文｜本刊记者 周洋 摄影｜周洋
China-Pakistan Economic Corridor Moves forward Pragmatic Cooperation
between Pakistan and China
Zhou Yang; China Investment; translated by Liao Dong; Photo by Zhou Yang
The China-Pakistan Economic Corridor (CPEC)is an example of cooperation within the framework of the OBOR initiative, onwhich the two governments and businesses of the two countries have made heftyinput of energy and resources, striving to achieve the goal of mutual benefitand win-win situation through open and inclusive cooperation.
On May 14, 2017, the Belt and Road Forumfor International Cooperation, attracting the world’s attention was held inBeijing, on which Pakistan expressed the hope to see more extensive developmentderiving from cooperation between the two countries. On conditions and prospect of cooperationbetween Pakistan and China, the China Investment correspondent had an exclusiveinterview with Mr. Zafaruddin Mahmood, the Pakistani Special Envoy on the CPEC.
China Investment: First of all, would youplease comment on the current progress of the China-Pakistan Economic Corridorand why Pakistan should have appointed a special envoy on it?
Zafaruddin Mahmood: First of all, I wouldlike to speak about the background of the CPEC.
In 2013, Chinese Premier Li Keqiang made anofficial visit to Pakistan, during which he put forward the idea of the Beltand Road. He proposed that with aprofound friendship between China and Pakistan, if the two countries could setup pragmatic cooperation within the framework of OBOR. It was through several consultations betweenleaders of both countries that a consensus had been reached to build the CPER. After both sides came to agreement on theintent for cooperation, leading members of concerned departments of bothcountries worked out a series of plans for the CPEC, including principal areasof cooperation, mode of cooperation and implementation of planning. Eventually, four areas are set for generaldirection.
The first area of cooperation is energycooperation, especially construction of power generation projects. The second area chosen for cooperation isconstruction of infrastructural facilities. The third area is the construction and management of the GwadarPort. The fourth area is cooperation onproduction capacity between the two countries.
It has been two years since the basicframework was put in place. Things aregoing on well and very smoothly with the four areas. In a short span of over two years, China’sinvestment in Pakistan has surpassed US$ 25 billion, unprecedented in thePakistani history of more than seventy years. It also results from the fact that both countries set great story by theCPEC. At the same time, as Pakistanbelieves that the cooperation between the two countries with areas so extensiveand involving an investment so large that calls for the designation of aspecial officer, whose job is to look after related contact work.
China Investment: Just now you mentioned that as far back as2013 when Premier Li Keqiang visited Pakistan, he called for cooperation on theCPEC. But its formal implementation didnot begin until 2015. For the two yearsin between, what work had been done?
Zafaruddin Mahmood: Because it was necessary to set the directionat the early stage and to work out the mode and plans for cooperation. Besides,the period of establishing cooperation on the CPEC happened to experience achange in government of Pakistan, and as such it was necessary to brief andexplain to the incoming government on conditions of the cooperation. And only by then could preparatory work ofthe early stage be done, including decisions on key areas and concrete projectsand how to deal with issues of implementation such as financing. As a gigantic plan, it had a preparatory procedureto go through in the early stage. All ofthe above took about two years.
China Investment: When President Xi Jinpingvisited Pakistan in 2015, he underscored that Sino-Pakistani cooperationcenters on the Gwadar Port, energy, communication infrastructures andindustrial cooperation. Within thecurrent CPEC framework, China’s actual investment in Pakistan has exceeded US$25 billion. As such, perhaps you couldcomment on the progress of projects in the above four areas and the prospect oftheir future development?
Zafaruddin Mahmood: First of all, let mebegin with the energy area. There arenumerous and complicated classifications of energy. For instance, by ways of power generation,power plants can be classified as thermos power stations, hydraulic powerstations, solar electrical energy power stations and wind poweredstations. As it is more speedily todevelop solar and wind powered stations, at present some of solar and windpowered projects under Pakistan-China cooperation have been operational andintegrated into the power grids. Atpresent, a thermos power station is operational. Besides, some of the power projects areexpected to be completed by the end of this year or early next year. It takes a longer period of time to build ahydraulic power projects, which is now under construction.
On May 12, the first unit of Sahiwal CoalPower Project (2×660 MW) built by China Huaneng and Shandong Ruyi wasinaugurated and connected to the grid successfully, becoming the firstcoal-based generation unit to be connected to the grid under the CPEC. It will markedly alleviate Pakistan’s powershortage.
Secondly, Pakistan conducts closecooperation with China on infrastructural cooperation.
The Karakoran Highway (KKH), being the onlyland passageway between Pakistan and China, is known as the Highway ofFriendship between Pakistan and China. In August 2008, the first phase of the project of KKH renovation andexpansion as one of Chinese assistance was officially launched. It was completed by June 2015.
