China’s economic growth impacts on Pakistan economy
LAHORE, (APP): China’s economic growth impacts on Pakistan economy
China's economic growth is benefitting Pakistan's economy, as Chinese interest here is to attract foreign investors in this country.
This was stated by Shah Faisal Afridi, President Pak-China Joint Chamber of Commerce and Industry (PJCCI) in a exclusive interview with APP.
Shah Faisal Afridi said reliable and steadfast friendship between China and Pakistan is considered as an example all over the world and its economic benefits for Pakistan are getting more imminent day by day.
The emergence of China as an International Economic Power is proving to be advantageous for Pakistan, he added.
Regardless of the law and order situation, Chinese investment is increasing, and along with the governments of both the countries, the business leaders of private sectors are also playing an important role in strengthening economic relations, he remarked.
He said that role of the President & founder of Pak-China Joint Chamber of Commerce and Industry (PJCCI) is themost prominent in this respect, adding that his aim is todevelop PCJCCI as a model chamber that shall serve as an apex platform for promoting mutual investment and strengthening Pak-China friendship.
The objective behind the establishment of this platform is to pave way for two-way trade and investment by eliminating hurdles between the business communities, he added.
To a question, he elaborated that China is a hugeeconomy which is gaining importance in global economicscenario, while Pakistan is geographically attached to China, thus, by taking advantage of China's modern technology and experiences, "we may strengthen Pakistan's economy".
"We are already running a number of successful businessand industrial joint venture projects with private andgovernment companies in China. Now we have started tractor and truck manufacturing in Pakistan with the help of a Chinese company named Shifeng, as a result of which a company, named Ruba Automotives, has been established in Pakistan."
Under the supervision of Ruba Automotives, trucks andtractors with modern technology have been introduced in thecountry. Centers were established at Lahore and Rawalpindi for their manufacturing, assembly and import.
Shah Faisal Afridi said that under this project, LightCommercial Vehicles (LCV), electric cars, industrial tires,diesel generators and fork lift trucks have been imported to boost agricultural growth in Pakistan.
He said that Raahi Tractors are of the latest design and modern technology which are still being used with the name Shifeng in the European countries and has won the confidence of its users.
Appreciating the government for celebration of 65 years of Pak-China relationship, the PCJCCI President said that nature has bestowed Pakistan with all types of resources in abundance and a friend like China has been complementing the elements of growth.
He observed that now, the need of hour is proper planning and its implementation, because due to the factors like trade deficit, and energy crisis in Pakistan has already affected industrial progress.
He was of the view that world has now become a global village and "we cannot survive without connecting with neighboring countries. Nowadays, safeguarding ones economic benefits is first priority of every country".
Focusing on the economic gains, "we shall promote tradeand mutual investments with the neighboring countries", he remarked.
He said that European countries fought with each other for hundreds of years but mutual economic benefits have united them in the form of European Union.
He asserted that in order to safeguard country's ideological and geographical boundaries, without compromising national interests, trade agreements with neighboring countries should be signed and maintained. In this way regional trade will flourish and Pakistan's economy shall recover, he added.
Shah Faisal Afridi also urged that local and international investors shall be provided with constitutional protection for establishment of their businesses, protecting their valuable investments. For this purpose, immediate legislation shall be done to build the confidence of investors and businessmen.
He expressed the hope that peaceful environment and viable policies are important components for the success of a business and this can only be possible if private and public sectors work jointly to formulate constructive policies.
To another question, he said that in 1979, under the leadership of Chairman Mao Ze Tung, China had developed a plan for economic development which is still being practiced.
The huge part of economy is under the control of government, in which production targets, determination of prices and division of resources are included.
He maintained that "If we take a look back in history, before 193 years, in the year 1820, at that time too, China was among the big economies of world. In International GDP, its share was 32.9 percent. According to new estimates, in the year 2030, China will have more than 30 percent share in the global economy which will be more than America".
After the Economic reforms of 1979 till 2011, he mentioned, China's average GDP growth has remained 10 percent.
In other words, China has doubled its economy after every eight years. Chinese leader, Yang Zuang is considered as the founder of Economic Reforms in China. It is due to his vision that that Chinese Economy has become "The Economy of Scale" which means that transportation or shipping expenditures of a product are more than its cost of production.
For example, if the production cost of a product is 2 dollars, then to transport it to America or any far flung country costs 3 dollars. That is an economic miracle which has been realized by the Chinese nation, he added.
Shah Faisal Afridi said that from 1980 till date, approximately 500 million Chinese people who were living below the line of poverty have become prosperous. Today, China is the second largest economic power of the world, but it is capable of achieving the number one position in a few years.
