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Does China prefer new trade partners to old friends like Pakistan?

And fine speeches in China might get more people to search him on the internet, but they're unlikely to seal too many deals.



By Shahab Jafry (Postscript)

Published: Thu 10 Oct 2019, 10:36 PM

Last updated: Fri 11 Oct 2019, 12:38 AM

By now Pakistani Prime Minister Imran Khan's speeches must have become predictable even for the Chinese. This was his third snap tour of Beijing this year, and the third time he reminded the Chinese how their success in lifting millions of Chinese people out of poverty in about 30 years really impressed him. "This has never happened in human history," he said once again, looking just as surprised as the first time. And how he wished he could take a leaf out of President Xi Jinping's book and put all the crooks in Pakistan behind bars as well. Would that the legal process back home wasn't quite so "cumbersome".
But this tour was more important; even more than requesting an urgent bailout (like the $2b they gave us in January) at (hopefully) below-market markup just so we can keep from drowning, or defaulting, for another couple of years. Having become one of the most googled and tweeted about heads of state in the world, his next mission is to save CPEC (China Pakistan Economic Corridor), Xi's stroke of genius and something every Pakistani leader all the way back to General Musharraf has been taking credit for.
But why does CPEC need to be saved, rather "revived," according to the Pakistani press? Wasn't it the answer to all our problems? And sooner rather than later the old, fabled Silk Road would be revived in a fascinating, modern setting; with massive infrastructure and trade projects connecting Asia, Europe and beyond.
Needless to say that Pakistan's ruling party, PTI (Pakistan Tehreek e Insaf), does not buy all the "exaggeration" and "fake news" that the project needs to be "revived." All the PM is doing in China is "speeding it up," besides raising more business and trade talking points with the Chinese. That's why he's also throwing the Pakistan Steel Mills (PSM), once the most prominent and prestigious among the family silver, into the deal.
But call it "speeding up" instead of "reviving" all you want, it won't change the simple fact that CPEC has clearly been pushed down on the priority list since Imran Khan's party came to power last year. Chinese FDI to Pakistan has dropped 77 per cent during this time, according to Bloomberg, and most CPEC projects stand stalled.
Some observers say it's all because Pakistan's severe Balance of Payments (BoP) crisis and credit crunch forced it to look anywhere it could for immediate, emergency financing. That, to cut a long story short, gave CPEC less time and urgency in the PM's cabinet. Others, however, have suggested that perhaps it was the Chinese that took the foot off the gas, so to speak, because of other concerns.
One, they felt Pakistan's foreign policy priorities changed with the new government last year as Islamabad once again focused on improving ties with America; most likely because Delhi had moved so close to Washington all the time Islamabad was cast into the wilderness.
Two, Pakistan's famous corruption, coupled with a paralysed bureaucracy didn't help, and the Chinese simply didn't want to see all their money wasted till some important problems were ironed out.
Three, terrorism, too, could have played a part. The May12 bomb attack on a five-star hotel in Gwadar clearly rattled the Chinese. If there's one thing investors hate, its terrorism.
Either way, the Chinese really didn't like what Imran's commerce minister, Razzaq Dawood, said to the Financial Times just a few days into the job. "I think we should put everything on hold for a year so we can get our act together," he said. So perhaps the PM has realised that he just played it wrong, and is looking to make amends.
Yet, unfortunately, even if Imran has finally found the right thing to do, he might have timed it wrong. And fine speeches in China might get more people to search him on the internet, but they're unlikely to seal too many deals. That's because the Chinese are in a bit of a pickle themselves. The trade war with Washington isn't ending, and it's already pushed China to its lowest growth figures in almost three decades.
And Imran visit coincides with the (most likely) disappointment of the 13 round of trade talks in Washington. So even if the Chinese take the Steel Mills, they're unlikely to put too much money into it at the moment.
Maybe Xi also told Imran that he was off to India and Nepal as soon as he sees him off, and then onto an extended tour of the Asia Pacific region. Could that be because they're more interested in genuine trade partners as opposed to old friends that always need bailing out?
Shahab Jafry is a senior journalist based in Lahore, Pakistan


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