CPEC: Separating Facts From Fiction (Urdu)

[Riaz Haq]

Is China using China Pakistan Economic Corridor (CPEC) to colonize Pakistan just as the British East India company colonized India centuries earlier?

Will Pakistan be caught in a massive Chinese debt trap and eventually become China's colony? What are the terms of Chinese financing and investments in CPEC projects in Pakistan?

Are Pakistanis required to pay exorbitant interest rates on infrastructure loans and unreasonably high return on equity on power plant investments?

Is there an IBM-like organized campaign of fear, uncertainty and doubt (FUD) being waged by CPEC's detractors to convince Pakistanis that it's a zero sum game in which China's gain is Pakistan's loss?

Is there no possibility of win-win in CPEC for both China and Pakistan?

Azad Labon Ke Saath host Faraz Darvesh discusses these questions in Urdu with Riaz Haq (www.riazhaq.com)

https://youtu.be/YZzea9OsC2k

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Campaign of Fear, Uncertainty and Doubt Against CPEC

CPEC Financing: Is China Ripping Off Pakistan?

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Riaz Haq's YouTube Channel

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[Riaz Haq]

Xinhua Headlines: Economic corridor changes Pakistan's business, economic landscape
Source: Xinhua| 2018-06-08 13:35:15|Editor: Lu Hui

http://www.xinhuanet.com/english/2018-06/08/c_137239583.htm


ISLAMABAD, June 8 (Xinhua) -- Five years after its launch, the China-Pakistan Economic Corridor (CPEC) has achieved magnificent results that help lay a solid infrastructure foundation for Pakistan's economic development.

Under the long-term and systematic framework of CPEC, several projects in areas of energy, transportation infrastructure and port construction have been completed.
---

Pakistan's Ministry of Energy said that the completed CPEC power projects have brought a great change in the energy sector by bringing the power cut hours to zero form 12-14 hours a day in 70 percent of the country.

Two coal-fired power projects equipped with the latest state-of-the-art environment-friendly technology -- the 1,320-megawatt Sahiwal coal-fired power project in the country's Punjab and the Port Qasim coal-fired power plant with the same capacity in southern port city Karachi -- have already started production.

The two projects are expected to generate 18 billion KWh of electricity together annually, which can cater for the needs of eight million local families.

The CPEC power projects not only have eased daily lives of Pakistanis but are also creating hundreds of thousands of jobs by helping restart the industries that were closed due to power shortage.

Besides the coal-fired power plants, CPEC also provides new energy to Pakistan so as to diversify the country's energy sources to maintain its energy security. Part of the Quaid-e-Azam Solar Park is functional and three wind power farms are also supplying electricity in southern Sindh province, while two such projects will also start their commercial operations later this year.

Pakistan's Ministry of Planning, Development and Reforms said that energy projects under CPEC will double the energy-thirsty country's current capacity of electricity production after their completion.

Yasir Rehman, an anchor from the official Pakistan Television, said that the developed infrastructure under CPEC is bringing stimulus to the Pakistani economy, creating jobs and improving business by starting a constructive process.

"Uninterrupted power supply is helping industries increase production, creating an ideal atmosphere for Pakistan's economy," said Rehman, adding that with the functionalized Gwadar port, CPEC will benefit every common Pakistani.

Gwadar, the ending point of CPEC, which was once an ignored small sluggish fishing town located at the Arabian Sea in Pakistan's southwest Balochistan Province, is now witnessing a wave of development projects which are creating new opportunities for employment and business.

Gwadar port, with the fully functional port terminal, regular cargo service, free zone, business center, is a symbol of future development and prosperity of Pakistan.

According to China Overseas Ports Holding Company (COPHC), the port's operator, some 20 companies in different businesses have already joined the Gwadar free zone with direct investment of 3 billion Chinese yuan (over 460 million U.S. dollars).

Gwadar's local people are feeling the development impetus triggered by the rapidly developing port, construction of new roads, establishment and upgrading of educational institutions and hospitals, construction of a new international airport and installation of water purification plants.

Thousands of people, from laborers to businessmen, have migrated from across the country to Gwadar to grab emerging opportunities for business and employment since the launch of CPEC.

