‘China sees CPEC as a way of creating free market’ says leading specialist

South Asia expert from Oxford University thinks that CPEC will have a positive effect on Pakistan but certainly not a transformative one. 

As reported recently in the New York Times, Trump’s isolation of Pakistan means that China will play an even greater role in our country’s future. In addition to economic development, it is now the case that the previously peaceful objectives of CPEC are duly shifting towards military cooperation involving “defense-related projects, including a secret plan to build new fighter jets.” It is possible to attack the Chinese-Pakistani partnership and label Pakistan a “guinea pig” for Chinese experiments, but the expansion of ties will also empower Pakistan against the increasing menace posed by mad Modi and his acolytes. The showcasing of Chinese military technology will be accompanied by Pakistan playing a key civilian and military role in China’s Beidou satellite navigation system, a prime part of the Belt and Road Plan considered to be the “information Silk Road”, which Beijing hopes to sell to all Belt and Road countries. In these rather interesting times, Professor Matthew McCartney, and specialist in development in South Asia, addressed the members of the PIIA on 31 March 2019. News reports are available below. Watch video

From Dawn: “Eight years ago when I had entered the Oxford School of Global and Area Studies at the University of Oxford, the focus there was on India but today our focus is truly on South Asia where the study on India is not possible without knowing about Pakistan,” said Professor Dr Matthew McCartney at the Pakistan Institute of International Affairs on Saturday. Dr McCartney, who teaches political economy and human development of South Asia at Oxford University, was speaking on the subject of ‘China-Pakistan Economic Corridor: Sustainable Economic Growth and Industrial Policy in Contemporary Pakistan’.

The research scholar said that it was also why he decided to come to Pakistan to research CPEC while on a sabbatical. He said that Pakistan’s economic focus has moved from IMF to China. He said:

When I look back some 15 years, I have observed that the International Monetary Fund [IMF] was discussed more here in Pakistan when you talked about economic growth but now that focus too has moved to China.

‘A resilient economy’

“If you look at the economic story of Pakistan from the time of independence, you can see that Pakistan is not a miracle economy but it has moderate economic success, first through agriculture exports and then, after the 1980s, through the export of manufactured goods. This country has not had an economic recession since 1960. It is more of a resilient economy with a size of over $300 billion,” he said.

He added that Pakistan was one of the first countries to recognise China in 1950 and later during the 1960s China helped Pakistan in the construction of the Karakoram Highway.

“CPEC really does seem like the culmination of a much longer economic cooperation with China for Pakistan. So here is a long-term committed China-Pakistan relationship unlike what the USA is criticised of,” he said. “Still, there may be a lot more going on other than China’s ‘One Belt, One Road’ initiative outside Pakistan that is happening inside it, which is crucial to know for a big project of $60bn, that is CPEC.”

He added that despite a lot of concerns over CPEC’s motivation and liability, and Pakistan not known to complete most of its donor-funded agreements, the last four administrations in Pakistan have remained committed to it.

Still, he reminded that CPEC was only agreed in 2015 so we are still in its early stages and it is quite difficult to evaluate the success of big projects when different groups within it are after different things.

“The big infrastructure projects such as the energy projects, highways and railways are still in their development stages,” he said. “Big infrastructure projects can help economic growth with predictable as well as unpredictable outcomes.”

Then he questioned whether the economies of western China and Pakistan were complementing each other or competing with each other? “The more complementary they are the more potential there is for economic gains,” he said. “But if they are competitive … they don’t seem to promise economic gains,” he said.

“CPEC would make transport lines more effective, naturally with shorter routes also being created for greater efficiency so exporters in China will find it easier to send out their goods while using Pakistan as a transport link. China sees CPEC not really as a commitment to industry but a way of creating a free market where exports from China will see a surge while exports from Pakistan will be stagnated,” suggested Dr McCartney. Still, he said, though he was pessimistic about CPEC, he felt optimistic about Pakistan.

“Because CPEC will have a positive effect on Pakistan, better than the IMF programmes could do. And although the financial impacts of CPEC are still not very clear, China’s commitment to creating trade routes is, which may also help Pakistan in the long term,” he concluded.

CPEC’s effects on Pakistan’s economy analysed, from The News International.

The China-Pakistan Economic Corridor (CPEC) will have a positive effect on Pakistan but certainly not a transformative one,

These views were expressed by Dr Matthew McCartney, associate professor of political economy and human development in South Asia, Oxford School of Global and Area Studies, University of Oxford, UK, while addressing the members of the Pakistan Institute of International Affairs (PIIA) and the media on Saturday evening.

He said one of the reasons for this was that the economies of Pakistan and China were not complementary. He said that the economies of China and Pakistan looked more competitive than complementary and the textile industry in Sinkiang which was highly advanced would capture the Pakistani market in no time.

McCartney said China was viewing CPEC not as a means to economic development but as a means to free trade. He also talked of Pakistan’s widening trade deficit with China.

He said he refused to believe that Pakistan was a failed state or a failed economy. By the 1990s, he said, 80 per cent of Pakistan’s exports were manufactured goods. He said:

Pakistan is a highly resilient and stable economy, maintaining an average growth rate of five per cent.

There had been no lost decade. According to the World Bank, he said, Pakistan had not faced a recession since after 1960. The GDP, he said, had been recorded at $320 billion.

The first trade accord between China and Pakistan was in 1963. CPEC, he said, represented a long cooperation between Pakistan and China. He said that lots of concerns had been voiced about CPEC, but Pakistan had signed 12 agreements with the IMF of which only one had been implemented.

“One of the problems is that many CPEC projects are being implemented in places which are marked by instability, like Balochistan,” he said. Another problem, McCartney said, was that while many projects had been completed, communications systems were still to take off.

Comparing the two countries, he said Shanghai had the world’s largest metro system. He illustrated the communication systems through video slides and one of the slides was that of the railway train in the Indo-Pak subcontinent after 1854, which was built by the British for the transportation of materials and produce which benefited manufacturing in the UK only. He also showed a photo of Japan’s bullet train which was instrumental in spurring trade and commerce in Japan and north Asia. The talk was followed by an animated question-answer session. One of the questioners strongly asserted that what really was central to Pakistan’s economic woes was not CPEC but the Washington DC-based IMF.

2 Comments

Filed under CPEC, Discussion, Pakistan, Pakistan Horizon, Politics

2 responses to “‘China sees CPEC as a way of creating free market’ says leading specialist

  1. Pingback: Video from PIIA event on CPEC | PIIA Library Blog

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