Vaqar Ahmed's remarks at seminar on Belt and Road Initiative and China-Pakistan Economic Corridor: Impact on Developments in South West Asia Strategic Vision Institute

1. SVI In-house Seminar/Panel Discussion: Report – February 7, 2019
Belt and Road Initiative and China-Pakistan Economic Corridor: Impact on
Developments in South West Asia
Compiled by: Waqas Jan
Reviewedand Edited by: S. SadiaKazmi
STRATEGIC VISION INSTITUTE (SVI),
ISLAMABAD

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As part of its continued focus on examining the impacts of CPEC, the Strategic Vision Institute
(SVI) under its China Studies & Information Center (SVI-CSIC) organized an In-House Seminar
titled “Belt & Road Initiative (BRI) and China-Pakistan Economic Corridor: Impact on
Developments in South West Asia” on 7th
February 2019.
Chaired by Dr. Zafar Iqbal Cheema, President/Executive Director of the
SVI, the seminar was aimed at fostering a lively discussion on the
economic rise of China as well as the increasingly prominent role being
played by the CPEC and the BRI within this frame work. It drew on the
expertise of a broad range of both local and international experts
whose specializations spanned across regional politics, economics,
development studies, diplomacy, peace and security. These included Prof. Shahram Akbarzadeh
(Research Professor, Alfred Deakin University, Australia), Prof. Baogang He (Professor and Chair
in International Relations, Alfred Deakin University Australia), Dr. Zahid Shahab Ahmed
(Research Fellow, Alfred Deakin Institute for Citizenship and Globalization, Australia), Mr. Zhao
Lijian (Deputy Chief of Mission, Embassy of People’s Republic of China in Pakistan), and Dr.
Vaqar Ahmed (Joint Executive Director, Sustainable Development Policy Institute [SDPI],
Pakistan).
Formally inaugurating the session, Dr. Zafar Iqbal Cheema warmly welcomed all participants
and expressed his heartfelt gratitude for their attendance. In his introductory remarks he
explained how he was looking forward to an inclusive rather than exclusive discussion that was
cognizant and appreciative of the existence of multiple perspectives on the issue at hand. He
linked this to how the SVI has prided itself on remaining an independent and autonomous body
that has continued to strive for objectivity and impartiality in its contributions to an overall
discourse that is multidimensional, while at the same time remaining well cognizant of the
national interests of the country.
Speaking on the fast evolving discourse on the BRI and CPEC, he explained how both these
initiatives serve as the logical and inescapable consequence of China’s rise as an economic
power. He elaborated on how CPEC for instance, while an extension of the BRI, has also been

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facilitated to a large extent by the long and prospering history of China-Pakistan relations which
have remained friction-free for the most part. This is in contrast to Pakistan’s relations with the
West and for instance the US which have been at times characterized as being more
transactional in nature. Briefly summarizing the consequences of Pakistan’s foreign relations
over the last few decades, Dr. Cheema pointed out that the onus also lies on Pakistan to
manage its complex web of relations with better regard to its national interests such as its
economy which it had unfortunately mismanaged considerably over the years.
With respect to the BRI, he pointed out how both the BRI and CPEC have been viewed from
diverse and at times opposing perspectives. The designers and architects of the BRI for instance
have purportedly approached it from a geo-economic perspective. This has entailed a focus on
promoting greater economic connectivity, development, and trade through the development of
Special Economic Zones and large infrastructure at the regional level.
At times contrary to this perspective has remained the geo-strategic perspective, which is
rooted more in the wider region’s super-power politics. That China is expanding into Pakistan
and the wider region, at the expense of the United States. Viewed as a zero-sum game, this
perspective is based on the premise that China’s expansion would in multiple ways limit US
influence, economically, politically, militarily and even psychologically. Hence, it is not
uncommon to find some Western scholars that view the BRI and CPEC from such a perspective
within International Politics. And then there are also other perspectives of similar and opposing
arguments. There are multiple regional perspectives, including Pakistan’s national perspective
all of which are grounded in certain assumptions and premises based on their varying scope of
analyses. There is even a Middle Eastern and Iranian perspective that is being presented today
which adds to the rich discourse on the impact of China’s rise as an economic power.
After his introductory remarks Dr. Cheema invited the first speaker to deliberate on the
subject.
Prof. Shahram Akbarzadeh presented his views on the “BRI and China’s Appeal to the
Muslim Middle East”. Speaking on the idea that the Belt and Road Initiative was in some way a