In the meantime, CPEC has also brought major improvements and overhauls to Pakistan's transportation infrastructure by upgrading and reconstructing already existing roads and building new superhighways.

[Riaz Haq]

“392-Km $2.89 billion M5 #motorway completion is a milestone for #CPEC, the $62 billion flagship of China's Belt and Road Initiative (#BRI) that includes roads, railways, power plants, ports seeking to link #China with #Pakistan” https://worldview.stratfor.com/situation-report/china-pakistan-key-... via @Stratfor Worldview

What Happened: The China-Pakistan Economic Corridor's (CPEC) M5 motorway connecting Sukkur with Multan has been completed two weeks ahead of schedule, according to a July 24 Xinhua report.

Why It Matters: The motorway's completion is marking a milestone for CPEC, the $62 billion flagship initiative of China's Belt and Road Initiative that includes roads, railways, power plants and ports seeking to link western China's Xinjiang province with Pakistan.

Background: The 392-kilometer project is part of the Peshawar-Karachi Motorway, was completed within three years at the cost of $2.89 billion and is set to open for traffic in August.

[Riaz Haq]

Senior Pak official Dr Safdar Sohail: #CPEC long-term plan stunting for #Pakistan. Political elites and few bureaucrats channelizing CPEC #investments into such ventures where the short- term #benefits are personalized and long-term #risks are socialized. https://www.thenews.com.pk/print/627175-cpec-long-term-plan-stuntin...

Dr Safdar Sohail, Special Secretary Cabinet Division, was the first convener of the Joint Working Group on Industrial Cooperation when the CPEC was conceived and materialized into billions of dollar projects.

He also disclosed that both sides decided to establish Industry CooperationFund but that was never materialized. Dr Safdar remained affiliated with the CPEC at different positions in the past. He was the lead negotiator on CPEC Long Term Plan and then served as the founding Executive Director of CPEC Center of Excellence.

He made these bold and blunt remarks during a one-day dialogue on industrial cooperation under the CPEC and SEZs framework arranged by the Board of Investment here. Dr Safdar said he was using the harsh word of “stunting” for the CPEC Long Term Plan because it failed to achieve the strategic institutional thickening.

He said corporations on both sides joined hands with the help of some political elites and a handful of bureaucrats, channelizing their investments into such ventures where the short- term benefits were personalized and long-term risks were socialized.

Dr Safdar further said the titled CPEC LTP agreed in November 2017 did not lend itself to any kind of 'mutually constitutive' development alliance. “This 'aspirational plan’ actually is an amalgamation of old China-Pakistan Cooperation Agreement, LTP Outline MoU and Draft Production Capacity MoU 2015, leaving Chinese and Pakistani LTP aside” he added.

“It was a bad luck for the LTP process that the mid-level officials of NDRC coordinating the Early Harvest Program (EHP) had also taken in their hands to conclude the LTP. They were somehow averse to accepting any long-term commitments with Pakistan, he added.

Now, he said both sides had the new terms of second phase, without clearly speaking what the first phase was and without evaluating the performance of the first phase under the CPEC.

For way forward, he suggested that there was a need to create conditions for a reset of CPEC starting with the vision and goals, setting new priorities and new framework of a Long Term Strategic Economic Partnership between Pakistan and China.

Without a major upgradation of governance capacity, he said the chances of optimally benefitting from the CPEC would continue to be slim. But, CPEC could not wait for an overhaul of the whole governance apparatus. Therefore, there is a need to go for a selective institutional thickening both at the federal and local level which has a demonstrated capacity of being effective, he added.

For industrial development, he suggested enhancing governance capacity of trade and investment officers, aligning Development Policies and internal policy reform agenda with CPEC by building industrial infrastructure and upgrading Regulatory and Policy Support System e.g. early establishment of already approved Exim Bank and Land Port Authority of Pakistan, adopting a strategic Industrial Policy; choosing champions but also defending legitimate interests of the local industry, upgrading the Business Environment, reducing litigations, frauds, managing land issues, security, enhance ease of doing business, preparing for bigger inflows of Chinese aid, re-socializing Pakistani firms and policy community towards China and overcoming synergy deficit among government ministries through greater collaborative efforts.

