CPEC a game changer ?

[Nilgiri]

Don't give up so early, you can always try to persuade others to think otherwise with your facts. I was rather enjoying your line of argument as it made sense which is quite rare to be honest coming from across the border. The project in itself is very ambitious strengthened only by the special relation Pakistan enjoys with it's counterpart and that is the root cause for such optimism for us.

Oh I will discuss various points as they come up. By waiting I mean I need to wait for more data to come out. Right now its quite early still.

 

[PAKISTANFOREVER]

Oh I will discuss various points as they come up. By waiting I mean I need to wait for more data to come out. Right now its quite early still.

For someone who isn't Pakistani or Chinese, why are you so interested in the succcess or failure of CPEC?

 

[Nilgiri]

For someone who isn't Pakistani or Chinese, why are you so interested in the succcess or failure of CPEC?

I enjoy discussing economics related issues. 46 billion USD is obviously a large proposed investment for Pakistan economy. It is also the first time China is trying something of this scale, most of their investments so far worldwide involve resource extraction + stand alone infra, not long term logistics/connected network. It will be interesting to see if the spare capacity/liquidity China now has plays a big role in CPEC financing and what the end result will be eventually.

 

[PAKISTANFOREVER]

is not this obvious he is jealous of the CPEC power that will make pakistan centre of planet's trade and fill it with mony, CPEC has so much mony that pakistan can raise the defence budget to 100 billion by next decade and as we Indians are your enemy we should do analisys how to get in terms with CPEC power pakistan.
I have also started reading about CPEC in internet lots of topics I wanna to discuss on this. I am specially interested in route that wil go from queta and peshawar lots of investments are coming.

LOL.....Think you're being overly melodramatic. He is a good poster who asks good questions. Good at analysing things aswell. Albeit I don't really agree with his POV.

 

[ssethii]

 

[Nilgiri]

First of all India is regarded as a poor and dirty country by almost everyone . Our cities are not pile of garbage . Your cities have the honour of being the most polluted and dirtiest in the world .

http://www.indiatimes.com/travel/mumbai-voted-worlds-dirtiest-city-50300.html

http://indianexpress.com/article/ci...world-delhi-suffers-from-a-toxic-blend-study/

And considering Indians living habits I am not surprised they are fond of living in that dirt at all .

Second incase of income it wasn't until 7 years ago that you passed us . So that means for 65 years you were behind . . Human development index is not the be all end all . Pakistan is ranked well ahead then India in world happiness report 2016 . In terms of poverty , your percentage of population is way higher which suffer from poverty just check world bank figures or human development 2016 report . PK is ahead even on another Happiness index which is Happy planet Index . And the Life expectancy for both countries is almost equal so don't misguide people .

http://www.happyplanetindex.org/data/

http://povertydata.worldbank.org/poverty/country/IND
http://povertydata.worldbank.org/poverty/country/PAK

http://www.telegraph.co.uk/news/wor...els-higher-than-Pakistans-says-UN-report.html

In absolute terms, 41.6 per cent of India's 1.1 billion people earned less than 78 pence per day compared with 22.6 per cent of Pakistan's 173 million.

The report quotes its 'multi-dimensional poverty index' which includes measures of schooling, child mortality, nutrition, access to electricity, toilets, drinking water, and hygienic living conditions, and reveals India is poorer.
It found 53.7 per cent of Indians suffering from this broader kind of poverty, compared with 49 per cent of Pakistanis.

So according to this report India is behind on poverty , access to electricity , living in hygenic conditions and what not .

You might as learn from Pakistan how to live in a clean way .

http://tribune.com.pk/story/883648/...n-improving-water-and-sanitation-study-shows/

Pakistan was ranked five and India 92 .

And finally there loads of areas where Pakistan excell India like road infrastructure , Access to electricity ( only 75 % of India has electricity compared to 92 of ours) , sanitation etc etc . Just check hundreds of indicators here and you will find loads of fields where Pakistan is ahead .

http://data.worldbank.org/indicator

Im not saying Pakistan is behind in everything and India is ahead in everything. But overall India is ahead by most composite measures of development (the most famous being HDI)....and its putting more distance between the two each year.

