CPEC - stalled and lost momentum?

[313ghazi]

I am not trolling or such just asking Pakistani friends on PDF that how can CPEC actually help Pakistan. As far as I know,

1. The Chinese workers working on the projects and raw materials for the same are coming from China.

2. It is a bilateral corridor hence Chinese products will flood into Pakistani markets and minimal will be sent to China as Pakistan doesn’t have a manufacturing industry to that level.

3. 62 Billion dollar loan is being given to Pakistan by China including an amount as investment, that amount is being spent by Pakistan on Chinese workers and raw materials hence all the money is returning to China and Pakistan is getting free loans.

I’m just curious so don’t curse me pls.

1. I believe most of the workers are Pakistan, but I suspect most of the experts are Chinese. I doubt raw materials are coming from China (apart from steel) but a lot of the machinery will be coming from China.

2. CPEC is more than a corridor. Full details of the projects and progress can be seen here. http://cpec.gov.pk/progress-update

The idea is that through development of infrastructure, establishment of SEZ's, ending the power deficit, we'll create the physical environment required to help industry flourish in Pakistan. The transit of goods to and through Pakistan is only a very small part of this project. The hope is to attract foreign investors to setup manufacturing and other industry in Pakistan and also encourage local companies to compete with them. Note i used the word hope - i'll touch on that later on in this post.

3. The biggest winner of CPEC is China - this is the same for all OBOR projects. They turn cash into loans which will be returned making a profit. They also create jobs and investment opportunities abroad for their companies and skilled workers. Eventually they generate easy access to export markets for their own products. That doesn't mean the partners in these projects are set to lose; but they have no garunatee of a win. Pakistan must utilise the infrastructure and opportunity created by CPEC and we will win massively, if we don't we will lose.

CPEC will work if Chinese buy Pakistani products

But the CPEC projects are structured to pay Chinese companies and workers for their services
The only problem is that Pakistani populace will be paying the bills unless Chinese government decides to take a haircut on the loans

If infrastructure is a criteria for success Saudi Arabia will be world class industrial power

100% agree. As i was saying to @HostileInsurgent Pakistan must work to take advantage of the infrastructure developed to actually see any benefits. A few years ago our textile industry was shutting down because power outages were making doing business unaffordable. Today it's back in boom.

We have a power surplus now, What's the benefit of a power surplus though? Nothing really, not unless we can increase our industrial output to take advantage of it.

Similarly we have an FTA with China, but do we really benefit if our goods aren't able to penetrate the Chinese market? The opportunity is there though, it's up to our businesses to take advantage of them.


Ultimately a saying comes to mind... you can take a horse to water, but you can't make it drink.

The Pakistani horse has taken out quite a loan to get access to water, it is thirsty, but will it drink?

 

[HostileInsurgent]

Jee han meri jan. ML1 alone is said to generate 150000 jobs 90% of which will be given to Pakistanis while 10% will be Chinese. Par ye bat india kahan phonchygi.

I was just asking.

 

[TNT]

Our rent mentality reallly is a hindrance. Any investors or people with some money i come across want to build a plaza or market or shops and sit and enjoy the rent. No one wants to start manufacturing and exporting, where actually real money can be made. At most we export raw products.

 

[Indus Pakistan]

Guys this thread has gone off tangent. Few points to note. CPEC has not stalled because of any debt payment issues. If anybody takes the time to see Pakistan's debt payment profile the CPEC component is very small part of it. If Pakistan is in debt trap it is to other lenders - mostly based in West.

Also when I say stall I mean the corridor itself - in red below. After all CPEC is touted as a "corridor". Thus far only the port has been made opersational but the corridor that was supposed to 'feed' it has not been built.

Thus Gwadar today is just a port like a marooned ship. It has no transport infra to convey the corridor. This is the thrust of this thread. Yes, work under CPEC on other secondary projects continues but the corridor was supposed to be lynchpin of the project. Sadly this has not been taken up with gusto by the Chinese.

 

[TaiShang]

If you read my opening post you would know this is exactly my point. Despite 5 years plus of CPEC no corridor has been created. All we have is a port with almost know transport infra connecting it with the hinterland. Gwadar is thus like a beached whale with rusting cranes that see a ship once every month - even that to keep up the pretence.

I think, as other members pointed out, it needs time.

Such a massive project in such a fragile region needs just more than funds: Security structure, education institutions and a whole new culture of development not only in Pakistan, but also in the region (like Afghanistan) so that Pakistan would be truly a corridor as well as participant in trade.