In April 2016, the first key highwayproject of the CPEC, the second phase of KKH elevation and renovation (theThakot-Havelian section) was officially launched in the Manshera District,Pakistan. The project is contracted toChina Road and Bridge Corporation, a subsidiary of China CommunicationsCorporation and expected to be completed next year.
The construction of the KKH is a complexproject. The project moves southwardalong the KKH to Islamabad, Pakistan’s capital, the highest elevation being 4500meters above the sea level and the lowest (Islamabad), merely 700 meters, thealtitude drop being great. Though thehighway is not too long in distance, less than 400 kilometers as the crowflies, the engineering work is very difficult. The topography along the highway is complicated, with many rivers andvalleys to go across by tunneling and building bridges. As a result, the construction is costly inexpenses and slow in speed, which is eventually decided to be built section bysection.
Meanwhile, the superhighway between Karachiand Lahore is also an important project within the framework of the CPEC, ofwhich the Sukkur-Multan section is about 400 kilometers long and designed for 6carriageways in both directions and 120 kilometers/hour in speed. The project is built by China ConstructionGroup and expected to complete next year. The ultimate goal of the superhighway is to link the two largest citiesof the country Karachi and Lahore, which will greatly promote social andeconomic development.
Third, the construction of the GwadarPort. At present, the management rightof the port has been transferred to companies on the Chinese side. Through renovation, the port has beenremarkably improved in terms of depth of water and port facilities. The port now handles loading and unloading ofChinese ships on regular basis, it now operates in business mode. At the same time, Pakistan will enter intoagreement with China on cooperation in building the superhighway in Gwadar andin overall urban planning of the city. The Government of Pakistan has declared a free trade zone (FTZ) inGwadar, which is likewise handed over to Chinese companies for management andoperation. The first phase of tenantenrolling and leasing of the FTZ has been completed. The greatest bright spot of the FTZ forinvestment is preferential policy including tax exemption for 22 years. Currently, ongoing projects there include theconstruction of a power plant with the investment of China CommunicationsCorporation, which is already underway. The construction of the Gwadar Airport,an assistance project by the Chinese Government, will be started with theyear. There is also a large-scalelogistic center built with the investment of Linyi, China, the first phase ofwhich is completed. Geographically,Gwadar is located near the Middle East, bordering countries like Iran andAfghanistan, which, in addition to the preferential policy of 22-year taxexemption make it suitable for doing business with neighboring countries. As a result, the construction there isdefined as one for logistic base.
Overall, the construction of Gwadar isunder a comprehensive plan. Previously, owing to the lack of development, thebusiness opportunity of the coastal city is not well utilized. In the future, within the framework of theCPEC, the city will be built into a free trade center, an industrializedmetropolis and a logistic center.
Fourth, in the area of cooperation inproduction capacity between the two countries, the priority of this year is tobuild a China-Pakistan industrial park in Pakistan, in support of which theGovernment has announced a policy of ten-year tax exemption. The labor cost of Pakistan is relatively low,about a third of that of China, which is an important factor for thedevelopment of manufacturing industries. Both of the points will become the bright spots for the industrial parkto attract investment.
China Investment: According to mediareporting, the text of the long-term plan for CPEC has been basically finalizedrecently. Would you please speak aboutthe principal tasks and set goals of the planning?
Zafaruddin Mahmood: At present, the text ofthe long-term plan for CPEC has been basically decided upon throughconsultation, the planned timeframe being until 2030. However, in the process, both sides of Chinaand Pakistan will continue to work on planning. For instance, in the area of energy construction, in the future,exploration of water resources in Pakistan will be conducted and studies willbe made for rational utilization of water resources. In the area of infrastructure construction,an upcoming agreement will be one on cooperation in setting up a highwaytraining and research center and cooperation in other areas of extension. Therefore, I believe that when this timeframeends, both countries will go further on hand in hand.
On the importance of electrical power toPakistan, I would like to say that over a long period of time in the past, thestate of Pakistan went amiss in setting store by electrical resources. In addition, its own technological basis isnot broad enough. All of this has led tothe situation of serious shortage of power for the whole country, which has experienced10-hour blackouts in a large area. Now, Pakistan is moving towards anindustrialized country and there will be more industries in the future. If this situation remains unchanged as soonas possible, it will stand in the way of development on top of causinginconvenience in livelihood.
