The real face of CPEC : Destroying Pakistani Industry

[Hellfire]

@somebozo It is indeed interesting to note that some members are berating a perfectly understandable piece.

I fully agree with your posts till now. India has a substantially larger manufacturing base, yet we can hardly service a small percentage of our domestic consumer market and have tremendous amount of imports from China which are cheaper and preclude setting up a competitive domestic manufacturing substitute due to high cost of finance for start ups, one of the reasons wherein Rajan was under criticism. It is interesting to see the members actually calling it, the CPEC,a boon.

China remains a nation of manufacturing based exports with production far exceeding the domestic consumer market. The steel example is one which has led to China dumping steel in EU and US with closure of plants over there due to high labor costs and non competitive pricing. And Chinese steel manufacturing plants are so numerous that the slowdown in demand in these nations has led to backwages accumulating and some plants being forced to close or civil disturbances in China itself.

For China, CPEC remains its conduit to reducing cost of export, cost of import of raw materials and a strategic alternative to the increasing hostilities in SCS. If anyone is under impression that local industries in Pakistan will gain, they are mistaken. The only area you will see a spurt of growth will be in service provision. Until and unless Pakistan takes steps to protect itself and encourage local manufacturing at competitive pricing and quality, there are foreseeable closure of established businesses in Pakistan ahead.

 

[SQ8]

The issue with CPEC is that its a dual edged sword. Where it allows Pakistan the opportunity to truly realise its economic corridor potential; it also negates the effectiveness of its market vis a vis China.
For CPEC to succeed, Pakistan must limit China's involvement to investment and infrastructure construction. Otherwise you will have a lot of Paksitani unemployed youth who will end up joining Daesh or even assisting the Uighur terrorists. They either pay or help them avenge their unemployment.

 

[raj76]

None sense article , local industries should learn to improve their business model

Really are u asking ur industry to compete with
1)Economy of scale
2)Subsidy and tax free manufacturing environment
3)latest tech

Goodluck and by the way u shouldnt attatch FTA with CPEC these should be discussed seperately

 

[somebozo]

The issue with CPEC is that its a dual edged sword. Where it allows Pakistan the opportunity to truly realise its economic corridor potential; it also negates the effectiveness of its market vis a vis China.
For CPEC to succeed, Pakistan must limit China's involvement to investment and infrastructure construction. Otherwise you will have a lot of Paksitani unemployed youth who will end up joining Daesh or even assisting the Uighur terrorists. They either pay or help them avenge their unemployment.

1 SAR = 1.75 CNY
1 SAR = 27.91 PKR

There is no way Chinese can manufacture so cheaply..
and Pakistani are being typical idiots..instead of taking advantage of currency difference and build their own industry they are giving trade corridor to China..The only reason Chinese can compete if by dumping through subsidies and stealing in quality...

 

[C130]

I would worry that Chinese come in and take over. they set up shop and drive out local Pakistan businesses. they have done this in Africa and Latin America.

not knocking them for it....they are hard workers after all, but they really do destroy local businesses


this is a funny documentary of China in Africa also

 

[SQ8]

1 SAR = 1.75 CNY
1 SAR = 27.91 PKR

There is no way Chinese can manufacture so cheaply..
and Pakistani are being typical idiots..instead of taking advantage of currency difference and build their own industry they are giving trade corridor to China..The only reason Chinese can compete if by dumping through subsidies and stealing in quality...

A trade corridor that flows both ways. As such, the corridor isnt exactly what Pakistan wanted.
Pakistan's corridor dreams were of Koh Kaaf but thanks to Zia's absurd corruption and insistence on using extremism to stay in power; along with the myopic vision of the ISI in managing assets in the Afghan war.. that option was lost forever.

 

[AZADPAKISTAN2009]

Opens better companies to come to Pakistan new modern Technology to come to Pakistan so Welcome CPEC

Local Industries will still remain as always is the case

 

[somebozo]

I would worry that Chinese come in and take over. they setup shop and driving out local Pakistan businesses. they have done this in Africa and Latin America.

not knocking them for it they hard workers, but they really do destroy local businesses


this is a funny documentary of China in Africa

Chinese are nobody friend..but again Chinese did not enter into Africa by force..the Africans themselves let it..it is not like the European colonialism where European Armies marched into Africa by force and occupied land..


