Blessings of Chinese Investments & Way Forward
Editor's Note: The author is Dr Mehmood Ul Hassan Khan, Executive Director of the Center for South Asia & International Studies (CSAIS), Islamabad, and Regional Expert on China, CPEC & BRI. This article only reflects the opinion of the author, not necessarily of Gwadar Pro.
Currently, Pakistan is in dire need to attract more foreign direct investments (FDIs) to avoid so-called propagated default. The incumbent government headed by Prime Minister Shehbaz Sharif is striving to maintain economic stability and achieve sustainability. However, the main economic indicators are pushing us into deep waters.
In this doom and gloom, the Chinese government and its private companies have shown their interest in investing in diverse sectors.
China has now become the biggest investor and trading partner of Pakistan which has further strengthened its capacity building in infrastructure, energy, health, agriculture, manufacturing sectors and last but not least, the industrialisation process.
According to the Board of Investment (BOI) Pakistan’s data, China has contributed over 23 percent of the total FDI in the country received in the first five months of the ongoing fiscal year 2022-23.
Comparative studies reveal that in FY 2021-22, Pakistan received $531.6 million (28.46 % of the total) FDI from China while in FY 2020-21 despite the COVID pandemic Pakistan received $751.6 (41.3%) million FDI from China. Moreover, in sector-wise FDI in July-Nov 22, the power sector received $204 million followed by the financial business and oil and gas sectors with $141.1 million and $40.2 million respectively.
Undoubtedly, CPEC and the Chinese investments have become a blessing for the country, industry and people alike. As per the Chinese Ambassador to Pakistan Nong Rong, CPEC has provided 192,000 new jobs, 6,000MW of power supply, 510 km of highways, and 886km of transmission line, which proves to be a solid foundation for Pakistan’s socio-economic development.
Moreover, Chinese investors are trying their best to make Pakistan greener. China has become the biggest investor in green energy in the country. According to official figures (December 2022) out of the $144 million in foreign investment in solar PV plants in Pakistan, $125 million is from China, accounting for nearly 87 percent of the total which vividly reflects Beijing’s commitment towards socio-economic development and transformation of its iron-clad brother Pakistan.
Various Chinese private companies are making investments in the IT and digital economy of Pakistan due to which hopefully, its IT industry will reach $10 billion by 2025.
Future prospects of Chinese investments and CPEC are bright. According to a published report titled “Overview of Pakistan’s Power Sector and its Future Outlook” issued by the China Three Gorges South Asia Investment Ltd (CSAIL), a total of more than 36 CPEC projects, with a projected expenditure of $27.5 billion, are in the works and it is believed that many of them will be completed by 2030.
Moreover, it is estimated that 700,000 new jobs will be created by 2030 under CPEC. A recent study conducted by the CPEC Centre of Excellence, Ministry of Planning, Development and Reform of Pakistan showed that indirectly, CPEC could help create even 1.2 million jobs under its presently agreed projects.
It has further strengthened Pakistan’s economic development. Hopefully, the development and completion of special economic zones (SEZs) under the umbrella of CPEC will further enhance Chinese FDI in the years to come.
China-funded Eastbay Expressway of Gwadar port has commenced which has already reduced physical distance and increased socio-economic utility since June 2022. It has further modified the connectivity of the port, which is now transporting two hundred thousand tonnes of fertiliser and contributing to the overall development of the country’s economy.
China is also ready to facilitate and support Pakistan under the flagship holistic initiatives of global development and security. Its private companies are still ready to contribute to the well-being of its people and the peace and development of the region and beyond.
CPEC has transformed Pakistan completely, making it an attractive destination for FDIs. Chinese investments are blessings and the policymakers of Pakistan should take care of their genuine concerns with sincerity and sense. The way forward heavily rests on constant conflict resolution through the highest political consultation, diplomacy, dialogue and development.