According to the opinion of expert economists, he mentioned, there is no doubt that in Global Economy, China is at second number in direct external investments, it is on the top in manufacturing and its Foreign Exchange reserves meets no match in the world.
Shah Faisal Afridi commented that in 1979, the exports of Chinese products was $ 14 billion, which has witnessed more than 14 times increase up till now. International investment companies share 52.4 percent of Chinese exports and 49.6 percent of imports.
Talking about the factors behind China's rapid economic growth, Shah Faisal Afridi said that in 1979, to facilitate foreign investors, special economic zones were established and their purpose was to increase export and to import modern technology in China.
Moreover, decentralized economic policies were implemented which resulted in the endorsement of free market trade rules. Un-necessary paper work proceedings were eliminated and conditions for doing business were softened.
These measures accelerated the process of attracting foreign investors to China. In short, China's rapid economic growth is due to attracting large scale investments and accelerating the process of production along with strict implementation of the economic reforms.
To a query, he explained that in the year 2013, China introduced the pilot project and established Shinghai Free Trade Zones to accelerate economic development. This initiative will benefit China and it will set up new trends of competition on the global economic scenario.
Shah Faisal Afridi added that China has its place as a strong pillar in Pakistan's foreign policy.
The project of Gawadar port is an important sign of stronger Pak-China relations. In May 2013, Gawadar port project was officially handed over to China. According to the agreement, it was decided to invest US $750 million in the project, initially. He said that Gawadar port is really significant to China. The reason behind this vital importance is that 60 percent of oil is being imported by China from gulf countries and reaches to it after covering the distance of 16,000 KMs. After the completion of Gawadar port project, the distance will reduce to 2500 KMs only which is, from all aspects, more safe and feasible.
He maintained that in the year 2007-2014, many practical measures have been taken for the development of Gawadar Port Project, which will benefit Pakistan's economy. He called upon the business community to support the project of national interests of the country.
Talking about the Currency Swap Agreement between Pakistan and China, he termed it a positive initiative to strengthen economic relations between both the countries. He said that now there is no need to use dollar as intermediary currency for trade with China. After this agreement, both countries can directly trade with each other in their own currencies. Inclusion of Chinese currency in Pakistan's foreign exchange will benefit it in all aspects.
Responding to a question about the CPEC, the PCJCCI President said that a new Silk Route is being constructed between China and Pakistan. Meanwhile, China-Pakistan Economic Corridor (CPEC) project has been initiated and a Joint Working Group has been devised, which has conducted its first meeting in January 2014 and second meeting was held in February 2014 at Beijing.
The meeting was co-chaired by, Mr. Zhang Xiaoqiang, Vice Chairman of the National Development and Reform Commission of the People's Republic of China and Professor Ahsan Iqbal, Minister for Planning Development & Reform (MPD&R) of Pakistan.
The objective of this project, he added, is to facilitate trade between both countries by building an economic corridor.
He said, the trade route will start from Kashghar towards Khunjerab and passing through Islamabad, Multan, Lahore, Sukkur shall reach to its end at Karachi and Gawadar port. Already built roads like Karakoram Highway and motorway shall be upgraded and railway lines shall be mended. New roads, railway lines and dry ports shall also be constructed.
Shah Faisal Afridi added that apart from transport sector, the meeting of Joint Working Group has also finalized 16 new projects of generating energy from wind, water and coal.
Talking about the modern revolutionary hybrid technology in automobile sector, he said, although Japanese cars are widely used in Pakistan and high-end imported hybrid cars are also common on Pakistani roads, but the arrival of 800cc small hybrid car by the end of year 2014, did revolutionized the automobile sector in the country. The car has the capacity to run 400 km on one battery charge of eight hours. At current rates of petrol, it will cost 10 paisa per kilometer. He said "We are confident of not only providing Pakistani consumer top quality vehicles but also modern after sales services."
Mutual Five-year Development Plan for Trade and Economic Cooperation plays most significant role in Pak-China Economic relations. In this regard the first five-year plan has accomplished its goals.
In second phase of this plan 36 projects are under consideration in which the investment of $ 14 billion is expected. In 2012, the volume of mutual trade between both countries was $ 12 billion. In 2011, the establishment of Joint Working Group for the establishment of geo-thermal, hydro-thermal, coal, solar, wind, biomass and nuclear power projects was also an important advancement. Industrial and Commercial Bank of China is also opening its branches in Islamabad and Karachi.
Concluding his views about Pak-China's long lasting ties, he said that in such an encouraging environment created with support from governments of China and Pakistan, the business community should come forward proactively to promote regional and global trade.
The Government of Pakistan should, however, take concrete measures to provide protection to the local as well as the foreign investors so as to make Pakistan an emerging economic power of the region.