CPEC is as much political as it is economic. Political aspect can only be helped by people themselves. China would not interfere. So ling as the other political leg is weak, economic leg can only make slow progress - although I do not think the CPEC is that slow.

 

[TaiShang]

Isn't it strange? I've been listening about game changer CPEC for about 15 years. The principle was build it and people/ industries etc. will come. Now they've built some stuff (power plants and stuff) and the response has been null. You didn't need to spend 45 billion to build a power plant and that harbor in Gawadar is the only port after hambentota to be completely empty. This clear looks like hambantota part-2 but with more massive losses.


maybe because it won't make a difference. The world is coming to realize that the chinese provide unrealistic assessments of projects under CPEC whose results are actually zero.

You wanna know why there is no silk road anymore...because there is no need for a silk road. Cost of transport by sea is 15% of the cost by land. Why would any manufacturer bother to send by land?

Actually, Hambantota is not complete yet, as well. It is also only one of the four port projects SL launched.

And No, unlike Western/Indian claims, there is no debt trap, and the project is just one of many.

China’s Belt Road Initiative: Hambantota Port an example of China’s Debt Diplomacy? - Silk Road Briefing

By Andre Wheeler An alternative headline for this article could quite easily have been: “Does Sri Lanka really want Hambantota Port returned”. This question is a response to the numerous recent headlines that claim that Sri Lanka’s newly elected government is demanding a return of the Port...

www.silkroadbriefing.com

Some context to Sri Lanka debt is needed to better understand why Hambantota is such a political football. Sri Lanka’s international debt obligations by the end of 2015, was such that $17billion was required to pay for maturing foreign loans between 2019 and 2023. With $55 billion in foreign debt and foreign reserves only totalling $8.3 million, Sri Lanka was headed for financial ruin. It is worthwhile noting that China accounted for only 10% of that debt. This raises some interesting questions as to the veracity of claims that only China uses the notion of “debt diplomacy”.

Another claim made is that China charges high commercial interest rates in order to secure indebtedness of Countries. However, when looking at a typical loan structure offered by China, they are offered on concessional terms, at a rate of 2% with a typical repayment period of 20 years as well as a grace period for repayment between 5 – 12 years. In the case of Hambantota, there were five loans paid to Sri Lanka between 2007 and 2014 to construct the Port. Whilst the total amounted to around $1.3billion, only $357 million were obtained at the higher commercial interest rate of 6%, the balance have been given at the concessionary rate of 2%. Furthermore, the loan repayment instalments required by China’s EXIM Bank, only accounted for 5% of Sri Lanka’s TOTAL foreign debt repayments.

It should also be noted that there was no ‘debt for asset “swap. There has been no debt written off in exchange for equity. The Loans and Port Lease agreements are separate items, as such 70% of Hambantota has been leased for 99 years to China. The remaining 30% is held by the Sri Lanka Port Authority, with joint operations of the port. In other words, Sri Lanka still owns the port and the $1.12 billion paid in lease agreement was used, not to pay for construction of the port but used to cover Sri Lanka’s balance of payments issues.

China’s Belt& Road Initiative Is Being Blamed For Sri Lanka’s Hambantota Port Problems. But The Real Story Is Rather Different

It is safe to say that claims around China’s predatory “debt diplomacy” strategy, does not stand up to scrutiny. As is argued by the Chief Economist at the Eurasian Fund for Stabilization and Development, China uses its Triple A credit rating to allow developing countries with lower credit ratings, to access funds at lower rates of interest. This is particularly true of the Asia Infrastructure Investment Bank. Furthermore, it allows developing nations to build infrastructure itself to generate loan repayments.

There is also an ongoing claim that Hambantota was a poor choice in terms of location and commercial viability. Of interest is the claim that the shallow draft at the port entrance was a substantial limitation. Some context is needed to understand the issue. The idea of the port was first conceived in 1997. The issue of depth and access were raised as were other issues that needed to be addressed during the development phase. This is typical of all port developments. For example, Darwin port in northern Australia, had to deal with a depth of 6 meters due to rock and tidal movements, India’s Sittwe port in Myanmar’s north had to accommodate ongoing silting issues in its development plans. These issues do not necessarily mean that a location is unviable as a port.

