Tuesday, September 11, 2018

China and US Battle For Influence in Pakistan

Top US and Chinese diplomats have visited Pakistan to meet with the country's new prime minister Mr. Imran Khan within days of his assuming office. The US Secretary of State Mike Pompeo was the first to call on Prime Minister Imran Khan in Islamabad. Pompeo's visit was soon followed by a three-day visit by Chinese Foreign Minister Wang Yi. What is at stake in the battle between China and the United States in Pakistan is the prize of global superpower status, according to the US-based Wall Street Journal.

There is a lot of speculation in the western media about the objectives of Pakistan policies being pursued by the two great powers and their impact on the US-China competition for world dominance. Such speculations have centered on the debt related to China-Pakistan Economic Corridor (CPEC) and the US leverage in potential IMF bailout of Pakistan.

American business publication Wall Street Journal has produced a short video explaining how its staff sees what it describes as "US-China conflict brewing in Pakistan". What is at stake in the battle between China and the United States in Pakistan is the prize of global superpower status. Here are the key points it makes:

1. The US-China conflict brewing in Pakistan is about global dominance sought by the two great powers.

2. If China succeeds, it could become the new center of global trade. If the US wins, it could frustrate China's push to become a global power. The impact of it will be felt around the world for decades.

3. China has already surpassed the United States as the world's biggest exporter of goods and services.

4. The biggest project in China's Belt and Road Initiative (BRI) is China-Pakistan Economic Corridor (CPEC) in which China is investing heavily and providing massive loans.

5. China could use the infrastructure built in Pakistan under CPEC to gain access to the Indian Ocean and supplant the United States in Pakistan.

6. CPEC-related spending is sinking Pakistan deeper in debt to China. It could force Pakistan to seek $8 billion to $12 billion bailout by IMF where US is the biggest shareholder with veto power.

7. US does not want the IMF bailout money to be used to repay Chinese debt. Not bailing out Pakistan is not an option because it could cost US an important ally in the region.

8. US could, however, use IMF bailout to limit what Pakistan can borrow from China. Such a condition will achieve the US objective of significantly slowing down CPEC and BRI.

9. Pakistan's dilemma is that it needs both the infrastructure improvements financed by China and the IMF bailout to ease pressure on its dwindling foreign exchange reserves.

10. Whoever wins in Pakistan will become the number one global superpower.

Here's the Wall Street Journal video:

https://youtu.be/wvw-85CC1t4




Related Links:

Haq's Musings

South Asia Investor Review

Can Pakistan Avoid Recurring Balance of Payment Crisis?

Pakistan Economy Hobbled By Underinvestment

Pakistan's IT Exports Surging

Can Indian Economy Survive Without Western Capital Inflows?

Pakistan-China-Russia Vs India-Japan-US

Chinese Yuan to Replace US $ as Reserve Currency?

Remittances From Overseas Pakistanis

Can Imran Khan Lead Pakistan to the Next Level?

China to Expand Manufacturing in Special Economic Zones

19 comments:

Majumdar said...

As our beloved Qaid Jinnah sahib had said many decades ago: "America needs Pakistan more than Pakistan needs America … Pakistan is the pivot of the world, as we are placed- the frontier on which the future position of the world revolves.’”

The Qaids prophecy is finally coming true!!!

Niaz said...

Majumdar sahib,


Many thanks for reminding us of this remark. Obviously, you are a well-read person, please accept my compliments.


The only place I have come across this ‘Quote’ is in the book “Halfway to Freedom” by Margaret Bourke-White who was a journalist for the ‘Life’ magazine.

In 1948 Marshall Plan was in full swing wherein, following the end of WW2, the USA gave away $12-billion in aid for the rebuilding of war-torn Europe. This is more than $100-billion in today’s money!

Understand that in reply to the Bourke-White’s question about his expectations for aid from the USA; the Quaid allegedly replied: “America needs Pakistan more than Pakistan needs America. Pakistan is the pivot of the world, as we are placed — the frontier on which the future position of the world revolves.” He also said that: “Russia is not so very far away.”

Calling it the Quaid’s Prophesy is stretching it a bit too far. The reply should be seen in the context of the question. IMHO the Quaid had implied that Pakistan will not beg the USA or any other country for money.
Thanks

Mohajir said...

Niaz and Majumdar: Husain Haqqani has quoted many such words by the Quiad in his book Reimagining Pakistan, most of it, is really embarrassing.


