At least spare the Chinese

To set the record straight, here is the response to major allegations on Chinese investment circling in the media

On August 23, nine days into the PTI and PAT protests, I wrote an article titled “The foreign side of the Long March” arguing that whether consciously or not, damaging the China-Pakistan economic cooperation was one of the major targets of the PTI and PAT protests. Several readers mocked and called it an outrageous notion, but time vindicated my argument. In less than three weeks, PTI leaders who were out on the streets for ‘electoral reforms’, somehow (possibly through planning) involved the Chinese in our political mess and appeared bent upon destroying China-Pakistan economic cooperation, while wheeling massive propaganda to malign the leadership and economic relations between the two countries. As suspected, the cancellation of the Chinese president’s visit was announced, projects were delayed and Pakistan faced international embarrassment that Imran Khan somehow took as a victory for the PTI.

Like almost every other allegation that has come out of the container, no evidence has yet been provided on the massive corruption or fraud in the China-Pakistan economic cooperation programme. To set the record straight, following is the response to major allegations that have been circling in the media.

Allegation 1 — it’s a loan not an investment: China is investing $34 billion in Pakistan through its private sector and state-owned banks. The idea that this is a loan is nothing but rumours.

Allegation 2 — amendment to procurement rules: due to security issues and political instability most foreign investors have already blacklisted Pakistan. Some economic partners like China and Middle Eastern countries that are still interested in investment need to be facilitated in order to bring in investment that can balance payments. It is for this reason that the government has applied special procurement rules.

Allegation 3 — no international bidding: according to the rules of the World Trade Organisation, countries having mutual Most Favoured Nation statuses enjoy the liberty of giving projects to each other without International Competitive Bidding in order to strengthen economic ties. Plus, economic partners usually give waivers in International Competitive Bidding on developmental projects. This is a common practice.

Allegation 4 — revised upfront tariffs for coal projects: due to lack of private investment and foreign direct investment in coal-related projects and in order to mobilise the unexplored reserves of coal in Pakistan, the upfront tariffs on coal projects were increased to facilitate investment in order to eradicate the energy crisis situation and to attract investment in Pakistan — a win-win economic move.

Allegations 5 — dumping of old Chinese coal plants: China is not dumping its coal plants. Only Beijing will be a coal-free zone. The rest of the Chinese coal plants will continue to operate as in the past. Furthermore, even if it were true, this is a common practice. When a developed country dumps its old technology in a less developed country, it is called comparative advantage, but in this case, it’s not that. Upholstering of old plants from China and transporting them to Pakistan and then reassembling them here will cost China a fortune. Transporting new parts or manufacturing parts to Pakistan will cost China less. Lastly, China has to call off coal plants at home by 2020 and these projects that are signed between Pakistan and China will start way before that — so dumping of old Chinese plants is improbable.

In the midst of the current political crisis where media, intellectuals and all the institutions are playing party politics by choosing sides, it has become rather difficult to separate propaganda from facts. It must be emphasised that in this internal war for power, protestors should at least not malign or defame Pakistan’s strategic partners like China or Turkey. Chinese investment can prove to be a game-changer for Pakistan’s sick economy and allow it to be a strong regional actor. Let’s at least not shoot ourselves in the foot and destroy whatever little we have.

Published in The Express Tribune, October 4^th, 2014.

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