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revival of the ancient Silk Route, Prof. Akbarzadeh explained that he
had significant doubts regarding the veracity of this claim. He
believed that this idea was propagated more of as an attempt to
romanticize and further characterize the BRI as he was unsure of
how connecting Australia for instance relates to the ancient Silk
route. He went on to explain how this idea of linking the BRI with the
silk route had so far worked as nothing more than a great marketing
gimmick by the BRI’s planners and architects. He did acknowledge that based on China’s rise as
an economic power, the BRI was a direct manifestation and product of China’s need to connect
with rest of the world. By investing in large-scale infrastructure and new trade routes, the BRI
represents a wise and clever way to sustain its long-term growth. In addition, it indicates
China’s willingness and commitment to think and plan for the long-term. However, it is worth
noting that even though China is thinking long-term, it has confined itself more or less to the
economic sphere without really pushing for a global political agenda. This is an important
factor as it has major implications on how China is perceived and reacted to by others in the
region.
Hence, in talking about a Muslim response to the BRI it is also important to underscore that
each region’s response and experience with the BRI has been different. South-East Asia’s
experience with the BRI has been markedly different from South Asia’s for instance. Giving the
example of Muslim rule in Malaysia he explained how the existence of a large Chinese
population there gave way to its own internal dynamics. Thus, keeping in mind such
qualifications he explained how his current presentation was restricted more to how the ruling
elite in the Muslim Middle East in the present perceives the BRI and China’s long-term vision.
Prof. Akbarzadeh was of the opinion that at the present the overall perspective in the Middle
East regarding the BRI is very positive if not overly enthusiastic. This was because of two
reasons, the economic and political aspects. The economic aspect is in itself quite self-
explanatory. Enhanced trade, greater investment in infrastructure, and more diversified sources
of capital are the areas where Middle Eastern countries are already looking to explore
opportunities. However, what is of more importance and interest to Prof. Akbarzadeh is the

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political aspect, which has remained considerably understudied specifically from the
perspective of the ruling elite of the region.
The fact that at present China is not really pursuing a global political agenda stands in direct
contrast with the United States. While the US is proud of advocating and pushing for certain
ideals to be implemented, China has refrained from pushing a global political agenda. In fact,
China has been renowned for quite famously adhering to the principle of non-interference in
the affairs of other states. This contrast is further evident for instance from the direct
involvement of the US in its military interventions in Iraq, Libya and Syria on the one hand, and
a China that has abstained and often voted against such interventions on the other.
Hence, China is not concerned with the extent of political openness in the Middle east or for
instance, with the state of human rights in the Middle East. This is in contrast to Western
investments and/or assistance that is often directly tied with an insistence of improving the
state of human rights, political openness and/or democracy in the Middle East. This has worked
in China’s favor with regard to its expanding influence in the region.
However, in contrast to the US, China does not have the capacity to exert the level of soft
power and cultural influence that is exerted by the US in the region. While the United States
may have jeans and Hollywood, Prof. Akbarzadeh doubted whether there would be many in the
Middle East that would be committed to Confucianism or Communist ideology. This relative
lack of cultural appeal greatly limits the extent to which China can exert a level of soft power
and cultural influence that is on par with the United States.
Going back to how the ruling elite in the Middle East perceives the rise of China, it is
important to highlight that China’s appeal to the Middle East is enshrined more in the business-
like manner in which they are based. This carries with it an added bonus for small powers for
which China presents a sort of alternative to the US hegemony and unilateralism in the region.
This proves immensely useful in for instance extracting greater concessions and benefits in
negotiations with the US as there is now a second power attempting to exert influence in the

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region. For instance, if the US were to push too hard on human rights as part of a certain deal,
such small powers now can always resort to exploring closer ties with China as an alternative.
Hence, overall the future looks very bright for China. This is in terms of expanding ties,
developing closer links and presenting an alternative to US leadership in the Middle East. In
addition beyond the economic benefits of greater trade and connectivity there is an added
diplomatic benefit in terms of China’s ability to influence for instance these countries’ foreign
policy choices. This is evident in the Muslim Middle East’s response to (or lack thereof) of
China’s harsh treatment of its own Muslim population in the Xinjiang region. Among the
widespread accusations of torture, arbitrary arrests and widespread detentions, there has been
little condemnation if any from the Muslim rulers of Middle Eastern countries while these
reports have largely emanated from Western sources. Whether this is a by-product of China’s
growing economic power or whether it is an issue that lacks the required appeal, what’s
important is to realize that China’s rise has greatly influenced the foreign policy choices that are
taken by the ruling elite of the Muslim Middle East.
Following Prof. Shahram Akbarzadeh the second topic presented
was “BRI as an Extension of the Chinese Development Model” by Prof.
Baogang He. Drawing from his vast expertise into the domestic politics
of China and the wider region, Prof. Baogang He explained how his
approach to the issue is enshrined within a domestic developmental
perspective, using ideas from the study of the International Political
Economy.
He discussed how before going into the actual concept it was perhaps easier to provide a
concrete example of how and why China’s State-Owned Enterprises (SOEs) have taken such an
interest in overseas development projects. He gave the example of one such SOE which is in
charge of building dams across China. After having built all the required dams in the country the
company with its unique technological expertise, trained labor-force, and vast supply chains
had considerable excess capacity that was still lying un-utilized. Hence, it was only logical to
take this excess capacity outside of China to build dams in countries where they were needed