In February 1948, Jinnah recorded a radio talk to introduce Pakistan to the people of Australia. He described Pakistanis as ‘mostly simple folk, poor, not very well educated and with few interests beyond the cultivation of their fields’. But then he addressed what he saw as the key to addressing Pakistan’s poverty. Pakistanis, he insisted, ‘come of hardy, vigorous stock, and I think without boasting I can claim that they are brave. They made good soldiers, and have won renown in many battles. They have fought side by your side in two world wars.’ This gave them a claim on external support in Jinnah’s view and he said he did ‘not believe that anyone from abroad who gives a helping hand would have reason to regret it’. According to him, the fact that the ‘greater part of the world’s jute is grown in East Bengal’ gave Pakistan ‘the great benefit of earning large sums of foreign exchange’, which would be ‘very valuable to us in setting up and expanding our industries’. Pakistan was ‘short of capital and technical knowledge; but given a little time, and here and there a friendly hand, these deficiencies should be made good’.
This, in a nutshell, was the economic plan of Pakistan’s founding father. West Pakistan’s warriors would be the attraction for Western capital and technical knowledge while East Pakistan’s jute would would earn foreign currency that would help the country’s industrialization. Instead of economic considerations, foreign policy and being home to warriors who proved their mettle fighting alongside the British in two world
wars were deemed enough as building blocks of the country’s economy. By the time Liaquat, as prime minister, arrived in the United States in 1950 on his first official visit, he ‘stressed his nation’s strategic position and the fighting qualities of her anti-Communist Muslim warriors’ to seek American aid.21 That approach has worked for Pakistan to the extent of keeping it going thus far but is proving inadequate for transforming it into an Asian economic tiger.

20‘Quaid-i-Azam Muhammad Ali Jinnah’s Broadcast talk to the people of Australia’, Recorded on 19 February 1948.

Riaz Haq said...

Anon: "Husain Haqqani has quoted many such words by the Quiad in his book Reimagining Pakistan, most of it, is really embarrassing."

Quaid e Azam Mohammad Ali Jinnah was absolutely right.

Newly independent nations like Pakistan had been left impoverished by the colonial rulers and they needed a lot of help to rebuild.

The only country left intact and economically strong was the United States after World War II.

Europe was ravaged by war and itself needed help to rebuild which America provided via Marshall Plan.

So naturally Pakistan too looked to the United States and received substantial US assistance that helped Pakistan gdp grow rapidly through 1960s.

US invested in Pakistan in the 1960s at the height of the Cold War when Pakistan's development model was taught at Harvard Business School and Koreans came to Pakistan to learn. Then came the 1971 war and Bhutto's nationalization that scared away foreign investors.

https://www.riazhaq.com/2014/06/civilian-democracy-vs-military.html

Pakistan was on a similar trajectory as the Asian Tigers during 1960s under Gen Ayub Khan's rule. GDP growth in this decade jumped to an average annual rate of 6 percent from 3 percent in the 1950s, according to Pakistani economist Dr. Ishrat Husain. Dr. Husain says: "The manufacturing sector expanded by 9 percent annually and various new industries were set up. Agriculture grew at a respectable rate of 4 percent with the introduction of Green Revolution technology. Governance improved with a major expansion in the government’s capacity for policy analysis, design and implementation, as well as the far-reaching process of institution building.7 The Pakistani polity evolved from what political scientists called a “soft state” to a “developmental” one that had acquired the semblance of political legitimacy. By 1969, Pakistan’s manufactured exports were higher than the exports of Thailand, Malaysia and Indonesia combined.

Asad M. said...

چین کو دنیا کی سپر پاور بنانے کی چابی پاکستان کے ہاتھ میں کیسے ہے ؟ امریکہ اور چین کے درمیان پاکستان میں مفادات کی کیا جنگ جاری ہے ؟ دیکھئے امریکی جریدے وال سٹریٹ جنرل کی رپورٹ، اور خود سے سوال پوچھئیے کہ کیا پاکستان اس صورتحال کو اپنے مفاد کیلئے ایک مثبت موقعے میں بدل پائے گا یا سری لنکا کی طرح چینی قرضوں کے چنگل میں پھنس کر گوادر سے ہاتھ دھو بیٹھے گا ؟ دو عالمی طاقتوں کی اس جنگ میں پاکستان کے ہاتھ میں اپنا مستقبل بنانے یا بگاڑنے کا موقعہ ہے ، کیا نئی حکومت اس چیلنج سے نمٹ پائے گی ؟ ویڈیو دیکھئے اور سمجھیے

Riaz Haq said...

#China, #Pakistan agree to open economic corridor to #investors from other countries to ease concerns about the strategic intent behind its vast #infrastructure push . #UnitedStates #India #CPEC #BRI https://sc.mp/2CPkfgJ via @SCMPNews

The agreement was reached during a meeting in Islamabad between Ning Jizhe, vice-chairman of China’s National Development and Reform Commission, and Pakistan’s Minister for Planning, Development and Reforms Makhdoom Khursro Bakhtiar.

In a statement released after the meeting on Sunday, Pakistan’s planning and development ministry said the country had introduced new socioeconomic targets for the project, and agreed to establish a mechanism for third-party participation.

On Tuesday, Chinese foreign ministry spokesman Geng Shuang confirmed the decision, saying the two sides would open up the China-Pakistan Economic Corridor to other countries and that it would benefit the whole region.


The move is the latest sign of Beijing trying to adjust its approach amid a series of setbacks in countries involved in its “Belt and Road Initiative”. The economic corridor is a flagship project under that strategy, which aims to build a huge trade and infrastructure network spanning Asia, Europe, Africa and Latin America.

Pakistan’s Dawn newspaper quoted unnamed sources as saying that Beijing wanted involvement from “countries friendly to both Pakistan and China because it wished to steer clear of adverse criticism, particularly from the US and India”.