[Riaz Haq]

#China-#Pakistan Economic Corridor #CPEC to be enhanced in 2nd phase. #Industrial development, #agriculture , #food security, #science and #technology , and #tourism will be major sectors in this phase, according to Gen Asim Saleem Bajwa. | The Star Online

https://www.thestar.com.my/news/regional/2020/04/10/china-pakistan-...

The China-Pakistan Economic Corridor (CPEC) is making steady progress, and its scope will be further enhanced in the second phase, the chairman of the CPEC Authority in Pakistan said.

The industrial development, agriculture, food security, science and technology, and tourism will be the major sectors in the second phase of the multi-billion-dollar project, Chairman Asim Saleem Bajwa said in a tweet on Wednesday.

Many projects focusing on infrastructure and energy sectors in the first phase of CPEC have been completed and are already operational, and work on the second phase is underway.

Talking to Xinhua, Vaqar Ahmed, joint executive director at the Sustainable Development Policy Institute, an Islamabad-based think tank, said the foreign direct investment by Chinese companies in the special economic zones under CPEC, is expected to be the major contributor to the uplift of Pakistan's economy in the post COVID-19 scenario.

The process of formation of joint ventures between the private sectors of the both countries has already been initiated, and will get a further boost when things got back to normal after the disease is defeated.

[Riaz Haq]

The #Chinese ‘Debt Trap’ Is a Myth. #SriLankan Writer Michael Ondaatje says “In Sri Lanka a well-told lie is worth a thousand facts.” And the debt-trap narrative is just that: a lie, and a powerful one. #Hambantota #CPEC #SriLanka #Pakistan #China https://www.theatlantic.com/international/archive/2021/02/china-deb...

Seen this way, China’s internationalization—as laid out in programs such as the Belt and Road Initiative—is not simply a pursuit of geopolitical influence but also, in some tellings, a weapon. Once a country is weighed down by Chinese loans, like a hapless gambler who borrows from the Mafia, it is Beijing’s puppet and in danger of losing a limb.

The prime example of this is the Sri Lankan port of Hambantota. As the story goes, Beijing pushed Sri Lanka into borrowing money from Chinese banks to pay for the project, which had no prospect of commercial success. Onerous terms and feeble revenues eventually pushed Sri Lanka into default, at which point Beijing demanded the port as collateral, forcing the Sri Lankan government to surrender control to a Chinese firm.

The Trump administration pointed to Hambantota to warn of China’s strategic use of debt: In 2018, former Vice President Mike Pence called it “debt-trap diplomacy”—a phrase he used through the last days of the administration—and evidence of China’s military ambitions. Last year, erstwhile Attorney General William Barr raised the case to argue that Beijing is “loading poor countries up with debt, refusing to renegotiate terms, and then taking control of the infrastructure itself.”

As Michael Ondaatje, one of Sri Lanka’s greatest chroniclers, once said, “In Sri Lanka a well-told lie is worth a thousand facts.” And the debt-trap narrative is just that: a lie, and a powerful one.

Our research shows that Chinese banks are willing to restructure the terms of existing loans and have never actually seized an asset from any country, much less the port of Hambantota. A Chinese company’s acquisition of a majority stake in the port was a cautionary tale, but it’s not the one we’ve often heard. With a new administration in Washington, the truth about the widely, perhaps willfully, misunderstood case of Hambantota Port is long overdue.

The city of Hambantota lies at the southern tip of Sri Lanka, a few nautical miles from the busy Indian Ocean shipping lane that accounts for nearly all of the ocean-borne trade between Asia and Europe, and more than 80 percent of ocean-borne global trade. When a Chinese firm snagged the contract to build the city’s port, it was stepping into an ongoing Western competition, though one the United States had largely abandoned.

It was the Canadian International Development Agency—not China—that financed Canada’s leading engineering and construction firm, SNC-Lavalin, to carry out a feasibility study for the port. We obtained more than 1,000 pages of documents detailing this effort through a Freedom of Information Act request. The study, concluded in 2003, confirmed that building the port at Hambantota was feasible, and supporting documents show that the Canadians’ greatest fear was losing the project to European competitors. SNC-Lavalin recommended that it be undertaken through a joint-venture agreement between the Sri Lanka Ports Authority (SLPA) and a “private consortium” on a build-own-operate-transfer basis, a type of project in which a single company receives a contract to undertake all the steps required to get such a port up and running, and then gets to operate it when it is.