For all the claimed better hygiene and health and cleanliness...why are Pakistanis expected to live 2 years less than Indians on average? That means when India continues to get its act together in the remaining places its lagging...that means the average Indian may soon live 5+ years than the average Pakistani and then even more.

 

[OrionHunter]

CPEC is truly a unique case.

CPEC is being financed by China and Chinese private sector in form of Direct Investments and Loans.

Pakistan is in no position to assure high rate of Interest or High profits to Chinese.

Therefore the onus is on China to make this project viable to get its money back.

But the dichotomy is that China is known for killing other nations Industries and creating jobs only for Chinese citizens

OR

There could be a different game plan altogether

Chinese will only build the Gwadar Port, CPEC's roads and pipelines infra as a part of their future Defence Strategy.

Chinese will not be looking at the economic viability of CPEC but look at it purely as Defence expenditure

ONLY TIME WILL TELL

The Chinese long term game plan is to establish a naval base at Gwadar for dominating the IOR and the Strait of Hormuz. The industries and power projects that are supposed to be part of the project are just side shows - a carrot dangled in front of the Pakistanis to persuade them shed their land for free for what are basically Chinese projects.

Someone did mention the thousands of megawatts of power that would be made available, but failed to mention that the cost per unit would be in the range of Rs 18-20 PKR, not cheap by any standards. That would be unaffordable to the ordinary Pakistani. After all, the Chinese companies investing in the CPEC have to pay back the enormous amount of loans they have taken from China's Central Bank and other lending institutions at high rates of interest.

Out of the $46 billion, $11 billion is a loan given by the Chinese to Pakistan for construction of motorways at high interest rates. But the question is: What is Pakistan going to export using this motorway that it is not exporting already? Export of low value goods such as textiles and mangoes would not be viable as the cost of transportation would be more than the cost of goods! Until Pakistan gears up to export high value goods such as steel, iron ore, specialized auto parts, automobiles, engineering goods and so on, using this road would be a non starter.

 

[Nilgiri]

Out of the $46 billion, $11 billion is a loan given by the Chinese to Pakistan for construction of motorways at high interest rates.

How high are these interest rates you talk of? As far as I know the standard rates being charged are 1.6% and 2% depending on the location. The higher interest rates normally govern the energy projects, not the transport/construction stuff.

Until Pakistan gears up to export high value goods such as steel, iron ore, specialized auto parts, automobiles, engineering goods and so on, using this road would be a non starter.

Steel and iron ore are not high value goods. Iron ore especially so is a non-replaceable raw commodity so a high population developing country should never really export it. Steel also only pays of its capex after many years as well given the scales to make it economically esp in todays environment of cheap chinese steel importing. Manufacturing is the only thing Pakistan should be looking at for high value....but it needs to train its kids and youth a lot better first....and bring in lots more economic reform with prudent fiscal policy.

Basic premise of your post is well thought out however.

 

[optimisticlad]

I dont think they are going to get any transit fee... Roads are built by them and pakistan has to repay at a rate of 18% on dollar value... Gwadar is leased for 40 years as of now and chinese have all rights on port.. no fees for Pakistan as per my understanding... power plants are also chinese companies, chinese engineers and chinese maintenance... but pakistan has to payback at 18% interest rate... i am not sure what pakistan will gain...

i you are ill informed and not sure about your comments ...you better stay away from this discussion
Thankx

 

[Khan_21]

Im not saying Pakistan is behind in everything and India is ahead in everything. But overall India is ahead by most composite measures of development (the most famous being HDI)....and its putting more distance between the two each year.

For all the claimed better hygiene and health and cleanliness...why are Pakistanis expected to live 2 years less than Indians on average? That means when India continues to get its act together in the remaining places its lagging...that means the average Indian may soon live 5+ years than the average Pakistani and then even more.

