CPEC, Opinions

The China factor

Dubbed as the “practical picture of Pak-China friendship” by Ahsan Iqbal, Pakistan’s Minister of Interior and Planning, Development and Reforms, the China-Pakistan Economic Corridor (CPEC) is seen as a platform that will bring economic benefits to Pakistan. CPEC comprises numerous projects, including a deep-sea port, road and railway networks, solar farms, coal mines and a fibre-optic cable project. Originally valued at $46 billion, CPEC’s gross value was upgraded to $62 billion, which is equivalent to 20% of Pakistan’s total current economic output.

The impact of CPEC, however, is not limited to the economic sphere; it has started to have a significant impact in four key areas.

Chinese goods

Although Pakistan has been importing Chinese goods for over a decade, CPEC, and the resultant relaxation in trade policies and strengthening of business ties between Pakistan and China, have seen volumes grow. According to a State Bank of Pakistan (SBP) report, China has the largest share in Pakistan’s total imports (29%), growing from $1.8 billion in 2004-05 to $13.9 billion in 2016-17. Pakistan imports over half of its electrical appliances, equipment and machinery from China. In fact, Pakistan imports everything from nuclear power plants, high-tech industrial machinery, iron, steel and organic chemicals to man-made filaments and garlic. The electronics market used to be dominated by Japanese brands; although they were high in quality, they were expensive on the pocket. Chinese brands then started offering mock-ups of these Japanese brands at considerably lower prices. According to Muhammad Azhar of ‘Freeze It’ (an electronic appliances sales and repair shop in Lahore), Pakistan is a price-sensitive market. “Price is the biggest driver of sales. The exposure provided by TV and internet has created a growing demand for electronic appliances such as air-conditioners, flat-screen TVs, refrigerators, gadgets and toys. So there was a huge demand gap and China filled it by providing an alternative to highly-priced Japanese and German products.” Humayoun Bashir, Marketing Manager, Haier, a Chinese multinational company, agrees. “Brand loyalty has become a thing of the past. There is an almost immediate recognition of new international brands, especially among discerning consumers and among the tech-savvy, social media-using younger generation.” Many people believe this flood of cheap imports has been detrimental to the local industry. “The actual import figures are much higher than the official ones provided by the SBP, due to the fact that a great many Chinese products enter the country through illegal channels,” said Muhammad Ahmad, an SME owner. China may be the second largest importer of Pakistani goods after the USA, but Pakistan’s exports to China are only 60% of its imports, creating a trade deficit of 40%; this is expected to widen in the forthcoming years. On the positive side, many Pakistanis believe the influx of Chinese imports has created new business opportunities by giving a boost to Pakistan’s retail sector, which in fact, is reported to have grown exponentially in the last decade.

Real estate

 

Analysts believe that the development of the transport infrastructure will drive a real estate boom, resulting in a rapid rise in property values along the CPEC route, both in suburban and rural areas. This impact is visible in Gwadar where the construction of a deep-sea port is under completion; once a remote fishing town, prices of residential and commercial properties now run in millions and in some areas, have witnessed a 100% rise. Numerous high-end commercial zones and housing schemes are under construction, not only to accommodate Chinese workers, but to cater to a wider demand. Havelian, where a dry port is in the planning stages, has also seen a boom in real estate. Real estate activity is not restricted to the areas along the CPEC route; the impact has also been felt in major cities like Karachi, Lahore and Islamabad, where a growing number of properties in high-end areas like DHA, Karachi; DHA and Bahria Town, Lahore and Sectors F7 and F8, Islamabad, have been purchased by Chinese officials working on CPEC-related projects. This is mainly because buying property is more cost-effective than renting it for extended periods of time.

Education

An increasing number of Pakistani students are learning Mandarin to be able to cater to the influx of Chinese citizens in Pakistan who require a local workforce they can communicate with. The Sindh Government’s Education Department has signed an MoU with the Chinese Education Department, whereby schools in Sindh will teach Mandarin to students and those who excel will then be given scholarship opportunities for further education in China. Furthermore, forward-looking educational institutions, such as the Roots School System (which has branches across Pakistan), have added Mandarin to their curriculum; the Pakistan-China Institute in Islamabad and the Pakistan Institute of Management in Karachi have done the same. Tuition centres in Karachi and Lahore have started advertising Mandarin classes over the weekend for students and professionals. China’s impact on education has not been restricted to Pakistan. Traditionally, Australia, Canada, the UK and the US are the destinations of choice for university-bound students. However, last year saw 19,000 Pakistani students going to China, making Pakistan the fourth largest source of international students in China. This year has seen an even larger number of Pakistani students enrolling in Chinese higher educational institutions. This is because of the affordability factor, as well as the comparatively higher ranking of the institutions there. China has introduced a range of preferential policies as well as a Chinese Government Scholarship Programme for 10,000 students every year for countries on the ‘One Belt, One Road’ initiative.

Media

Increasing Chinese influence has also had an impact on the media. Most of us have seen the Shan Foods’ TVC showing a Chinese family bonding with their Pakistani neighbours through food. PTV has begun airing Chinese dramas dubbed in Urdu while Chalay Thay Saath, a Pakistani movie released earlier this year, starred Syra Shehroze and Kent S. Leung in a cross-border love story. The makers of the film formed a collaboration with Soneri Bank which conducted a live streaming session of the movie on its official Facebook page that resulted in viewer engagement of 745,103 and 178,000 views.

The year 2030 is when the CPEC projects are expected to be completed. Given how the initiative is already having an impact on Pakistan’s economy and lifestyle, it is safe to conclude that this influence will continue to grow in coming years.

Syed Wajeeh-ul-Hassan Naqvi on the growing impact of China’s influence.

Syed Wajeeh-ul-Hassan Naqvi is a freelance writer.
wajeehassan@gmail.com

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