Building on stable foundations

The China-Pakistan Economic Corridor, the flagship project of the Belt and Road Initiative, is now making significant progress. With quite a few major projects already under construction or completed, it will significantly enhance the sustainable development of Pakistan’s economy.

But even so, we should also address the stresses and problems created by the corridor to ensure that this project will further develop on a firm and sustainable basis.

The reality tells us that we urgently need to appoint personnel who are familiar with Pakistan’s economy, its international strategy, and its Islamic culture, and enhance our communication strength, which may include jointly establishing a coordinating mechanism for communication.

We should consider providing information about the China-Pakistan Economic Corridor on a regular basis, such as its construction progress, debt situation, future prospects, and the benefits it has brought to the people, to counter negative voices. For this purpose, we also need to encourage the Chinese media to set up branches in Pakistan to convey China’s voice, Chinese beliefs and culture to Pakistan.

We also need to streamline the corridor construction tasks. In doing this, we should first gradually shift the emphasis from large-scale infrastructure construction to developing industries and establish industrial parks, with more weight put on the role of the market in attracting nongovernmental and private investment.

Then we need to strengthen communication ties and keep up with the times in cooperating with the Pakistani side, so as to promote the integration of the new development strategies of the two countries.

This calls for balancing what we can do at different times while further reinforcing the independent and objective evaluation of investment projects.

Finally, it is important to give more weight to projects that will improve the livelihoods of ordinary people in Pakistan. Pakistanis who know and understand China well should be brought on board to influence more people in Pakistan.

The corridor should be seen not only as a matter concerning China and Pakistan, but as one concerning the interests of other related parties. That means construction of the corridor should be treated as an open project of broad international interests, so that all parties will

become active forces promoting construction of the corridor.

This means properly handling the China-India-Pakistan triangular relationship, for India is a key third party in the construction of the corridor. We should then make efforts to get more international organizations and countries interested in participating. This may help form a “China-Pakistan +” framework.

In fact, Saudi Arabia has already indicated a willingness to join in with investment. We should open the “corridor door” even wider and welcome the investment of enterprises from the Middle East, India, the United States, Europe and Japan.

The corridor should also promote the internationalization of the renminbi. Pakistan is a country susceptible to an external debt crisis, with the US dollar crisis as the key issue due to its weak exports. For this reason, it has been relying on external aid and loans from international organizations for a long time to maintain its current account balance.

This situation has recently worsened with depreciation of its currency against the US dollar, which in turn, has made its external debt crisis more prominent.

Therefore, jointly promoting renminbi settlement in investment and trade between China and Pakistan could also be promoted.

The Pakistani side could obtain renminbi through two channels, namely exports to China and use of China’s investments. Then, it will be able to purchase from China equipment and labor services, which will help the flow of renminbi between the two sides.

In view of Pakistan’s present trade deficit with China, we should also consider upgrading the second phase of the China-Pakistan FTA negotiations as soon as possible, so that the two countries can reach a consensus on some key issues such as schedules for realizing zero tariffs and current preferential conditions.

Eventually, these measures will help expand China’s imports from Pakistan, balance China-Pakistan trade and help Pakistan avoid the risks stemming from a dollar crisis.

The author is deputy director and associate research fellow at World Economics Division of China Center for International Economic Exchanges. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Construction of the ChinaPakistan Corridor should be treated as an open project of broad international interests

SONG CHEN / CHINA DAILY