If India is ahead in HDI then Pakistan is ahead in world happiness report and Happy planet index . Both measures quality of life in a different way . Income distribution is much better in Pakistan and that is why you see much more prosperity across Pakistan compared to India .

As for life expectancy its almost equal the difference is negligible .

http://www.infoplease.com/world/statistics/life-expectancy-country.html

2015 estimates

India 68
Pakistan 67

https://www.google.com/#q=life+expectancy+pakistan

Just check the history of life expectancy and you will find India just got level around 2 years ago . There were times when the life expectancy gap between Pakistan and India was 6 years . Just like GDP per capita , India got level with us just recently when historically India was always behind .

We suffered greatly from 2008-2013 due to terrorism and that's what affected everything in Pakistan . With terrorism almost dead now every indicator is looking positive for Pakistan .

 

[Nilgiri]

If India is ahead in HDI then Pakistan is ahead in world happiness report and Happy planet index . Both measures quality of life in a different way . Income distribution is much better in Pakistan and that is why you see much more prosperity across Pakistan compared to India .

As for life expectancy its almost equal the difference is negligible .

http://www.infoplease.com/world/statistics/life-expectancy-country.html

2015 estimates

India 68
Pakistan 67

https://www.google.com/#q=life+expectancy+pakistan

Just check the history of life expectancy and you will find India just got level around 2 years ago . There were times when the life expectancy gap between Pakistan and India was 6 years . Just like GDP per capita , India got level with us just recently when historically India was always behind .

We suffered greatly from 2008-2013 due to terrorism and that's what affected everything in Pakistan . With terrorism almost dead now every indicator is looking positive for Pakistan .

I am quoting from UN data, not CIA world factbook. I personally feel the UN is more transparent about the methodology it uses whereas CIA just releases a number in its factbook each year based on some averages without explaining what they were.

I also am leery of composite indices like GNH that use "perception" ratings and flim flammy components like "generosity" with no explanation of their weightage or structured methodology beyond surveys (and no accompanying bias/error analysis).

I prefer it when we have numbers that can be computed from large volumes of direct observed/measured data.

Thats why I wont even quote the 100s of other such composite measures where India outpaces Pakistan (like failed state index and such), because a lot of them use this wishy washy stuff about democratic happiness, security perception and all kinds of other things that I feel end up being more subjective than objective.

Income distribution also does not mean much to me compared to absolute poverty rate (which Pakistan is better in but not by much). Thats because to get growth you need to allow income inequality to expand for a few decades. It happened to every society as it industrialises, even the USSR as hard as it tried to fight it (And ended up fiscally and politically failing because of it combined with pressure from its military spending strategy). Only later does social welfare kick in to smoothen out the income distribution (And even this is quite controversial to let happen but thats a topic for another day)

Just check the history of life expectancy and you will find India just got level around 2 years ago . There were times when the life expectancy gap between Pakistan and India was 6 years . Just like GDP per capita , India got level with us just recently when historically India was always behind .

Well Pakistan is a smaller country and inherited a higher GDP per capita at independence and higher aid inflow per capita along with possibly a better organised bureaucracy for its first 20 years or so. The stagnation started because for some reason education was always grossly ignored in Pakistan compared to India. The deepset difference started from the 80s onwards when India pulled ahead quite drastically in enrolment, completion rate, literacy rates, youth literacy, transfer rate, female education and other such indices (you can look up the data in the UNESCO database or even the google thing you are using which uses World Bank data)....and now India is quite far ahead.

To me education is the absolute key and crux (because of how it feeds into the base of health, income and many other important things), and it is worrying that pakistan bureau of statistics is reporting a drop in overall literacy rate of Pakistan in recent years.

That is the major reason why India is pulling ahead in many key areas and overcame the initial socio-economic advantage Pakistan enjoyed to some degree.

https://www.google.ca/publicdata/ex...0&tend=1339560000000&hl=en_US&dl=en&ind=false

Its the difference in education that more than offset the difference in life expectancy and income in the earlier period you were talking of going back some time:

http://hdr.undp.org/en/composite/trends

http://www.photius.com/rankings/human_developement_index_1975-2005.html

We suffered greatly from 2008-2013 due to terrorism and that's what affected everything in Pakistan . With terrorism almost dead now every indicator is looking positive for Pakistan .