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most such as in Myanmar and other places. This serves as one of the underlying reasons
attributed as to why China has resorted to promoting such large-scale infrastructural and
economic development outside of its borders.
He explained how keeping this example in mind, it was important to distinguish China’s
approach to such large-scale development with the Japanese approach. He pointed out that
there have been two development models that have so far been deployed on a large scale in
East Asia. The Japanese model which gained traction in the 60’s is widely attributed to have
brought about the rapid economic development experienced by East Asian and South-East
Asian countries such as Korea, Singapore, Thailand and Malaysia. Based on the transfer of
second-hand technologies first developed in Japan, private companies from Japan set up
manufacturing plants during the 80’s for various consumer electronic goods such as televisions,
cameras, etc. This was setup as part of a regional production network which oversaw the
production and exports of such high-tech manufactured goods. China as part of the BRI is to
some degree following the same logic that Japan had employed in the 80’s. What China
however is doing differently is that instead of setting up factories across the region for mass
produced consumer based goods such as televisions and camcorders, China is focusing on the
development and export of infrastructure. These include dams, highways, railways etc.
Another key difference between the two models is that Japan’s objectives were more
moderate in nature with regard to its regional production and supply network. This is apparent
in the network being limited more to East and South-East Asia. China’s ambitions on the other-
hand are more global in nature. They are building not only in Asia, but in as far as Africa, Latin
America and the Pacific Islands. Hence, what China is aiming to build is a global production
network based on global supply chains. This difference is marked further by the fact that the
driving force behind China’s development model is state owned enterprises. This is in contrast
to the Japanese model which is led primarily by private companies.
Prof. He emphasized that due to the Chinese state’s close involvement in the entire process,
the sheer scale and magnitude of the Chinese model further sets it apart from the Japanese
model in a number of telling ways. This includes for instance, the scale and scope of

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investments. If investments from private Japanese enterprises are accounted for by the millions
then China’s investments account for billions of dollars in investments for massive projects.
Similarly, the amount of land involved in Chinese funded projects is also exponentially
larger. Japanese factories required purchases of at the most 2-3 acres of land for building
industrial zones, etc. In the case of Chinese projects focused on building large dams, or high-
speed rail links, the scale of land involved runs over thousands of kilometers. The infusion of
labor too is of marked difference in both models. In case of Japan, the extent of involvement of
Japanese labor is limited to managerial and consultancy roles with a large involvement of the
local labor force. In case of the Chinese model however, a large proportion of the labor force
employed is Chinese as is evident from the 10,000-20,000 Chinese workers currently working
on projects throughout Pakistan. The same is the case for sourcing raw materials. Whereas the
Japanese model emphasizes sourcing raw materials from local sources, the Chinese model due
to its sheer scale and potential benefits from economies of scale, relies more on supply chains
based in China. For instance, the steel being employed in Malaysia for such large infrastructural
projects is being sourced from China as it is cheaper than steel produced in Malaysia.
Prof. He further went on to explain that these differences in the previously outlined factors
of production as utilized by China have carried with them their own set of challenges. This is
apparent in the troubling levels of local resistance faced in a number of regions and countries.
For instance, the lack of involvement of local labor in projects particularly in Africa was
highlighted as a major issue that was addressed accordingly. Similarly, the issue of managing
the large swathes of land involved in major projects has also appeared as a major issue. This
was exemplified in Cambodia where plans to construct a certain dam had to be scrapped
because of widespread protests by the local population on the issue of land ownership of the
designated site. The sheer size and scope of the capital involved as part of Chinese investments
also carries with it its own risks of debts and non-payment issues. These often have to be
settled by land and lease transfers as was the case in Laos where the government’s inability to
pay back the investment for a railway project led to the government transferring ownership of
large swathes of junk land over to the Chinese company for further development.

