Analyzing CPEC

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Re: Analyzing CPEC

Postby SSridhar » 21 May 2019 08:11

Chinese envoy calls on Pakistan army chief, discusses bilateral ties and regional security situation - PTI
Chinese ambassador to Pakistan Yao Jing on Monday called on army chief General Qamar Bajwa and discussed matters of mutual interest, including regional security situation, the Pakistan army said.

The meeting came days after Pakistan army announced that it would deploy another division-size special force to protect Chinese nationals and projects under the China-Pakistan Economic Corridor (CPEC).


According to Inter-Services Public Relations, the Pakistan military's media wing, matters of mutual interest including regional security situation were discussed in the meeting held at the General Headquarters in Rawalpindi.

Pakistan's civil-military leaders frequently hold meetings with Chinese officials in the backdrop of the multi-billion dollar CPEC project.
The CPEC is a 3,000-kilometre network of roads, pipelines and railways to connect Gwadar port in Pakistan to Kashgar in the Xinjiang region of China.

In a recent interview with the Chinese state media, chief military spokesperson Major General Asif Ghafoor said Pakistan military had raised a whole division-sized force to ensure the security of the CPEC, and was planning to deploy another division for the purpose. His statement came as some of the CPEC-linked project have been attacked by separatists in provinces like Balochistan.

Earlier reports said a Special Security Division (SSD) comprising 9,000 Pakistan army soldiers and 6,000 para-military forces personnel has been set up for the security of the CPEC project and Chinese nationals working on it.

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Analyzing CPEC

Postby Peregrine » 23 May 2019 15:22

Fully Posted on the P E S W Thread & X Posted on the OBOR, Chinese Strategy and Implications Threads

Pakistan discloses borrowing from China - Shahbaz Rana

ISLAMABAD: Pakistan, for the first time, fully disclosed the debt taken from China which stood at $6.5 billion for the current fiscal year alone, equal to three-fourths of the $8.6 billion worth of total loans that Islamabad received in the past 10 months, show official documents. I bet that this disclosure has been Treated and Approved by and with the Chinese Medicine Man's "DOCTORING"
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Analyzing CPEC

Postby Peregrine » 25 Jun 2019 04:22

X Posted on the P E S W Thread

An Old Article which Spells out Terroristani Doom!

CPEC Turns into a Chinese Albatross on Pakistan’s neck Salman Rafi Sheikh December 1, 2017

On Nov. 24, a federal minister told Pakistan’s Senate that 91 percent of revenues to be generated from the US$62 billion Gwadar port and the China-Pakistan Economic Corridor that would transport the port’s imports would go to China.

Pakistan faces repaying US$16 billion in loans obtained from Chinese banks for its development, the free-trade zone surrounding it, and all communications infrastructure, at annual rates of more than 13 percent, inclusive of 7 percent insurance charges. The Pakistan government obviously has no answers on how it will repay the loan over the next 40 years out of the 9 percent of revenues the government will retain. China expects to recoup its own cost of development of the CPEC from the first four years of earnings.

Understandably gun-shy over the one-sidedness of China’s generosity,
on Nov. 15 the Pakistani government turned down an offer of assistance by Beijing for construction of the US$14 billion Diamer-Bhasha Dam in Pakistan-Occupied Kashmir and said it would remove the project from the CPEC. The cost of the dam project has zoomed from US$5 billion to US$14 billion, with international lenders linking serious conditions with the provision of funding.

Pakistan thus is just one of several nations, including Sri Lanka, to have discovered the exorbitant conditions China is attaching to its massive One Belt, One Road.

“The real issue will come when some of those countries, particularly in central Asia, have to pay back some of the loans that were acquired in the Belt and Road Initiative,” Steve Tsang of London’s School of Oriental and African Studies told the Voice of America radio network. “And most of those countries will have problems paying back those loans.

Given past practice, Pakistan will either look to the West and particularly the International Monetary Fund for loans to re-pay Chinese loans – or it will rely on Beijing for soft loans to repay the CPEC loans, thus getting caught in a vicious cycle.

In addition, what is likely to cause a lot more damage to Pakistan’s potential earning is the tax concessions and tax holidays over 20 to 40 years that Pakistan has granted to contractors and sub-contractors associated with the Chinese state-run China Overseas Port Holding Company for imports of equipment, material, plant, appliances and accessories for port and special economic zone.

According to reports, the 923-hectare free zone, which is to include factories, logistics hubs, warehousing facilities and display centers, will all be exempt both from customs duties and from provincial and federal taxes.

On the contrary, no comparable tax breaks and incentives have been provided to Pakistan’s local companies. This is likely to naturally reduce the demand for made-in-Pakistan goods because these goods, compared to Chinese goods, will be much costlier.

Even outside the free-zones, the Chinese companies’ activity amounts to disguised looting of Pakistan’s natural resources. The reason for this looting, in part, is Pakistan’s own ill-preparedness to protect its interests and revenues.

