{"id":11625,"date":"2017-05-15T12:38:27","date_gmt":"2017-05-15T07:38:27","guid":{"rendered":"http:\/\/jworldtimes.com\/old-site\/jwt2015\/?p=11625"},"modified":"2017-05-15T12:38:27","modified_gmt":"2017-05-15T07:38:27","slug":"exclusive-cpec-master-plan-revealed","status":"publish","type":"post","link":"https:\/\/www.jworldtimes.com\/old-site\/css-exclusive\/css-special\/exclusive-cpec-master-plan-revealed\/","title":{"rendered":"Exclusive: CPEC master plan revealed"},"content":{"rendered":"

By: KHURRAM HUSAIN<\/em><\/p>\n

\n

Details from original documents laying out the CPEC long term plan are publicly disclosed for the first time.<\/span><\/h2>\n<\/blockquote>\n
    \n
  • Plan eyes agriculture<\/strong><\/li>\n
  • Large surveillance system for cities<\/strong><\/li>\n
  • Visa-free entry for Chinese nationals<\/strong><\/li>\n<\/ul>\n

    The floodgates are about to open. Prime Minister Nawaz Sharif arrived in Beijing over the weekend to participate in the One Belt, One Road summit, and the top item on his agenda is to finalise the Long Term Plan (LTP) for the China-Pakistan Economic Corri\u00addor.<\/p>\n

    Dawn has acquired exclusive access to the original document, and for the first time its details are being publically disclosed here. The plan lays out in detail what Chinese intentions and priorities are in Pakistan for the next decade and a half, details that have not been discussed in public thus far.<\/p>\n

    For instance, thousands of acres of agricultural land will be leased out to Chinese enterprises to set up \u201cdemonstration projects\u201d in areas ranging from seed varieties to irrigation technology. A full system of monitoring and surveillance will be built in cities from Peshawar to Karachi, with 24 hour video recordings on roads and busy marketplaces for law and order. A national fibreoptic backbone will be built for the country not only for internet traffic, but also terrestrial distribution of broadcast TV, which will cooperate with Chinese media in the \u201cdissemination of Chinese culture\u201d.<\/p>\n

    The plan envisages a deep and broad-based penetration of most sectors of Pakistan\u2019s economy as well as its society by Chinese enterprises and culture. Its scope has no precedent in Pakistan\u2019s history in terms of how far it opens up the domestic economy to participation by foreign enterprises. In some areas the plan seeks to build on a market presence already established by Chinese enterprises, eg Haier in household appliances, ChinaMobile and Huawei in telecommunications and ChinaMetallurgical Group Corporation (MCC) in mining and minerals.<\/p>\n

    In other cases, such as textiles and garments, cement and building materials, fertiliser and agricultural technologies (among others) it calls for building the infrastructure and a supporting policy environment to facilitate fresh entry. A key element in this is the creation of industrial parks, or special economic zones, which \u201cmust meet specified conditions, including availability of water\u2026perfect infrastructure, sufficient supply of energy and the capacity of self service power\u201d, according to the plan.<\/p>\n

    But the main thrust of the plan actually lies in agriculture, contrary to the image of CPEC as a massive industrial and transport undertaking, involving power plants and highways. The plan acquires its greatest specificity, and lays out the largest number of projects and plans for their facilitation, in agriculture.<\/p>\n

    Agriculture<\/strong><\/span><\/h2>\n

    For agriculture, the plan outlines an engagement that runs from one end of the supply chain all the way to the other. From provision of seeds and other inputs, like fertiliser, credit and pesticides, Chinese enterprises will also operate their own farms, processing facilities for fruits and vegetables and grain. Logistics companies will operate a large storage and transportation system for agrarian produce.<\/p>\n

    It identifies opportunities for entry by Chinese enterprises in the myriad dysfunctions that afflict Pakistan\u2019s agriculture sector. For instance, \u201cdue to lack of cold-chain logistics and processing facilities, 50% of agricultural products go bad during harvesting and transport\u201d, it notes.<\/p>\n