China, Pakistan can resolve investment problems, but ‘belt and road’ concerns should not be ignored, experts say
Zhao Gancheng, director of South Asia Studies at the Shanghai Institutes for International Studies, said the move was an effort to address the backlash over China’s activities in the region.

“Inviting a third party will help to ease concerns and the view that there is strategic intent behind the cooperation between China and Pakistan – in particular concerns held by India,” Zhao said.

He added that inviting third countries to take part would also help to improve the global standing and recognition of the projects.

Sun Shihai, an expert in South Asian studies at the Chinese Academy of Social Sciences, said Beijing was learning lessons from recent setbacks but that overall its global infrastructure push was on track.

“China needs to reflect on the problems that have emerged as it makes progress with the belt and road,” Sun said. “The uneven distribution of benefits among different provinces and regions in Pakistan may have caused some grievances and scepticism within Pakistan – China can make adjustments and address these issues.”

The US$60 billion Gwadar port deal is one of the projects that has drawn criticism. The US and India see the port project as China seeking to extend its geopolitical influence, while there have been warnings from the International Monetary Fund and others that Chinese infrastructure investments will create a debt trap for Pakistan.

On Sunday, Pakistan’s new Prime Minister Imran Khan reaffirmed his country’s commitment to the economic corridor.

But the day before, the Financial Times quoted Abdul Razak Dawood – the Pakistani member of cabinet responsible for commerce, textiles, industry and investment – as saying that companies from Pakistan had been put in a “disadvantaged” position. He suggested that Pakistan should “put everything on hold for a year” and even “stretch CPEC out over another five years or so”.

Facing a trade war and bumps along the belt and road, China may have to revisit the cost of its grand plan
Chinese foreign ministry spokesman Geng denied Pakistan was seeking to delay or extend the project, saying “Pakistan-China relations are impregnable and the government’s commitment to the CPEC is unwavering”.

Riaz Haq said...

#Pakistan keen to start #CPEC’s next phase. #China has invited Prime Minister #ImranKhan to attend the China International Import Expo as the guest of honor at the conference to be attended by members of Belt and Road Initiative. #BRI #trade #exports
https://tribune.com.pk/story/1803731/1-pakistan-keen-start-cpecs-next-phase/

The Chinese government has invited Prime Minister Khan to attend the China International Import Expo. Pakistan is the guest of honour at the conference to be attended by members of the Belt and Road Initiative.

It added that the joint working groups meetings were planned to be convened in October. There are five working groups: planning, energy, transport, Gwadar and industrial parks.

Planning Secretary Zafar Hasan gave an overview of the ongoing projects and rundown of the schedule of the upcoming events, leading to the 8th Joint Cooperation Committee (JCC).

The cabinet committee endorsed the government’s new priority list of CPEC. The committee decided to prioritise development of Gwadar, Special Economic Zones, Pakistan Railways $9 billion Main Line 1 project, inclusion of social sector development and third-country participation in CPEC, according to the official handout

The committee – the highest bilateral decision-making body – has planned to hold its 8th meeting in the first week of December in China, declared the planning ministry.

The PTI government has undertaken an internal review of CPEC aimed at making it more representative of the aspirations of the people.

Also, the Chinese ambassador on Friday met PM’s Adviser on Textile and Industry Razak Dawood. Both the sides agreed to work more closely to build a brighter and prosperous future for the region, according to a statement issued by the minister’s office after the meeting.

----
Meanwhile, the 8th JCC will review progress on the implementation of decisions taken during the 7th JCC that was held in November last year.

The officials said progress could not be made on most of the issues that had been decided in the last JCC meeting.

At present, 22 projects worth $28.6 billion are under various phases of implementation under CPEC. They include energy projects estimated at $34.8 billion, road projects at $5.8 billion, ML-1 at $9 billion and Gwadar port and city projects.

The 7th JCC meeting had agreed to resolve the issue of the revolving fund, which was to be set up to make energy payments to Chinese investors. However, the issue remains unresolved till date.

In a related development, the Pakistan Private Infrastructure Board extended the deadlines of a few projects that were falling behind schedule.

The deadlines on ML-I project could not be met. Both the sides agreed to finalise the preliminary design of the project by November 2017 that remains outstanding.

Progress on four provincial road projects – Mansehra-Muzaffarabad-Mirpur Motorway, Gilgit-Shandur-Chitral Road, Naukundi-Mashkhel-Panjgur Road and Keti Bandar port development – could not be made either.

The greater Peshawar Mass Transit Circular Rail and the Quetta Mass Transit projects also remained on papers during the past one year.

The resolution of the Gwadar Water supply scheme of five million gallons per day had been declared an urgent priority by the 7th JCC. So far, no tangible progress has been made.

Bottlenecks to the construction of 300 megawatts Gwadar coal-fired power plant could not be removed, and Pakistan now wants to address it during the prime minister’s visit.

China and Pakistan had also agreed to start construction on the New Gwadar International Airport within six months of signing of the implementation agreement. But work on the project has yet to be started.