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Hence summing up the discussion, China while building on the Japanese model has pushed
forth its own approach and logic with regard to the transfer of technology and expertise across
the wider region. This has had its own implications on the varying ways the Chinese
development model has employed the use of land, labor and capital as factors of production.
However, to link the Chinese impact of this approach with the wider region’s geo-politics is a
different issue, one that is perhaps inferred prematurely considering how a large number of
these projects are yet to be completed with their impact yet to be assessed beyond mere
claims.
The next speaker Dr. Zahid Shahab Ahmed discussed the findings from his paper titled
“CPEC and Nation-Building in Pakistan”. Drawing from his vast experience on peace and nation-
building within the Pakistani context, Dr. Zahid Shahab Ahmed
highlighted how his paper examined the domestic dynamics of CPEC
based on the developments that took place between President Xi
Jinping’s visit to Pakistan and the change in Pakistan’s ruling
government up until the recent elections. Moving on to the framework
of nation-building that was employed by him, Dr. Ahmed further
explained how numerous scholars had emphasized varying ideas with
regard to the role played by the state vis-à-vis external actors in terms of nation-building. He
also explained how numerous scholars had applied this framework particularly to the CPEC. In
general he cited how Indian scholars had looked at it more from a geo-political perspective
while a number of scholars from Pakistan for instance have focused on the geo-economic side
of things. He also noted that there had been a certain lack of focus on CPEC from a more
domestic perspective which he aimed to fill through his research.
Further elaborating on the importance of a more domestic approach, he explained how a
number of studies on nation-building carried out by external actors such as the World Bank had
repeatedly emphasized the importance of an organic and more home-grown approach to
nation-building, that even despite the injection of aid and foreign funding, external actors have
always remained limited in their ability to promote and support such nation-building efforts.

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China has nevertheless played a huge role within this framework, the effects of which have
been studied to a large extent in its efforts in Africa and the Pacific islands. With regard to
Pakistan however, the impact of China’s efforts have arguably been greatly dependent on the
internal dynamics of Pakistan’s domestic politics. These in particular comprise of the broad-
ranging inter-provincial tensions drawn across political, economic and ethnic fault-lines which
form the basis of the vast majority of constituent politics within the country. These politics he
argued have also seeped into CPEC with numerous projects and initiatives being carried out
under CPEC causing friction amongst the political parties that in turn draw their support
alongside these provincial tensions. This internal friction is thus used by the political parties to
settle political scores at times holding CPEC hostage to these politics.
The implications these have had on CPEC were apparent even during President Xi Jinping’s
visit to Pakistan when some sane voices were cautioning the political parties from turning CPEC
into another Kalabagh Dam. This he argued presented a glaring acknowledgment of such
tensions serving as a major limitation to the potential success of CPEC. Another major
implication he argued was the significant improvement in the overall security situation of the
country which he attributed to a large extent on CPEC. Similarly China’s experience in facing
such issues in Pakistan has also had significant implications for CPEC’s importance as a pilot
project for the overall Belt & Road Initiative. The flexibility which China has shown as a result of
its experience in Pakistan is also indicative of the lessons China has itself learnt as part of its
overall vision for the BRI. This is evident for instance in the changes made to the geographical
distribution and layout of the Special Economic Zones that were re-negotiated based on the
concerns of unequal development voiced by certain political parties.
With respect to the prevailing Federal-Provincial tensions, such flexibility also marked a
wholly positive achievement of attaining political consensus and unity, the extent of which has
remained more or less unprecedented. Hence, China has perhaps unintentionally or somewhat
intentionally helped political parties in Pakistan achieve and maintain consensus on certain
highly divisive issues that have served as major impediments to the country’s past growth and
development. Issues such as the share of development or the provision of employment at the

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local level is where China has shown remarkable flexibility and careful attention to detail. It has
been careful in appreciating and understanding the unique challenges that have arisen from
within Pakistan’s domestic dynamics and has in a way helped foster the required political
consensus on which any serious efforts at nation-building are heavily dependent.
Hence, in conclusion it is imperative that this consensus that has been achieved as perhaps
a by-product of CPEC continues to form the basis on which the Pakistani state can embark on a
prolonged and serious impetus for nation-building that is mandatory for it to achieve its
envisioned growth and development targets.
Speaking on behalf of the Chinese government, Mr. Zhao Lijian
presented “China’s Perspective on BRI and CPEC” and emphasized
how both CPEC and the BRI have been envisioned as a win-win
cooperation mechanism for all the countries and international
organizations focusing on inclusivity and greater connectivity. It is in
essence an economic project that was proposed by President Xi
Jinping. He also explained that in contrast the BRI has been often
represented particularly in the West as a strategic and military cooperation mechanism as part
of the overall propaganda against China. This he emphasized was not true.
Providing a snapshot of the overall progress made by the BRI, Mr. Lijian explained how the
BRI now in its sixth year has been moving extremely well with regard to the initial tasks and
objectives it had set out to achieve. Citing data gathered by the Chinese government, he said
that by the end of last year there have already been around 103 countries and international
organizations that have signed 118 cooperative agreements with the Chinese government. In
the first Belt and Road Summit held in 2017 there were around 279 deliverables that were
proposed. By the end of 2018 around 265 deliverables have been achieved. The second Belt
and Road Summit which is slated to be held later in April this year in Beijing would also provide
an opportunity to further review its progress and set new targets for the next two years.