    Enterprises entering agriculture will be offered extraordinary levels of assistance from the Chinese government. They are encouraged to \u201c[m]ake the most of the free capital and loans\u201d from various ministries of the Chinese government as well as the China Development Bank. The plan also offers to maintain a mechanism that will \u201chelp Chinese agricultural enterprises to contact the senior representatives of the Government of Pakistan and China\u201d.<\/p>\n

    The government of China will \u201cactively strive to utilize the national special funds as the discount interest for the loans of agricultural foreign investment\u201d. In the longer term the financial risk will be spread out, through \u201cnew types of financing such as consortium loans, joint private equity and joint debt issuance, raise funds via multiple channels and decentralise financing risks\u201d.<\/p>\n

    The plan proposes to harness the work of the Xinjiang Production and Construction Corps to bring mechanization as well as scientific technique in livestock breeding, development of hybrid varieties and precision irrigation to Pakistan. It sees its main opportunity as helping the Kashgar Prefecture, a territory within the larger Xinjiang Autonomous Zone, which suffers from a poverty incidence of 50 per cent, and large distances that make it difficult to connect to larger markets in order to promote development. The prefecture\u2019s total output in agriculture, forestry, animal husbandry and fishery amounted to just over $5 billion in 2012, and its population was less than 4 million in 2010, hardly a market with windfall gains for Pakistan.<\/p>\n

    However, for the Chinese, this is the main driving force behind investing in Pakistan\u2019s agriculture, in addition to the many profitable opportunities that can open up for their enterprises from operating in the local market. The plan makes some reference to export of agriculture goods from the ports, but the bulk of its emphasis is focused on the opportunities for the Kashgar Prefecture and Xinjiang Production Corps, coupled with the opportunities for profitable engagement in the domestic market.<\/p>\n

    The plan discusses those engagements in considerable detail. Ten key areas for engagement are identified along with seventeen specific projects. They include the construction of one NPK fertilizer plant as a starting point \u201cwith an annual output of 800,000 tons\u201d. Enterprises will be inducted to lease farm implements, like tractors, \u201cefficient plant protection machinery, efficient energy saving pump equipment, precision fertilization drip irrigation equipment\u201d and planting and harvesting machinery.<\/p>\n

    The plan shows great interest in the textiles industry in particular, but the interest is focused largely on yarn and coarse cloth.<\/p>\n

    Meat processing plants in Sukkur are planned with annual output of 200,000 tons per year, and two demonstration plants processing 200,000 tons of milk per year. In crops, demonstration projects of more than 6,500 acres will be set up for high yield seeds and irrigation, mostly in Punjab. In transport and storage, the plan aims to build \u201ca nationwide logistics network, and enlarge the warehousing and distribution network between major cities of Pakistan\u201d with a focus on grains, vegetables and fruits. Storage bases will be built first in Islamabad and Gwadar in the first phase, then Karachi, Lahore and another in Gwadar in the second phase, and between 2026-2030, Karachi, Lahore and Peshawar will each see another storage base.<\/p>\n

    Asadabad, Islamabad, Lahore and Gwadar will see a vegetable processing plant, with annual output of 20,000 tons, fruit juice and jam plant of 10,000 tons and grain processing of 1 million tons. A cotton processing plant is also planned initially, with output of 100,000 tons per year.<\/p>\n

    \u201cWe will impart advanced planting and breeding techniques to peasant households or farmers by means of land acquisition by the government, renting to China-invested enterprises and building planting and breeding bases\u201d it says about the plan to source superior seeds.<\/p>\n

    In each field, Chinese enterprises will play the lead role. \u201cChina-invested enterprises will establish factories to produce fertilizers, pesticides, vaccines and feedstuffs\u201d it says about the production of agricultural materials.<\/p>\n