However, a Chinese delegation is expected to visit Pakistan soon to discuss the airport project, the officials said.

Similarly, four out of nine prioritised Special Economic Zones have also remained stuck for the past one year.

Anonymous said...

China is the only way to go with full support. Betrayal by US in the past provides enough for us to learn. In this current geopolitical situation it seems like China will be number one superpower soon followed by US and then Russia. India may not become superpower soon but at some point it will. Just imagine if Pakistan tilts heavily towards America, then we will not have good relations with China, the country that is on our borders and Americans are against them. If this happens then China might start favouring India to maintain good relations with them, another country on our borders. As we know Iranians are skewed in favour of India, for a long time, may join in with China, India and Iran against Pakistan. Pakistan already has Afghanistan and India against it in very open manner. On this occasion Pakistan cannot afford to join in with America as we can not take our land borders away from the region where we live. Future will be much disturbing for Pakistan if we join America now.

This debt trap diplomacy is partially true not fully true. It is being popularised by west against China as if west has not done the same thing in the past with many countries. Entire WW2 was funded by bankers to get countries in their debt trap. These bankers were westerns and they are still reaping the reward.

Its time that Pakistan should focus more on China, Russia, Iran and Turkey. All five countries are very powerful one way or another. These countries together can bring a change for rest of the globe. Its not a time when few narrow minded politicians in Pakistan should take decision in favour of America against some money, that money will end up in western banks anyway like it happened in the past. Take a little hardship now and future will be rewarding.

Riaz Haq said...

#Pakistan's army chief Gen Bajwa visits #Beijing after 'Silk Road' tension. He is most senior figure to visit staunch ally #China since the new government of Prime Minister Imran Khan took office in August. #CPEC #BRI https://www.reuters.com/article/us-pakistan-china-military/pakistans-army-chief-visits-beijing-after-silk-road-tension-idUSKCN1LW0PR

Pakistan has deepened ties with China in recent years as relations with the United States have frayed.

Bajwa may be hoping in Beijing to smooth out any Chinese alarm at comments last week by Pakistan’s commerce minister, Abdul Razak Dawood, who suggested suspending for a year projects in the China-Pakistan Economic Corridor (CPEC), the Pakistan leg of China’s Belt and Road Initiative that includes recreating the old Silk Road trading route.

Bajwa, the Chief of Army Staff (COAS), regularly holds meetings with world leaders due to the Pakistan armed forces’ outsize influence in the nuclear-armed nation, where the military controls security and dictates major foreign policy decisions.


“During the visit COAS will interact with various Chinese leaders including his counterpart,” Major General Asif Ghafoor, the military spokesman, tweeted late on Sunday.

Beijing has pledged to invest about $60 billion in Pakistan for infrastructure for the Belt and Road project.

Dawood, in an interview with the Financial Times, also suggested the CPEC contracts had been unfairly negotiated by the previous government and were too favorable to the Chinese. Later he said the comments were taken out of context, but did not dispute their veracity.

The critical comments were published just after China’s top diplomat, State Councillor and Foreign Minister Wang Yi, visited Pakistan and the two sides reaffirmed the mutual benefits of the Beijing-funded projects.

On Thursday, Pakistan’s government said it wanted CPEC to include more projects with a focus on socio-economic development, something which would align more with the populist agenda of Khan’s new administration.

Riaz Haq said...

#China says #military ties 'backbone' to relations with #Pakistan. Belt and Road initiative (#BRI) should be a benchmark for China-Pakistan ties. #CPEC https://reut.rs/2PHj04s

Military ties between China and Pakistan are the “backbone” of relations between the two countries, a senior Chinese general told Pakistan’s visiting army chief, days after a Pakistani minister stirred unease about Chinese Silk Road projects.

General Qamar Javed Bajwa is the most senior Pakistani figure to visit ally China since the new government of Prime Minister Imran Khan took office in August, and his trip comes a week or so after a senior Chinese diplomat visited Islamabad.

Pakistan has deepened ties with China in recent years as relations with the United States have frayed.

Bajwa may be hoping to smooth out any Chinese alarm at comments last week by Pakistan’s commerce minister, Abdul Razak Dawood, who suggested suspending for a year projects in the China-Pakistan Economic Corridor, the Pakistan leg of China’s Belt and Road Initiative that includes recreating the old Silk Road trading route.

On Tuesday, Zhang Youxia, a deputy chairman of China’s powerful Central Military Commission which President Xi Jinping heads, reiterated to Bajwa that the two countries are “all weather” strategic cooperative partners.


“China-Pakistan military ties are an important backbone of relations between the two countries,” said Zhang according to a statement by China’s Defence Ministry late on Tuesday.

“The two militaries should further pay close attention to practical cooperation in all areas, keep raising the ability to deal with various security risks and challenges, and join hands to protect the common interests of both countries.”

However, Zhang cited Xi as saying that the Belt and Road initiative should be a benchmark for China-Pakistan ties.

He said China appreciated the new Pakistan government’s platform of fully promoting the relationship and that China was willing to work with the new government to push construction of the China-Pakistan Economic Corridor.

Beijing has pledged to invest about $60 billion in Pakistan for infrastructure for the Belt and Road project.


