A test of our economic diplomacy

China Pakistan Economic Corridor is essential part of OBOR and serves as a showcase given best relations enjoyed by two countries. Funding of 62B$ is by far the highest for any single country (Malaysia being second with 35B$). China unveiled the ambitious 'One Belt, One Road' (OBOR) initiative in 2013 covering continents of Asia, Europe and Africa through a network of roads, railways, pipelines, ports, airports, and telecommunications links. The project has two components; Silk Road Economic Belt (SREB) that would be established along the Eurasian land corridor from the Pacific coast to the Baltic Sea; also involving development of deep water ports infrastructure to link them to markets in four continents, and 21st century Maritime Silk Road designed from China's coast to Europe through the South China Sea and the Indian Ocean in one route, and from China's coast through the South China Sea to the South Pacific in the other.
Prime mover is the fact that China has more than 4 trillion foreign reserve holdings (some $3.5 trillion mostly in cash and in US and Japanese securities yielding low interest rates ever since global crisis), domestic over-capacity, rising costs, and environment and over exploitation depleting natural resources, domestic consumption & public investment, all exerting pressure on government for viable alternates. Hence scope of OBOR has rightly been bolstered by China's plan with thousand odd projects already in hand in 60 countries and number is increasing as is evident from agreements being signed during current OBOR forum. Chinese policy banks like EXIM and China Development Bank plan to lend 82 billion, 40 billion dollar by Silk Road Fund, 100 billion dollar by AIIB. Still, all this can't and should not discredit the benefits of OBOR to the countries participating in it due to overall economic benefits to trade and investment, communication, competitiveness and technology. After all epicenter of global economic activity has shifted to Asia and historic opportunity so provided has been spearheaded by China that deserves due credit for its bold initiatives.
OBOR and the CPEC have tremendous potential but face serious challenges too, starting from strategic factors of involvement of big powers such as the US and Japan collaborating with India, alternate forums, exploitation of territorial disputes on land and sea routes, huge spread and many nations involved. Even in Asia, issues of regional co-operation for economic integration can't be ignored either. FTA regime and institutional framework of co-operation with different frameworks, like ASEAN Political-Security Community Blueprint 2025 etc; with competing national interest has to be streamlined for success of OBOR and CPEC. Streamlining of efforts and taking people to confidence is of greater importance. Partnering countries are cautious about true benefits as most projects will be planned, designed and executed by Chinese enterprises, with limited outsourcing to local partners and that China wants avenues to explore governance of global financial structure, thus rendering OBOR not an altruistic project. Pakistan has a singular character of being non-controversial (except illogical issues raised by India which itself is participating in BCIM Corridor with China; thus negating its own stance on CPEC).
It goes without saying that economic corridors are a science now for having been developed the world over including many by China. The experience of local support and participatory economic initiatives had not been forthcoming in some countries in Africa, Latin America and & lately Asia. Small countries are talking of their national interest in access to Chinese markets, covering the risks of dumping of Chinese goods and depriving the locals of the trickle-down benefits of the OBOR including development of Special Economic Zones, unrealistic import concessions and hiring of manpower. Representative trade and investment bodies have already raised objections on such issues and it would be in the interest of CPEC to be as neutral as possible in carving a win-win success for larger China and a comparatively small but altruistic friendly Pakistan. From these perspectives, there will be a need for more supportive character of China for a sounding success of CPEC worth China-Pak mutual diplomatic and consistently outstanding bilateral relations.
In terms of our economic diplomacy, Pakistan for the first time in its history has been exposed to multiple and a different crossroad scenario. Therefore, despite limited choice Pakistan's prime objective at this critical juncture should be careful nurturing of relationship so as to muster requisite support from China, Central Asian States, Russia, Europe, Iran and Turkey to bolster multiple capabilities and strengthen our economic and manufacturing capacities for better management of projects. All nations must be weighing the pros and cons of associating with OBOR to decide on basis of supreme national interest and Pakistan should not be an exception in pursuing effective economic diplomacy.
There is a need to develop consensus-based corridors and make selection of very right kind of projects from amongst various countries who have expressed their interest in joining OBOR and particularly CPEC. Going by any other's choice for whatever reasons including FDI and in disregard of broad national interest, natural resource endowment and geo-strategic location will be a chronicle of wasted opportunities.
(The writer is an ex-Economic Minister in Embassy of Pakistan, Beijing China. He can be contacted at [email protected])