    \u201cChina-invested enterprises will, in the form of joint ventures, shareholding or acquisition, cooperate with local enterprises of Pakistan to build a three-level warehousing system (purchase & storage warehouse, transit warehouse and port warehouse)\u201d it says about warehousing.<\/p>\n

    One of the most intriguing chapters in the plan speaks of a long belt of coastal enjoyment industry that includes yacht wharfs, cruise homeports, nightlife, city parks, public squares, theaters, golf courses and spas, hot spring hotels and water sports.<\/p>\n

    Then it talks about trade. \u201cWe will actively embark on cultivating surrounding countries in order to improve import and export potential of Pakistani agricultural products and accelerate the trade of agricultural products. In the early stages, we will gradually create a favorable industry image and reputation for Pakistan by relying on domestic demand.\u201d<\/p>\n

    In places the plan appears to be addressing investors in China. It says Chinese enterprises should seek \u201ccoordinated cooperation with Pakistani enterprises\u201d and \u201cmaintain orderly competition and mutual coordination.\u201d It advises them to make an effort \u201cseeking for powerful strategic partners for bundling interest in Pakistan.\u201d<\/p>\n

    As security measures, enterprises will be advised \u201cto respect the religions and customs of the local people, treat people as equals and live in harmony\u201d. They will also be advised to \u201cincrease local employment and contribute to local society by means of subcontracting and consortiums.\u201d In the final sentence of the chapter on agriculture, the plan says the government of China will \u201c[s]trengthen the safety cooperation with key countries, regions and international organizations, jointly prevent and crack down on terrorist acts that endanger the safety of Chinese overseas enterprises and their staff.\u201d<\/p>\n

    Industry<\/span><\/h2>\n

    For industry, the plan trifurcates the country into three zones: western and northwestern, central and southern. Each zone is marked to receive specific industries in designated industrial parks, of which only a few are actually mentioned. The western and northwestern zone, covering most of Balochistan and KP province, is marked for mineral extraction, with potential in chrome ore, \u201cgold reserves hold a considerable potential, but are still at the exploration stage\u201d, and diamonds. One big mineral product that the plan discusses is marble. Already, China is Pakistan\u2019s largest buyer of processed marble, at almost 80,000 tons per year. The plan looks to set up 12 marble and granite processing sites in locations ranging from Gilgit and Kohistan in the north, to Khuzdar in the south.<\/p>\n

    The central zone is marked for textiles, household appliances and cement. Four separate locations are pointed out for future cement clusters: Daudkhel, Khushab, Esakhel and Mianwali. The case of cement is interesting, because the plan notes that Pakistan is surplus in cement capacity, then goes on to say that \u201cin the future, there is a larger space of cooperation for China to invest in the cement process transformation\u201d.<\/p>\n

    \u00a0\u201cThere is a plan to build a pilot safe city in Peshawar, which faces a fairly severe security situation in northwestern Pakistan\u201d.<\/p>\n

    For the southern zone, the plan recommends that \u201cPakistan develop petrochemical, iron and steel, harbor industry, engineering machinery, trade processing and auto and auto parts (assembly)\u201d due to the proximity of Karachi and its ports. This is the only part in the report where the auto industry is mentioned in any substantive way, which is a little surprising because the industry is one of the fastest growing in the country. The silence could be due to lack of interest on the part of the Chinese to acquire stakes, or to diplomatic prudence since the sector is, at the moment, entirely dominated by Japanese companies (Toyota, Honda and Suzuki).<\/p>\n

    Gwadar, also in the southern zone, \u201cis positioned as the direct hinterland connecting Balochistan and Afghanistan.\u201d As a CPEC entreport, the plan recommends that it be built into \u201ca base of heavy and chemical industries, such as iron and steel\/petrochemical\u201d. It notes that \u201csome Chinese enterprises have started investment and construction in Gwadar\u201d taking advantage of its \u201csuperior geographical position and cheap shipping costs to import crude oil from the Middle East, iron ore and coking coal resources from South Africa and New Zealand\u201d for onward supply to the local market \u201cas well as South Asia and Middle East after processing at port.\u201d<\/p>\n

