Counting on China

Did Prime Minister Nawaz Sharif actually ‘secure’ $42 billion worth of investment from China? If newspaper reports are to be believed, Nawaz has worked the biggest economic miracle in the country’s history: after all, the ‘pledged’ investment constitutes nearly 18 per cent of the total size of Pakistan’s economy.

But a quick read beyond headlines reveals that the figure is calculated on the basis of 19 non-binding agreements and memoranda of understanding that the two sides signed during Nawaz’s two-day visit to Beijing. So all the goodwill and benevolence from our Chinese brethren aside, one can safely say that there’s still many a slip ‘twixt cup and lip. Moreover, there has been no mention of the timeframe for the expected Chinese investment.

Let us examine how plausible the $42 billion figure sounds after taking into consideration the FDI inflows in the recent past. According to Pakistan’s Board of Investment, net FDI inflows from China since 2007-08 equal $869.2 million — million, with an ‘m’. It means the government wants the nation to expect FDI from China that is 48 times the investment that the neighbouring country has actually made in Pakistan during the last seven years and three months.

FDI in Pakistan stood at a meagre $1.6 billion in 2013-14 after increasing 12.7 per cent from the preceding fiscal year. No wonder the claim that FDI can increase from $1.6 billion to $42 billion, even over the next five to seven years sounds highly incredible.

It will not be out of place to refer to the Chinese president’s visit to New Delhi last month in which President Xi Jinping pledged $20 billion investment over the next five years. That China wants to invest in India about half the amount it intends to invest in Pakistan is puzzling. The enormous gap in the two figures brings their credibility under suspicion. After all, India’s rapidly growing economy is almost eight times bigger than Pakistan’s and will be overseen by a decidedly pro-business government at least for the next five years.

If FDI is an indicator of ‘friendship’ in global affairs, the United States is surely a better partner. Pakistan received FDI of $3.58 billion from the United States in the last seven years, which is four times higher than the FDI received from China over the same period.

Published in The Express Tribune, November 11^th, 2014.