CPEC — the inner vision

It has taken far too long for the details of the China-Pakistan Economic corridor to come into the public domain, and now that it has it is very much a mixture of good-ish news and news that is potentially uncomfortable for all manner of groups and entities associated with it. The Long-Term Plan (LTP) is that Chinese currency renminbi is to have a status at par with the US dollar, a goal very close to the Chinese heart as it seeks to internationalise its currency. The LTP also details the vulnerabilities and threats that have to be overcome by Pakistan, not the least of these being realignments in foreign policy by regional and global powers, particularly America. Also highlighted are deficiencies of governance and uneven regional development, both issues that are well-enough known and which the Chinese would like to see if not completely resolved then seriously addressed.

New terminology was introduced. CPEC is made up of core and radiation zones that make up ‘one belt, three axes and several passages’. How that will translate into the fractious provinces of Pakistan is yet unknown, lacking as they do the capacity to think and act beyond the purely local. Assuming that the known unknowns are resolved CPEC is going to be transformative, speeding up industrialisation and the urbanisation processes across the country.

Aside from Pakistan being told to sharpen up its act it is the decision regarding the renminbi that is going to be the long-term game changer as it reduces reliance on the almighty dollar. A range of financial instruments and processes are going to emerge over the next three years. The renminbi is to have a role at every level with investment banking and a Cross-Border Inter-Payment System that will facilitate the free flow of funds to name a few. All this will go largely unnoticed by many millions, but Pakistan has entered into a pact that is potentially Faustian if it is unable to make the reforms that the Chinese are saying have to happen for CPEC to reach its potential. We live in interesting times.

Published in The Express Tribune, December 20^th, 2017.

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