    The plan shows great interest in the textiles industry in particular, but the interest is focused largely on yarn and coarse cloth. The reason, as the plan lays out, is that in Xinjiang the textile industry has already attained higher levels of productivity. Therefore, \u201cChina can make the most of the Pakistani market in cheap raw materials to develop the textiles & garments industry and help soak up surplus labor forces in Kashgar\u201d. The ensuing strategy is described cryptically as the principle of \u201cintroducing foreign capital and establishing domestic connections as a crossover of West and East”.<\/p>\n

    Preferential policies will be necessary to attract enterprises to come to the newly built industrial parks envisioned under the plan. The areas where such preferences need to be extended are listed in the plan as \u201cland, tax, logistics and services\u201d as well as land price, \u201centerprise income tax, tariff reduction and exemption and sales tax rate.\u201d<\/p>\n

    Fibreoptics and surveillance<\/strong><\/span><\/h2>\n

    One of the oldest priorities for the Chinese government since talks on CPEC began is fibreoptic connectivity between China and Pakistan. An MoU for such a link was signed in July 2013, at a time when CPEC appeared to be little more than a road link between Kashgar and Gwadar. But the plan reveals that the link goes far beyond a simple fibreoptic set up.<\/p>\n

    China has various reasons for wanting a terrestrial fibreoptic link with Pakistan, including its own limited number of submarine landing stations and international gateway exchanges which can serve as a bottleneck to future growth of internet traffic. This is especially true for the western provinces. \u201cMoreover, China\u2019s telecom services to Africa need to be transferred in Europe, so there is certain hidden danger of the overall security\u201d says the plan. Pakistan has four submarine cables to handle its internet traffic, but only one landing station, which raises security risks as well.<\/p>\n

    So the plan envisages a terrestrial cable across the Khunjerab pass to Islamabad, and a submarine landing station in Gwadar, linked to Sukkur. From there, the backbone will link the two in Islamabad, as well as all major cities in Pakistan.<\/p>\n

    The expanded bandwidth that will open up will enable terrestrial broadcast of digital HD television, called Digital Television Terrestrial Multimedia Broadcasting (DTMB). This is envisioned as more than just a technological contribution. It is a \u201ccultural transmission carrier. The future cooperation between Chinese and Pakistani media will be beneficial to disseminating Chinese culture in Pakistan, further enhancing mutual understanding between the two peoples and the traditional friendship between the two countries.\u201d The plan says nothing about how the system will be used to control the content of broadcast media, nor does it say anything more about \u201cthe future cooperation between Chinese and Pakistani media\u201d.<\/p>\n

    udging from their conversations with the government, it appears that the Pakistanis are pushing the Chinese to begin work on the Gwadar International Airport, whereas the Chinese are pushing for early completion of the Eastbay Expressway.<\/p>\n

    It also seeks to create an electronic monitoring and control system for the border in Khunjerab, as well as run a \u201csafe cities\u201d project. The safe city project will deploy explosive detectors and scanners to \u201ccover major roads, case-prone areas and crowded places\u2026in urban areas to conduct real-time monitoring and 24 hour video recording.\u201d Signals gathered from the surveillance system will be transmitted to a command centre, but the plan says nothing about who will staff the command centre, what sort of signs they will look for, and who will provide the response.<\/p>\n

    \u201cThere is a plan to build a pilot safe city in Peshawar, which faces a fairly severe security situation in northwestern Pakistan\u201d the plan says, following which the program will be extended to major cities such as Islamabad, Lahore and Karachi, hinting that the feeds will be shared eventually, and perhaps even recorded.<\/p>\n

