A great opportunity

Chinese President Xi Jinping's visit last week was another milestone in Pak-China relations that remain unaffected by regime changes in either country. This trend manifests the immensely friendly feelings people in both countries have for each other. No matter what biased critics (like Hussain Haqqani) may say, Pak-China relations are an example of how neighbours must live together.
America's role of an aggressor taught China that economic co-operation and assistance, not invasion, is the way to lead the world. After becoming a republic in 1949, except for the 1962 border conflict with India and supporting the Vietnamese in the long Vietnam War, China neither engaged in conflicts with its neighbours nor invaded another country.
On the contrary, since 1983, it focused on collaborating with counties all over the world to modernise China's economy. By adopting this course and opening up its economy, China rapidly became an ever-bigger supplier of a vast variety of goods, at first to the to Third World economies, and then to the developed economies, and by 2030 may become the world's biggest economy.
Until the Chinese President's visit to Pakistan last week, China never signed so many (51) bilateral agreements nor committed such a huge amount ($46 billion) of investment in a foreign country in a single multi-faceted package during a Chinese President's visit. Besides strategic reasons, this gesture also manifests China's concern for and commitment to Pakistan and its people.
For Pakistan, this investment inflow is of paramount importance because it is being promised at a time when the country's risk-rating has skyrocketed due to concerns about internal security and political turmoil. It is therefore imperative for Pakistan to ensure by all means that the Chinese are assisted in completing the planned projects without any hindrance, and on time.
For the critics, it is important to note that, in the package of investments offered to Pakistan, the only projects wherein China has its own interest are the Gwadar Port and the China-Pakistan Economic Corridor (CPEC); all the other projects are the brainwork of Pakistani policymakers based on the priorities determined by them and the present government.
It is therefore important that the government discloses critical project-wise details including projects' location, task to be undertaken, amount of investment in equipment, materials and other costs, and the investment terms agreed with the Chinese government/investors, so that the critics don't get an opportunity to malign these investments by capitalising lack of clarity on these aspects.
This is imperative because not disclosing the terms of agreement, no matter how fair they may be, creates the impression that they are being withheld because they serve certain vested interests. In the past, many such agreements (the latest - LNG import from Qatar) became suspect because the government didn't clarify the terms on which these agreements were entered into.
Until now, the government hasn't disclosed the details of the 51 "agreements" signed during the Chinese President's visit. According to Bloomberg, under the agreements signed, $33.69bn will be invested in the energy sector, $5.9 billion in roads/highways, $3.69 billion in railways, $1.6 billion in mass transit in Lahore, $0.66 billion on the Gwadar Port, and $0.04 billion in fibre-optics projects.
These amounts add up to a total of $45.58 billion although Pakistani media reports have been quoting marginally different figures. But the bigger unclear issue is the number of documents signed and their nature, ie, the sort of investment commitment they reflect. In this context, the differences between official hints and media reports are pretty worrisome.
In the absence of official disclosures, you have to rely on the media. According to one such report, during the Chinese President's visit, 8 plaques were unveiled, ground-breaking of 5 power projects took place, and the documents executed included 4 financing agreements, 13 Memoranda of Understanding (MoU), 19 other agreements, 6 protocols, 3 term sheets, and 4 exchanges of notes.
Based on this press report, compared to 51 (claimed by government sources) 39 documents were executed and all of them weren't agreements; 13 of them were MoUs. How correct are these facts is anybody's guess until details are disclosed by the government. Delaying the release of these details could also prove damaging in terms of diplomatic practices and conduct.
The major issue triggering controversies is the CPEC. While the government claims that baseless accusation are being made to politicise this key development project, the KPK Chief Minister has faulted the changes made in the original CPEC route which, according to him, will deprive KPK and Balochistan of the economic benefits that will accrue to the Punjab from the CPEC.
Planning Minister Ahsan Iqbal tried to clarify this issue by denying any changes being made to the route, and that several routes and alignments have been identified and will be built, but the one that can become operative immediately by using the existing infrastructure is being opened up first. However, he didn't give a timetable for building of these "alignments".
For the power sector, both countries finalised plans to add 10,400MW of power generation capacity through "early harvest" countrywide projects that will be completed by 2017-18, but together the generation capacities of the identified projects do not add up to 10,400MW. Besides these projects, adding another 6,645MW generation capacity is on the "actively promoted" list.
The proposed Chinese-financed coal-fired and nuclear electricity generation projects too have been criticised. While coal-fired projects are being criticised because China itself realises their adverse ecological effects and has decided to gradually close them, the Japanese experience with its nuclear power plants on the seashore worries experts about such plants being set up near Karachi.
While these worries need to be addressed, it is crucially important that Pakistan's bureaucracy comes up, as quickly as possible, with focused and accurate ground surveys and feasibility reports on all projects included in the investment package so that it is utilised fully and leads to optimum results. Let us not forget that gaps in Pakistan's infrastructure are its biggest bottleneck.
Besides increasing power generation capacity, the projects for cutting losses in the power distribution system, revival of Pakistan Railways' goods transportation capacity, and developing new special economic zones could lead to substantial economies for the industrial sector and lift its sliding competitiveness. Above all, it could create many new jobs, which is now imperative.
Finally, the biggest chunk of Chinese investment will go into Pakistan's power sector. To sustain investors' confidence, 'circular debt' (bulk thereof reflecting amounts due from state offices) must contract substantially. This won't be possible until the state ensures that its offices pay their power bills fully and on time. Will the debt-ridden state ensure that this happens? This remains a big question mark.