Blame The Chinese
Every Pakistani flag knows that friendship between Pakistan and China is the only answer. So what makes CPEC a game changer? Apparently! New industries will emerge, existing ones will close, exports will soar, Gwadar will become another Dubai, all debts will be paid off, jobs will be plentiful and the sun will shine forever.
These dreams will be shattered as Pakistan gallops toward default. CPEC was launched in 2013 and has spent $62 billion to date. But now highly indebted Pakistan is looking for loans to pay off older loans. Everyone who donates – and under all conditions – is very welcome. At stake are the “unbreakable bonds” of friendship between Pakistan and China.
According to the IMF, China holds about $30 billion of Pakistan’s total external debt of $126 billion. That is three times the debt to the IMF ($7.8 billion) and exceeds the combined World Bank and Asian Development Bank lending and blame the Chinese. So why is mighty China waiting for a green signal from the US-led IMF before providing aid? Shouldn’t he at least reschedule Pakistan’s debt? Or is it better to clean?
Let’s be honest: These are naive hopes. Chinese capitalism, like any other capitalism, is driven by profit, not philanthropy. In Marketing-101, a budding businessman learns how to sell water to a drowning man. Banking-101 tells you how to identify desperate debtors. Law-101 deals with relations with debtors.
Chinese companies, public or private, are like any other company. They are following their government’s directives to consider Pakistan a strategic ally and understand that Gwadar offers access to the warm waters of the Persian Gulf, the same waters that would have prompted the USSR to invade Afghanistan. But they move with caution; Pakistan is not the best place in the world to park its capital.
As a result, new companies are few and even these are not very technologically advanced. The Hub Factory produces excellent Hui Cheng beer. Elsewhere: A mobile phone assembly plant, car and shoe parts, a microfinance bank, blame the Chinese, etc. are produced here. Farmland was also purchased for the shipment of vegetables to the Chinese market.
Ah, but what about advanced technologies like nuclear technology? There is a 50-year history of Chinese nuclear aid to Pakistan, both overt and covert. Without them, Pakistan’s 1998 nuclear bomb and nuclear tests would not have happened. Nonetheless, the bomb contained a significant Pakistani element.
This does not apply to nuclear reactors! Bombs were technologically advanced until the 1960s, but not later. But reactors are complex beasts. The two Hualong HPR-1000 factories ($7 billion each), known as Kanupp-2 and Kanupp-3, have designed and manufactured all major components in China. The fuel also comes from China. The role of the PAEC is only supportive. Under Chinese supervision, it undertook the construction, installation, and operation of factories.
Cf. blame the Chinese involvement in Singapore, which like Pakistan is a former British colony. This island is 42 times smaller in terms of population and 1093 times smaller in terms of area. But last year FDI to Singapore was $92 billion compared to Pakistan’s $2 billion. Its economy attracts American and Chinese giants in semiconductor design and manufacturing, communications, robotics, fintech, business, professional services, and more.
These surprisingly large differences require an explanation.
First, Singapore is at peace while Pakistan is violent. Terrorism – a by-product of earlier official support for “jihadist” groups – is once again sweeping the country. Despite 10,000 special units protecting blame the Chinese workers in Pakistan, they live in fear.
A spate of outrageous lynchings – including the lynching of a factory manager in Sri Lanka – has heightened their concerns. In addition, there is cultural distance and a language barrier, which severely limits the mixing of Chinese and locals.
Second, Singapore’s laws are respected in word and spirit, while Pakistan’s laws must be broken. In this untrustworthy trading environment, clandestine transactions are just as common as legitimate transactions, and blame the Chinese. Because the opacity of CPEC transactions is justified by the need for national security, we cannot know the size of the bribes.
Third, Singapore has a hardworking, highly skilled, and flexible workforce. In the case of Pakistan, this is not the case. Hence the de facto exclusion of Pakistanis from the design and construction of large CPEC projects on Pakistani soil. Earlier promises have therefore crumbled.
CPEC was built around a fatally flawed premise. It was assumed that the infrastructure alone – roads, bridges, and electricity – would create growth and jobs. It’s like assuming that an abundance of water, soil, and fertilizer will produce a bountiful harvest blame the Chinese. But the most important input is the seed: human capital. And then something went wrong.
Surely Pakistan has as brilliant and talented people as anywhere else. But a dysfunctional education system provides industry with inferior human capital. As indoctrination has been promoted at the expense of knowledge and skills, we have become stuck in a sea of unemployed youth.
Sending 30,000 Pakistani students to China for higher education has not created human capital. I hear shocking stories from alumni who have returned with degrees in hand. Most Pakistani students in China would rather follow the system and take shortcuts than learn or excel.
Few but the most mediocre Chinese universities are adequately equipped in engineering and science. Of course, there are always glorious exceptions.
Fear and anger mount as the pitfalls of debt and comparisons with Sri Lanka are discussed. However, it needs rest so that the past madness does not repeat itself and blame the Chinese. The delusion that America was Pakistan’s most loyal friend – and that it provided for all its needs – eventually destroyed ties with its former “most loyal ally“.That shouldn’t have – shouldn’t have – happened.
blame the Chinese are probably to blame for shorting us: Most IPP transactions are considered fraudulent. Likewise tax exemptions for Chinese companies. Duty-free imports from China have put many local producers out of business. But it was our trumpeters who sold us the absurdity of CPEC as a Marshall Plan for Pakistan. Europe was ruined by the war, but Pakistan fell to its knees because of it.