Education is not looking so hot. It needs to be fixed ASAP or Pakistan will slip further behind in the development race. It feeds into things like health (an educated person is more likely not to be violent towards a Polio worker trying to vaccinate his kids etc...), income (obviously determines your potential and type of job) and many other important things.

This has little to do with the war on terror, since Pakistan education budget amount is generally mediocre to bad...but whats really bad is the transfer efficiency and transparency of the bureaucracy (i.e what actually gets spent efficiently instead of pilfered or wasted for captive corruption). Educating kids is not a very expensive affair, but it needs commitment and a good bureaucracy if you are to do it through a public initiative. Then there is high school education which is in a very bad state of affairs. Fewer than 50% of kids graduated lower secondary school in Pakistan (increasing at about 1.7% a year from 2008 - 2014)... Thats half of your demographic dividend spoiled right from the get go in the attempt to get people to middle class. Compare this with 80% for India in 2013 (and improving by about 2.6% every year from 2008 - 2013):

You can find more such data about education at:

http://data.uis.unesco.org/

Just like when working out if you had to choose 1 exercise, it would be swimming since it works out every part of your body....if you have to choose one sector to gauge a country's development by....it would be education.....because it illustrates where the country is headed and its potential.

Thats the main basis for me saying India is ahead. I don't mean to say Pakistan is behind in everything related to development....but it is well behind in this most important thing (Education). Its the very reason for India surpassing over time every other development indicator which it used to be behind. Education really is that important....because of its crossover effects. I hope Pakistan addresses it ASAP.

 

[Khan_21]

I am quoting from UN data, not CIA world factbook. I personally feel the UN is more transparent about the methodology it uses whereas CIA just releases a number in its factbook each year based on some averages without explaining what they were.

I also am leery of composite indices like GNH that use "perception" ratings and flim flammy components like "generosity" with no explanation of their weightage or structured methodology beyond surveys (and no accompanying bias/error analysis).

I prefer it when we have numbers that can be computed from large volumes of direct observed/measured data.

Thats why I wont even quote the 100s of other such composite measures where India outpaces Pakistan (like failed state index and such), because a lot of them use this wishy washy stuff about democratic happiness, security perception and all kinds of other things that I feel end up being more subjective than objective.

Income distribution also does not mean much to me compared to absolute poverty rate (which Pakistan is better in but not by much). Thats because to get growth you need to allow income inequality to expand for a few decades. It happened to every society as it industrialises, even the USSR as hard as it tried to fight it (And ended up fiscally and politically failing because of it combined with pressure from its military spending strategy). Only later does social welfare kick in to smoothen out the income distribution (And even this is quite controversial to let happen but thats a topic for another day)



Well Pakistan is a smaller country and inherited a higher GDP per capita at independence and higher aid inflow per capita along with possibly a better organised bureaucracy for its first 20 years or so. The stagnation started because for some reason education was always grossly ignored in Pakistan compared to India. The deepset difference started from the 80s onwards when India pulled ahead quite drastically in enrolment, completion rate, literacy rates, youth literacy, transfer rate, female education and other such indices (you can look up the data in the UNESCO database or even the google thing you are using which uses World Bank data)....and now India is quite far ahead.

To me education is the absolute key and crux (because of how it feeds into the base of health, income and many other important things), and it is worrying that pakistan bureau of statistics is reporting a drop in overall literacy rate of Pakistan in recent years.