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If one was to assess the BRI’s progress from a project wise basis, there are a number of
projects that have been completed from among the six economic corridors all comprising of a
large number of both big and small projects. For example, in Pakistan, development on the
Gwadar Port and Free Zone has been going on quite well. The recently completed Business
Center and the Expo Center boasting state of the art facilities was for instance completed in a
record 6 months. Similarly, another major project currently underway in Pakistan is the M5
Motorway linking Sukkur and Multan that costs around 2.9 Billion USD. Currently being the
largest project under CPEC, it is slated to be completed by the middle of this year. Another
major project is the Thakot to Havelian link of the Karakoram Highway (KKH) that is almost 80%
complete, and should be finished by the end of this year.
There are a number of energy projects that have been completed in record time. These
include the Sahiwal Power Plant that was completed in just 22 months and the Port Qasim
Power plant. There is also the Hub Power Plant in Baluchistan that is nearing completion and is
slated to be completed by the end of Spring. Furthermore, there are a number of hydro-electric
projects that are also currently underway; these include the Karot Power plant as well as the
Suki-Kinari Power project. Hence, there are a number of large projects in Pakistan that are
currently going along well.
Beyond Pakistan, in South-East Asia for instance, major projects such as the China-Thailand
Railway and China-Laos Railway are also currently under construction. In addition, there are a
number of projects in Africa, Western and Central Asia which have been completed or are
currently underway. China has also considerably expanded its rail-links with Europe with more
than 10,000 trains now reaching 43 cities in 15 European countries as of last August. In gauging
the extent of China’s trade and economic cooperation it is worth noting that China’s overall
trade volume has surpassed 5 Trillion USD as of mid-2018. In effect, China has become the
largest trading partner of 25 BRI countries including Pakistan. Furthermore, Chinese investment
within BRI countries has surpassed 70 Billion USD. China has already invested 28.9 Billion USD in
Special Economic Zones (SEZs) within BRI countries. This figure however excludes Pakistan in
which this phase of development has not started yet. This figure accounts for around 82 SEZs in

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which almost 4,000 Chinese Enterprises have set up operations. These have in turn generated
tax revenues worth 2 Billion USD while providing more than 250,000 jobs within their host
countries.
As part of providing the required financial coverage, China has also added funds to the
Asian Infrastructure Investment Bank (AIIB) which it had first established. Right now more than
60 countries are being provided access to funds via the AIIB including Pakistan. Some of the
projects currently underway in Pakistan such as the M4 Motorway and the Karot Hydro Power
Project are also being funded by the AIIB, as part of the Silk Road Fund. In the meantime China
is also exploring a number of other options to further expand the funding mechanisms linked
with the BRI. These include setting up inter-bank consortiums with Shanghai Cooperation
Organization (SCO) countries for which China has offered 30 Billion RMB. Similar inter-bank
consortiums are also being set with the cooperation of Arab countries as well as Central and
Eastern European countries. All of these efforts are being made to expand the pool of funds
available to BRI countries for development projects.
Last but not the least, Mr. Lijian elaborated on the key importance laid on generating
greater people to people exchanges as part of the BRI. He emphasized that no matter the scale
and scope of development projects, all these efforts were useless if China was unable to win
the hearts of the people. Giving an example of the impact of CPEC and the BRI has had on this
area; Mr. Zhao Lijian explained how there has been a marked increase in the number of
international students studying in China since the inception of the BRI and CPEC. In 2017, for
instance there were around 300,000 students from BRI Countries studying in China. From
Pakistan, based on estimates provided by the Pakistani embassy in China there were around
22,000 Pakistani students studying in China in2016. This number has also likely increased
considerably since then. Still, just to put this number into context, the number of Pakistani
students studying in the UK by contrast is around 14,000-16,000 while the number of Pakistani
students studying in the US is just around 5,000. In addition, the BRI has also provided a
considerable boost to tourism in BRI countries.

