pakistani companies and the Pakistani exports; and in certain areas of the economy people will lose their jobs.
- The CPEC will result in very serious environment problems; and both China and Pakistan are tight lipped about this. No plans are made to deal with environmental problems which will surely hurt people of Pakistan, especially people of Gilgit Baltistan and Balochistan.
- Some Pakistani economists estimate that Pakistan will pay back about 90 billion dollars to China. Does the Pakistani economy have potential to pay this kind of amount? If answer is no, then what will Pakistan give to China to settle the loan? People of Pakistan need to think about this seriously.
- My worst apprehension is that the CPEC will result in political and economic instability, bloodshed and even a war, as the countries which be directly affected; or will feel threatened by the military and strategic aspects of the CPEC will not sit and watch.