The Canadian project failed to move forward, mostly because of the vicissitudes of Sri Lankan politics. But the plan to build a port in Hambantota gained traction during the rule of the Rajapaksas—Mahinda Rajapaksa, who served as president from 2005 through 2015, and his brother Gotabaya, the current president and former minister of defense—who grew up in Hambantota. They promised to bring big ships to the region, a call that gained urgency after the devastating 2004 tsunami pulverized Sri Lanka’s coast and the local economy.

[Riaz Haq]

Phase-II of CPEC, flagship BRI project, much broader in scope: Pakistan Ambassador to China
Phase-II much broader in scope: Ambassador


https://www.globaltimes.cn/page/202201/1246043.shtml


GT: The first brick of the CPEC was laid in 2013, it has been nine years, can you comment on the current status of CPEC construction efforts? Tackling the energy shortage was frequently mentioned in the earlier years of the CPEC, how is the situation now?

Haque: The CPEC marks a new phase in Pakistan-China relations by placing economic cooperation and connectivity at the center of bilateral agenda. Being the flagship project of the Belt and Road Initiative (BRI), it aims to enhance connectivity and trade linkages between Pakistan, China and the region through a network of roads, rail, fiber optic, energy pipelines, industrial clusters and Special Economic Zones.

In its first phase, the CPEC has helped us develop major infrastructure and address our essential energy needs. The energy projects which have already been completed include 1,320 megaWatt (MW) capacity coal-fired power plants in Sahiwal (Punjab), Port Qasim (Karachi) and Hub (Balochistan); 660MW Engro Thar coal power project; 1,000MW Quaid-e-Azam Solar Park in Bahawalpur (400MW project is complete while 600MW is under-implementation), and some smaller wind & solar energy projects. A mega, 878-kilometer long, Matiari to Lahore ±660 KV HVDC Transmission Line project has also been completed with the capacity to evacuate 4,000 MW electricity.

It has also upgraded Pakistan's national and international highway network to provide more reliable Pakistan-China connectivity across the Karakoram Mountains and smoother inland communications. The CPEC investment and its spin-off effects have also generated thousands of jobs.

GT: How do you see the current challenges and opportunities facing the CPEC in 2022? What's there to be built in the second phase?

Haque: It is a matter of great satisfaction that despite the challenges posed by COVID-19 pandemic in the last two years, the CPEC cooperation and work on all projects continued unhindered. The recently held 10th meeting of the Joint Cooperation Committee reviewed wide-ranging cooperation under the CPEC framework and identified more areas of cooperation including establishment of a Joint Working Group on Information Technology and Industry, which is expected to support high-quality development of the CPEC as envisioned by the leadership of the two countries.

While the first phase of CPEC was mainly focused on infrastructure and energy projects to cater to the immediate needs, the high-quality CPEC phase-II is much broader in scope and focuses on industrial relocation, agricultural modernization, science and technology cooperation, job creation and our people's socio-economic well-being. We are also making rapid progress on the development of the Gwadar Port and Free Trade Zone, which would promote regional connectivity and economic integration.

GT: What is the current level of third-party participation in the construction of the CPEC?

Haque: As the CPEC aims to promote regional integration and win-win cooperation, Pakistan and China have agreed to welcome and encourage high-quality investments and introduction of advanced technologies and expertise in the CPEC from third-party partners who are ready to work with us for common development.

The two countries are jointly working to finalize a mechanism for third-party cooperation under the CPEC framework before formally processing such requests.



GT: Regional cooperation is a key word for 2022 and BRI construction is also progressing rapidly. How do you see Pakistan's and CPEC's role in this direction?

Haque: Pakistan is one of the earliest supporters and participants of the BRI. We emphatically endorse the spirit and philosophy of the BRI, which seeks to transcend national boundaries and lay bridges for a win-win cooperation and closer economic integration for a shared future.

[Riaz Haq]

ADB study stresses economic corridor development to transform Pakistan's economy

https://www.dawn.com/news/1672882


https://www.adb.org/sites/default/files/publication/768396/economic...