Riaz Haq said...

Reform the IMF to reflect new economic landscape
From Kavaljit Singh, Director, Madhyam New Delhi, India
an hour ago
Martin Sandbu rightly warns about the diminishing role of the IMF as a crisis manager ( Free Lunch, September 19). The challenges faced by the fund are much bigger than its lack of financial resources to put out fires.

The current financial market turmoil in Argentina shows the IMF’s standby loan of $50bn — the largest ever credit line in IMF history — has failed to provide an effective anchor for addressing financial vulnerabilities and bolstering market confidence. The immediate disbursement of $15bn (30 per cent of the total IMF loan) to Argentina did not help in averting currency collapse or arresting capital flight.

These developments in Argentina may deter other emerging market economies to seek financial support from the IMF as its ability to provide the missing anchor for financial stability has been seriously undermined.

In the aftermath of the global financial crisis, new bilateral and regional mechanisms for crisis management have emerged, but they have remained largely untested. Hence, there is a need to implement quota and voice reforms at the IMF to better reflect the new economic landscape. In addition, the IMF should move away from the orthodoxy in terms of economic thinking and adopt a more nuanced approach towards capital controls that have proved to be effective tools in curbing capital outflows.

Kavaljit Singh
Director, Madhyam New Delhi, India

Riaz Haq said...

Free Lunch: The good, the bad and the ugly in structural reform
IMF finds no productivity gain from labour market deregulation
MARTIN SANDBU

https://www.ft.com/content/e9c6e16e-e349-11e4-9a82-00144feab7de

Not all reforms are created equal

"Not helpful" was then-commissioner Olli Rehn's reaction a few years ago when the International Monetary Fund realised - and duly publicised - that it had underestimated the harm fiscal austerity inflicted on growth. The rest of us may beg to differ: it's a good thing when a large economic research and policy institution improves our knowledge and even better if policies improve as a result. The implication of the new take on fiscal multipliers was that the eurozone and the IMF had made the recession worse by overdoing the fiscal belt-tightening.

The IMF is being helpfully unhelpful again. There is a lot of interesting stuff in the fund's World Economic Outlook, in particular its Chapter 3, which analyses the worldwide fall in productivity growth. But the most interesting bits were only hinted at in chief economist Olivier Blanchard's presentation on Tuesday. A blog post by Francesco Saraceno proves that it pays to read until the end of the WEO Chapter 3. Tucked away in the last pages (Box 3.5, p104), is a short study on how productivity is affected by structural reforms.

To point out the obvious, this is particularly relevant to the eurozone, where structural reforms are imposed on the weakest members, bought from stronger countries in return for extended deadlines on deficit reduction, and insisted on by the ECB as the counterpart for its doing the monetary heavy lifting. So you might think Europeans would be particularly keen to find out if reforms achieved their promise.

The IMF estimates the effect of labour market reforms and product market reforms separately. Product market liberalisation - reforms that increase competition in the sale of goods and services - have a positive effect on productivity, especially in the service sectors, but the short-term effect is negative. Meanwhile, labour market deregulation does not help productivity at all, and even has negative effects in the short run. The figure below summarises the findings:

https://www.ft.com/__origami/service/image/v2/images/raw/http%3A%2F%2Fim.ft-static.com%2Fcontent%2Fimages%2Faf0857a8-e356-11e4-9a82-00144feab7de.png?source=next&fit=scale-down&width=600


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https://www.ft.com/content/e9c6e16e-e349-11e4-9a82-00144feab7de

I'll write that again. Product market liberalisation is good for productivity in the long run but costly in the short run. Labour market deregulation shows only bad effects on productivity. Blanchard's euphemism is that "structural reforms are no miracle cure - the effects are very often uncertain". Indeed. You might think that in a rational world, better knowledge about what works and what doesn't would inform policy decisions and help us move on from the generic call for "reform". You might even hope that it would inform the current stand-off in Greece, whose government says it is keen to weaken product market monopolies but undo some of the labour market reforms (on collective bargaining and minimum wages) enforced by creditors.

Riaz Haq said...

Pakistan Trudges Along a Familiar Economic Path

https://worldview.stratfor.com/article/pakistan-trudges-along-familiar-economic-path

Elevated energy prices and the lack of internationally competitive exports will continue to drive Pakistan's high import bill and trade deficit.
Spending cuts targeting development will narrow the budget deficit but at the cost of slowing growth and increasing unemployment.
New Prime Minister Imran Khan's great challenge will be to balance his impassioned populism with a pragmatism required to govern Pakistan.
As Prime Minister Imran Khan tries to set a new direction for Pakistani politics, his administration is urgently seeking to resolve the country's most serious macroeconomic challenge: boosting its dwindling foreign exchange reserves. As of Sept. 7, the State Bank of Pakistan's net reserves remained beneath $10 billion. That's less than the three-month import cover recommended by the International Monetary Fund (IMF), fueling speculation that Khan will turn to the U.S.-based organization for a bailout. Indeed, Finance Minister Asad Umar has unveiled a series of measures targeting the widening budget deficit ahead of an IMF delegation visit to Islamabad on Sept. 27. These measures include cutting more than $2 billion in planned development spending, doubling the tax rate on the highest income earners to 30 percent and hiking tariffs on 5,000 nonessential imports.

