CHINA WATCH [MARCH 21-28] – US Invited to CPEC

Summary:

One of China’s top power sector entrepreneurs has said that China’s interest in Pakistan’s energy sector was aimed at fostering sustainable development in Pakistan rather than merely gaining benefits for China. In order to ensure transparency in the multi-billion project, Pakistan and China have signed an agreement for holding joint audit of selected projects of the China-Pakistan Economic Corridor (CPEC). Pakistan’s ambassador to the US invited America to join the CPEC.

Local Industries:

One of China’s top power sector entrepreneurs, Wang Binghua, has said that China’s interest in Pakistan’s energy sector under the CPEC was aimed at fostering sustainable development in Pakistan rather than merely gaining benefits for China.[i] Mr Wang said that “We come to Pakistan not for the installation of our equipment and to gain profits. We pay more importance to improving the development of local high-end manufacturing industries so as to make the development sustainable.” Though China’s proposed $46-51 billion of investment in Pakistan under the CPEC has potential to trigger a sustainable economic development process in the country, such rosy statements cannot obviate the debate of winners and losers underpinning this arrangement. Fearing that they might suffer at the end of the day, Pakistan’s local industries have shown increasing reservations with regard to exemption of Chinese firms and products from import and sales tax.[ii] Futuristic calculations aside, China seems to have got rather favourable economic treatment under the CPEC.

Audit of CPEC projects:

In order to ensure transparency in the multi-billion project, Pakistan and China have signed an agreement for holding joint audit of the selected projects of the CPEC.[iii] The Auditor General of Pakistan Rana Asad Amin pointed out that such a Memorandum of Understanding (MoU) will enable Pakistani auditors to exchange their experiences with counterparts and would also pave the way for conducting joint audits. The two countries have already signed agreement to curb graft in CPEC-related projects. Whether such agreements and MoUs will really lead to increasing transparency in, and preempt any misuse of, the funding is anyone’s guess. On the one hand, deep opacity shrouds the details of CPEC projects, on the other, involvement of Pakistan’s political leadership in corruption scandals have raised serious questions in the minds of foreign investors.

US Invited to CPEC:

Pakistan’s ambassador to the US Aizaz Chaudry invited America to join the CPEC. While speaking at a US think-tank, Mr. Chaudry said that “[A] number of western countries have shown their interest in projects under CPEC and we want the United States to also make investment in the development schemes.”[iv] Any support of the CPEC project by the US would be a positive development but there are many reasons to believe it is not going to happen any time soon. First, America has been cautious and to an extent concerned about China’s growing global influence. Second, by joining or supporting this project, Washington will seriously weaken New Delhi’s assertions against CPEC. For both of these strategic reasons, Pakistan’s calls for doing the CPEC will fall on deaf ears in the US.

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

[i] APP. (2017, March 29). Hub power plant to generate 10,000 jobs, says Chinese entrepreneurs. Retrieved on April 4, 2017, from https://www.dawn.com/news/1323524/hub-power-plant-to-generate-10000-jobs-says-chinese-entrepreneur

[ii] Jorgic, Drazen. (2017, March 29). Some Pakistani power firms stuck in slow lane on China’s Silk Road. Retrieved on April 4, 2017, from http://www.reuters.com/article/us-china-silkroad-pakistan-idUSKBN1710CJ

[iii] Haider, Mehtab. (2017, April 2). Pakistan, China sign accord for joint audit of CPEC projects. Retrieved on April 4, 2017, from https://www.thenews.com.pk/print/195800-Pakistan-China-sign-accord-for-joint-audit-of-CPEC-projects

[iv] Radio Pakistan. (2017, April 2). Pakistan invited the United States to invest in projects under CPEC to achieve its regional peace objective. Retrieved on April 4, 2017, from http://www.radio.gov.pk/02-Apr-2017/pakistan-invites-the-united-states-to-invest-in-projects-under-cpec-to-achieve-its-regional-peace-objectives

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