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Why Pakistan is letting itself get colonised by China

Why Pakistan is letting itself get colonised by China

International Monetary Fund has warned in its latest report that the repayment obligations that come with the 46 billion-dollar CPEC investment will be serious for Pakistan.

Photo: Reuters Photo: Reuters

International Monetary Fund's latest warning on CPEC has sent ripples in Pakistan's political class. Soon after the International Monetary Fund (IMF)'s assessment on CPEC, lawmakers from the upper house of Pakistan expressed fear that the CPEC could turn into another East India Company if the country's interests were not actively protected.

Last year in April, Chinese President Xi Jinping rolled out his most ambitious project China Pakistan Economic Corridor (CPEC) with the initial investment of 46 billion-dollar. The CPEC investment is one of China's biggest ever outside the country.

Soon after the announcement, Pakistan's Prime Minister Nawaz Sharif said that the $46 billion CPEC would be a "game-changer" for the country as well as for the entire South Asia region. Sharif's statement underlines the geopolitical significance of this project not only for Pakistan but also for the South Asian giant.

But, the first real assessment by an international financial global organization has raised serious doubts about the long-term impact of the Chinese investment in Pakistani economy. IMF has warned in its latest report that the repayment obligations that come with the investment will be serious for the country.

Moreover, Beijing stands to gain more as the CPEC will essentially make it easier for China to import oil, gas and other resources from Middle Eastern countries such as Saudi Arabia and Iran via the port and an extensive land route in Pakistan.

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However, Pakistan has got its own share of problems that will force Nawaz Sharif to walkover the IMF's warning and look forward to the Chinese investment. Here's why:

Weak economy

 

As per the State Bank of Pakistan, country's total foreign debt and liabilities has piled up to Rs 74 trillion, which is a record high in the history of Pakistan. Till 2013, the total debt of the country stood at $61.9 billion, which was the first financial year of Nawaz Sharif's government.

Pakistan badly needs huge foreign investment as the current situation is quite disappointing. The State Bank of Pakistan statistics showed that country's overall foreign private investment (FPI) plunged by 55 per cent to $405.5 million during July-February 2015-16 from $898.3 million in the same period last year.

This drastic decline was due to a massive outflow of $345 million from the equity market during the period. Nawaz Sharif knows that terrorism has severely affected country's prospects of foreign investment. And in such turbulent time, he is in no position to back off from the 46 billion-dollar project which is three times the total FDI Pakistan has got in the last decade.

India's rise

Pakistan's relations with the United States has virtually ebbed over a period of last one decade. And, during the same period India's economy has done fairly well. Last year, India replaced China as the fastest growing major economy in the world.

According to Delhi's Central Statistics Office, India's economic growth is now expected to hit the high of 7.6 per cent in year 2016. India's last year's quarterly growth was in line with expectations at 7.3 per cent which outstripped China's 6.9 per cent.

All troubles aside, India's economic growth could be the most worrying factor. India is one of the biggest purchasers of arms in the world and Pakistan will be deeply worried with its neighbour's military prowess exceeding its own. China also sees partnering with Pakistan as an effective strategy to counter India's rise in the region.

"Much of what we have seen in the strengthened China-Pakistan alignment in the last decade is a reaction to the rise of India. China's move to invest in Pakistan has been purely geopolitical and it's policy has been driven by power political criteria," writes Andrew Small in his book - The China-Pakistan Axis.

 

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Energy crisis

Pakistan has also been gripped by severe energy crisis for some years with parts of the country facing acute electricity shortage. In most of the places electricity cut goes for up to 20 hours a day. The country has an installed electricity capacity of 22,797 megawatts (MW), but production stands at a dismal 12,000 MW. China has announced $34.4 billion for power projects in Pakistan.

Poverty

What is more serious of all is acute poverty in Pakistan. A little less than half the population of Pakistan comes under poverty line. At least four out of 10 Pakistanis are living in acute poverty with the population of Balochistan faring the worst among the provinces. Pakistan's first-ever official report on multidimensional poverty states that 38.8 per cent of Pakistan's population lives in poverty. A majority of the rural population 54.6 per cent lives in acute poverty.