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In conclusion, Mr. Zhao Lijian said that he too believed that there is a definite consensus
from the Pakistani side in terms of being on the same page with regard to CPEC. He also
acknowledged that for the most part where there were certain concerns raised with regard to
CPEC, they arose mainly from a lack of information and/or misinformation regarding the
initiative. These he explained have for the most part been addressed accordingly.
The next speaker, drawing on his extensive research on economic
development within the country, Dr. Vaqar Ahmed presented the final
topic on “CPEC’s Impact on Pakistan’s Economic Growth and
Development”. Considering how the newly elected government is in
the process of familiarizing itself with CPEC, he appreciated the
timeliness of the In-house seminar organized by the SVI. In answering
whether CPEC had any positive impact on Pakistan’s economic growth
and development, he said that the short answer to this question was - yes it has led to gains in
Pakistan’s economic growth.
This was evident in the fact that Pakistan finally crossed the 5% mark of the rate of real GDP
growth after decades as a result of CPEC related inflows. These include FDI inflows from non-
China related sources that have since built on that momentum generated by the CPEC. At
present, the 22 Billion USD worth of CPEC projects that are currently in the pipeline are also
quite promising. As these projects near completion it is also worth acknowledging the
numerous benefits already gained over from the completion of the Early Harvest Projects under
CPEC. These include the benefits gained not only from utilizing the idle capacity of the large-
scale manufacturing sector but also the additional capacities that were added over the last
three and a half years. These include steel, iron, cement, construction and building materials
industries. As a result, the economy experienced considerable buoyancy from the private sector
with fixed investments rising to levels that were unseen since the 2010 energy crisis. So yes,
there has been a definite uptick in economic activity in terms of a marked increase in business
confidence as a result of both domestic and FDI inflows.

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Dr. Ahmed went on to explain that building on these gains, it was important to discuss how
Pakistan can put its own house in order to be able to maximize this opportunity and gain
optimally from the next phase of development as outlined in the CPEC Long-Term Plan (LTP).
This includes development of the Special Economic Zones as well as other objectives laid out in
the LTP. Based on field surveys carried out by the SDPI amidst the business community, Dr.
Vaqar Ahmed shared his organization’s findings on how businesses can further leverage the
opportunities and advantages being provided under CPEC. These include the potential gains to
be made from future trade and investment cooperation as well as the development of certain
value chains with China and the rest of the region. He explained how there were three broad
areas which the private sector had highlighted based on their surveys.
First they would like to see the development of Special Economic Zones expedited,
particularly the SEZs in Faisalabad, Dhabeji and Rashakai. Second they would like to see CPEC’s
next phase further bolster Pakistan’s transit potential. There exist numerous opportunities for
servicing or scaling up goods and services in transit for Afghanistan, Central Asia and even Iran.
Third, the business community was in agreement that in terms of trade opportunities CPEC’s
gains would be optimized if Pakistan and China are able to reach an early agreement on the
revised Free Trade Agreement (FTA). This is important considering that while CPEC offers
considerable level of infrastructural endowments; it is ultimately market access for Pakistani
exports that would generate more trade opportunities through a more balanced FTA between
both countries. This entails adjusting both tariff lines and non-tariff barriers for Pakistani
exports to China perhaps more in line with those linked with Chinese trade with Bangladesh,
India and other ASEAN countries.
Dr. Ahmed explained that the business community was also of the opinion that in terms of
import development China had to perhaps go beyond just the development of hard
infrastructure, and assist Pakistan in setting up one-window operations at Pakistani ports.
While the FBR does have a goal to set these up by 2020 this needs to be expedited further with
perhaps Chinese assistance. Based on responses from the country’s small and medium
enterprises, there was a definite need to further formalize the industrial policy of each province

