Prime Minister Shehbaz Sharif concluded his two-day November 1-2 visit to China. With effectively on one day at his disposal, Prime Minister Shehbaz Sharif met those who matter — Xi Jinping, President of China, Li Keqiang, Premier of the State Council and Li Zhanshu, Chairman of the Standing Committee of the National People’s Congress.
The two leaderships discussed cooperation across a range of issues, including defence, trade and investment, agriculture, health, education, green energy, science and technology and disaster preparedness.
Prime Minister Sharif and President Xi also discussed key issues, pertaining to the region, including the situation in Indian Illegally Occupied Jammu and Kashmir (IIOJK) and Afghanistan.
During the visit Pakistan is reported to have secured China’s continued support to the country’s sustainable economic and strategic projects, including expansion of the China-Pakistan Economic Corridor (CPEC), the Main Line-1 (ML-1) rail track, early launch of Karachi Circular Railway and additional assistance package of RMB 500 million for the country’s flood relief efforts. Moreover, President Xi accepted prime minister’s invitation to visit Islamabad soon.
The Prime Minister availed the forum to extend an invitation to Chinese corporate heads to invest in government’s mega solar and renewable energy projects.
Much of the above said is more of the same and at best affirmation of the goodwill between the two countries and commitment towards the ambitious $ 65 billion CPEC, which is a critical part or flag ship of China’s global Belt and Road Initiative.
On the diplomatic front the visit was a necessity in view of the grave economic, political and global challenges Pakistan is faced with. Pakistan now needs China as never before in its history.
The foremost challenge is Pakistan’s extremely fragile fiscal situation and its beleaguered economy, which demanded something more tangible out of the China visit.
Although China has said that it will support Pakistan in stabilising its financial situation, there is no explicit and tangible explanation for this remark made by President Xi.
Pakistan is struggling with a balance of payment (BoP) crisis which aggravated due to devastating floods this summer, burdening it with an estimated $30 billion losses.
Pakistan was expected to seek debt relief from China, particularly the rollover of bilateral debt of around $23 billion. This is the most critical concession sought from China and was on Pakistan’s wish list of discussions. In the joint declaration and in any of the media talk there is no explicit mention of the outcome of the debt rescheduling. One knows that China is strict on loan conditions and does not encourage renegotiations.
Further, to spur economic growth in the country, Pakistan was to prevail upon China to shift its low-end industry to Special Economic Zones being set up by China in Pakistan as earlier scheduled. China has shifted many of its low-end industry to cost-effective states in Asia. A response to this request, if any, is also not known.
The balance of trade between China and Pakistan continues to be heavily skewed in favour of China. Much has been talked about to strike some balance but Pakistan, so far, has not been able to break down barriers at home and in China’s markets.
There has been some success for the establishment of RMB clearing mechanism in Pakistan. As per the statement issued this week by People’s Bank of China (PBoC), China’s central bank and the State Bank of Pakistan have signed a memorandum of cooperation for the establishment of an RMB clearing arrangement in Pakistan in a bid to facilitate the use of RMB for cross-border transactions by enterprises and financial institutions in both countries. In global markets, all countries need strong partners in economy, diplomatic leverage and political stability for sustainability. China is no exception.
That China and Pakistan are not in a state of equality is a fact. Pakistan, in fact, is in a perpetual state of crisis, seeking concessions. Much of this is on account of self-inflicted follies and positioning of self-interest above national interest in economy, politics and global diplomacy. Pakistan has to set its house in order without any further loss of time.
(The writer is former President of Overseas Investors Chamber of Commerce and Industry)Farhat Ali, "PM’s China visit: main takeaways," Business recorder. 2022-11-05.
Keywords: Economics , Bank of Chin , Economic growth , Central bank , State Bank , Economy , Shehbaz Sharif , Xi Jinping , Li Zhanshu , Pakistan , China , Asia , IIOJK , CPEC , RMB