Trade volume between China and Pakistan, which stood at $4 billion in 2008, peaked to $15.6 billion in 2016-17. Pakistan’s exports to China were only $1.5 billion in the last fiscal year while imports amounted to $14 billion, according to Chinese statistics. Under first phase of the Free Trade Agreement (FTA), Pakistan gave duty concessions on 35% of tariff lines, which led to a huge influx of Chinese goods and many local industries could not survive. Under the second phase of FTA, China wants Pakistan to offer zero duties on 75% import tariff lines as a result of which FTA-II hasn’t been signed as yet because of strong opposition from businessmen across the country.
Businessmen fear dumping of Chinese goods under China-Pakistan Economic Corridor (CPEC). What they need to do is to reduce their dependence on government and learn how to compete in the international markets and add value to their products. Regarding CPEC, there are many apprehensions but one thing that should be understood is that CPEC is not for Pakistan only. The silver lining is that the project will also give access for Pakistan’s businesses to Central Asian markets.
The best thing the government could do to protect local interest is to promote joint ventures, meaning Chinese companies should have a local partner. Pakistan needs to find industries where China doesn’t want to get involved because of language barrier like IT and services.
In competition with China in goods manufacturing, Pakistan is not the only country that has lagged behind, even the US and India have not been able to compete with Beijing. This is further accentuated by the recent trade spat between the US and China where the main bone of contention was tariffs on automobiles and intellectual property rights. The Chinese economy is opening up and various opportunities are up for grab for those countries who wish to avail the opportunities under CPEC.
CPEC, a flagship project of One Belt and One Road Initiative (OBOR), will create new business opportunities for not only Pakistan but also other countries in South Asia and adjacent areas as it reshapes the regional economic landscape by shortening trade routes. China will launch new cooperation platforms, including the first China International Import Expo, as well as pilot zones for free trade, and development and cooperation zones. Priority would be given to major investment and foreign aid projects, to make sure that they deliver positive socioeconomic impacts, lead as flagship projects.
China will facilitate e-commerce through big data, cloud computing and artificial intelligence services to help Belt and Road countries develop digital economy and fit into economic globalization.The country would also work to promote the liberalization and facilitation of trade and investment along the Belt and Road, while carrying out major foreign aid projects including the Happy Home Projects, the Anti-Poverty Projects and the Health Recovery Projects.
More than 140 countries have participated in or responded to the initiative since it was proposed by China in 2013. In 2017, trade volume between China and countries along the Belt and Road amounted to 7.4 trillion yuan (about $1.2 trillion), surging 17.8 per cent year on year, outpacing the 14.2 per cent increase in China’s total foreign trade last year, according to data released by the National Bureau of Statistics.
Even on the diplomatic front, China always regards Pakistan as a priority. China and Pakistan are all-weather strategic cooperation partners and both the countries support each other on issues of core interest. The political impact of CPEC could best be gauged once it makes its complete landfall with increasing prosperity and improved lines of communication. There is no part of daily life that the OBOR project will not touch in Pakistan, and it presents the greatest set of opportunities since independence.