-----------

All told, Pakistan needs an estimated $31 billion in the current fiscal year, hence its dialogue with the IMF. Pakistan has gone to the Washington, D.C.-based guarantor of global monetary stability 21 times since 1958, completing its latest loan program, $6.6 billion, in 2016 under then-Prime Minister Nawaz Sharif. Khan reportedly is seeking to hash out the details of a loan ahead of next month's IMF-World Bank meetings in Bali, Indonesia. If his administration implements its various cost-cutting proposals — including trimming development expenditures, reducing tax and tariff exemptions, restricting nonessential imports, privatizing money-losing public sector corporations, widening the tax base, and raising tax collection targets — the GDP growth rate probably will fall by as much as 1 percent, since curbing development spending will hit an engine of economic expansion. (Indeed, a key driver of the fiscal budget deficit — which reached 6.6 percent of GDP in fiscal 2017-18 — was spending by provincial governments on development projects as lawmakers' terms ended ahead of July's elections.) Meanwhile, withdrawing tax and duty exemptions means that prices on hundreds of items will go up. This will give grist to the political opposition as it moves to criticize Khan's management of the economy.

Ultimately, the road to resolving Pakistan's fiscal and trade deficits will be a long one. Khan will be forced to make unpopular decisions to stabilize the country's finances in the short term so he can be better positioned to address its structural problems. He will seek to advance the country's industrialization in support of a more competitive export base, without which growth of productivity, income, employment and the overall economy will lag. Khan's great challenge will be to strike a careful balance between the impassioned populism that ushered him into office and the pragmatic administration of government necessary to bring his vision of "a new Pakistan" closer to reality.

Riaz Haq said...

#China's top diplomat says plots to disrupt ties with #Pakistan will fail. #CPEC #BRI #US #India http://po.st/n8y86Y via @ChannelNewsAsia

Any plots to sow discord in China's ties with Pakistan will not prevail, the Chinese government's top diplomat said on Tuesday, as Beijing fends off criticism of its economic projects in Pakistan and a clampdown in China's western Xinjiang region.

China has pledged US$57 billion (£43 billion) to build power stations, major highways, new railways and high capacity ports along the China-Pakistan Economic Corridor, a key part of Chinese President Xi Jinping's Belt and Road plan to further tie China to Eurasia.

The sustainability of Chinese projects has come under fresh scrutiny in recent months, as U.S. Secretary of State Mike Pompeo in July warned that any potential International Monetary Fund bailout for Pakistan's troubled economy should not be used to pay off Chinese lenders. Both Beijing and Islamabad say the loans are sustainable.

China welcomes the good start made in its "all-weather" partnership with Pakistan following the election of the new government under Prime Minister Imran Khan, State Councillor Wang Yi told Pakistan Foreign Minister Shah Mehmood Qureshi on the sidelines of the U.N. General Assembly in New York.

But "any conspiracies attempting to incite disharmony or interfere in China-Pakistan relations will not prevail," Wang added, without elaborating, according to a statement released by China's foreign ministry on Wednesday.

China and Pakistan should continue to make "all-out" efforts to promote the economic corridor, expand trade and reduce poverty to bring more benefits to the ordinary people of Pakistan, Wang said.

The relationship between China and Pakistan will not change, regardless of circumstantial changes, Qureshi told Wang, according to China's statement.

The corridor is "extremely important" to Pakistan and has brought "deep impact" for jobs, development and livelihood, and Islamabad will take effective measures to ensure the security of the entire route, he added.

Beijing has faced growing international criticism from rights groups, some western nations and United Nations human rights experts over its sweeping security crackdown in the far western region of Xinjiang, which borders Pakistan.

Islamabad, like most governments of majority Muslim countries, has so far remained silent on the issue, but a group of Pakistani businessmen whose Chinese wives and children have been trapped in Xinjiang are lobbying the new government to help pressure Beijing into allowing their release.

Beijing says it faces a serious threat from Islamist militants and separatists in Xinjiang and has rejected accusations of mistreatment.


Read more at https://www.channelnewsasia.com/news/asia/china-says-plots-to-disrupt-ties-with-pakistan-will-fail-10758750

Riaz Haq said...

#Japan is countering #China’s Belt and Road Initiative (#BRI) with a whirlwind of Japanese visits and #investment announcements from Southeast Asia to #Pakistan to the Baltics in recent months. #CPEC https://www.scmp.com/news/asia/article/2132811/japan-takes-lead-countering-chinas-belt-and-road-initiative via @scmpnews

Sri Lanka, after Pakistan, is one of the clearest examples of how China’s ambitious infrastructure development plans – known as the Belt and Road Initiative – are spooking neighbours who worry about Beijing’s rapidly increasing influence and military reach.

Those fears were made manifest late last year, when Sri Lanka handed over the port of Hambantota to China to cover its debts to Beijing.

