Musafir123
Senator (1k+ posts)
Development and debt seal relationship while Americans find ‘getting message out is a challenge’
China is staking a claim to supplanting the U.S. as a Pakistan’s most influential ally with tens of billions of dollars of investment, an embrace that promises Pakistan economic benefits and saddles it with debt—ensuring the relationship will last.
By
Saeed Shah
ISLAMABAD—Pakistan’s ruling power structure has long been summed up with the saying “Allah, Army and America.”
China is now staking a claim to supplanting the U.S. with tens of billions of dollars of investment, an embrace that promises Pakistan economic benefits and saddles it with debt—ensuring the relationship will last.
Chinese President Xi Jinping has made Pakistan his flagship partner in a program to spread Chinese-built infrastructure—and Beijing’s sway—across Asia and beyond. Pakistan has so far signed on to $55 billion in Chinese projects, many of them guaranteeing China a high return on its investments and granting tax breaks to Chinese companies.
Former President Barack Obama’s “Asia pivot” is giving way to Mr. Xi’s infrastructure juggernaut, in a model that could be replicated across the region.
“China came in when no one else was willing to invest,” said Commerce Minister Khurram Dastagir. The U.S. missed its chance, he said.
Beijing calls its program “One Belt One Road,” referring to the ancient sea and land Silk Road trade routes that China seeks to revive. Pakistan Prime Minister Nawaz Sharif inaugurated the program’s first big completed project here in late May, a Chinese-built, coal-fired power plant in his home province of Punjab.
China is building roads, railways, power plants and a port, and has lent Pakistan $2 billion in under two years to shore up its foreign-exchange reserves.
A promised $1 trillion Chinese splurge hasn’t yet materialized for many countries. But in Pakistan, $18 billion in projects are under construction in what is known as the China Pakistan Economic Corridor.
The centerpiece is Pakistan’s Arabian Sea port at Gwadar, under expansion and run by a Chinese company to enable trade in goods from China’s southwest.
Pakistan calculates that the Chinese investments will add 2 percentage points to growth in the next few years by providing infrastructure needed to kick-start industrialization.
President Donald Trump has abandoned what was viewed by the Obama administration as a counterbalance to China, a trade deal with nations in the region called Trans Pacific Partnership. An American official said civilian aid to Pakistan, a longtime ally, remained substantial but “getting our message out is a challenge.”
Chinese workers gather at an open pit mine in Pakistan’s Thar desert in March. Photo: Asim Hafeez/Bloomberg News
“The Chinese are winning the perceptions game, whatever the reality. That then leads to political outcomes, because people see the inevitability of China’s rise and China’s power,” said Ely Ratner of the Council on Foreign Relations, an independent U.S. think tank.
While Washington’s approach in Asia is military-led, Beijing is binding countries to its interests with economics, said Mr. Ratner.
At a Chinese celebration of its belt and road plan in Beijing in May, Matt Pottinger, senior director for East Asia at the National Security Council, welcomed the initiative but called for Beijing to “ensure that privately owned companies can bid in a fair process.”
That means that American businesses should be allowed to compete for contracts, U.S. officials said.
There is little sign of that in Pakistan. Islamabad chooses bidders from an all-Chinese short-list provided by Beijing. Pakistani officials say this is because Chinese companies bring their own financing.
The U.S. has asked to participate in the China-Pakistan Economic Corridor, but nothing has come of it, one of the American officials said.
Much as the U.S. secured the Pakistan alliance with aid to the country’s powerful military, China has made the Pakistani army a beneficiary. Many construction contracts that weren’t given to Chinese firms have been awarded to the military’s engineering arm. The military has raised a special force, now at 15,000 and set to double in size, to protect Chinese projects.
Since 2001, Islamabad has received $33 billion in U.S. military and civilian aid, according to the Congressional Research Service. But U.S. aid hasn’t yielded any high-profile infrastructure projects in Pakistan, and Pakistani officials say that joining America’s war on terror has cost it $123 billion in economic losses and tens of thousands of lives.
Infrastructure development under the China-Pakistan Economic corridor plan links southwest China to Pakistan’s Arabian Sea port at Gwadar, shown here in March.Photo: Liu Tian/Xinhua
“We want to move away from geopolitics, to geoeconomics, from fighting wars for others,” said Ahsan Iqbal, Pakistan’s planning minister, who oversees the Chinese investment. “Our vision is to place Pakistan as the hub of trade and commerce in this region.”
China’s expenditure isn’t aid. With transport projects, Pakistan incurs debt; power plants come with an obligation for Pakistan to purchase the electricity produced.
Tahir Mashhadi, a senator from the opposition Muttahida Qaumi Movement, compared China to the East India Company, the commercial enterprise that colonized India before the British government took over.
“Here’s the danger: the banks are Chinese. The money is Chinese. The expertise is Chinese. The management is Chinese. The profits are for China. The labor is Chinese,” said Mr. Mashhadi.
Nadeem Javaid, chief economist at Pakistan’s planning ministry, said Pakistan would be paying $5 billion a year to China by 2022, but that the debt should be easy to manage as Pakistani exports rise, electricity prices fall, and toll revenues are generated from trade from China to Gwadar.
“The fears,” he said, “are not genuine.”
—Trefor Moss in Shanghai and Qasim Nauman in Islamabad contributed to this article.