Now that you have made a frank confession, it's time for us to make a frank confession too....why do you think India opposes belt and Road initiatives? Any economist can do the math that most of these projects are complete duds whose main purpose is to keep chinese laborers employed as their real estate industry slows down. Why do you think there are anxious and heart wrenching pangs in Indian establishment every time a project is announed under belt and road...

Actually, real estate investment was up by 6+% in 2020 despite about half of the year the country was on a standstill.

China's property investment up 7 pct in 2020--China Economic Net

 

[TaiShang]

Why Noonies are in a hurry to complete CPEC? Is the debt and trade deficit money to finance CPEC coming from Mian Saanps personal accounts?

See this way: India has nothing to do with BRI. Yet, it is a net debtor. Even its military procurement is debt-based.

To be in debt, you do not need BRI. You just need incompetent, corrupt political and business class.

 

[Indus Pakistan]

I think, as other members pointed out, it needs time.

Such a massive project in such a fragile region needs just more than funds: Security structure, education institutions and a whole new culture of development not only in Pakistan, but also in the region (like Afghanistan) so that Pakistan would be truly a corridor as well as participant in trade.

CPEC is as much political as it is economic. Political aspect can only be helped by people themselves. China would not interfere. So ling as the other political leg is weak, economic leg can only make slow progress - although I do not think the CPEC is that slow.

I agree with you. The issue with Pakistan is that as a society it is still stuck in the narrative of middle ages and feudal structures. Their solution to the undeveloped condition of the people to find solutions in the very thought that is cause of their backwardness. Pakistan is like before Meiji Japan and the forces that refuse to accept the modern world hold the upper hand. Anybody suggesting moving forward will be called 'gora' [White] or Westoxified liberal beap bleap. Such is the hold of this primitive culture that if this was applied to China you still would be dressed like middle ages China and your women would be walking around in small wooden shoes. Socialism or communism would be branded a European dirty system etc.

So no doubt the problems are in Pakistan. However the western corridor could be developed in 7 years with about $25 billion outlay. I know that is lot of money but for a country like China it's small change. If China pushed ahead and regarded it as Marshal Plan for a ally the corridor would develop and with two decades be a rip roaring success that would transform Pakistan.

I give you one example. The eastern corridor with Karachi as the port was laid by British in 1880s when this region was mostly just desert. If the British had carried out a economic audit the laying down of the Eastern corridor [which was a rail line linking north with Karachi] it would have made no sense. But over the succeeding decades that investment became Pakistan's core economic corridor.

I think China now needs to be more aggressive in it's support of it's allies like USA was to Europe post WW2. It will not only beneit Pakistan but benefit China by having a solid and strong ally with huge trade potential.

 

[Microsoft]

I think, as other members pointed out, it needs time.

Such a massive project in such a fragile region needs just more than funds: Security structure, education institutions and a whole new culture of development not only in Pakistan, but also in the region (like Afghanistan) so that Pakistan would be truly a corridor as well as participant in trade.

CPEC is as much political as it is economic. Political aspect can only be helped by people themselves. China would not interfere. So ling as the other political leg is weak, economic leg can only make slow progress - although I do not think the CPEC is that slow.

What are China's plans for development in the western part of the country? I think that is the main incentive for China to fully back CPEC. If China has no real incentive then of course the project is likely to lag because Pakistan is generally lazy and probably does not have the expertise to complete this as fast without Chinese help. Covid and the Uighur issue in Xinjiang also don't help.

 

[Unite & Defend]

If any Pakistani questions the viability of CPEC on this thread - YOU ARE SIMPLY A DUMB ***.

CPEC is a fu.king GAME CHANGER.

Get your ***-UP and take advantage of it, before the opportunities pass you by.

All that is required is a new power order and how society/processes are created and governed within Pakistan!!!!
China waiting, times ticking.

 

[TaiShang]

What are China's plans for development in the western part of the country? I think that is the main incentive for China to fully back CPEC. If China has no real incentive then of course the project is likely to lag because Pakistan is generally lazy and probably does not have the expertise to complete this as fast without Chinese help. Covid and the Uighur issue in Xinjiang also don't help.

Western China is currently fastest developing region in the country. China does not have a one size fits all approach. Rather, it is very localized, based on local advantages. For example, in CN's poorest region, Guizhou, AI and big data industries are set up. Tencent, Alibaba, Huawei, Inspur,Lenovo etc. all have research and development centers there. Tibet region is projected as a nature tourism and food industry area. Xinjiang region is being designed as a trade hub with food and textile industries as well as cultural tourism. Last year the region received more than 200 million (mostly) domestic and foreign tourists. I think once COVID is over, Xinjiang lodging business will grow exponentially. Pakistan can utilize Xinjiang trade services (especially online retail such as Tmall, JD or Pinduoduo, and export to the rest of Mainland.

