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Pakistan

PM Khan’s China visit and need for an economic-order reset

Shakeel Ramay

Pakistani PM Imran Khan is visiting China next week. The visit is considered critical as it comes soon after the celebration of 70 years of Communist Party rule in China. The celebrations are mark of China’s steadfast movement on the path of the “Chinese Dream”. In last 70 years, China has attained the status of second largest economy growing to 90.03 trillion yuan in GDP from 67.91 billion yuan in 1952. The contribution of primary, secondary and tertiary sectors in national economy also changed from 50.5: 20.8: 28.7 in 1952 to 7.2: 40.7: 52.2 in 2018.

Although China is trying to emerge as peaceful nation, it is still facing stern opposition from USA and its allies. President Xi Jinping underlined that no one can stop China from its path of development and achieving the “Chinese Dream”.  China is very clear that it will continue its march towards economic development. It also understands that to continue progress, it will have to develop partnerships to share prosperity with other countries and regions.

Therefore, China is looking for trusted friends who can work with it and stand by Beijing in the time of need. Pakistan is one such friend, which stood by China and can be a good partner in economic endeavor in future. China is already working hard to assist Pakistan towards economic transformation through the China Pakistan Economic Corridor (CPEC). Unfortunately, the partnership in the form of CPEC could not deliver the perceived goals due to multiple reasons.   

In this context, the visit of PM Khan would be very critical and future oriented. The context urges the Pakistani side to be well prepared before leaving for Beijing. The most important point for preparation would be that Pakistan should think beyond CPEC. It should work on and include other avenues like Shanghai Cooperation Organization, Heart of Asia, Asian Infrastructure Investment Bank etc. and their economic relevance for Pakistan. The second and prime area of preparation should be “economic governance and policy order” of Pakistan and its relevance to China and other institutions.

The economic governance order would be the deciding factor to determine the fate of economic cooperation between China and Pakistan. Presently, Chinese and Pakistani models of development have many contrary approaches and governance systems to achieve the goal of sustainable development.  China believes in “transformation” of economy in a systematic way. On contrary Pakistan is interested in “revolution” theory. Difference in ways of theory of development is creating a problem and will continue to create problems if not addressed in a proper way.

The concept of revolution is haunting Pakistan for far too long. Interestingly, Pakistan always pursued it in the name of reform. Reform has been the favorite buzz word for successive governments. Everyone came into power with the slogan of reform. The most recent attempts by PTI government is continuity of that trend. Right after coming to power, PTI established a number of committees or task forces to enhance its agenda of reform. The most recent intervention came with the help of IMF.  

Unfortunately, these all reforms are opposite to the concept of Chinese model of reform and transformational theory. China believes in incremental reforms. It always remains open to correction and new ideas. However, it believes in continuity of process and dedicated efforts. Moreover, it also asks for patience to achieve the perceived targets.

Pakistan’s style of economic governance, based on its model of reform, is hindering the fruitful engagement of both countries. PM’s visit can reset the tone of cooperation by introducing the required reforms. For that purpose, PM Khan will have to re-set the economic order, governance and ways of perceiving the change mantra.

First, the PM will have to ask his team to look reforms as a phenomenon which will take 30 or 40 years or at least 20 years to produce any tangible results. Ideally, PM should ask his team to develop “Agenda 2047” for Pakistan and phase it according to need of country and available resources including financial, human and technological. Phasing can be done as, low hanging fruit (2 years, agriculture), short term (5 years, SMEs and industry) medium term (15 years industry and SMEs) and long term (28 years, change the share of primary, secondary and tertiary levels as, 10: 55: 35).  These four phases should be tagged with a figure of GDP; such as US$ 400 billion in 2 years, US$ 600 billion in 5 years, US$ 1.5 trillion in 15 years and US$ 3 trillion in 28 years.  It can only be achieved by developing consensus among stakeholders.

The consensus agenda should be turned into a policy document. However, for the time being, the PM can share a blue print of agenda with China. The process of consensus building can be started once the PM returns from China. The caution would be that agenda should not be focused on CPEC, it should look beyond CPEC and economic integration with China and other platforms.

In the absence of such preparedness, Pakistan would not be able to secure any meaningful engagements. It is not self-assumed conclusion, it is based on the analysis of past experiences. Lack of preparation always hurt the interests of Pakistan. Most of the time, we try to shift blame on our partners without realizing what we did wrong. For example, Pakistan and China concluded first FTA in 2006. As a result, China’s export increased to US$ 15.74 billion in 2017-18 from US$ 3.5 billion in 2006-07. On the contrary, Pakistan’s export only increased to US$ 1.74 billion in 2017-18 from US$ 574 million in 2006-07.

The reason for low growth in exports of Pakistan was the lack of preparation during the negotiation of the FTA. Moreover, Pakistan offered products which were of little interest to China. Pakistan tried to refine the second FTA and asked China for favors but systematic approach to build the base for export was not given much attention.

China is ready to help Pakistan to transform its economy, but we need to show that Pakistan is also ready to transform its own economy. This will not come from rhetoric but from concrete steps to re-order the economic and policy order of Pakistan. For that purpose, Pakistan needs to come out of euphoria, rhetoric and revolution theories. Pakistan can learn from its own experience in the fields of defence and nuclear cooperation with China. It is considered one of the most successful examples in world. The reason for success on these sectors is that defence and nuclear sectors rely on solid plans and tangible outputs. They do not waste time on rhetoric.

The same can be applied on economy. PM Khan should carry this message to China that we are now ready to follow steps of defence and nuclear cooperation in economic filed. We are ready to come out of rhetoric and take practical steps. Moreover, Pakistan will take all necessary steps to adopt the approach of “transformation not revolution”. This will definitely help the PM to get an encouraging response from the Chinese leadership. PM Khan already enjoys a good reputation; these practical steps will enhance his prestige and promote his image of a visionary leader among the Chinese leadership.

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