ISLAMABAD: Finance Minister Mohammad Ishaq Dar has said that Pakistan and China have greatly expanded the economic dimension of their relationship as a key priority.
The China-Pakistan Economic Corridor (CPEC) was a flagship initiative in this regard which would speed up economic cooperation and connectivity, he said in an interview withh CCTV NEWS (China).
“We have several institutional mechanisms in place such as Pakistan-China FTA and the Pakistan Joint Economic Committee as well, which would boost trade and investment in the years to come.”
Ishaq Dar said that two countries had upgraded their strategic partnership to an “All-Weather Strategic Cooperative Partnership”, formalized in the joint statement issued during the visit of Chinese President Xi Jinping’s to Pakistan.
The political leadership-level interaction had increased, which would of course further deepen this relationship, he remarked.
Highlighting the significance of Asian Infrastructure and Investment Bank (AIIB), the minister said that the bank would provide financing support to developing countries in Asia, including Pakistan, for infrastructure development in order to promote regional connectivity.
“We believe that the bank will be an important platform to convert the abundant savings available in the region into investment to help regional economies to achieve sustainable and rapid development thereby contributing to the world economy,” he added.
The minister said that Pakistan had been supporting the initiative right from the initial announcement for the establishment of AIIB.
The bank, he said, would provide additional financing to support the establishment of infrastructure projects, including construction of roads, dams, power projects etc.
He expected that the bank would cooperate with the existing multilateral development banks by providing co-financing for the development of infrastructure projects in the member countries.
However, he said that the bank would also aim to be leaner and faster than the existing institutions and it would provide some healthy competition.
The AIIB, he added, would distinguish itself from other multilateral development banks (MDB) like the World Bank (WB) and the Asian Development Bank (ADB) because MDBs major focus was on poverty reduction while the AIIB would focus on infrastructure development and regional connectivity.
Ishaq Dar said,”A regional bank provides an excellent framework for decisions about projects and financing, particularly those with cross-border implications at regional level.”
Pakistan, he said, had always extended support to China at regional and international fora.
“We believe this is another of China’s sincere efforts to help out developing countries that are left out of the race for economic development otherwise due to lack of support from international financial institutions,” he added.
He said the banks, which had been previously shouldering responsibilities for lending, were already overburdened and therefore, there had to be some new institution that could come in handy at this critical juncture.
Infrastructure development and poverty alleviation was needed for nations like Pakistan in Asia to ward-off the dangers of extremism and “I think AIIB is a hope for all of us in Asia,” he noted.
Replying to a question about China-Pakistan Friendship Year, Dar said that Pakistan-China friendship was all-weather and time-tested.
“It is an evergreen relationship that has its roots in the hearts and minds of the people of Pakistan and China. It has been the constant endeavour of our government to add more depth and breadth to this all-important relationship,” he added.
As strategic partners, he said, Pakistan and China had always enjoyed excellent cooperation across a diverse range of areas and sectors.
However, he said,”Our two governments have placed a special emphasis on enlarging the economic footprint of this relationship. We believe that the peoples of both countries should enjoy the fruits of this special relationship.”
As a result, he added, both the countries were cooperating on a number of people-centric projects.
The highlight of these projects, of course, was the China-Pakistan Economic Corridor (CPEC), which “we regard as a game changer for our countries as well as the region at large,” he said.
Dar said that the Corridor and its related projects would deliver jobs and prosperity to millions of people in both countries.
Replying to another question regarding Chinese President’s visit to Pakistan in April this year, he said this was President Xi Jinping’s first visit after assuming office in March 2013 and the first by a Chinese President since November 2006.
“This visit was the hallmark of “Pakistan-China Year of Friendly Exchanges: 2015”.
The highlight of the visit, he said, was the signing of over 50 agreements/ memorandums of understanding relating to key development projects in infrastructure, energy and communication sectors, under the umbrella of the China-Pakistan Economic Corridor (CPEC) in the governmental and private sector.
