China wishes to shift industries to Pakistan: Iqbal

[Abingdonboy]

I stopped caring about responding to this guy. I actually thought should I reply when he said "trillions" of investment...but figured whats the point. Its the same guy that said 10 years of 7% growth is 70% growth or something.

So compounding wasn't taken into effect?

Like @Oscar said somewhere, this is pretty much the last bus that China is sending to Pakistan to get its affairs in order....but China is not going to put its own economy on the line if Pakistan misses it again. It is Pakistan that has to do the hard legwork to make this all succeed. Most of the 46 billion dollar CPEC is still in the form of MOUs if I am not mistaken.

This basically ensures maximum economic benefit for China (increased goodwill and demand for Chinese goods from Pakistan)...and a way out for China if their initial investment stream outside of what they gain strategically (infra route to arabian sea) is a flop.

But I guess when you have been in the desert for so long (economically speaking)...any oasis that pops up in the horizon is good news....and you put out of your head that it may be a mirage. We have to wait and see how this all materialises....without education and at least 2 years vocational training of majority of the students that graduate high school....Pakistan is going to be stuck in its rut long term as well. CPEC will end up having been little more than a dreamy distraction.

This sounds about right.

The Chinese have got to where they are because they are increidbly shrewd and they aren't interested in doling out free lunches. That said, the Chinese are going to have to rely on Pakistan getting its internal issues in order and this extends far beyond violence but the route causes of such ie the fractured nature of Pakistani society. i don't know if I can see a $46BN lollipop being offered to the GOP as being enough to get this addressed and within the space of time one is talking. Look at the CPEC threads on here and you can already see that CPEC is being distorted from its orginal mandate (economically feasible projects) to fit Mr Sharif's interests/politics ie shifting some projects to the East (and thus away from the West). If the comments on these threads are anything to go by, those provinces that are being denied their share (Balouchistan/KPK) aren't going to accept that. Some members have even said "we either get our way or no CPEC". If this is the talk on PDF amongst educated members then one can only speculate what the feeling is on the ground. And this is all going on before CPEC has even got going in earnest.

As I've said, these issues go to the very heart of the troubles in Pakistani society and they can't exactly be fixed overnight.


Addtionally, I've yet to see a credible account of how Pakistan is going to service the enourmous amount of debt being used to finance these projects. Being charged 7-8% (in some cases 30%) when you are growing at <5% and your FOREX barely stands at $30BN makes it seem like a debt trap is coming Pakistan's way.

 

[Nilgiri]

So compounding wasn't taken into effect?

Yeah, for a while I wouldnt let him forget it hehe since he was boasting about being from some ivy league university.

But now I just dont care enough. Besides in other threads he is actually quite a reasonable fellow compared to some others here.

He just has big dreams. I had similar dreams too much earlier for India....now I am more pragmatic ...except when I am dreaming too . But I don't air such dreams in serious discussions as much as I can.

The thing with economics (or anything really) is that you must always plan for everything that can go wrong....to go wrong and have plan B, plan C etc... rather than plan for everything to go right as this fellow tends to think. He may learn that in the years to come. But for now its still time to make hay when the sun shines (projection wise) since there are years to go till the reality gets realised (for better or worse).

The Chinese have got to where they are because they are increidbly shrewd and they aren't interested in doling out free lunches. That said, the Chinese are going to have to rely on Pakistan getting its internal issues in order and this extends far beyond violence but the route causes of such ie the fractured nature of Pakistani society. i don't know if I can see a $46BN lollipop being offered to the GOP as being enough to get this addressed and within the space of time one is talking. Look at the CPEC threads on here and you can already see that CPEC is being distorted from its orginal mandate (economically feasible projects) to fit Mr Sharif's interests/politics ie shifting some projects to the East (and thus away from the West). If the comments on these threads are anything to go by, those provinces that are being denied their share (Balouchistan/KPK) aren't going to accept that. Some members have even said "we either get our way or no CPEC". If this is the talk on PDF amongst educated members then one can only speculate what the feeling is on the ground. And this is all going on before CPEC has even got going in earnest.

As I've said, these issues go to the very heart of the troubles in Pakistani society and they can't exactly be fixed overnight.

The only number that matter to me concern how much China invests in training Pakistani youth, specifically from 18 years to about 30 years old.

China has not done any of this in any significant project worldwide....and Pakistanis are a pretty inept lot regarding this from what I have seen (though India is also below-average though improving).

Why China hasn't done this is simple, they gain the most economic margin by simple resource extraction and creating captive markets. Why would you create competitors to your own economic model while you still have 100s of millions of people that need to move up the economic chain domestically? It wont be till 2030, maybe even 2050....a full generation later basically till China is so far removed from such a model (theoretically) that it can then seriously afford to face the impact of its own de-industrialisation like the US, West and Japan already have been doing do for quite some time now.

