Prime Minister Shehbaz Sharif’s visit to China, which started on Tuesday in Shenzhen, is his first since his government returned to office after the February election. It began with the investment conference in Shenzhen, attended by a large number of potential investors from China. It was an indication that Mr Sharif wants to replicate the example of Saudi Arabia and the UAE, where instead of loans, they are now providing foreign exchange by investment. Therefore, Mr Sharif will measure the visit’s success not by the loans China will give, but by the loans it will make. He seems especially interested by Shenzhen, which was China’s first Special Economic Zone, it thus represents the next stage of the China-Pakistan Economic Corridor, where such SEZs will proliferate, and will rely on business-to-business (B2B) rather than government-to-government (G2G) synergy to prosper. It is an important part of the China-Pakistan Economic Corridor, which is the G2G basis on which the development will be B2B-driven.
Of course, with the CPEC, other considerations enter, such as the fact that it is incomplete. One of the main components is the $6.8 billion ML1 rail project, involving the upgradation of the track between Peshawar and Karachi. Then Mr Sharif will ask the Chinese leadership, when he meets it in Beijing, for the inclusion of the Diamer Bhasha Dam project, in the CPEC framework. The Dam cannot get funding from traditional development-finance institutions at this point, leaving in the lurch about midway through. China has already suffered terrorism by the inclusion of the Sau Hydropower Project in CPEC, leaving Pakistan still trying to explain away the attack both to the Chinese government, and Chinese investors, who must have taken away the impression that Pakistan is not just hostile but unsafe.
When Mr Sharif returns to Pakistan, he will have three China-related issues to deal with. First, the IMF, with which he is anxious to conclude a deal, has reservations about CPEC. This is the result of the IMF backing the USA in its tussle with China. That tussle is the second issue he must deal with, because Pakistan is doing its best to avoid taking sides even as other countries line up on one side or the other. Most crucial of all, the must ensure that any investors find that Pakistan is a safe country for them to invest in.