 

[Ghost Hobbit]

Actually, Hambantota is not complete yet, as well. It is also only one of the four port projects SL launched.

And No, unlike Western/Indian claims, there is no debt trap, and the project is just one of many.

China’s Belt Road Initiative: Hambantota Port an example of China’s Debt Diplomacy? - Silk Road Briefing

By Andre Wheeler An alternative headline for this article could quite easily have been: “Does Sri Lanka really want Hambantota Port returned”. This question is a response to the numerous recent headlines that claim that Sri Lanka’s newly elected government is demanding a return of the Port...

www.silkroadbriefing.com

Some context to Sri Lanka debt is needed to better understand why Hambantota is such a political football. Sri Lanka’s international debt obligations by the end of 2015, was such that $17billion was required to pay for maturing foreign loans between 2019 and 2023. With $55 billion in foreign debt and foreign reserves only totalling $8.3 million, Sri Lanka was headed for financial ruin. It is worthwhile noting that China accounted for only 10% of that debt. This raises some interesting questions as to the veracity of claims that only China uses the notion of “debt diplomacy”.

Another claim made is that China charges high commercial interest rates in order to secure indebtedness of Countries. However, when looking at a typical loan structure offered by China, they are offered on concessional terms, at a rate of 2% with a typical repayment period of 20 years as well as a grace period for repayment between 5 – 12 years. In the case of Hambantota, there were five loans paid to Sri Lanka between 2007 and 2014 to construct the Port. Whilst the total amounted to around $1.3billion, only $357 million were obtained at the higher commercial interest rate of 6%, the balance have been given at the concessionary rate of 2%. Furthermore, the loan repayment instalments required by China’s EXIM Bank, only accounted for 5% of Sri Lanka’s TOTAL foreign debt repayments.

It should also be noted that there was no ‘debt for asset “swap. There has been no debt written off in exchange for equity. The Loans and Port Lease agreements are separate items, as such 70% of Hambantota has been leased for 99 years to China. The remaining 30% is held by the Sri Lanka Port Authority, with joint operations of the port. In other words, Sri Lanka still owns the port and the $1.12 billion paid in lease agreement was used, not to pay for construction of the port but used to cover Sri Lanka’s balance of payments issues.

China’s Belt& Road Initiative Is Being Blamed For Sri Lanka’s Hambantota Port Problems. But The Real Story Is Rather Different

It is safe to say that claims around China’s predatory “debt diplomacy” strategy, does not stand up to scrutiny. As is argued by the Chief Economist at the Eurasian Fund for Stabilization and Development, China uses its Triple A credit rating to allow developing countries with lower credit ratings, to access funds at lower rates of interest. This is particularly true of the Asia Infrastructure Investment Bank. Furthermore, it allows developing nations to build infrastructure itself to generate loan repayments.

There is also an ongoing claim that Hambantota was a poor choice in terms of location and commercial viability. Of interest is the claim that the shallow draft at the port entrance was a substantial limitation. Some context is needed to understand the issue. The idea of the port was first conceived in 1997. The issue of depth and access were raised as were other issues that needed to be addressed during the development phase. This is typical of all port developments. For example, Darwin port in northern Australia, had to deal with a depth of 6 meters due to rock and tidal movements, India’s Sittwe port in Myanmar’s north had to accommodate ongoing silting issues in its development plans. These issues do not necessarily mean that a location is unviable as a port.


Actually, real estate investment was up by 6+% in 2020 despite about half of the year the country was on a standstill.

China's property investment up 7 pct in 2020--China Economic Net

I think you should just stop this BS. Everyone knows Hambentota is finished. And Gawadar isn't picking up at all.

 

[TaiShang]

I think you should just stop this BS. Everyone knows Hambentota is finished. And Gawadar isn't picking up at all.

You are wrong, not everyone.

Theport is not complete. You need to understand that, by itself, a port facility is of little use. You need a whole ecosystem.

Second phase in Hambantota is complete. Third phase may be finished by 2013 .