So how much China spends (and what the ground results are from that spending) with regards to industrial training in Pakistan is the only thing that will be of real consequence to fundamentally change Pakistan's economic realisation.

One can also make the case for education sector in general, but that is already getting far removed from what CPEC is all about.

 

[Viper0011.]

There is a huge problem with security. And that won't go away...because it is linked to religion.

You are right on the second part. But such a problem exists inside India too, with the BJP and Hindu nationalists doing all kind of crazy stuff. Where it does differ compare to the issue in Pakistan, is the fact that Hindu nationalists destroy and kill India's Christian, Muslim and other minorities, but they won't do anything to destroy their system and the economy. In Pakistan's case, these fukking mullahs will issue fatwas to destroy educational institutes, modernization, civilization, etc.

The problem only has one solution and it has finally start to establish its roots. The solution is a democratically run civilian system that enforces common ground, peace, diplomacy and economic prosperity. I recently read a report that just in Punjab (Pakistani side), they had arrested over 150 mullahs on giving crazy sermons and spreading some hate message. So that's only possible through a civilian system because it has backing of the majority of the public.

When $$$$ start to rain in as the Pakistani economy grows, majority of youngsters will start to work, education will spread more and the civilization and $$$$ will take over the bad parts of the country. Once that happens, the economy and financial freedom backed by education will overwrite this entire little culture created by these crazy mullahs.

Remember, these issues exist among a small fraction of the Pakistani population. When I visited Pakistan many years ago, I didn't find mainstream cities to be any different then the Indian side. I went to plenty of parties where there was plenty of Alcohol and women and dancing and all. So be careful in blaming the entire country for screw ups of a few thousand, that too, in war torn areas next to Afghanistan and for obvious reasons. Its like me blaming the entire India for what few hundred thousand crazy people from BJP, RSS and Shiv Sena do to Indian minorities!!

 

[PARIKRAMA]

This source of capital coming into Pakistan via China is the best way for GOP bcz such investments will help first diversify and strengthen trade relations between Pakistan-China as compared to traditional partners in Eurozone, USA, other countries.. Second, the appetite of Chinese investments are pretty huge and its firms are trying to increase geographical footprint with overseas production bases. The third and most important point being Chinese firms are very strongly working to optimize their supply chain productivity which leads them to open up new activities in Pakistan.

Of course Pakistan can learn from China how they have absorbed the manufacturing sector development with the help of technology in various sectors, which all together raised the profile of the industries and their contribution to the economy. If and when Pakistan learns this, it can automatically become a net exporting country for multiple goods and services.

Primarily Pakistan can focus from China the following

• China's expertise solution in infrastructure, transport, power sector, telecommunications, and the military industrial complex
• Commodities from mining to exports like copper, coal, iron ore, zinc, lead etc found in Sindh and Baluchistan.
• Development of port cities and border areas, a way of safeguarding Chinese investments for strategic and energy need purposes.
• The consumer market of Pakistan which can help give productivity at fractional labor costs for Chinese companies setting up manufacturing units in Pakistan. .

The major benefits for Pakistan comes via the effect of such investments in the form of direct and indirect injections into the economy.

• The industry wide equipment modernisation and increased automation will be able to raise productivity, quality and a new ability to meet order requirements in quicker time. Eg Textile industry.
• The Human resources/Labor will see more new skill sets being learned which makes them far more better prepared to handle multiple job avenues.
• China invests a lot in R&D and this segment will make lot of product and process research to be done in Pakistan. For example, any R&D done for agriculture produce can in fact bring in a very strong green revolution in Pakistan and also help farming difficult crops with long gestation like cotton.
• The local industry will get an opportunity to come up to international standards and while they start exporting they will learn the vagaries of international norms and competitions.

But there are bottle necks too

• Biggest bottle neck is political and economical will power
• Lack of a democratic government run for say at least 2 decades.
• Limited industrial groups retaining profits and not diversifying to compete for global markets
• government policies for reforms
• the high security threat to such investments in the form of terror led risks

Untill the GOP and the parliament properly commits itself to a long term growth strategy which also aspires to a high GDP growth year on year and takes affirmative actions to address the issues, the threats and removing bottlenecks, in reality the FDI coming from China into Pakistan will remain limited. Thus, Pakistan will not realize the potential it has for exports of its locally produced goods, commodities etc and will remain a net importer for most cases and will be an underachiever.

The biggest threat being in case Pakistan misses the opportunity being presented by China, the FDI in future may be very very limited or negligible. So GOP has to act quick and with concrete steps.


