Planes, Trains And Automobiles

[Zain Malik]

The commercial windfall coming in from China continues, as a consortium of Chinese investment companies have announced that that they will be investing $3 billion in the shape of launching a new airline service in Pakistan. It remains to be seen whether this will be an extension of operations of a currently existing Chinese airline to Pakistan, acquisition or a merger with a Pakistani airline, or the establishment of a new airline altogether.

While the benefits of Foreign Direct Investment (FDI) of this sort are legion, not least being the thousands of jobs this could provide for the people, the government must be careful to not rely on China to solve every Pakistani economic problem there ever was. Currently, the government is placing all the eggs it can find in the China basket, and relying too much on just one nation can often turn into a flawed strategy.

There is a future cost to this too. Nation states, even those that are allies, are always pragmatic. China offers its assistance as a friend, but this assistance never comes for free. Economic experts have already highlighted the potential problems the country could face when CPEC moves past its ‘early harvest’ stage and the time for the Chinese outflow comes. If the country’s exports do not ‘aggressively’ increase alongside a controlled management of Chinese outflows such as profit repatriation and loan repayments, Pakistan might end up not capitalising on a project that could usher a whole new level of economic growth.

But there is a silver lining to all of this. All these problems are predicated on whether or not the government makes policy adjustments to boost exports with the advent of a countrywide, fully-functional rail and road network. Additionally, CPEC’s early completion will automatically result in increased Foreign Direct Investment (FDI), and the evidence of this, alongside favourable policies for international investment (case in point: The new auto policy) can already be seen; Gandhara Nissan Limited has already informed the Pakistan Stock Exchange of its plans to start production of Renault vehicles in Pakistan.

This breaks the age-old monopoly of Japanese cars into the Pakistani market, but it is just the beginning. CPEC’s actual benefit should be measured in terms of what Pakistan can achieve on its own after it is completed, and multinationals, while immensely beneficial for employment opportunities will take their profits elsewhere. There is a need for Pakistan to focus on its own industries and businesses, because while immediate employment may help the fortunes of the current generations, actual development can only take place if the country moves towards increased industrial output and production.