For instance, Pakistan doesn’t have a regulatory framework to oversee the export of the country’s natural resources, for example marble, allowing the Chinese companies to bypass Pakistan’s processing industries, which could otherwise be a major contributor to the country’s fast-falling value-added exports.

According to a report by the State Bank of Pakistan, Marble and Marble Products, “China is the biggest importer of marble from Pakistan; however, the marble exported to China also includes semi-processed marble, which is then re-exported from China after value addition, which is hurting Pakistan’s marble industry to a significant extent.”

It isn’t surprising therefore that Pakistan’s share in bi-lateral trade with China stood at, in 2016, US$41.9 billion as against China’s share of almost US$ 17 billion. Pakistan’s exports to China have actually fallen in value while China’s exports have increased, raising concerns that the 1,300-km Karakoram Highway linking the port to the Chinese border is a one-way street.

Besides the fact that the Chinese companies are almost operating in Pakistan as if they were operating in China, another startling concern is that these companies are bringing in shiploads of Chinese workers, and thus only rarely form genuine partnerships with Pakistani companies. Consequently, there is little or no transfer of skills or technology, which is one reason why Pakistan cannot prevent the import of marble to China as China has the right technology to process marble while Pakistan doesn’t.

That Chinese companies are bringing in their own workers is an illustration of the internal logic of CPEC whereby China is not only expanding its industrial reach, establishing new markets but also re-locating its excess labor as well. This, according to Pakistani economist Farrukh Saleem, is how China’s labor problem connects with CPEC and Pakistan: “China produces 60 percent of the global cement output. [But] domestic demand has gone down sharply, and the CPC would have to cut roughly 390 million tonnes of cement capacity. And that would mean unemployed cement workers.” Hence the imperative of re-locating this excess labor to countries like to Pakistan.

Similarly, China’s metal smelting and rolling industry, which employs 3.63 million workers, has annual production of at 800 million tonnes as against domestic demand of 400 million tonnes, indicating the need for a sharp cut in the industry and relocation of the excess labor.

As such, by 2023, the city of Gwadar alone is expected to see 500,000 Chinese workers and professionals. Accordingly, the China Pak Investment Corporation (CPIC) announced last month a partnership with Top International Engineering Corporation (TIEC), a Chinese state-owned company, to develop China Pak Hills, the first Chinese built Master Community in Gwadar that will accommodate about 500,000 Chinese by 2023.

Therefore, with Pakistan all set to take a deep plunge into ‘Chinese communism’ and create many mini-Chinas in Pakistan, hopes of reaping the benefits out of the ambitious project have largely been misplaced and a result of misguided and misperceived policy of the Pakistan government.

But Pakistan has little to no strength in its economy to refuse the Chinese capital. With its foreign exchange reserves standing at US$19 billion and with its external debts standing at US$78 billion, there appears little to no choice for Pakistan other than to jump on the Chinese bandwagon. Still, it all depends upon what Pakistan can extract out of its partnership with the Chinese. So far, however, it is the Chinese who seem perfectly placed to benefit both strategically and economically.The External Debt of Terroristan is now US$ 105 Billion and RISING

Salman Rafi Sheikh (kingsalmanrafi@gmail.com) is a Pakistani academic and long-time contributor to Asia Sentinel

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Analyzing CPEC

Postby Peregrine » 15 Jul 2019 16:50

X Posted on the Terroristan Thread

Will CPEC survive the IMF bailout? - Afshan Subohi

The staff report released by the International Monetary Fund (IMF) last week must have provided some measure of comfort to the champions of the China-Pakistan Economic Corridor (CPEC) as well as China that chose Pakistan to be the first key destination for the Belt and Road Initiative (BRI), which aims to sustain its economic triumph and realise future ambitions.

If this is just a coincidence, it is intriguing. After a long lull, there is light blipping again on the CPEC drawing board. Last Friday, a 55-member Chinese delegation of business executives met Prime Minister Imran Khan and reportedly committed to ploughing $5 billion investment over the next five years. “Probably the interaction with the Chinese delegations was already planned, but the fact that it did materialise as soon as details of the IMF deal were made public kindled new hope for the future,” commented a top leader of the government’s economic team.

In its staff report following the approval of a three-year $6bn bailout programme, the IMF mentions the repayment of $14.68bn due for $21.8bn bilateral and commercial loans that Pakistan owes to China. This is almost 24pc of the country’s total $85.8bn external debt and liabilities. The document states that the Chinese commercial debt will be fully retired by the end of the programme in 2022 while the bilateral debt ($15.5bn) will be almost half of what the country owes at this point to $7.9bn.