@WAJsal @Oscar @Horus @Slav Defence @Icarus @MilSpec @AUSTERLITZ

 

[Viper0011.]

Currently the west is only interested in selling them weapons, and india can never reach the level of china due to india vast majority of different demographics and religions diferences, plus all of the south asians are corrupted to the core and will remain so atleast in the 21st century

You'd be surprised what a few trillion dollars can do . The West wants India to be the next super power so that will happen. Unlike China, the entire West backs India up......

 

[CHD]

You'd be surprised what a few trillion dollars can do . The West wants India to be the next super power so that will happen. Unlike China, the entire West backs India up......

Good for us, the more West backs india, the greater will china pumps in Pakistan and i dont think no country in the west has $ 3 trillion reserves and china can play this game for a long time

 

[Nilgiri]

Good for us, the more West backs india, the greater will china pumps in Pakistan and i dont think no country in the west has $ 3 trillion reserves and china can play this game for a long time

And you obviously dont understand how reserves work. Thanks for your input though.

Just keep in mind that China spent twice Pakistans entire GDP in USD just to prop up their currency last year....they are not going to sacrifice their own financial stability for some long winded dream.

Ever wonder why CPEC is just 46 billion dollar "proposed" over many years? Its a trial run to keep everyone happy and hope things go as planned in the long run (which is a ball in Pakistan's court, not China's.). Forex reserves are not investment money that can be spent on a dime.

 

[CHD]

Ever wonder why CPEC is just 46 billion dollar "proposed" over many years?

Its not over many years, even some of the projects are 80% completed and most of the chunk of $46 billion will be spent before 2018, and their are other projects of billions of dollars under consideration and china is ready to finance which are are not even under this $46 billion.

 

[Samlee]

All the development is taking place in Lahore and rest of Pakistan is neglected.
Pakistan should develop all the coastal cities in Balochitan.....built massive infrastructure, build industries in Balochitan, it will help relocating people from Southern punjab and upper Sindh to Balochistan.

Can you imagine if all the coastal cites (Gwadar, Jhirk, Jiwani, Keti, Ormara, Pasni, Pishukan, Shahbandar) are devloped in Pakistan?

We Should Invite Investors From All Over The World To Construct Port Cities On BOT Basis.Considering The Lucrative Location Makran Coast Is In.The World Will Come With Their Kitties

 

[Nilgiri]

Its not over many years, even some of the projects are 80% completed and most of the chunk of $46 billion will be spent before 2018, and their are other projects of billions of dollars under consideration and china is ready to finance which are are not even under this $46 billion.

I will wait to see how its reflected in the UNCTAD data. The 80% "completion" of projects barely registered anything for 2015.

Do you have a link to a source that gives specific investment flow plan to 2018...that are not merely MOUs?

You are the only one that has clearly addressed at least a timeline to me. But I still need a good source to verify..

 

[Samlee]

And you obviously dont understand how reserves work. Thanks for your input though.

Just keep in mind that China spent twice Pakistans entire GDP in USD just to prop up their currency last year....they are not going to sacrifice their own financial stability for some long winded dream.

Ever wonder why CPEC is just 46 billion dollar "proposed" over many years? Its a trial run to keep everyone happy and hope things go as planned in the long run (which is a ball in Pakistan's court, not China's.). Forex reserves are not investment money that can be spent on a dime.

You Indians Have No Idea About CPEC So Stop Trolling.The $46 Billion Is Just For An Initial This Is Going To Extend To $100 Billion Plus Investment And This Is Just The Basic Infrastructure.This Does Not Include TheInvestment Chinese Industrial and Shipping Companies Are Going To Make

 

[Nilgiri]

You Indians Have No Idea About CPEC So Stop Trolling.The $46 Billion Is Just For An Initial This Is Going To Extend To $100 Billion Plus Investment And This Is Just The Basic Infrastructure.This Does Not Include TheInvestment Chinese Industrial and Shipping Companies Are Going To Make

Yes show me the guarantees and commitments...not just MOUs.

Do you know what the average conversion rate is for total MOU proposals worldwide?

If its a lot higher for CPEC, so be it....but we need to see evidence of that in the numbers in this current fiscal year itself.

This is all I can get for Pakistan w.r.t FDI for fiscal year 2015/16:

Pakistan receives $119.3 million in FDI, higher by 7.5% - The Express Tribune

If you got something more, please post.

 

[CHD]

I will wait to see how its reflected in the UNCTAD data. The 80% "completion" of projects barely registered anything for 2015.

Do you have a link to a source that gives specific investment flow plan to 2018...that are not merely MOUs?

You are the only one that has clearly addressed at least a timeline to me. But I still need a good source to verify..