That is the major reason why India is pulling ahead in many key areas and overcame the initial socio-economic advantage Pakistan enjoyed to some degree.

https://www.google.ca/publicdata/ex...0&tend=1339560000000&hl=en_US&dl=en&ind=false

Its the difference in education that more than offset the difference in life expectancy and income in the earlier period you were talking of going back some time:

http://hdr.undp.org/en/composite/trends

http://www.photius.com/rankings/human_developement_index_1975-2005.html



Education is not looking so hot. It needs to be fixed ASAP or Pakistan will slip further behind in the development race. It feeds into things like health (an educated person is more likely not to be violent towards a Polio worker trying to vaccinate his kids etc...), income (obviously determines your potential and type of job) and many other important things.

This has little to do with the war on terror, since Pakistan education budget amount is generally mediocre to bad...but whats really bad is the transfer efficiency and transparency of the bureaucracy (i.e what actually gets spent efficiently instead of pilfered or wasted for captive corruption). Educating kids is not a very expensive affair, but it needs commitment and a good bureaucracy if you are to do it through a public initiative. Then there is high school education which is in a very bad state of affairs. Fewer than 50% of kids graduated lower secondary school in Pakistan (increasing at about 1.7% a year from 2008 - 2014)... Thats half of your demographic dividend spoiled right from the get go in the attempt to get people to middle class. Compare this with 80% for India in 2013 (and improving by about 2.6% every year from 2008 - 2013):

You can find more such data about education at:

http://data.uis.unesco.org/

Just like when working out if you had to choose 1 exercise, it would be swimming since it works out every part of your body....if you have to choose one sector to gauge a country's development by....it would be education.....because it illustrates where the country is headed and its potential.

Thats the main basis for me saying India is ahead. I don't mean to say Pakistan is behind in everything related to development....but it is well behind in this most important thing (Education). Its the very reason for India surpassing over time every other development indicator which it used to be behind. Education really is that important....because of its crossover effects. I hope Pakistan addresses it ASAP.

What is the drop out rate in India in places where there is insurgency? Probably low and compared to national average lower than that .Lets see what is the literacy rate for north -east India and their education rate compared to rest of India? Insurgency hit areas in Pakistan from 08-13 were KPK , FATA belt and balochistan . Schools got destroyed and people stopped sending their kids to school . Do you know how much improvement their has been in KPK alone in 3 years because of relative peace ? . Its now about to rival punjab for literacy rate . Places where there is insurgency , education , health and daily life gets badly affected . But that is being overcome now. Sindh government has announced its biggest budget for education and KPK is rivalling punjab now due to peace there .

Despite our lower literacy than both India and Bangladesh , Pakistan has 7 universities in QS world top rankings and around 16 universities in QS asian top 250 universities . Bangladesh has zero universities in any ranking despite having a better literacy rate . NUST , GIK , Quaid e azam , PIES , agha khan , Punjab university ,LUMS ,IBA are ranked in top universities of the world which has been possible despite having lower literacy rate . India and Pakistan are the only two nations to have great universities from south asia . No other country from South asia including srilanka(which has a literacy rate of 90 %) has a single university in any ranking . Nor do they have any university than can rival any in Pakistan .

I am content with India getting ahead in some barometers because Pakistan was ahead for more many decades and is still ahead in alot of indices . One decade Pakistan is ahead in another India will be . Its a continuous cycle . Every dog has his day .

As for life expectancy there hardly is any difference . You will cite the websites where India is even slightly ahead . If anything i think no city in South asia rivals Islamabad for the quality of life it offers for its citizens .

 

[Nilgiri]

What is the drop out rate in India in places where there is insurgency? Probably low and compared to national average lower than that .Lets see what is the literacy rate for north -east India and their education rate compared to rest of India?

Literacy rate in North East is actually quite good and above the average of rest of India overall. I believe Assam is only slightly below the Indian average (75%)....and places like Mizoram and Tripura have around 90% literacy rates. These figures are from 5 years back from the 2011 census. Their education parameters would be similar in trend too, since literacy rate doesn't just come out of nowhere.

Schools got destroyed and people stopped sending their kids to school . Do you know how much improvement their has been in KPK alone in 3 years because of relative peace ? . Its now about to rival punjab for literacy rate . Places where there is insurgency , education , health and daily life gets badly affected . But that is being overcome now. Sindh government has announced its biggest budget for education and KPK is rivalling punjab now due to peace there .

