Impact of Covid-19 on CPEC

COVID-19 pandemic has spread to more than200 countries and regions causing severe shocks in the whole world. Even though the situation in Pakistan is not that worse as in some countries for the time-being, as the confirmed cases are on the rise, the social and economic uncertainties caused by the pandemic, especially the lockdown across the country, have been increasing.

Along with the growing worries across the board, people from all walks of life have been asking questions about the likely impact of COVID-19 on China Pakistan Economic Corridor (CPEC).

As this writer mentioned in his previous articles, the COVID-19 pandemic is a common threat and enemy of human beings and its effect is multidimensional. Because there is no vaccine and effective medicine till now, the only and most effective way to deal with it is cutting off the transmission channels by practicing social distance - isolation.

This practice has so far brought a vast majority of the world to a standstill. The effects are obvious in manufacturing, service and foreign trade sectors. Worldwide, the production chains, supply chains and value chains are all incurring a severe damage. Furthermore, labour supply has been also witnessing a worsening situation.

There3 is the need to shed some light on the achievements of CPEC. The cooperation and implementation of CPEC enjoys the support of Pakistani people, serves their well-being and has won high respect of our two countries.

CPEC construction has achieved fruitful results over the past years with a score of projects completed already, and another score under construction. It's worthy to mention energy sector here especially.

Nine energy projects have been put into commercial operation with a total installed capacity of 5320MW. The actual power generation of CPEC projects was 17.728 billion kWh during Pakistan's fiscal year 2018-19, accounting for 14.5% of the total power generation of Pakistan's national power grid.

In the meantime, CPEC has created 75,000 jobs directly and 200,000 jobs indirectly for Pakistani people, enabling Pakistan's percapita income to increase by 23%. More than 100 small and medium-sized enterprises have been involved in construction of CPEC projects creating over 100,000 jobs.

According to Pakistan government's analysis, CPEC is expected to create 2.3 million jobs in Pakistan from 2015 to 2030, and fuel the average annual economic growth rate up by 2~2.5%. In a word, the signal project has brought huge changes, benefits and well being to Pakistan and her people. There are some synonyms for CPEC - change maker, fortune maker, king maker, etc.

Under the current circumstance of fighting a war against COVID-19 worldwide, frankly speaking, no sector can escape from the effects, so does CPEC. The main possible effects are as follows.

Firstly, the risk of contraction of the virus may impact negatively on the steady supply of the work force for CPEC projects. Shielding the work force at every CPEC project from contraction of the virus forms the top priority at present.

Along with the rise of confirmed cases, in case some cities or regions become the epicenter and large number of people are infected, these will surely add more pressures to the management of each project.

If there occurs infection, tough measures of isolation as well as prevention will be applied which will impact in varying degree on the implementation of the projects based on how many people will be affected. This may lead to the risk of reduction of work force.

Some replacements may not materialise and some expired visas and passports may not be renewed in due course. On the other hand, the local employees form the bulk of the work force of the projects, there is a high risk that the current status quo may not be maintained and replacements may be delayed. These will more or less impact the operation and implementation of the projects.

Ever since the outbreak of the epidemic early this year, every project has been taking stringent preventive measures with strong support rendered by the Pakistan Federal and Provincial governments together with the Special Protection Forces.

The Chinese side has been taking strictest measures to screen and check the inbound personnel from China, and so far there is not a single imported case from China. And Zero contraction target has occurred and maintained in all projects till now. And all the projects are operating smoothly according to schedule.

Secondly, the import and shipment of the equipment, spare parts, materials, etc., may not be made on time and may affect the smooth operation, and cause delays in implementation of some projects. The lock-down of the cities and provinces, and closure of government and business offices may cause delays in clearance by the customs, handling and transporting of the relevant goods.

Thirdly, the pandemic may cause many legal issues based on force majeure. This may add more burdens to the relevant companies.

In short, the less the pandemic prolongs the smaller the effect on CPEC. If the pandemic prolongs a longer period of time, the bigger the effect will be. But one thing is clear and that is also the advantage Pakistan has, the quick recovery of China after her winning the preliminary battle against the pandemic.

According to the latest statistics, China's PMI in March hit 52% after it nosedived to 37% for the first two months. This indicates that China's economy has returned to the fast track of development.

China has been the biggest trading partner of Pakistan for five years in a row and the biggest investor in Pakistan for six consecutive years. Pakistan and CPEC projects will surely benefit a lot. Ever since the outbreak of the pandemic, China has been giving a big hand to Pakistan and we firmly believe that together we can win the battle against COVID-19. And the effects by COVID19 on CPEC will be manageable.

(The writer is China's consul-general based in Karachi)