    Tourism and recreation<\/strong><\/span><\/h2>\n

    One of the most intriguing chapters in the plan is the one that talks about the development of a \u201ccoastal tourism\u201d industry. It speaks of a long belt of coastal enjoyment industry that includes yacht wharfs, cruise homeports, nightlife, city parks, public squares, theaters, golf courses and spas, hot spring hotels and water sports. The belt will run from Keti Bunder to Jiwani, the last habitation before the Iranian border. Then, somewhat disappointingly, it adds that \u201cmore work needs to be done\u201d before this vision can be realized.<\/p>\n

    The plans are laid out in surprising detail. For instance, Gwadar will feature international cruise clubs that \u201cprovide marine tourists private rooms that would feel as though they were \u2018living in the ocean\u2019\u201d. And just as the feeling sinks in, it goes on to say that \u201c[f]or the development of coastal vacation products, Islamic culture, historical culture, folk culture and marine culture shall all be integrated.\u201d Apparently more work needs to be done here too.<\/p>\n

    For Ormara, the plan recommends building \u201cunique recreational activities\u201d that would also encourage \u201cthe natural, exciting, participatory, sultry, and tempting characteristics\u201d to come through. For Keti Bunder it recommends wildlife sanctuaries, an aquarium and a botanical garden. For Sonmiani, on the eastern edge of Karachi, \u201cprojects like a coastal beach, extended greenway, coastal villa, car camp, SPA, beach playground and a seafood street can be developed.\u201d<\/p>\n

    It is an expansive vision that the plan lays out, and towards the end, it asks for the following: \u201cMake the visa-free tourism possible with China to provide more convenient policy support for Chinese tourists to Pakistan.\u201d There is no mention of a reciprocal arrangement for Pakistani nationals visiting China.<\/p>\n

    Finance and risk<\/strong><\/span><\/h2>\n

    In any plan, the question of financial resources is always crucial. The long term plan drawn up by the China Development Bank is at its sharpest when discussing Pakistan\u2019s financial sector, government debt market, depth of commercial banking and the overall health of the financial system. It is at its most unsentimental when drawing up the risks faced by long term investments in Pakistan\u2019s economy.<\/p>\n

    The chief risk the plan identifies is politics and security. \u201cThere are various factors affecting Pakistani politics, such as competing parties, religion, tribes, terrorists, and Western intervention\u201d the authors write. \u201cThe security situation is the worst in recent years\u201d. The next big risk, surprisingly, is inflation, which the plan says has averaged 11.6 per cent over the past 6 years. \u201cA high inflation rate means a rise of project-related costs and a decline in profits.\u201d<\/p>\n

    Efforts will be made, says the plan, to furnish \u201cfree and low interest loans to Pakistan\u201d once the costs of the corridor begin to come in. But this is no free ride, it emphasizes. \u201cPakistan\u2019s federal and involved local governments should also bear part of the responsibility for financing through issuing sovereign guarantee bonds, meanwhile protecting and improving the proportion and scale of the government funds invested in corridor construction in the financial budget.\u201d<\/p>\n

    It asks for financial guarantees \u201cto provide credit enhancement support for the financing of major infrastructure projects, enhance the financing capacity, and protect the interests of creditors.\u201d Relying on the assessments of the IMF, World Bank and the ADB, it notes that Pakistan\u2019s economy cannot absorb FDI much above $2 billion per year without giving rise to stresses in its economy. \u201cIt is recommended that China\u2019s maximum annual direct investment in Pakistan should be around US$1 billion.\u201d Likewise, it concludes that Pakistan\u2019s ceiling for preferential loans should be $1 billion, and for non preferential loans no more than $1.5 billion per year.<\/p>\n

    It advises its own enterprises to take precautions to protect their own investments. \u201cInternational business cooperation with Pakistan should be conducted mainly with the government as a support, the banks as intermediary agents and enterprises as the mainstay.\u201d Nor is the growing engagement some sort of brotherly involvement. \u201cThe cooperation with Pakistan in the monetary and financial areas aims to serve China\u2019s diplomatic strategy.\u201d<\/p>\n