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out of which only Punjab had formally done so. While the Early Harvest program had already
set the groundwork by significantly reducing the energy deficit, these policies need to be
formalized for these benefits to be reaped successfully. There was also a desire from the
business community particularly in Karachi to engage in joint ventures with Chinese companies
where there were greater opportunities for technology transfer. This is yet another aspect that
can be incorporated as part of the government’s policies with regard to its focus on
development of the SEZs. There was also an emphasis on promoting the services sector as part
of the next phase of CPEC’s development. For instance, Pakistan’s IT services sector comprising
mostly of freelancers has experienced a considerable boom over the last few years. The export
of these services to China holds immense opportunities particularly under the subsequent
stages of CPEC. In general there is a lot of work that needs to be done in terms of re-assessing
the range of potential imports from Pakistan by China. Based on some research Dr. Ahmed
listed a wide range of goods and services as part of Chinese imports from countries such as
India and Bangladesh. These include seafood, horticulture, coal, leather items, rice, vegetables,
ground nuts, etc. most of which are items that can easily be supplied by Pakistan to China.
He also emphasized that of all the potential benefits to be accrued from CPEC, these should
not be simply limited to trade cooperation but also investment cooperation. While
acknowledging China’s efforts in promoting investments by Chinese Enterprises into the SEZs it
had helped set up in BRI countries, he explained how Pakistani enterprises too wished to be
linked with Chinese Enterprises as part of this emerging supply and production network. He
cited his organization’s research in the Sundar Industrial Estate near Lahore where 12 Chinese
companies from the private sector had so far set up operations. Similarly in Faisalabad there
are 9 Chinese companies based in the M3 Industrial Estate. Hence, while there is a definite
interest and opportunity, these Chinese companies are producing for the domestic market.
Ideally Pakistan would like to see these Chinese companies come in and contribute to the
country’s overall exports in the future. Therefore, coming back to the revised Free Trade
Agreement (FTA), it is imperative that the FTA has a more focused investment promotion clause
that while also avoiding instances of double taxation, it becomes easier for Pakistani companies
operating in China to open their overseas branches and help facilitate the sale of Pakistani

17. 16
goods and services in China. Similarly, while relaying the views of representatives from the
Chambers of Commerce (particularly the Sialkot Chamber of Commerce), Dr. Vaqar Ahmed
explained how there was a desire to have more Chinese delegation visit these areas particularly
with respect to the leather industry for developing trade and investment opportunities. They
were also of the opinion that the government has been unable to support the development of
certain niche export industries for which there is already considerable demand by import
vendors in China. For instance, Halal Food and Meat exports were cited by the representatives
from the Peshawar and Lahore Chambers of Commerce as lacking in government support. This
was because most of these goods currently being exported were in fact being smuggled into
China via alternative routes such as through Vietnam.
Winding up, Dr. Vaqar Ahmed emphasized that despite the myriad of business and
regulatory challenges within Pakistan, it was quite encouraging to see a number of Chinese
companies come in and set up operations throughout Pakistan. These include companies
producing consumer goods that after relocating their plants and machinery in Pakistan are
achieving up to a 45% return on their investments. These also include Joint ventures with
Pakistani companies that further pave the way for other opportunities for the growth and
development of the wider industry. This he said was apparent for instance in the joint venture
between Haier and Ruba which are transitioning towards producing high-end consumer goods
and electronics such as laptops, refrigerators, air conditioners and washing machines, etc.
These examples present thus one of the many encouraging possibilities of utilizing the
proposed SEZs under CPEC to their full potential, given the right conditions.
The talks were followed by an interactive discussion and Question & Answer session.
Lt. Gen (R) Syed Muhammad Owais (Former Secretary Defense
Productions) while commenting on the proceedings appreciated the broad
scope of the seminar comprising of a diverse array of experts from the world
over. He added that due to Pakistan’s geo-strategic position with regard to
the BRI, Pakistan enjoys a unique advantage to contribute to the
development of the wider region encompassing South Asia, Central Asia, the Persian Gulf, and

18. 17
the Middle East. However, as pointed out by Dr. Vaqar Ahmed, this depends on how fast and
how effectively Pakistan can put its own house in order to be able to fully benefit from this
initiative.
Dr. Inayat Kalim (Assistant Professor, COMSATS University, Islamabad)
posed two questions to the panel. His first question was to Prof. Baogong
He, to whom he asked whether the BRI would disturb China’s existing
trade balance with BRI countries such as Malaysia. His second question
was to Prof. Shahram Akbarzadeh to whom he asked whether China
would disturb the pre-existing relations between the US and Middle
Eastern countries. Prof. Baogong He responded by pointing out that the sheer scale of China’s
development projects are more likely to add to the demand for local supplies, boosting trade
rather than upsetting pre-existing relations. Prof. Shahram Akbarzadeh replied that China was
not trying to export culture to the Middle East, unlike the US. Rather it is through the rationale
of large-scale economic cooperation that China is making friends in the Middle East.
Ms. Rina S. Khan (Environmental Journalist, Express Tribune)in a question directed at Mr.
Zhao Lijian asked to what extent can CPEC be considered as ‘Green’ as part of President Xi
Jinping’s vision of promoting an eco-friendly civilization. Mr. Zhao Lijian
elaborated that China was wholly cognizant of the environmental impact of
CPEC and the impact it would have on Pakistan’s soil, water and air. He gave
the example of how with regard to CPEC’s contributions to the energy
sector, the energy mix being deployed was cognizant of this factor and was
also focused on utilizing renewable sources of energy, such as solar, and
hydroelectric power. Building on this argument he said that it was important to dispel certain
myths that were doing rounds linking the coal power plants being setup through Chinese
assistance with rising air pollution levels. He explained how even though China too was phasing
out the use of coal power plants, the ones being set up in Pakistan were employing state of the
art technology aimed at generating minimum levels of air pollution. He pointed out that these
levels were still considerably lower than the air pollution levels being caused by existing oil-