Important agreements relating to areas of cooperation outside the CPEC were also concluded, which would go a long way in changing the destiny of the people of the two countries, he added.
Ishaq Dar said that the CPEC was being conceived as a lynchpin of plans by both China and Pakistan to deepen their economic cooperation.
Early implementation of the CPEC would be transformational for Pakistan’s economy and dovetail perfectly with China’s strategy of developing its inland and western regions, he added.
He said that China’s interest in the project was also strategically driven by President Xi Jinping’s visionary concept of integrating regions and countries across the globe under the Silk Road Economic Belt and the 21st Century Maritime Silk Road Initiative.
“It envisages deepening policy coordination amongst countries and regions, extending and improving infrastructure connectivity in all its forms – road, air, sea, rail, telecommunications, energy etc. – across regions, fostering trade and investment flows and, last but not the least, enhancing people to people connectivity. The CPEC fits naturally into this vision of a `Road and Belt’ with Gwadar and Karachi serving as its southern nodes and an outlet to the Arabian Sea and the Persian Gulf,” he added.
The minister said that regional and sub-regional economic integration as a means to bolster growth, investment and trade in countries had a long chequered history.
However, he said, the recent history of regional economic integration had had some unmistakable successes.
In fact, this had been one of the major successful developments after the Second World War, he added.
Ishaq Dar said that the regional integration in Europe brought success in terms of regional growth, economic development, investment and trade and more importantly fostered peace in the region.
“Hence Asia can also benefit by following the same pattern. In this respect, the Corridor can provide an integrating platform for over three billion people in Central, West and South Asia, the Middle East and Africa regions”, he added.
He said that the increase in trade, investment, digitalization and financial flows would bring peace and prosperity to the region through enhancement in the competitiveness of the economies of the countries, contribute to reducing regional disparities and social inequality, and improve life expectancy and quality of life in every country and in the region.
Thus in real terms, he added, it could re-open the economic artery blocked for years as said by my Chinese brother.
“This shall become even more relevant when we look at future forecasts that Asia and Pacific region’s share in world GDP between 2010 and 2050 is expected to rise from nearly from 28 to more than 52 per cent, with China accounting for 20 per cent and India for 16 per cent,” he remarked.
Replying to yet another question, Ishaq Dar said that Pakistan had always been upfront and committed towards the issues dear to China’s core interests matching the consistent support, friendship and cooperation provided by both countries to one another.
President Xi Jinping, he said, had provided a visionary concept of integrating regions and countries across the globe under the Silk Road Economic Belt and the 21st Century Maritime Silk Road Initiative representing a new model of regional and South-South cooperation, which would offer new opportunities for Asia’s rejuvenation and the common prosperity of all countries.
Dar said that it envisaged deepening policy coordination amongst countries, extending and improving infrastructure connectivity in all its forms – road, air, rail, telecommunications, energy etc. – across regions, fostering trade and investment flows and, last but not the least, enhancing people-to-people connectivity.
Regional integration, he said, thus became a key driver for stimulating growth.
“It is bound to enable sharing of the fruits of growth across countries and regions and bring peace and prosperity to the regions that it envelops. Pakistan firmly supports and will actively take part in the building of ‘the Belt and Road’ as it believes it will serve the fundamental interests of the two countries and peoples and contribute to peace, stability and development in the region and beyond. CPEC is an important project of “the Belt and Road” initiatives as it provides a link between the road and the sea route and in President Xi’s words it is where the two “meet”. It also has same developmental goals which will bring peace, harmony and prosperity along the Corridor, in the region and the world.”
When asked about the ‘1+4’ cooperation structure, with the CPEC at the center and the Gwadar Port, transport infrastructure, energy and industrial cooperation being the four key areas to achieve a win-win result and common development, he said that the 1+4 cooperation structure/framework was a beautiful concept given by President Xi to which the Pakistani government had fully endorsed as it summarized the concept of the Corridor simply, yet beautifully.