Even some of the top most Chinese manufacturers are only producing sub-standard junk they dump cheaply into emerging economies and destroy local industries. I had an experience recently with the largest copper tube manufacturer of China..my client reject them because they have tested their samples earlier and it failed the quality control...

A trade corridor that flows both ways. As such, the corridor isnt exactly what Pakistan wanted.
Pakistan's corridor dreams were of Koh Kaaf but thanks to Zia's absurd corruption and insistence on using extremism to stay in power; along with the myopic vision of the ISI in managing assets in the Afghan war.. that option was lost forever.

A trade corridor came in 2015..but where is our industrial development from 1947 to 2015??

Opens better companies to come to Pakistan new modern Technology to come to Pakistan so Welcome CPEC

Local Industries will still remain as always is the case

Cheap goods dumping to Pakistan..scamming Pakistani consumer welcome..

 

[AZADPAKISTAN2009]

Well Pakistani company owners should perhaps focus on importing robotics and other new technologies to improve local production and improve quality instead of whining about things.

Half of their fortune is in Swiss accounts or UAE properties

Local companies can be productive

• Joint ventures with Chinese
• Better introduction of new models for Production (New machines , Robots -Human)
• More spent on improving quality to international standards
• Better marketing and understanding of Local Pakistani customer use that advantage
• New factories and better textile machines for safer efficient operations
  
• More energy efficient machines and focus on R&D

If Local Pakistani company will make second rate Suzuki Mehran in Pakistan then its better for that company to die


Age of GOLDEN spoon is over we live in Free Trade society

 

[somebozo]

Well Pakistani company owners should perhaps focus on importing robotics and other new technologies to improve local production and improve quality instead of whining about things.

Half of their fortune is in Swiss accounts or UAE properties

Local companies can be productive

• Joint ventures with Chinese
• Better introduction of new models for Production (New machines , Robots -Human)
• More spent on improving quality to international standards
• Better marketing and understanding of Local Pakistani customer use that advantage
• New factories and better textile machines for safer efficient operations
  
• More energy efficient machines and focus on R&D

If Local Pakistani company will make second rate Suzuki Mehran in Pakistan then its better for that company to die


Age of GOLDEN spoon is over we live in Free Trade society

Well thanks to bhutoo socialism..he eroded the spirit of competition in Pakistani market and introduced socialist protectionism..which means companies are guaranteed market share despite churning our third rate products...This is also destroyed the Pakistani consumer mindset that rather than going for quality product with long term reduction of operating cost they are only looking at low upfront cost..nothing explains this better than the prevalent power crisis in the country which is at large due to wastage and theft.

 

[New Resolve]

The way forward is to let Chinese invest here in the Free Trade Zones being set up so local people are employed, win win.

 

[Ryuzaki]

All the work for CPEC is being done by Chinese companies,so there is no benefit to local MSMEs.

 

[HariPrasad]

http://tribune.com.pk/story/821418/fta-with-china-pakistan-offers-to-scrap-duties-on-50-of-products/


ISLAMABAD:
As domestic industries are at risk of being wiped out due to dumping of cheap Chinese products, Pakistan has offered to eliminate duties only on half of the total product lines in the second phase of the free trade agreement (FTA) instead of 90% under the original plan.

Both the countries agreed on four broad principles for implementing the second phase of FTA, which would protect the interest of local industries, said Khurram Dastgir Khan, the Minister of Commerce.

“One of the main principles is that tariff concessions will not be on a reciprocal basis, rather these will be in favour of Pakistan,” Khan said.

Firstly, tariff reduction modalities of the second phase will be independent of the first phase, meaning there will be fresh negotiations on all aspects of the agreement.

Secondly, the tariff reduction will not be on a reciprocal basis and China will give more incentives to Pakistan to make up for the adverse impact of the first phase.

Thirdly, both sides offered different timelines for bringing down duties and on the pace of lowering tariff and in Pakistan’s case it will be slow.

Lastly, if imports surge beyond a threshold, the two countries can apply trigger mechanisms and impose safeguard duties.

Pakistan offered immediate reduction in duties to zero on 50% of product lines, which was far less than the original plan of lowering the duties on 90% of product lines, said Dr Robina Ather, Additional Secretary of Commerce Ministry.