19. 18
based power plants such as the ones still being used in Port Qasim. The effects on air pollution
levels of these new coal based power plants has thus been exaggerated, especially considering
how coal still plays a very important role even in the US Energy Department’s energy mix.
Mr. Saud Bangash (Resident Director, Pakistan Business Council) in
another question directed at Mr. Zhao Lijian asked how Pak-China
economic cooperation was improving value added manufacturing in
Pakistan. Mr. Zhao Lijian responded by citing the example of Haier
that was mentioned earlier by Dr. Vaqar Ahmed. He explained how
the company went from earning around 1 Million USD in revenues
during President Hu Jintao’s visit (in 2006) to currently generating
revenues worth almost 900 million USD. He pointed out that the success of Haier has been
hailed as one of the first successful examples of SEZs in Pakistan. He also mentioned the vast
demand for Pakistani mangoes and kinnows in China also presented ample opportunities for
Pakistan to further develop its export capacity as part of Pak-China economic cooperation. Dr.
Vaqar Ahmed adding to the DCM’s comments, pointed out that there was a definite need to
undertake a large-scale assessment to identify key areas where Pakistan holds the comparative
advantage in trade with China. This entailed an important need to identify high growth sectors
and the underlying reasons of why local enterprises were succeeding and/or failing within these
sectors. This has to be carried out by taking into account these sectors’ investment potential as
well as how to further streamline the regulatory environment including the use of exchange
and foreign currency mechanisms.
Mr. Hassan Daud Butt (Project Director/CPEC Coordinator, Ministry for Planning
Development and Reform) on the request of Dr. Zafar Iqbal Cheema, presented the closing
remarks for the session. He provided an overall snapshot of where CPEC stands based on the
present government’s priority areas with regard to economic growth and development. He
emphasized that CPEC has demonstrated that by working together and by achieving synergy
between the multiple arms of the government as well as between countries, all the evidence
points to the fact that CPEC works. This was evident in the revival of the country’s numerous

20. 19
sectors including most recently the textile sector. Based on the new government’s key priority
areas he pointed out that experts on education and healthcare are also closely working with
China to help develop these sectors in Pakistan. Furthermore, even though we have lagged
behind on our targets pertaining to the SEZS, these are also being addressed. The FTA is also in
the process of being ratified and should be finalized soon. He further added that under the
direction of the present government, the promotion of certain Human Resource Intensive
industries are also being looked at with a view to generating greater employment. Mr. Daud
also said that 2019 was an important year for Gwadar as a number of key developments are
expected be launched and completed. He mentioned that the government was also keenly
focused on managing the ecological impact of CPEC on the overall environment. This he said
was directly linked to generating a positive impact on tourism that was vital to the overall
success of CPEC particularly in key regions such as Gilgit-Baltistan. He assured the audience that
both his Ministry and the government at large were keenly focused on ensuring that the
increasing momentum generated by CPEC is carried further for accelerating the country’s
overall growth and development.
In the end Dr. Zafar Iqbal Cheema thanked all the worthy participants for their valuable
input on the topic.

21. 20
Media Coverage:
The event was widely covered by the print media as is evident from the links provided below:
Express Tribune:
1. https://tribune.com.pk/story/1907162/1-key-energy-infrastructure-cpec-projects-almost-
ready/
2. https://tribune.com.pk/story/1906618/2-large-scale-cpec-projects-completed-months/
Nation:
https://nation.com.pk/09-Feb-2019/key-cpec-projects-to-be-completed-soon-china-envoy
Business Recorder:
https://fp.brecorder.com/2019/02/20190209445800/
Dawn:
https://www.dawn.com/news/1462656
Newswire:
http://www.newswire.com.pk/2019/02/08/cpec-projects-to-be-completed-in-few-months-
lijian-zhao/
Official media/CPEC official website
APP:
http://www.app.com.pk/key-infrastructure-energy-projects-nearing-completion-lijian-
zhao/
CPECinfo:
http://www.cpecinfo.com/news/a-number-of-large-scale-cpec-projects-will-be-completed-
soon-lijian-zhao/NjY1OQ==