Write to Saeed Shah at [email protected]
Source: https://www.wsj.com/articles/china-pushes-u-s-aside-in-pakistan-1497783600
China is staking a claim to supplanting the U.S. as a Pakistan’s most influential ally with tens of billions of dollars of investment, an embrace that promises Pakistan economic benefits and saddles it with debt—ensuring the relationship will last.
By
Saeed Shah
ISLAMABAD—Pakistan’s ruling power structure has long been summed up with the saying “Allah, Army and America.”
China is now staking a claim to supplanting the U.S. with tens of billions of dollars of investment, an embrace that promises Pakistan economic benefits and saddles it with debt—ensuring the relationship will last.
Chinese President Xi Jinping has made Pakistan his flagship partner in a program to spread Chinese-built infrastructure—and Beijing’s sway—across Asia and beyond. Pakistan has so far signed on to $55 billion in Chinese projects, many of them guaranteeing China a high return on its investments and granting tax breaks to Chinese companies.
Former President Barack Obama’s “Asia pivot” is giving way to Mr. Xi’s infrastructure juggernaut, in a model that could be replicated across the region.
“China came in when no one else was willing to invest,” said Commerce Minister Khurram Dastagir. The U.S. missed its chance, he said.
Beijing calls its program “One Belt One Road,” referring to the ancient sea and land Silk Road trade routes that China seeks to revive. Pakistan Prime Minister Nawaz Sharif inaugurated the program’s first big completed project here in late May, a Chinese-built, coal-fired power plant in his home province of Punjab.
China is building roads, railways, power plants and a port, and has lent Pakistan $2 billion in under two years to shore up its foreign-exchange reserves.
A promised $1 trillion Chinese splurge hasn’t yet materialized for many countries. But in Pakistan, $18 billion in projects are under construction in what is known as the China Pakistan Economic Corridor.
The centerpiece is Pakistan’s Arabian Sea port at Gwadar, under expansion and run by a Chinese company to enable trade in goods from China’s southwest.
Pakistan calculates that the Chinese investments will add 2 percentage points to growth in the next few years by providing infrastructure needed to kick-start industrialization.
President Donald Trump has abandoned what was viewed by the Obama administration as a counterbalance to China, a trade deal with nations in the region called Trans Pacific Partnership. An American official said civilian aid to Pakistan, a longtime ally, remained substantial but “getting our message out is a challenge.”
Chinese workers gather at an open pit mine in Pakistan’s Thar desert in March. Photo: Asim Hafeez/Bloomberg News
“The Chinese are winning the perceptions game, whatever the reality. That then leads to political outcomes, because people see the inevitability of China’s rise and China’s power,” said Ely Ratner of the Council on Foreign Relations, an independent U.S. think tank.
While Washington’s approach in Asia is military-led, Beijing is binding countries to its interests with economics, said Mr. Ratner.
At a Chinese celebration of its belt and road plan in Beijing in May, Matt Pottinger, senior director for East Asia at the National Security Council, welcomed the initiative but called for Beijing to “ensure that privately owned companies can bid in a fair process.”
That means that American businesses should be allowed to compete for contracts, U.S. officials said.
There is little sign of that in Pakistan. Islamabad chooses bidders from an all-Chinese short-list provided by Beijing. Pakistani officials say this is because Chinese companies bring their own financing.
The U.S. has asked to participate in the China-Pakistan Economic Corridor, but nothing has come of it, one of the American officials said.
Much as the U.S. secured the Pakistan alliance with aid to the country’s powerful military, China has made the Pakistani army a beneficiary. Many construction contracts that weren’t given to Chinese firms have been awarded to the military’s engineering arm. The military has raised a special force, now at 15,000 and set to double in size, to protect Chinese projects.
Since 2001, Islamabad has received $33 billion in U.S. military and civilian aid, according to the Congressional Research Service. But U.S. aid hasn’t yielded any high-profile infrastructure projects in Pakistan, and Pakistani officials say that joining America’s war on terror has cost it $123 billion in economic losses and tens of thousands of lives.
Infrastructure development under the China-Pakistan Economic corridor plan links southwest China to Pakistan’s Arabian Sea port at Gwadar, shown here in March.Photo: Liu Tian/Xinhua
“We want to move away from geopolitics, to geoeconomics, from fighting wars for others,” said Ahsan Iqbal, Pakistan’s planning minister, who oversees the Chinese investment. “Our vision is to place Pakistan as the hub of trade and commerce in this region.”
China’s expenditure isn’t aid. With transport projects, Pakistan incurs debt; power plants come with an obligation for Pakistan to purchase the electricity produced.
Tahir Mashhadi, a senator from the opposition Muttahida Qaumi Movement, compared China to the East India Company, the commercial enterprise that colonized India before the British government took over.
“Here’s the danger: the banks are Chinese. The money is Chinese. The expertise is Chinese. The management is Chinese. The profits are for China. The labor is Chinese,” said Mr. Mashhadi.
Nadeem Javaid, chief economist at Pakistan’s planning ministry, said Pakistan would be paying $5 billion a year to China by 2022, but that the debt should be easy to manage as Pakistani exports rise, electricity prices fall, and toll revenues are generated from trade from China to Gwadar.
“The fears,” he said, “are not genuine.”
—Trefor Moss in Shanghai and Qasim Nauman in Islamabad contributed to this article.
Write to Saeed Shah at [email protected]
Source: https://www.wsj.com/articles/china-pushes-u-s-aside-in-pakistan-1497783600
