China-Pakistan Economic Corridor Program Achieves Unexpected Progress

The China-Pakistan Economic Corridor (CPEC) will play a leading role in the Belt and Road initiative. Recently, the Chongyang Institute for Financial Studies at Renmin University of China launched an intensive research program to look at the progress and problems of the CPEC construction in Pakistan.

After the assessment, we found that the construction has been unexpectedly fast. Four key areas of cooperation — energy, transport infrastructure, industrial cooperation and Gwadar Port — have made significant progress. Among them, electricity and infrastructure have seen smooth development.

Some of the official departments in Pakistan have been criticized for years of inefficiency, and projects not being completed on schedule has become a normal phenomenon. This caused some doubts about the progress of the CPEC project. However, Pakistan should not always be judged based on old ideas. For example, we saw evidence of a busy rhythm and efficient working atmosphere in the Pakistan Ministry of Planning, Development and Reform during the research period, and their past bureaucratic style has disappeared. Minister for Planning, Development and Reform Ahsan Iqbal and the CPEC project director, and their subordinates were all keeping clear minds and were highly familiar with the whole situation.

According to the director, electricity programs under the CPEC framework have attained total generation capacity of over 10 million kilowatts. He even said that due to the rapid development of power projects, Pakistan is expected to achieve a balance of supply and demand for electricity in 2018. If this goal is achieved, it will solve a chronic problem that has troubled Pakistan for more than 10 years and will accelerate the development of Pakistan's economy.

China and Pakistan are still exploring the potential for further industrial cooperation. We have already seen successful stories of Chinese enterprises in Pakistan. CMPak, China Mobile's wholly owned subsidiary, has developed into the nation's third-largest operator, with a market share of 20 percent. The company has completed its localization in terms of management with 21 Chinese employees and about 3,100 Pakistani employees working together. The company has boosted employment in Pakistan and also formed a local industrial chain.

Based on this example, it seems likely that more Chinese enterprises will take root and become successful in Pakistan. In the four-year promotion period of the CPEC so far, its contribution to Pakistan's economy, security and employment has been significant, and the country has a full understanding of this.

Over the past four years, the political situation in Pakistan has not experienced great turbulence, and the country has been through a period of rare stability, compared to the previous 18 years. This is partly thanks to the Pakistani army's campaign aimed at exterminating terrorists. Pakistan's unstable period, which was marked by a series of terrorist attacks, is hopefully coming to an end. In the past four years, the annual growth rate of Pakistan's economy has been constantly above 4 percent, making it one of the best performers in Asia. Its inflation rate has continued to decline, dropping below 2 percent and reaching the lowest point in 12 years. Pakistani Prime Minister Nawaz Sharif said that Pakistan's rapid economic growth has benefited from the construction of the CPEC.

However, the CPEC still faces plenty of internal and external difficulties, and the rapid progress of its construction has led to eagerness for instant success. The Pakistan government is hoping that most of the power station and infrastructure projects can be completed ahead of next year's election. However, this may not be possible according to the construction contractors.

Pakistan's domestic situation is extremely complex. Sometimes, conflicts can be intertwined. In the face of the huge benefits of the CPEC, miscellaneous political forces all want to have a finger in the pie, which makes the original contradictions even more intensified. Some decision-makers involved in construction of the corridor have little interest in project construction but great interest in personal gain, ignoring the social benefits of the project.

Some Chinese enterprises in Pakistan also have shortcomings. They are fond of instant success instead of making long-term plans. Several Chinese enterprises have violated Pakistan's laws and local social customs, which badly damaged the reputation of the Chinese people.

To solve these problems, the construction of the CPEC requires a long-term plan. The cross-stage development experience of China's backward areas, a step-by-step introduction to China's poverty alleviation experience in undeveloped provinces and a plan to help Pakistan to develop its more remote regions is of great significance to benefit Pakistan at the grass-roots level.

In Pakistan, it is unrealistic to expect to eliminate corruption completely, but we hope it can be constrained as much as possible. In addition, political, environmental and security risks should be minimized by persuading the central government to take care of the interests of all parties.

 

Zhou Rong is a senior research fellow with the Chongyang Institute for Financial Studies at Renmin University of China. Chen Xiaochen is director of the International Studies Department at the Chongyang Institute for Financial Studies. [e-mail]

This article was written by Zhou Rong and was originally published in the Global Times.