Third phase includes port development, such as a ''duty free zone, cement grinding, storage and bagging facilities, a fertiliser manufacturing, storage and packaging plant, LP Gas distribution facility, a warehousing complex, a vehicle assembling facility, flour mill, a food processing and packaging facility and other associated import-export businesses.''

Port of Hambantota

The Port of Hambantota, also called Ruhunu Magampura International Port, is a new international ship port being developed in phases…

www.ship-technology.com

 

[Ghost Hobbit]

You are wrong, not everyone.

Theport is not complete. You need to understand that, by itself, a port facility is of little use. You need a whole ecosystem.

Second phase in Hambantota is complete. Third phase may be finished by 2013 .

Third phase includes port development, such as a ''duty free zone, cement grinding, storage and bagging facilities, a fertiliser manufacturing, storage and packaging plant, LP Gas distribution facility, a warehousing complex, a vehicle assembling facility, flour mill, a food processing and packaging facility and other associated import-export businesses.''

Port of Hambantota

The Port of Hambantota, also called Ruhunu Magampura International Port, is a new international ship port being developed in phases…

www.ship-technology.com

The ecosystem was the lie. You knew it. And still you misled them.

 

[nahtanbob]

Actually, Hambantota is not complete yet, as well. It is also only one of the four port projects SL launched.

And No, unlike Western/Indian claims, there is no debt trap, and the project is just one of many.

You make it sound like Sri Lanka does not have any ports. They already have one - Colombo. There is no need for Hambantota. It is another ploy for Chinese companies to make money along with corrupted Sri Lankan politicians

1. I believe most of the workers are Pakistan, but I suspect most of the experts are Chinese. I doubt raw materials are coming from China (apart from steel) but a lot of the machinery will be coming from China.

2. CPEC is more than a corridor. Full details of the projects and progress can be seen here. http://cpec.gov.pk/progress-update

The idea is that through development of infrastructure, establishment of SEZ's, ending the power deficit, we'll create the physical environment required to help industry flourish in Pakistan. The transit of goods to and through Pakistan is only a very small part of this project. The hope is to attract foreign investors to setup manufacturing and other industry in Pakistan and also encourage local companies to compete with them. Note i used the word hope - i'll touch on that later on in this post.

3. The biggest winner of CPEC is China - this is the same for all OBOR projects. They turn cash into loans which will be returned making a profit. They also create jobs and investment opportunities abroad for their companies and skilled workers. Eventually they generate easy access to export markets for their own products. That doesn't mean the partners in these projects are set to lose; but they have no garunatee of a win. Pakistan must utilise the infrastructure and opportunity created by CPEC and we will win massively, if we don't we will lose.



100% agree. As i was saying to @HostileInsurgent Pakistan must work to take advantage of the infrastructure developed to actually see any benefits. A few years ago our textile industry was shutting down because power outages were making doing business unaffordable. Today it's back in boom.

We have a power surplus now, What's the benefit of a power surplus though? Nothing really, not unless we can increase our industrial output to take advantage of it.

Similarly we have an FTA with China, but do we really benefit if our goods aren't able to penetrate the Chinese market? The opportunity is there though, it's up to our businesses to take advantage of them.


Ultimately a saying comes to mind... you can take a horse to water, but you can't make it drink.

The Pakistani horse has taken out quite a loan to get access to water, it is thirsty, but will it drink?

China has never pulled any country out of poverty. The ones tied closely to China are North Korea and Myanmar.

The basic problem is no one has gotten rich selling finished products to China. It is one way street. You might supply a few raw materials

Unless Pakistan can repay those loans China is making no money off CPEC

CPEC creates a corridor, it is not planned to end in Pakistan.

So, there is more to be earned here as a corridor, but not an end market. To do trade with China, Pakistan does not need CPEC-sized project.

CPEC is run by Pakistan and built by Pakistani workers in collaboration with China.

Funds do not come from a single source-country as your manipulated mind imagines. For instance, AIIB joins a number of projects, hence, the loan it provides is international.

Infrastructure is not the only condition for success, but, an essential one.

Schools, hospitals, energy grids are all infrastructure. They help create a more quality people, who help build a better economy.

If development without infrastructure would be feasible, India would be Saudi Arabia today.

No wonder FDR initiated New Deal in the US in the 30s to build more call centers and IT colleges.

Most of CPEC project contracts are to Chinese companies. There are no schools and hospitals in CPECs. It is hard for Chinese companies to make money


USA was a world class industrial power before FDR's New Deal. The New Deal was redistribution of wealth to the working class