Chinese economy and dynamic CPEC

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Dr Wang Zhihua

The 2015 witnessed a slow global economic recovery while most major economies are suffering the slump in growth. Global trading has been facing the most serious downward pressure since Financial Crisis as well. Under such a circumstance, the economic and trade performance of China become more outstanding. Besides, as one important part of bilateral economic and trade relationship between Pakistan and China, CPEC attracts much attention all over the world.

China remains a major driving force for global growth The domestic and international situation China faced with was extremely complex and severe in 2015. Overall, with the progress in stability, the domestic economy and commerce works keeps the medium-to-high speed of growth and has achieved hard-won fruits with all performance indicators ranking forefront in the world. China GDP growth fell 0.4 percentage points to 6.9%, which remained relatively higher than many other major economies. China’s import and export trade in goods and export value have ranked the top one in the world since 2013, and the year 2015 is not an exception. The value of online retail sales maintained the first place of the world, the total value in retail sales of consumer goods and the import and export volume in service trade stably ranked the second place in the world, foreign investment has ranked the top one among developing countries for 24 consecutive years and the investment abroad ranked the third one in the world.

There are many highlights in China’s economic growth. According to a World Bank report, China’s economic growth contribution to the world increased 0.8 percentage points to 26.1%. In terms of import and export, with the double-digit negative growth in global trade last year, the decrease of China fell far below the decrease of other major economies and global trade. China’s share in global trade is expected to increase by a percentage point from 12.2% to over 13%. In 2015, China’s global share enhanced the fastest; in terms of international investment, the foreign direct investment (non-financial sectors) in last year, reached 118.02 billion US dollars, an increase of 14.7%, which remains the rapid growth of consecutive years; in terms of attracting foreign investment, actual use of foreign investment is 126.27 billion US dollars, an increase of 5.6%, and China still ranks the top one among developing countries. Consumption’s contribution to the social and economic growth has reached 66.4%, with an increase of 15.4% over 2014. That is to say, China has successfully achieved the vital transformation of economic development from investment and foreign trade based to domestic demand, especially consumption based.

“Belt and road initiative” has made positive progress “Belt and Road Initiative” is China’s top-level design of the opening and economic diplomacy in the new era and China’s suggestion and scheme on the cooperation development and common prosperity in the new era. Chinese President Xi actually proposed such a major cooperation initiative to promote peace and cooperation, openness and inclusiveness, mutual learning and benefits under the “Silk Road” symbol. With respect to the implementation of the “Belt and Road Initiative”, it does not delineate the boundaries by ideology, development path, development model and development level or other standards, but intends for mutual benefit and win-win through exchanges and cooperation in policy, trade, currency, infrastructure, cultural and other aspects based on the principles of broad consultation, joint contribution and shared benefits. At present, more than 60 countries have given positive responses and some countries carried out strategic docking with China, and put forward specific ideas of cooperation. Just as mentioned by President Xi in his speech, The “Belt and Road” is not China’s solo, but the mixed chorus of all related countries.

The implementation of “Belt and Road Initiative” achieved success in many countries like Pakistan, Sri Lanka, Belarus, Thailand, Egypt, Kenya and so on. China has established 75 overseas economic and trade cooperation zones in the world, which has created a large number of tax and employment for the host country. According to statistics, various overseas Chinese funded enterprises have paid taxes of more than 100 billion US dollars to the country in which they have invested; by the end of 2015, overseas Chinese funded enterprises have nearly employed 900,000 foreign employees.

CPEC will substantially promote economic and trade ties between the two countriesPakistan and China elevated their ties to all-weather strategic partnership in April 2015 after the Chinese president Xi’s historic visit to Pakistan, which further enhanced the long time-tested friendship between the two countries. As one important part of “Belt and Road initiative”, China Pakistan Economic Corridor (CPEC) will not only strengthen the economic and trade ties between both nations, but will also promote the common prosperity and development for the whole region. According to the statistics of Economic and Commercial Office of Consulate General of P.R. China in Karachi, the overall on-going and planned Pak-China related projects in both Sindh and Balochistan provinces reached 27, worth more than 12 billion US dollars, covering sectors such as power generation, resource development, roads, transmission lines, ports and so on, including Qasim coal-fired Power Plant, Dawood Wind Power Project, Thar Coal-Mining Power Plant, Gwadar Port etc. According to related companies, Dawood Wind Power Project will be done in this September; Qasim Coal-firing Power Plant is expected to be completed within the next two years.

CPEC injects new vitality to Pakistan’s economic growth. It will stimulate local industries like steel, cement, construction, logistic, travelling, security etc. According to local analysts’ estimate, the start of mega development schemes and power projects under the CPEC will boost the annual demand for steel products by more than 30% to 6 million tons from 4 million tons. Besides, Pakistan &Gulf Economist expects that Cement sales in FY2016 will increase 3.5% compared to last year, reaching 36.7 million tons, domestic sales will increase 11.4%, reaching 31.5 million tons. CPEC is also a major attraction for domestic investors and international capitals that see it as catalyst for Pakistan. The huge investment from China has made Pakistan one of the central economic activists all over the world, which is also a major attraction for large foreign capitals. Moreover, CPEC accelerates the industrial promotion of Pakistan and brings more advanced equipment and techniques through industrial shift and capacity cooperation.

CPEC benefits local residents in a more realistic way. On the one hand, Chinese enterprises bring more job opportunities to the local people and offer chances for them to get more skilled education, which improves the local living standards. On the other hand, Chinese enterprises built public facilities aiming at improving people’s well-being in the project region. Take MCC Sandak Copper-Gold Mine Project as an example, the Chinese company improved public infrastructures like irrigation systems, power plants as well as roads, which largely promoted the local livelihood.

We are fully confident that, based on the principle of broad consultation, joint contribution and shared benefits, the economic and trade ties between Pakistan and China will be further strengthened, and the future of Pak-China relationship is broad and bright.

(The writer is Counsellor Economic & Commercial Office of Consulate General of P.R. China in Karachi)