    The other big risk the plan refers to is exchange rate risk, after noting the severe weakness in Pakistan\u2019s ability to earn foreign exchange. To mitigate this, the plan proposes tripling the size of the swap mechanism between the RMB and the Pakistani rupee to 30 billion Yuan, diversifying power purchase payments beyond the dollar into RMB and rupee basket, tapping the Hong Kong market for RMB bonds, and diversifying enterprise loans from a wide array of sources. The growing role of the RMB in Pakistan\u2019s economy is a clearly stated objective of the measures proposed.<\/p>\n

    Conclusion<\/strong><\/span><\/h2>\n

    It is not clear how much of the plan will be earnestly followed up and how much is there simply to evince interest from the Pakistani side. In the areas of interest contained in the plan, it appears access to the full supply chain of the agrarian economy is a top priority for the Chinese. After that the capacity of the textile spinning sector to serve the raw material needs of Xinjiang, and the garment and value added sector to absorb Chinese technology is another priority.<\/p>\n

    Next is the growing domestic market, particularly in cement and household appliances, which receive detailed treatment in the plan. And lastly, through greater financial integration, the plan seeks to advance the internationalization of the RMB, as well as diversify the risks faced by Chinese enterprises entering Pakistan.<\/p>\n

    In some areas the plan seeks to build on a market presence already established by Chinese enterprises, eg Haier in household appliances, ChinaMobile and Huawei in telecommunications and China Metallurgical Group Corporation (MCC) in mining and minerals.<\/p>\n

    Gwadar receives passing mention as an economic prospect, mainly for its capacity to serve as a port of exit for minerals from Balochistan and Afghanistan, and as an entreport for wider trade in the greater Indian Ocean zone from South Africa to New Zealand. There is no mention of China\u2019s external trade being routed through Gwadar. Judging from their conversations with the government, it appears that the Pakistanis are pushing the Chinese to begin work on the Gwadar International Airport, whereas the Chinese are pushing for early completion of the Eastbay Expressway.<\/p>\n

    But the entry of Chinese firms will not be limited to the CPEC framework alone, as the recent acquisition of the Pakistan Stock Exchange, and the impending acquisition of K Electric demonstrate. In fact, CPEC is only the opening of the door. What comes through once that door has been opened is difficult to forecast.<\/p>\n

    Courtesy:\u00a0 Daily dawn<\/strong><\/p>\n

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    By: KHURRAM HUSAIN Details from original documents laying out the CPEC long term plan are publicly disclosed for the first time. Plan eyes agriculture Large surveillance system for cities Visa-free entry for Chinese nationals The floodgates are about to open. Prime Minister Nawaz Sharif arrived in Beijing over the weekend to participate in the One …<\/p>\n","protected":false},"author":149,"featured_media":11626,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[31,5285],"tags":[3158,1226,40,537],"_links":{"self":[{"href":"https:\/\/www.jworldtimes.com\/old-site\/wp-json\/wp\/v2\/posts\/11625"}],"collection":[{"href":"https:\/\/www.jworldtimes.com\/old-site\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.jworldtimes.com\/old-site\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.jworldtimes.com\/old-site\/wp-json\/wp\/v2\/users\/149"}],"replies":[{"embeddable":true,"href":"https:\/\/www.jworldtimes.com\/old-site\/wp-json\/wp\/v2\/comments?post=11625"}],"version-history":[{"count":0,"href":"https:\/\/www.jworldtimes.com\/old-site\/wp-json\/wp\/v2\/posts\/11625\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.jworldtimes.com\/old-site\/wp-json\/wp\/v2\/media\/11626"}],"wp:attachment":[{"href":"https:\/\/www.jworldtimes.com\/old-site\/wp-json\/wp\/v2\/media?parent=11625"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.jworldtimes.com\/old-site\/wp-json\/wp\/v2\/categories?post=11625"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.jworldtimes.com\/old-site\/wp-json\/wp\/v2\/tags?post=11625"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}