At present, Chinese exporters were enjoying zero duties on 35% of total product lines, she added.

In comparison, China has offered to immediately slash duties to 70% of product lines. It has also suggested that after five years it will reduce duties on another 10% and the 90% target will be achieved in the next 10 years.

However, Pakistan would lower duties on 90% of product lines in the next 15 to 20 years, she added.

These timeframes will be taken up in the next round of negotiations that will be held in Beijing at the end of March.

Intricacies of FTA

Both the sides are negotiating the FTA afresh after Pakistani industries complained about the 2006 agreement that was highly in favour of China. Negotiations for implementing the second phase were due but fresh principles were agreed to address the concerns of both the countries.

Dastgir said critics of the 2006 agreement believed that the FTA was not in favour of Pakistan, adding Pakistan had conveyed three main concerns to the Chinese team during the third round of negotiations for implementing the second phase.

Free trade access to China could not be sufficiently utilised as Beijing did not reduce duties on products where Pakistani sectors enjoyed a competitive advantage, said the minister.

Secondly, the margin of preference over other countries that Pakistan should have enjoyed effectively came to naught after China signed similar free trade accords with other countries, particularly the Association of Southeast Asian Nations (Asean).

Finally, Pakistan had been persistently sustaining a loss of Rs22 billion on account of tax exemptions granted to imports from China.

Pakistan did not fully exploit the FTA due to the energy crisis and dumping of Chinese products, the minister remarked. Dumping was the main concern of Pakistani industries, particularly of steel products, polyester staple fibre and many other products, he said.

The commerce ministry has been receiving individual complaints about the dumping of Chinese products.

At present, the balance of trade is in favour of China. Against exports worth $2.5 billion, Pakistan imported $7.5 billion worth of products from China.

However, while defending the FTA, the minister said it was beneficial as well as Pakistan’s cotton exports, particularly, increased from $329 million in 2006 to $1.3 billion in 2014.

Published in The Express Tribune, January 14th, 2015.

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Pakistan would have been greatly benefited had it gone for open tendering on their own terms and condition and invited globle tenders. Had pakistan had any idea of giving CHina this port development, they could have asked china to match best terms of all who had participated. I believe this approach would have helped pakistan in getting a much more favorable deal.

 

[raj76]

Well Pakistani company owners should perhaps focus on importing robotics and other new technologies to improve local production and improve quality instead of whining about things.

Half of their fortune is in Swiss accounts or UAE properties

Local companies can be productive

• Joint ventures with Chinese
• Better introduction of new models for Production (New machines , Robots -Human)
• More spent on improving quality to international standards
• Better marketing and understanding of Local Pakistani customer use that advantage
• New factories and better textile machines for safer efficient operations
  
• More energy efficient machines and focus on R&D

If Local Pakistani company will make second rate Suzuki Mehran in Pakistan then its better for that company to die


Age of GOLDEN spoon is over we live in Free Trade society

wow what world u live in do u know the kind of subsidies chinese manufacturers get or kind of economy of scales they enjoy u have no idea without duties and anti dumping laws u r industry will die
and u do know that cpec is designed to uplift ppl on western chinese border they want to set industry in that part of there country so why would they setup industry in pakistan

 

[somebozo]

Pakistan would have been greatly benefited had it gone for open tendering on their own terms and condition and invited globle tenders. Had pakistan had any idea of giving CHina this port development, they could have asked china to match best terms of all who had participated. I believe this approach would have helped pakistan in getting a much more favorable deal.

The fact is that CPEC is neither a gift not a blessing or anything as such from China...the entire 46 billion Chinese investment is a loan on 18% interest..and which is in turn being paid back to Chinese contractors..Pakistan could have raised capital in the international market or offshore banks on much better terms...

The only thing deeper than the oceans and higher than Himalayas is the Chinese finger being given in Pakistani behind!

The way forward is to let Chinese invest here in the Free Trade Zones being set up so local people are employed, win win.

Chinese free zone will employ Chinese workers..and they will use he Chinese port..it will generate peanut revenue for the national treasury at a vast expense of Pakistani nation..just wait and watch...very soon Pakistani unemployed and starving youth will be joining Ughair terrorist or kidnapping Chinese citizens for ransom...

Patwari mindset wants to turn Pakistan simply into a duty collecting trade hub of Chinese exports!