The goal of China-Pak Economic Corridor, he said, was to facilitate and intensify economic activity along the Corridor.
“It envisages connectivity and expansion of trade and investment through a network of roads, rail, fiber optic cables, and energy pipelines. It also provides for the creation of special economic zones, industrial parks and trade centers and development of energy and technical cooperation.”.
The CPEC, he said, would connect the nodes of growth center in such a manner that the fruits of the development would benefit all areas / provinces of Pakistan consistent with scientific planning parameters.
Further, he said, it would be connected with trade facilitation corridors, dedicated freight corridors, energy corridors, trade logistics corridor, telecommunication corridor etc.
Therefore, he said, the CPEC was not just name of a project but was a comprehensive package of cooperative initiatives and projects, which covered the key areas, including connectivity, information network, infrastructure, energy cooperation, industries and industrial parks, agricultural development and poverty alleviation, tourism, financial cooperation as well as livelihood improvement, including municipal infrastructure, education, public health and people-to-people communication.
Hence, he said, when “we look at each of the said element it fits in one of the key area of the framework resulting in community of shared destiny to ensure the perpetual continuity into friendship of our two countries from generation to generation.”
Regarding the role of the Gwadar Port play in the Belt and Road initiative, he said that the port had the potential of becoming an energy transportation hub due to its proximity to Strait of Hormuz, a key shipping route.
“It will not only be very vital for bilateral trade for Pakistan and China but shall also provide immense opportunities for the Central Asian region as well as the surrounding region which is home to around 2/3rd of the world’s oil reserves.”
Currently, he said, “the goods and energy transportation for China goes through Strait of Malacca which raises the cost of transportation in addition of poses security challenges due to being a longer route.
Ishaq Dar expected that the development of CPEC would on average reduce distance of 6000 km for China, approximately on average it takes 45 days for ship starting from the Middle East or Africa to reach Chinese ports and vice versa in addition to local transportation.
“In comparison it would take around 10 days to reach Gwadar Port which will have commercial importance for the economies by cutting time, distance and cost. Further it also provides risk management opportunities.”
Empirical analysis of other regional examples, especially in South East Asia, he said, suggested that multiple ports operating in regional countries had led to trade volume expansion and not contraction for the early players in the business.
The new ports in other parts of the world actually became new nodes for trade activity opening up those regions for international trade which were hitherto closed off or inaccessible, he said.
In addition, he said, the existing ports had their own core competencies on the basis of which they were providing their unique value propositions.
“The transshipment business can also open new opportunities that will arise by reducing the transportation cycle costs and by investing in the freight forwarding and transshipment opportunities in Gwadar which shall be beneficial for Pakistan, China and other land locked central Asian states,” he added.
Competitive cooperation in such a manner, he said, “provides financial incentive to the participants, helps in changing behaviours, removes discontentment / disparity and creation of jobs leading to peace, development, prosperity and harmony.”
“History is also witness to the fact that trade on the Silk Road was a significant factor in the development of the civilizations of China, the Indian subcontinent, Persia, Europe, the Horn of Africa and Arabia; by opening long-distance political and economic relations between the civilizations. The main traders during antiquity were the Chinese, Persians, Somalis, Greeks, Syrians, Romans, Armenians, Indians, and Bactrians, and from the 5th to the 8th century the Sogdians,” he added.
During the coming of age of Islam, he said, Arab traders became prominent. Though silk was certainly the major trade item from China, many other goods were traded along with religious and syncretic philosophies and various technologies.
In addition to economic trade, he added, the Silk Road served as a means of carrying out cultural trade among the civilizations along its network as well thus becoming game changer for those civilizations.
Hence today, he said, China and Pakistan along with other countries along the route would also benefit similarly and investing in these initiatives would prove to be a game changer/fate changer for all participatory economies/states.