By: Nida Yasmeen
We all know, Pakistan advanced trade relations with China, which are closely linked to FDI that is foreign direct investment. In recent years, China’s exports to Pakistan have been encouraged by FDI in transport infrastructure, trade facilitation, the power sector, and telecommunications. China’s is earning from so many ways in Pakistan. Many projects are happening in Pakistan. China’s interest in promoting Pakistan’s development and the political stability.
As growing Chinese funding guarantees to enhance Pakistan’s poor economy in a time of need, there are coexisting patriotic worries expressed with the aid of using nearby organizations and corporations that Chinese traders are cornering a lot of nearby industries, country assets and organizations to the barrier for Pakistani gamers and interests.
According to the world investment report 2020 of trade and development United Nation which indicates that foreign direct investment (FDI) in Pakistan increased from $1.6 billion in 2018 to $2.2 billion in 2019, with added FDI of $34.8 billion at the end of that year.
The share of FDI in Pakistan from China has creeped upwards because of their investment is mostly associated from CPEC. Chinese FDI remains more beneficial for Pakistan than investment from other sources because of these reasons.
- China has become the principal drivers of global growth with rapid expanding of local market which is creating increased demand for imports.
- Chinese FDI has capital to capitalize and some of its businesses are looking for to change their manufacture centers overseas as national pay budget increase.
- China advanced the value chain and is probably to out from some low value adding activities thus making new openings for the people of Pakistan.
There are numerous of projects has been happening under China are as follows:
Most of the contribution during the FY21 comes from energy sector that has received 113.3 million against 32.3 million in similar time of fiscal year. Most the share of investment in CPEC is engaged towards the production of power projects which will make 17045 Megawatts of power in Pakistan. Under which 10,400 MW of energy generation capacity would be installed based on priority. This enormous investment must be planned with the vision of consuming current energy resources and challenge the electricity crisis in Pakistan. Most of the energy generation projects are based on Hydel and coal technologies. CPEC includes the expansion of broadcast line on urgent basis from which 7 highly prioritize projects have been completed and some projects remains under construction under 19 billion USD have been financed in power projects as FDI and 3240 MW of electricity has been further add to the national power grid at the end of 2020. Hydro power project considers as a great source to clean and green Pakistan which considered as atmosphere friendly.
Both countries decided to include 800 MW to hydropower project of Azzad Pathan under the CPEC. Which would be funded done by Chinese currency. This project is a run river system on the Jhelum River, of Azad Jammu Kashmir, that has a capability of peaking 4 hours daily. It is located near the upstream pathan bridge of 720 megawatts of karot hydropower project and 640 megawatts to mahal hydro project, also part of the Jhelum River waterfall. This project would provide about 3.3 billion units of renewable and clean energy in the power grid after its accomplishment in 2026.
Establishment of all energy projects will increase the power supply security in Pakistan. With the CPEC project it is estimated that it will add 2.5% to our current GDP also growth will increase with 7.5%. Power supply projects will resolve the issues of energy in Pakistan not only for the industries also for the people, it finished it will be produced 400000 MW electricity as a result the problem of load shedding will be decreased.
The MERICS database shows 25.5 billion USD worth of projects as completed, 70% of those figures are being for energy projects. This includes solar, hydro, and wind powered generation, but fossil-fuel fired capacity establishes coarsely 60% of the added megawatt, if we exclude nuclear. Other projects are of coal as we biggest resources of coal in our country and 7 projects are prioritize which contributes to the energy projects.
The diplomatic relation between Pakistan and China has started since the Pakistan has become an independent state, it becomes the first country to recognize the people’s Republic of China. In 2013, there was a declaration of Gwadar port operations is given to China. Belt and road have opened many opportunities to all over the world for trade and industries and its import and export has started in the same year. In 2015 many countries had agreed to be the part of BRI, and BRI is an important project of CPEC. This will make ease for the public of Pakistan. CPEC strengthen the root of our economy.
Both countries are being linked by progress of a giant system of railway roads, airports, expressways and pipelines of gas and oil. Under CPEC transportation will joins Gawadar and Karachi seaports. It is beneficial for Pakistan and its economic growth. China economic corridor is a project of 5-year plan which was officially launched in April 2015, both governments had drawn up a long term plan which started in 2017 and significantly expanded the project timeline till 2030 for its completion. Its estimated cost has been increased from 42 billion to 62 billion yet. Mostly, CPEC projects do not involves China directly so we had chosen to add non CPEC projects that would be fall in the BRI purposes. The suggestion of a shipping corridor has mainly focused by worldwide attention. Bulk of projects has already completed CPEC projects with the help of power generation. It is quite difficult to measure the success of this initiative as it has exceptional and determined as CPEC. So many initial projects have already been completed as of 2020 but there are many projects also delayed and over budget.
During its construction phase we can see the clear boost in a Pakistan’s economic growth by 3% as development of industries with availability of resources. Also, value has been increased of the land surrounding which is improving and significantly beneficial for the owners and developers of the land. We see tremendous rise in agricultural production will result in agricultural growth with help of China and sharing modern techniques, machineries, and strategies according to the possible climate conditions. CPEC is promoting foreign investment which results in economic growth. It also increases the trade of our country which simultaneously increase our profit. China is the biggest trading partner of Pakistan. CPEC creates great employment opportunities for the residents of Pakistan which will boost our economic growth. Only from CPEC itself, there are more than 30,000 jobs opportunities have been formed by power projects only. Because of CPEC our international position has also increased. It will surely convey widespread tactical and monetary blessings to Pakistan and its surrounding areas. Not solely CPEC would be useful for us of a however the citizen of Pakistan will additionally be capable to endure fruits of its benefits to every individual.
Port of Gawadar:
Gawadar port is located at Gawadar, Balochistan on the Arabian Sea, which is connected to OBOR, it plays a vital role in the development of the inland central Asian region, aslo extension by silk route initiative the allocation for the development of gawadar has approximately 792.63 total USD, the city is set to become the bridgehead for 54 billion in CPEC. the port was selected as pakistans next economic Hub. Many trade projects come under the gwadar port, some of them is given below:
- Development of gawadar university
- Different types of businesses will be held in gawadar.
- For the promotion of fisheries and formation of boat making industries some specific projects will be started.
- For the improvement of education, recognition of skills and improvement of health and hospitals, supply of clean water and its distribution would be developed in Gawadar which will be called smart city.
- Additional terminals will be constructed which called as east bay expressway, also airport for gawadar international airport. More than 30 companies have invested in this free zone of economic with an investment of 475 million USD, it is said that after the development of gawadar port, Pakistan would be the hub of trade for whole region and its impact will be of duty-free economic zone.
- Airport is being established named as Gwadar New International Airport already 40% work has done.
After completion of port China will have an alternative and the short route for their energy imports from middle east, thus decreasing shipping costs and transportation times. It provides a direct short route to China, Afghanistan and central Asia also secure us more from India like more than KPT and PQ, it works as a shell-like Naval base from any distraction from any Indian. We have to wait for its completion till 2028.
China is one of the well established country and at the same time investing in Pakistan. Chain making a peace friendship relationship with Pakistan by growing its economy. They are implementing different projects, also sending their machines and human power which may help Pakistan to grow better.