Pakistan has the potential of becoming a hub of economic activity for Central, South and West Asian countries if it follows the model of economic corridor development (ECD), the Asian Development Bank said in a study released on Wednesday.

The ADB study, titled "Economic Corridor Development in Pakistan: Concept, Framework, and Case Studies", examined how Pakistan could address economic challenges through ECD.

In the foreword, ADB Central and West Asia Department Director General Eugene Zhukov noted that Pakistan had not yet been able to attain a sustained growth path "to move beyond its historic lacklustre and stop-and-go pattern, characterised by 'booms and busts' every three to four years".

"Through market reforms, Pakistan needs to transform its economy into an export-led growth trajectory. In addition to improving the economy’s competitiveness and productivity with a vibrant private sector, it is critical to attracting domestic and foreign investments to support this transformation," he said.


The official went on to say that Pakistan had already adopted and implemented an ECD-focused strategy as part of its core development and growth framework.

"ECD can be one of the most credible ways to help the government achieve its socio-economic objectives of reaching the upper-middle-income status by 2025," Zhukov said.

However, he cautioned that private sector development and a fair and efficient tax system were also required for transforming the economy to export-led growth.

Defining ECD, the study said that it aimed to promote economic growth by connecting different economic agents along defined geographic areas.

When implemented successfully, ECD supports economies of scale and scope and induces economic transformation and diversification through foreign direct investment.

"By enhancing domestic connectivity and linking lagging regions [including secondary cities] with urban growth centres, ECD can help Pakistan become a hub of economic activity for Central, South, and West Asian countries," the study said.

It stated that the country could "revitalise" its economic growth through facilitating economic centres by bolstering them with an efficient transport network based on "robust infrastructure and supported by a business-enabling policy framework".

However, it pointed out that Pakistan currently lacked the administrative machinery for effectively managing ECD.

"Its complex tax administration and compliance requirements impede growth and expansion of private investment, project management and implementation are weak, and a coherent regulatory framework for land use and urban development is lacking."

The study proposed several recommendations which could enable Pakistan to tackle these challenges:

Empowering a central corridor planning and development agency to oversee the overall development and management of ECD.
Strengthening an overall policy framework for ECD, including streamlining policies for transport, logistics, public-private partnerships, land use, zoning regulations, business regulatory framework and taxation regimes.
Providing institutional support for skills development to align labour force skills with industry needs.
Link current industrial clusters and urban areas with new industrial hubs and urban centres through infrastructure networks.
Seeking ways to channel partial resources from overseas Pakistanis into profitable investment ventures to fund ECD-related projects.
The study also identified four routes that could be used for a pilot ECD programme: M4 Motorway linking Faisalabad and Multan, N70 (national highway) connecting Multan and Killa Saifullah, N50 (national highway) linking Dera Ismail Khan and Kachlak, and the Hazara Motorway (E35 Expressway) from Islamabad to Mansehra.

[Riaz Haq]

ADB study stresses economic corridor development to transform Pakistan's economy

https://www.dawn.com/news/1672882


https://www.adb.org/sites/default/files/publication/768396/economic...


Explaining the rationale behind selecting the routes, the study said: "[They] offer real untapped economic potential with opportunities to diversify; good development synergy for linking production networks especially small and medium-sized enterprises with markets and other economic agents; close links to the CPEC (China-Pakistan Economic Corridor) and Carec (Central Asia Regional Economic Cooperation) routes; and favourable prospects for connecting and realising the economic potential of underdeveloped regions in Balochistan and Khyber Pakhtunkhwa."

Maximising CPEC benefits
The study also touched upon CPEC and said that it could pull off a number of economic objectives if it was implemented successfully.

However, it cautioned that CPEC alone could not improve the economy and would need to be supported by structural reforms to unleash its true potential.

The ADB report suggested four policy recommendations to fully benefit from CPEC.

Undertaking structural reforms to facilitate private sector development.
Broadening the tax base to make use of the country's tax revenue potential and improve fairness of tax collection.
Utilising transport infrastructure under CPEC to maximise investment return and turn it into a multilateral initiative.
Expediting development of nine special economic zones planned along CPEC routes.

