Big Chinese investment to kick-start Pakistan economy
DOBAI: The big Chinese investment plans announced this week, will kick-start the Pakistani economy - if all goes well.
China, the closest friend of Islamabad in economic and diplomatic fields for six decades, comes to Pakistan at a time when most traditional sources, of FDI, official development assistance (ODI), multilaterals, and foreign trading partners are holding back.
It can prove to be Beijing's shot in the arm for Pakistan. For instance, as soon as the visiting Chinese Prime Minister Wen Jiabao, and his 250 member businessinvestors team announced $36 billion investment plans, the bourses index rose to a record 30-month high.
The injection of the Chinese capital can provide a spike to Pakistani economy when GDP projection are down to 2.5-2.8 per cent for the current FY-2011, compared to the last decade's 4.5 to 6.0 per cent.
The Chinese will invest in 35 projects, costing $36 billio, over five years - 2011-15.
It includes 13 projects by the public sector, and 22 by the private sector. In case Pakistan quickly absorb this investment, it will stimulate other regions, particularly GulfMiddle East, US, UK, Japan and EU to resume, and enlarge, FDI inflows into Pakistan, as in the past.
The projects include: energy, oil and gas, mining, infrastructure development, power - including projects based on coal, hydel electricity, and gas - information technology, electronics, telecommunications, chemicals fertilizers, valueadded textile manufactures, automobile assembly, automotives,, agricultural implements, agriculture and agro- based industry, pesticides, cool chains, food and fruit processing, and packaging, livestock and dairy faming.
On the eve of signing of the investment agreements, Prime Minister Wen said "China will help Pakistan to find markets in our country in order to reduce the trade imbalance" which, for years, is against Pakistan. It is still widening.
"We will send trade promotion delegations to Pakistani to identify items, China can import."
The two sides are now setting their sights to boost bilat- eral trade to $25 billion annually over the next few years. Tariq Puri, Chief Executive Officer of Trade Development Authority o Pakistan (TDAP) says " trade between China and Pakistan will increase to $15 billion by 2015. and $10 billion in two years," he told the Pakistan-China Business Cooperation Summit.
The two-way bilateral trade between China and Pakistan reached $4.492 billion in FY-2010. The trade balance is against Pakistan. Its exports to China rose from $674 million in FY-2008 to $1.209b in FY-2010. -Afp