China Watch

​CHINA WATCH [MARCH 7-13] –  13,000 New Jobs

Summary:

China’s ambassador to Islamabad Sun Weidong has said that projects under CPEC have created 13,000 local jobs. Army Chief General Qamar Bajwa has assured that security forces were “fully prepared”to counter all the security challenges to projects of the CPEC and Chinese nationals living in Pakistan. An official of China’s Communist Party Ma Xiangwu has said that despite India’s “cleaner record compared to Pakistan” in the domain of nuclear proliferation, Pakistan should not be discriminated against. China’s provincial governments have shown increasing interest in President Xi Jinping’s ‘One Belt One Road’ (OBOR) initiative. A report by a brokerage house, Topline Securities, has reckoned that Pakistan will end up paying $90 billion to China over the time period of 30 years against the loan and investment portfolio worth $50 billion under the CPEC. Pakistan Army inducted Chinese-built Low to Medium Altitude Air Defence System (LOMADS) LY-80 in its air defence system.

13,000 Jobs:

China’s ambassador to Islamabad Sun Weidong has said that projects under CPEC has created 13,000 local jobs. He pointed out that these jobs were created as a result of 18 projects that were under construction. Weidong added that CPEC was ‘open and inclusive’ and other countries could also benefit from it. The creation of thousands of jobs like these is a good news for Pakistan’s economy which over the years has seen dwindling foreign direct investments and plunging exports. However, the current economic figures have shown that dependence on China can not only be a solution to Pakistan’s economic ailments but also part of the problem. Indeed, CPEC-related imports are so astronomical that the country’s trade deficit or the gap between exports has reached the record high of $20.2 billion.   

CPEC Projects’ Security:

Army Chief General Qamar Bajwa has assured that security forces were “fully prepared”to counter all the security challenges to projects of the CPEC and Chinese nationals living in Pakistan. He expressed his views on the occasion of a visit the army headquarters of the 15,000-man-newly-created Special Security Division (SSD) that has been created for the purpose of security of Chinese nationals and CPEC projects. The SSD consists of the nine army battalions (9,229) personnel) and six civil armed forces wings (4,502 personnel), raised at a cost of over Rs5 billion. The SSD has been earmarked one per cent of the total cost of CPEC projects. Despite the fact that Pakistan has taken the issue of security of CPEC and Chinese workers rather seriously, the challenge seems insurmountable so far. The sudden surge in terrorist attacks across the country during the last month that killed more than 100 people has exposed the limitations of Pakistan’s counter-extremism strategy and shown that there is much more needed to be done. 

China’s stance about India’s Nuclear Supplier Group (NSG) membership:

An official of China’s Communist Party Ma Xiangwu has said that despite India’s “cleaner record compared to Pakistan” in the domain of nuclear proliferation “[T]here should be no discrimination between the two” on the issue of NSG membership. He added that “India and Pakistan position on the issue is similar, if China can vote for India then why Pakistan cannot be voted in? Pakistan is a friend…It should also be given an opportunity to be voted in.” China has been reluctant to put its support behind the US and Indian efforts to grant the latter NSG membership. Such an approach has in effect hyphenated India with Pakistan on the issue of access to NSG market. Additionally, by putting Pakistan’s position on equal grounding vis-a-vis that of India, China does boost the standing of its ‘all-weather’ friend in nuclear proliferation regime.

Chinese provinces interested in OBOR

China’s provincial governments have shown increasing interest in President Xi Jinping’s ‘OBOR’ initiative. In fact, the provinces are trying their best to curry favour with the central government to get some role in this mega project. Delegates from different provinces trumpeted their support for OBOR initiative during the annual meeting of China’s parliament in Beijing this week. China has already started investing billion of dollars in CPEC which has been envisaged as the “flagship project” of OBOR. At global level, China’s effort of economic outreach to Asia, Europe and Africa through OBOR has a good scope. However, the slowing economy at domestic level in recent years might strain China’s ambitions in the future. 

Repayments for CPEC:  

A report by a brokerage house, Topline Securities, has reckoned that Pakistan will end up paying $90 billion to China over the time period of 30 years against the loan and investment portfolio worth $50 billion under the CPEC. The report has said that estimated return on these investment loans will be 40%. It said that “[A]verage annual repayment of CPEC will be $3 billion. {However, in medium term} between fiscal year 2020-25, it will range between $2.0- 5.3 billion with average payment of $3.7 billion.” The fiscal arrangements related to CPEC has been one of the core ares of concerns for economist analysts. Some decry the lack of transparency in financial terms and conditions of CPEC funding. Other analysts and experts – such as the International Monetary Fund – say that the outcomes of this multi-billion dollars project will be outweighed by the massive outflows of money to be payed for these loans. The two countries have yet ponder over this issue.

Miscellaneous:

Pakistan Army inducted Chinese-built LOMADS LY-80 in its air defence system. Spokesperson for Pakistan Foreign Office has said that CPEC will play the role of a catalyst for regional connectivity, prosperity and development. Inter Services Public Relations has said that Chinese and Turkish troops will participate in Pakistan Day parade later this month.

This report is written and compiled by Abdur Rehman Shah, Research Associate at the Centre for Research and Security Studies (CRSS), Islamabad.

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