I'm talking about literacy/education trends in Pakistan well before the insurgency/WoT as well. They were not good then either so I dont think we can put it down to insurgency 100%.

Anyways, it is better explained by looking at the population spread in Pakistan:

https://en.wikipedia.org/wiki/Administrative_units_of_Pakistan

Some 75% or so of Pakistan lives in two provinces: Punjab and Sindh....which were outside the main insurgency hit areas. So if we assume say the high school completion rate in the remaining 25% of Pakistan (Baluchistan + North West) was as low as 25% for arguments sake. That means they contribute 0.25*0.25 to the total overall ratio = 0.0625. Subtract this from total overall ratio of 0.5 to get 0.4375. Means Punjab and Sindh effective have a completion rate of 0.4375/0.75 = 0.583...around 58.3%.

Basically what that is showing is there is only so much the rest of Pakistan outside of the two heavyweights can influence the overall numbers of any development parameter. The overall Pakistani number is always going to be very close to the overall Punjab + Sindh number.....be it education, health, poverty, income by the virtue of the 75% presence of Punjab + Sindh in the Pakistan population profile.

The remaining 25%, no matter how bad their conditions are, will not pull down the average by a huge amount....because their weight is only 25% of the total.

Thats also why KPK improving literacy rate/education (compared to before) will not immensely improve Pakistan's overall literacy rate and education, that change has to come inside Punjab and Sindh. That is where the bureaucratic reform will need to be pushed through to improve education.

Despite our lower literacy than both India and Bangladesh , Pakistan has 7 universities in QS world top rankings and around 16 universities in QS asian top 250 universities . Bangladesh has zero universities in any ranking despite having a better literacy rate .

Universities/colleges are for more niche higher end jobs. What is the tertiary intake of total cohort for these three? Lets look at the UNESCO data:

About 10% for Pakistan, 13% for Bangladesh and 24% for India.

That means the very large majorities don't enter tertiary education at all and discussing the university rankings (which is the cream of the crop of tertiary sector which is a minority to begin with) only mean something for the highest elite which are a very small fraction of the population (and who are often susceptible to leaving the country afterwards anyway).

So the non-tertiary enrolled bulk are the people that then have to rely on what they acquired before (mostly up to high school in India....not the case for Pakistan where only 50% make it past lower secondary). These are the people that will be looking for the bulk of the jobs in manufacturing (or end up getting stuck in menial jobs, agriculture and informal economy) and thus they need to have the skills to do that from high school so they can be trainable in whatever apprenticing, skill workshop, training program etc efficiently. Thats where in the case of India, the Industrial Training institutes are being pushed in a big way now:

http://www.hindustantimes.com/educa...zzying-pace/story-7ZHcrnddB47mqiAZRUovYO.html

But I do not see such a push in Pakistan (maybe you can correct me) and the quality of the stock would be lacking to begin with anyway since Pakistan has yet to get its secondary school quality and quantity into some semblance of order overall.

This is actually going to be the major obstacle for CPEC economic transfer (capacity into production which is very reliant on human capital quality) down the road

I am content with India getting ahead in some barometers because Pakistan was ahead for more many decades and is still ahead in alot of indices . One decade Pakistan is ahead in another India will be . Its a continuous cycle . Every dog has his day .

Its not going to be a cycle for India but a continued increase. Onus is on Pakistan to catch up in education....you can look up how China did it (the path India is following now)....but it needs to be done.

Capacity in human capital is built and is not so easily lost. Countries are more like large loco diesel engines than a small micro car gasoline one, they have a large inertia in both stagnation/decline and upswing. The larger they are, the larger the effect.

 

[Asian.Century]

 

[MultaniGuy]

From Chinese perspective:
Get access to oil rich middle eastern countries
by-pass malacca straits

From Pakistani perspective:
China helps industrialize Pakistan
China builds Pakistan

So both sides benefits