The latest figures from the Central Bank of Pakistan, Pakistan’s central bank, are saying that Chinese investment in Pakistan has decreased while US investment has increased.
Figures for the first quarter (July-September) of the current financial year show that Chinese investment in Pakistan during this period was only $100 million, compared to more than $200 million last year.
In comparison, US investment stood at more than $100 million, compared to just $20 million in the first quarter of last year.
The largest Chinese investment project in Pakistan is the China-Pakistan Economic Corridor (CPEC), which includes the construction of roads, power plants, railway lines and industrial areas.
Work on the CPEC project started during the previous government in Pakistan i.e. Muslim League (Nawaz), under which many projects were inaugurated and some of them were even completed, but after PTI came to power, this project took a long time. There are complaints of lethargy.
While political opponents of PTI have accused the federal government of slowing down the CPEC project, independent observers and economic analysts are no different.
Experts believe that a major reason for the decline in Chinese investment is that the infrastructure and energy projects that were underway in the first phase of CPEC have been completed, and investments have already come in for those under construction.
On the other hand the problem is that no major project has been started under CPEC in the present government.
Khalid Mansoor, Special Assistant to the Prime Minister for the China-Pakistan Economic Corridor (CPEC), rubbished the notion that work on the CPEC was slow, saying it was just speculation and there was no truth to it.
- Chinese investment in Pakistan
Almost all investment coming into Pakistan from China is under CPEC projects. Government statistics show that the last major investment from China into Pakistan in the last two years was in December 2019, which was $300 million.
After this, this investment started declining steadily and after some rise and fall in different months, it remained less than $ 200 million in total. Although the corona virus has also affected Chinese investment, but this investment could not reach its high level even after the effect of corona virus subsided.
- Decline in investment in the last few years
In April 2020, this investment was limited to just $8 million, largely due to the coronavirus. However, in September 2020, it improved slightly and reached $130 million.
In January this year, its value stood at $50 million, which dropped further in the first month (July) of the current fiscal year, and in the last month i.e. September, the total investment was only $25 million.
Yusuf Saeed, economic analyst at Darson Securities, said that “Chinese investment was mostly coming in energy projects under CPEC, many of which have been completed. He said that if we look at the data of investments made in different sectors, then this confirms this.
Yusuf said that in the first quarter of the last financial year, the amount of investment in the energy sector was about $ 240 million, which has come down to about $ 140 million in the first quarter of the current financial year.
According to economist Abid Silhari, “Work on the CPEC project has not slowed down, but the real reason is that many old projects have been completed and then due to Corona and the situation in the region, this investment has come down.”
Economist Dr Ikram-ul-Haq believes that security risks are also behind this decline in investment. He said that attacks on Chinese engineers have also led to a reduction in investment.
Pakistan’s former Federal Planning and Development Minister Ahsan Iqbal says that most of China’s investment has been in roads and energy projects. He said that “the first phase was for infrastructure and energy projects, most of which were completed during the Nawaz League era.”
“The second phase is of the industrial sector, in which work has not started yet.”
He claimed that the reason for the decline in Chinese investment was that no work was done on these industrial areas and work on these projects was slowed down or deliberately not executed during the Tehreek-e-Insaf regime.
He said that “as per our plan, work was to start on nine industrial areas by 2020, but it is unfortunate to say that not a single one of them has been laid till now.” When work on these projects doesn’t even start, the Chinese investment itself will be less.”
- Imran Sarkar’s argument
Ahsan Iqbal claims that during the PTI era, work on CPEC projects was deliberately slowed down.
He said that similarly the project of ML-1 in the railway sector was signed in 2017, but some work has not progressed on that too.
Ahsan Iqbal said that 75 thousand Chinese were working on CPEC projects in our time, but the terrorist attacks on Chinese citizens in Gwadar, Quetta, Karachi and Dasu also led to a decline in investment.
In this regard, Khalid Mansoor, Special Assistant to the Prime Minister for CPEC, categorically rejected the notion that Chinese investment in Pakistan has declined in the last one and a half years.
He claimed that $25 billion has been invested so far under the CPEC project, but he did not specify how much of this investment had come in the previous government and how much had come under the current government.
Khalid Mansoor said that after the first phase, now in the second phase, work is going on at a brisk pace on the industrial areas.
Khalid Mansoor said that two weeks ago the ‘JCC’ meeting of the CPEC was held and various working groups discussed increasing the pace of work in the industrial, agricultural, information technology and scientific fields.
- US investment increased against China?
According to the data released by the Central Bank of Pakistan, during the first quarter of this financial year, the amount of investment coming from America has been more than Chinese investment.
On the increase in US investment, analyst Yousuf Saeed said that America would have invested in oil, gas or communications.
According to him, this investment must have been made for some time, which happens from time to time by American companies in some areas. Commenting on the long-term trend of US investments, Yusuf said that “no firm opinion can be given at this point of time”.
Former federal minister Ahsan Iqbal claims that “the current government was under pressure from the US that if it slowed down the work on the CPEC projects, the Pakistani government would get something from the US in return”.
He said that due to the policies of the government, China’s investment has decreased on the one hand and on the other hand even America is not trusting Pakistan.
- Attack on Chinese engineers slashed investment?
On the question of investment from the US, Dr Ikram-ul-Haq said that it is unfortunate to say that Pakistan is no longer an ideal country for investment.
Referring to the situation in the region with the decline in economic indicators and the internal problems of Pakistan, he said that in such a situation, what will come of American investment, but Chinese investment is also decreasing.
When Special Assistant to the Prime Minister Khalid Mansoor was asked whether the pace of work on CPEC projects has been slowed down at the behest of the US, after the present government came to power? So he said that “there is no truth in this”.
On Ahsan Iqbal’s claim, Mansoor said that he is not a political person, but he can say that Pakistan has better diplomatic relations with both the US and China.
- The future of Chinese investment in Pakistan
According to Khalid Mansoor, Special Assistant to the Prime Minister, Chinese investments in CPEC projects in Pakistan are likely to increase.
He said that work is going on on five industrial areas, in which Chinese investment will come.
However, former federal minister Ehsan Iqbal said that “the current government does not have any development plan on the basis of which it can bring Chinese investment into Pakistan”.
“Investment requires vision, agenda and a plan, which is lacking in the present government,” he said.
On this, economist Dr Abid Silhari says that the situation in Afghanistan is the biggest issue at the moment because due to this the region is facing uncertainty and investors are cautious in this regard.
According to economist Dr Ikram-ul-Haq, Chinese investors may now find Afghanistan more attractive than Pakistan for investment due to Afghanistan’s mineral wealth, which has never been given due attention before.