[Riaz Haq]

CPEC Results According to Wang Wenbin of China

https://twitter.com/bilalgilani/status/1677391745112477696?s=20

Bilal I Gilani
@bilalgilani
CPEC projects are creating 192,000 jobs, generating 6,000MW of power, building 510 km (316 miles) of highways, and expanding the national transmission network by 886 km (550 miles),” Foreign Ministry spokesman Wang Wenbin told reporters in Beijing."


Associated Press of Pakistan: On July 5, Prime Minister Shahbaz Sharif while addressing a ceremony to mark a decade of signing of the China-Pakistan Economic Corridor (CPEC), said that CPEC has been playing a key role in transforming Pakistan’s economic landscape. He also said that the mega project helped Pakistan progress in the region and beyond. What is your response?

Wang Wenbin: The China-Pakistan Economic Corridor (CPEC) is a signature project of China-Pakistan cooperation in the new era, and an important project under the Belt and Road Initiative. This year marks the 10th anniversary of the launch of CPEC. After ten years of development, a “1+4” cooperation layout has been formed, with the CPEC at the center and Gwadar Port, transport infrastructure, energy and industrial cooperation being the four key areas. Projects under CPEC are flourishing all across Pakistan, attracting USD 25.4 billion of direct investment, creating 192,000 jobs, producing 6,000 megawatts of electric power, building 510 kilometers of highways and adding 886 kilometers to the core national transmission network. CPEC has made tangible contribution to the national development of Pakistan and connectivity in the region. China and Pakistan have also explored new areas for cooperation under the framework of CPEC, creating new highlights in cooperation on agriculture, science and technology, telecommunication and people’s wellbeing.

China stands ready to work with Pakistan to build on the past achievements and follow the guidance of the important common understandings between the leaders of the two countries on promoting high-quality development of CPEC to boost the development of China and Pakistan and the region and bring more benefits to the people of all countries.

https://www.fmprc.gov.cn/eng/xwfw_665399/s2510_665401/2511_665403/2...

[Riaz Haq]

The mega undertaking (China-Pakistan Economic Corridor or CPEC) has created nearly 200,000 direct local jobs, built more than 1,400 kilometers (870 miles) of highways and roads, and added 8,000 megawatts of electricity to the national grid, ending years of blackouts caused by power outages in the country of 230 million people.


https://www.voanews.com/a/top-china-official-visits-pakistan-markin...


Chinese Foreign Ministry spokesman Wang Wenbin told reporters in Beijing earlier this month that CPEC projects "are flourishing all across Pakistan," making a "tangible contribution" to the national development of the country and to regional connectivity.

But critics say many projects have suffered delays, including several much-touted industrial zones that were supposed to help Pakistan enhance its exports to earn much-needed foreign exchange.

The country's declining dollar reserves have prevented Islamabad from paying Chinese power producers, leading to strains in many ties.

Pakistan owes more than $1.26 billion (350 billion rupees) to Chinese power plants. The amount keeps growing, and China has been reluctant to defer or restructure the payment and CPEC debts. All the Chinese loans – both government and commercial banks – makeup nearly 30% of Islamabad's external debt.

Some critics blame CPEC investments for contributing to Pakistan's economic troubles. The government fended off the risk of an imminent default by securing a short-term $3 billion International Monetary Fund bailout agreement this month.

Security threats to its citizens and interests in Pakistan have also been a cause of concern for China. Militant attacks have killed several Chinese nationals in recent years, prompting Beijing to press Islamabad to ensure security measures for CPEC projects.

Diplomatic sources told VOA that China has lately directed its diplomats and citizens working on CPEC programs to strictly limit their movements and avoid visiting certain Pakistani cities for security reasons.

"They [Chinese] believe this security issue is becoming an impediment in taking CPEC forward," Senator Mushahid Hussain, the chairman of the defense committee of the upper house of the Pakistani parliament, told VOA in an interview earlier this month.

"Recurring expressions of concern about the safety and security of Chinese citizens and investors in Pakistan by top Chinese leaders indicate that Pakistan's promises of 'foolproof security' for Chinese working in Pakistan have yet to be fulfilled," said Hussain, who represents Prime Minister Shehbaz Sharif's ruling party in the Senate.