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By BR Research

Business Recorder

Published Date: Nov 15, 2016

Road-testing CPEC

It ‘s a first. What has transpired in the past few days is significant. A pilot convoy of trucks carrying mostly Chinese goods snaked across the road infrastructure that is to be part of CPEC, under a security cordon. Upon reaching Gwadar, containers were loaded on to a Chinese ship, which then set sail for different shores, after having been seen off on Sunday by Pakistan ‘s who ‘s who.

The seemingly mundane chain of events demonstrated the viability of a new international trade route. More important, it signalled tangible progress in Pakistan ‘s evolving economic relationship with China, which has previously been concentrated mostly in defence. It ‘s a nice start. But as with many things, the proof is in the pudding. And pudding ain ‘t ready yet. Are the necessary ingredients in place yet?

While CPEC is expected to generate economic traffic in Pakistan, arguably, it alone cannot bring prosperity that is promised by the country ‘s leadership almost every day. To be able to benefit from this north-south corridor, Pakistan has to be able to produce goods that are competitive enough to survive the Chinese surplus. For that, competitiveness is required at both factory and farm levels.

Sadly, so far, nobody in the federal and provincial government has presented a plan to nudge the private sector, which itself is slow to respond, in that direction. Instead, private sector is whining about government ‘s limited transparency over CPEC. Additionally, according to an informed source, the dozen or so special economic zones (SEZs) identified by Pakistan remain mired in back and forth between Pakistani and Chinese officials over identification criteria of those SEZs.

Another view, based on location as a god-given competitive advantage, offers more hope. The historical economic vibrancy of the region which currently straddles Pakistan had been in transit and trade, serving as a key conduit for intra- and cross-continental trade. CPEC can hit that sweet spot, for Pakistan is ideally placed to cash in on China ‘s need to open up an alternative route for exchange of economic goods and procurement of its strategic supplies. But sustain such traffic will depend on at least three things.

One is connectivity infrastructure, which the Chinese and their Pakistani counterparts are already at work establishing. Over coming years, more road infrastructure is expected to accumulate. But planners must account for expected congestion, especially at the corridor ‘s northern flank on the Karakoram Highway. Once thousands of trucks start rolling in from the Khunjerab Pass, those winding roads will prove too narrow for a viable traffic flow.

Speaking to BR Research, SDPI ‘s deputy executive director, Dr. Vaqar Ahmed, pointed out the need to do necessary forecasting for transportation load management. “I congratulate the government authorities on starting the CPEC. To take it to the next level, planning has to be done to put enough road and rail infrastructure to manage a load of potentially tens of thousands of Chinese trucks. I have observed that such planning process has been lacking in the concerned government departments.”

The second is security, which is a precarious issue despite having relative normalcy been restored around the country in recent years. The horrific human tragedy in Khuzdar in central Balochistan, just a day before the Gwadar event, is a chilly reminder that the country is not out of the woods yet. Sure, ‘ whodunit ‘ is important to know, but so is accountability of the LEAs who fail to prevent such tragedies.

And the third is connecting CPEC with the wider region. This is where the country ‘s decision-makers can use some imagination. Linking up this north-south corridor with an east-west corridor may serve to multiply the economic traffic along the CPEC. If the connection happens, CPEC can inevitably become a source of peaceful coexistence among regional rivals through economic inter-dependency.

Besides the above, a few more issues need attention. For instance, CPEC-linked energy projects, which are critical for Pakistan, seem all over the place, with their portfolios changing regularly. Similarly, securing the vast CPEC route is likely going to be a costly affair to fund sustain ably. Opacity of CPEC projects is now causing some economists to warn of a debt pile-up under CPEC.

It is good to see that China ‘s strategic fondness for Pakistan now includes a greater economic content. But it remains to be seen what her growing economic presence eventually means for Pakistan.

Source: http://www.brecorder.com/br-research/999:all/7124:road-testing-cpec/?date=2016-11-15