The kerfuffle over Hambantota helps explain why Japanese Foreign Minister Taro Kono made a point of ending his visit with a tour of Sri Lanka’s other big port, Colombo, announcing plans to help build a natural gas import terminal.

It was just one of a whirlwind of Japanese visits and investment announcements from Southeast Asia to Pakistan to the Baltics in recent months.
Japan, faced with the abrupt disengagement of an inward-looking United States under President Donald Trump, now finds itself playing the leading role in pushing back against China’s grand plans to extend its influence throughout Asia and into Europe.
To do so, Tokyo is increasingly joining up with other countries and especially India, launching a US$200 billion infrastructure plan, and even boosting its military efforts in the broader Indian Ocean area in what is seen as a deliberate bid to counter Beijing’s growing heft.
The effort even extends as far afield as Eastern and Central Europe, where Japanese Prime Minister Shinzo Abe made a historic visit just last month.

Japan – if not India – even suggests periodically it could end up joining the Belt and Road at some point.
Seen from Islamabad, the biggest beneficiary of the Belt and Road thanks to the US$60 billion China-Pakistan Economic Corridor (CPEC), not even Japan and India’s partnership represents a serious threat.
“India and Japan can collaborate, but the Belt and Road is too big to be countered by them, and that is why they are keeping open the option to join sooner or later,” said Ahmad Rashid Malik, the director of the China-Pakistan Study Centre at the Institute of Strategic Studies Islamabad.

Riaz Haq said...

Chinese Communist Party General Secretary Deng Xiaoping's comments in Beijing to Albanian Communist Party's visiting delegation in 1962 (as quoted in China’s India War, 1962 as quoted in"Bulletin: Inside China's Cold War" 2007:

"During the last two years it is clear that the American imperialists are helping two forces in Asia: Japan and India. These two forces have yet to form completely. The attempts by the American imperialists to increase the power of India are due to the fact that India is very populous, while Japan is both populous and technologically advanced. Of course, lesser countries of South Asia and Indochina are also included in this plan. Their specific measures are intended to help India become a great power, but its body is very weak. In other words, they are trying to shift India from a policy of neutrality to the side of the American imperialists. Should something like this come to fruition, it would be a blow not only to China, but to the Soviet Union as well. When they help India, they offend Pakistan. The public opinion in Pakistan is now on the side of a change in the government policy, and now Pakistan has a good position towards us. This has yet to be achieved completely. It would take a long time to achieve it."

https://books.google.com/books?id=7mgRckgFXoUC&pg=PA240&lpg=PA240&dq=%22The+public+opinion+in+Pakistan+is+now+on+the+side+of+a+change+in+the+government+policy,+and+now+Pakistan+has+a+good+position+towards+us.+This+has+yet+to+be+achieved+completely.+It+would+take+a+long+time+to+achieve+it.%22&source=bl&ots=FFQavaIEaO&sig=ACfU3U3NFaCMUDhrcKfxzTMMR5-3z80X6g&hl=en&ppis=_e&sa=X&ved=2ahUKEwjnh63Hov7lAhWBu54KHZ4bBaYQ6AEwAXoECAQQAQ#v=onepage&q=%22The%20public%20opinion%20in%20Pakistan%20is%20now%20on%20the%20side%20of%20a%20change%20in%20the%20government%20policy%2C%20and%20now%20Pakistan%20has%20a%20good%20position%20towards%20us.%20This%20has%20yet%20to%20be%20achieved%20completely.%20It%20would%20take%20a%20long%20time%20to%20achieve%20it.%22&f=false

Riaz Haq said...

WASHINGTON: The Trump administration on Thursday sought to bring
Pakistan back into its sphere of influence by offering new business
opportunities with US for Islamabad alongside a lengthy critique of the
country’s engagement with Beijing through the China-Pakistan Economic
Corridor.


https://timesofindia.indiatimes.com/world/pakistan/us-warns-pakistan-about-china-projects-in-effort-to-regain-lost-ground/articleshow/72188925.cms