Refer to this thread with, it has all the updates
China Pakistan Economic Corridor (CPEC) | Updates & Discussions | Page 36

 

[Scavenger]

China's main issue remains English and other languages compared to India. Pakistan doesn't have that issue as English is spoken widely in the country and a small course can bring people up to speed as its not a new language to them. So China plans on using the Pakistani labor and will setup the base to compete against India's labor market. One of the MAIN reasons why India is hell bent in stopping and destroying the CPEC project at all costs.

You are incorrect.

English is required in a labour pool for services export.

It is not required for product export other than the company higher ups should speak it for contract finalization. The reason why China became the worlds factory without speaking english widely or properly.

China or its companies have zero plans to use Pakistan for services export.

Refer to this thread with, it has all the updates
China Pakistan Economic Corridor (CPEC) | Updates & Discussions | Page 36

I think you are hell bent on believing that CPEC is a miracle. Nobody can rob you of that right.

However, keep in mind that absolutely every penny that China invests in Pakistan (CPEC or no CPEC) is counted by the State Bank of Pakistan.

Its one of the primary jobs of the Central Bank to know how much money is flowing in and how much currency conversion is needed.

That figure - of how much China invests in Pakistan each year is given out very very clearly by SBP. As of now you are not even receiving $200million per year from China, let alone billions of dollars each year.

For your happiness's sake, I hope the figure increases.

 

[Samlee]

Yes show me the guarantees and commitments...not just MOUs.

Do you know what the average conversion rate is for total MOU proposals worldwide?

If its a lot higher for CPEC, so be it....but we need to see evidence of that in the numbers in this current fiscal year itself.

This is all I can get for Pakistan w.r.t FDI for fiscal year 2015/16:

Pakistan receives $119.3 million in FDI, higher by 7.5% - The Express Tribune

If you got something more, please post.

1.Chinese Do Not Normally Give Direct Cash Handouts.It Is Not Like That $46 Billion Will Suddenly Be Transferred to State Bank Accounts And Get Recorded As FDI.The Money Is Transferred to Chinese Companies And Those Companies Then Mobilise Men and Material To Complete The Desired Infrastructure
2.$46 billion Is Not Going To Be Spent Overnight In LumpSum.It Is Going To Be Given As Project Assistance Over A Period Of Time.
3.The Projects Are:
a)Sukkur Multan Section of Lahore Karachi Motorway
b)Upgrading of ML 1 Railway Line
c)Gwadar Port Upgradation,East Bay Expressway and International Airport Not To Mention The First SEZ Under CPEC
and Oil Refinery
d)Port Qasim and Sahiwal Coal Power Project
e)Havelian Dry Port
f)Karot Hydro Power
g)Suki Kinari(The First Project To Be Financed By AIIB,Just Goes To Show The Priority CPEC Has For China)
h)Dualisation Of Karakoram Highway(Now In It's Final Phase Raikot to Islamabad)
i)Lahore Orange Line Metro Train
k)Thar Coal Mining And Power Generation

The Above Are Some Of The Only Initial Projects.So You See Not Only Have Those MoUs Have Been Converted.They Are In Their Final Stages Of Completion.By 2018 CPEC Would Definitely Start To Function

You are incorrect.

English is required in a labour pool for services export.

It is not required for product export other than the company higher ups should speak it for contract finalization. The reason why China became the worlds factory without speaking english widely or properly.

China or its companies have zero plans to use Pakistan for services export.

English Is Also Required To Contact and Converse With Westerners.It Is The Global Language Of Business And Commerce And Is Not Just Required for Services Exports.My Sir Has Also Worked As Salesman For Numerous Chinese Companies Who Appointed Him On The Basis Of His English Skills

I think you are hell bent on believing that CPEC is a miracle. Nobody can rob you of that right.

However, keep in mind that absolutely every penny that China invests in Pakistan (CPEC or no CPEC) is counted by the State Bank of Pakistan.

Its one of the primary jobs of the Central Bank to know how much money is flowing in and how much currency conversion is needed.

That figure - of how much China invests in Pakistan each year is given out very very clearly by SBP. As of now you are not even receiving $200million per year from China, let alone billions of dollars each year.

For your happiness's sake, I hope the figure increases.

As I Have Mentioned Earlier Chinese Do Not Normally Give Direct Cash Handouts.It Is Not Like That $46 Billion Will Suddenly Be Transferred to State Bank Accounts And Get Recorded As FDI.The Money Is Transferred to Chinese Companies And Those Companies Then Mobilise Men and Material To Complete The Desired Infrastructure

So If The Money Is Not Appearing In SBP Records It Does Not Mean That The Investment Is Not Coming.Get Your Facts Strait