At present, we plan for a certain degree ofincrease in electricity every year. Through consultation in the past two years, both countries have come upwith an agreement for long-term cooperation plan until 2025. In five years to come, Pakistan will add17045 MW to its total installed generation capacity, an increase of about 80percent of its daily generation capacity of less than 20000 MW. Looking at the figure, this is obviously ahuge project. Both the Chinese andPakistani sides are detailed in the project plan and meticulous in its implementation. Both sides have set up a working group forregular meeting, reviewing the progress of the project, exploring onoutstanding issues and working out improvements. Sitting above the working group, there is asupreme committee to guide its work. The National Development and ReformCommission of China and the Ministry of Planning of Pakistan each haveappointed a leading member to head the committee. The reports of the working group aresubjected to the supreme committee for further studies. As such, every year there will bereadjustment of concrete measures for implementation so as to ensure that theplan will be carried out on time and according to what is desired.
China Investment: Would you comment on theattitudes of Pakistani general public toward the CPEC?
Zafaruddin Mahmood: Many people gain theirunderstanding of Pakistan through the media. However, there are also certainelements of exaggeration and cooking up there. Pakistan may face one kind or another kind of problems in its socialconditions. Therefore, since the CPECwas launched, the Government has taken very rigorous measures to ensure thesafety of foreign investors. So far,nothing abnormal has happened. Ingeneral, the Pakistani people entertain very friendly feelings for the Chinesepeople.
Among various political parties in thecountry, the concept and significance of the CPEC have gained moreunderstanding and more traction. For instance, the site selection forinvestment should be conducted according to the surrounding environment andwhat is required for post-construction operation. Only by getting economic viable investment,can development be achieved. All of theparty people have conversely turned to think in terms of how to attract foreigninvestment, producing very good benign effects.
Now, the benefits of projects undercooperation between the two countries can be foretold and so can the potentialbenefits for local people and local development. Though it takes time for the projects to beoperational and to make real economic returns, at present we have already beenaccorded with benefits of the CPEC for the overall development of Pakistan.
Let me give an example. In implementing all projects under planning,the employment of Pakistan is greatly promoted, increase on jobs leading toimprovement on people’s livelihood. Soit is a benign circle. Taking theconstruction of 400 kilometers of highway for example, it needs 10000 workersto work on site. Since it is far morecostly to hire Chinese workers than local, Pakistani ones, the company hiresonly 2000 Chinese workers, and therefore it gives 8000 jobs to the Pakistanis,which equals to solving the problem of the livelihood for 8000 Pakistanifamilies. Another example is a powerplant under construction, which has adopted the method of hiring 200 collegegraduates and financing their visit to China for training on technologicalknowledge, learning to operate machines and learning Chinese. On their return, they will work side by sidewith Chinese technical staff. Thecooperation period for the power plant is about 25 years, and therefore, the200 Pakistanis participating in the construction of the power plant will haveguaranteed jobs for just as long. At thesame time, in the process of their construction, the projects of highways,railways, power plants and ports have driven forward surrounding economicdevelopment locally, concerned industries such as the catering industries,hotels and retail businesses all enjoying parallel development. All this breeds potential benefits for localpeople in Pakistan and as a result, the Pakistani civil society is verysupportive of the construction of economic corridor between China and Pakistan.
China Investment: As the CPEC is thelargest project of the OBOR initiative under implementation, in this context,how would you comment on the OBOR initiative?
Zafaruddin Mahmood: When the Chinese side first came up with thisidea, there were a lot of comments in the world. Many of the commentators believed that it wasfor expanding its political influence that China made the initiative,displaying some doubts and concerns. However, Pakistan has all along maintained very good ties with China andwe do not believe that China has any such ideas. In the long history of diplomatic relationsbetween China and Pakistan, we have never seen China either interfere with ourcountry, or ask us to do anything improper or use us. Therefore, Pakistan has never harbored anydoubts about China’s OBOR initiative. Weconsider the OBOR initiative purely for mutual benefit and win-win situationand for expanding development of all countries. Should one list a self-serving purpose, one could say that it allowsmore opportunities of development for Chinese industries while all countriesparticipating in the construction of the OBOR can also be benefited. Pakistan is the first country that hasapprobated and responded to the OBOR initiative. When the Chinese Premier visited Pakistan, heproposed that China and Pakistan build an economic corridor together and makeit a showcase for all people to see. Asa result, Pakistan is very supportive and appreciative of the OBOR initiative.
China Investment: For the coming OBORsummit, what are your expectations?
Zafaruddin Mahmood: We expect that this summit can enable morepeople to understand the idea behind China’s OBOR initiative, to accept thisbeautiful aspiration and idea of China and to take part in OBORcooperation. With more people toparticipate and to mutually understand and support one another, the areas ofcooperation will continue to enlarge. More trust will lead to more sharing. I believe that the world can be more beautiful. It is also the hope of the Pakistanileadership to share Pakistan’s experience on cooperating with China with allparticipants and to tell them that what we have got, you should also joinup. Finally, it is for all countriesparticipating in the OBOR construction to benefit rather than a certain countryonly.