The US push to regain ground it has lost to China came on the heels of
President Trump’s phone call to Pakistan Prime Minister Imran Khan,
ostensibly to thank him for Islamabad’s efforts in facilitating the release of
two Western hostages in Afghanistan. A White House statement said the
two leaders also reaffirmed their commitment to strengthening the USPakistan trade relationship as well as investment and people-to-people “potentially at an unsustainable cost to Pakistan.”
“Inflated pricing of power & development projects isn’t good for the Pakistani people. CPEC almost always takes the form of
burdensome loans or financing with Chinese state-owned enterprises and the Chinese government profiting. This is hardly the
'peace and win-win cooperation' OBOR is supposed to facilitate,” US Assistant Secretary of State for South Central Asia Alice
Wells tweeted ahead of a speech at the Woodrow Wilson International Center for Scholars, where she said Pakistan faced longterm economic damage with little return if China keeps pursuing its giant infrastructure push.
“While the world’s economies certainly benefit from initiatives that promote sustainable global investment & trade, OBOR is far
from responsible in its economic practices. OBOR lacks transparent financing practices. Failure to repay can lead to
unsustainable debt burdens, which can result in surrendering of assets and diminishing sovereignty,” Wells warned.
Wells also argued that CPEC also relies primarily on Chinese workers and supplies rather than giving that business to Pakistani
companies and workers. She contrasted CPEC with the US-Pakistan business partnership which she said "contributes to
sustainable growth and expertise that builds capacity for local communities and by bringing superior quality & technology,
drives productivity gains in Pakistan."
“Unlike the Chinese government, the US doesn’t tell businesses where to go; they go where they see the greatest
opportunities. There are countless commercial connections between US & #Pakistan leading to thousands of jobs for
Pakistanis,” Wells said, adding that the US culture of corporate social responsibility also provides models for creating jobs and
opportunities.
Pakistan though remains in thrall of Beijing, even though the Trump administration has twitted it by highlighting China’s poor
treatment of Muslims in Xinjiang province to prick its conscience. China though is reported to be unhappy with the pace of
implementation of CPEC projects, resulting in a recent ministerial reshuffle by Prime Minister Imran Khan to address Beijing’sies between the two countries.
Trump had earlier cut off aid to Pakistan in keeping with his distaste for doling out American freebies, but he has repeatedly
said he is in favor of greater trade with all countries as long as it is on a level playing field. Pakistan too has come around to
saying it prefers to grow through trade rather than aid.
Trump’s phone call came even as a senior US official critiqued Pakistan’s economic engagement with China under the One Belt
One Road (OBOR) rubric, warning that the China-Pakistan Economic Corridor (CPEC), the main initiative under OBOR, comes

Riaz Haq said...

US Ambassador Wells said there was potential for “ever deeper” relationship with Pakistan.

https://tolonews.com/afghanistan/china-not-%E2%80%98real-player%E2%80%99-afghanistan-development-wells

Wells also spoke about the US relationship with Pakistan, saying as “Pakistan takes steps to move away and to restrict the ability of non-state terrorist proxies, the potential for our relationship to grow ever-deeper is there.”

Riaz Haq said...

#US sending 15 #trade delegations to #Pakistan next year: says Sec Alice Wells after her speech critical of #China and #CPEC - Newspaper - http://DAWN.COM

https://www.dawn.com/news/1519260


The paper, now posted at the US State Department’s official site, says that the US Commerce Department has “already stepped up its activity in Pakistan with 15 trade delegations planned for the next year”.

And once the new expanded Deve­lopment Finance Corporation (DFC) is up and running, “Pakistan is going to be a country of great interest”.

According to the paper, the DFC will have more than double the investment cap than the Overseas Private Investment Corporation (OPIC), increasing from $29 billion to $60bn. OPIC is a US government agency which mobilises private capital for overseas investments.

Document suggests US-Pakistan ties are going to expand

The paper argues that doubling the cap would enable investment in projects that have high standards and are financially sustainable over the long haul.

While urging Pakistan to benefit from these additional US resources, Ms Wells reminded Islamabad last week that “true sustainable development is really a marathon and not a sprint. It requires the development of effective regulatory framework, strong rule of law, fiscal health, and an enabling business climate”.

She recalled that during Prime Minister Imran Khan’s visit to the United States in July, President Donald Trump was “extremely enthusiastic about the potential for increasing and expanding our US-Pakistan trade and investment relationship. And both our governments are working very hard to find practical ways to do that. We commend Pakistan for surging 28 slots on the World Bank’s 2020 Ease of Doing Business ranking and being highlighted as one of the top ten reformers globally,” she added.

The paper also highlights some commercial connections between the United States and Pakistan such as, the US firm Excelerate is prepared to potentially invest more than $300 million to upgrade a floating storage regasification unit in Pakistan’s first LNG terminal.

ExxonMobil has been working to support Pakistan’s ambitious effort to access new LNG supplies.

Over the last five years PepsiCo has invested $800m to expand its infrastructure and diversify products, and Coca-Cola has invested $500m in the last couple of years, providing thousands of jobs for Pakistanis.

Uber Technologies entered the Pakistani market in 2016 and currently operates across nine cities, providing employment opportunities for thousands of Pakistanis.

The paper argues that US corporate social models are outstanding vehicles that create jobs and opportunities for communities associated with these foreign investments.

So, the US-Pakistan Women’s Council, for instance, fosters cooperation between American and private sector, Pakistani private sector, to mentor women and girls. Another American brand, KFC, supports the education of children with hearing disabilities and other underprivileged young people, partnering with schools throughout Pakistan.

Proctor & Gamble’s Children’s Safe Drinking Water Programme has provided 875m litres of clean drinking water to Pakistani communities in need.

Noting that US companies bring superior quality and technology, the paper points out that Pakistani leaders often praise US companies like Cargill and Corteva, that are passing critical technology and driving “enormous productivity gains in Pakistan’s huge agricultural sector”.

The US has also helped establish some of Pakistan’s most prestigious educational institutions and centres including Lums, IBA, JPMC and the Centre for Advanced Studies in Energy at Nust.

“And just to be crystal clear, the US-Pakistan development partnership has primarily taken the form of grants — not loans,” said Ms Wells while adding that such links “offer a sense of the direction that we envision”.