There is no official word from China on the apparent slow pace of CPEC projects. Its enthusiasm somewhat waned for want of clarity on the post-election economic direction

Sometime back, the United States explicitly expressed its dismay over the possibility that Pakistan could use the Fund’s money to pay back Chinese loans. The US stance exasperated the anxieties surrounding the multibillion-dollar China’s investment plan. The CPEC did stimulate growth and motivated economic drivers by removing infrastructure bottlenecks before the start of the current tumultuous phase in May last year.
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There is no formal word on the issue from China. The enthusiasm of the dependable friendly nation did somewhat wane for want of clarity on the post-election economic direction. There were concerns about the intent of the new set of rulers on the pledges by the PML-N government regarding CPEC-related projects. The initial statements by members of Prime Minister Khan’s economic dream team where they questioned the sealed deals must have added to the confusion. How far the visit helped to allay China’s reservations is anyone’s guess. But the optics are lacking if China is still as upbeat on the CPEC as before.

China prefers to speak with its silence most of the times. However, people in the know of things in Islamabad said that China did remind the current government, at some point, of the grave consequences of reneging on the earlier signed contractual obligations.

Approaching the relevant Chinese officers supervising the CPEC was a vain exercise as earlier efforts proved useless. It became apparent quickly that China feels neither keen nor obligated to share the details of its multiple deals. It sees no value in entertaining the prying journalists. Sometime back, a senior Chinese diplomat told this writer that whatever they wish to be known is put up on the CPEC website. He said their system does not allow free flow of information. “We need clearance from Beijing before sharing our opinion. It takes time and does not serve the calls of fast-paced media based in democratic traditions.”

The relevant people in the federal government dismissed the perception that the ruling party knocks the wind out of the CPEC sail as being a figment of someone’s imagination. All provinces, except Khyber Pakhtunkhwa, endorsed the counter-narrative — the movement on the CPEC agenda has indeed slowed down under the watch of the current government.

The focal person on the CPEC, Hasan Dawood Butt, sees the project progressing at the expected pace. He termed Pakistan “the buckle of the Chinese belt initiative”. “Prime Minister Khan is as much devoted and committed to the CPEC as anyone else. His successful meetings with the leadership in China hold testimony to his recognition of the project’s value to the country and its people. We are moving ahead in the next phase of economic cooperation that focuses on development of the social sector and economic cooperation,” he said over the phone from Islamabad.

“We host Chinese experts and business delegations every other day. Recently, a delegation of the petroleum sector was in Islamabad to explore the avenues of joint ventures in special industrial zones,” he said. There are nine sites identified across Pakistan for special zones.

Mr Butt attributed the relative lack of visibility of the Chinese in Pakistan to the completion of several early-harvest programmes in the first phase. “We are commencing the second phase of the CPEC where there are no big-ticket infrastructure projects that require Chinese technicians in big numbers. Instead, the focus now is on improving health, education and agriculture. There is discussion over agriculture co-branding etc. Once special zones become operational, perhaps the optics will improve,” he told Dawn.

The sense in the provincial capitals was different. Generally, officers were reluctant to come on record, but said that if the progress on the CPEC is not halted altogether, it is too slow to be seen as moving at all.

“Be it transport or industrial zones, I do not remember when it was last even mentioned in a high-level meeting. I don’t have a shred of doubt in my mind that the lack of interest right now is mutually shared between both partners. It could be the preoccupation of China with sour trade relations with the United States or the obsession of Prime Minister Khan’s team with the demands of the IMF. Whatever it is, it has pushed the CPEC down on the priority list on both sides,” a senior member of the hierarchy in Sindh said.

“At long last, the Punjab government has identified and started the process of acquiring land for the planned industrial zones. If all goes as planned, it will take another two years to fix the infrastructure and arrange for basic utilities before gates are opened to investors,” a senior officer from Punjab told Dawn.

Not everyone agrees. Dr Muhammad Amanullah, a senior officer from Punjab, defended the government. “In the second phase under the new government, the focus of the CPEC has moved towards industrial development, agriculture and socio-economic development. The perception of a slowdown, therefore, is wrong as currently provincial governments are working towards identifying and proposing projects for special economic zones. The exercise needs research and spadework with eyes on realising the full potential of this opportunity,” he said.

KP Planning and Development Secretary Atif Rehman sounded optimistic. He said the work is in progress on the Rashakai Economic Zone. He was happy with the pace of progress.

According to insiders, not all of the 22 projects in the first phase of the CPEC worth about $29bn have been completed yet. Some eight projects in the power sector that are completed are said to be in financial troubles for the non-payment of dues.

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Re: Analyzing CPEC

Postby sudham » 01 Aug 2019 11:01

Another article talking about Pakistan slowly turning sour on CPEC
https://medium.com/@farooqtirmizi/cpec- ... 18a891ff0b

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Re: Analyzing CPEC

Postby ArjunPandit » 01 Aug 2019 14:45

CPEC is a win win situation for china, if it's successful then chinese co.s can export..if it is not more trouble for india as these guys will have no place but india to go..

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Re: Analyzing CPEC

Postby sudham » 02 Aug 2019 00:51

ArjunPandit wrote:CPEC is a win win situation for china, if it's successful then chinese co.s can export..if it is not more trouble for india as these guys will have no place but india to go..


Hi Arjun,
But in the long run will it be a win for China? I somehow feel that the initial euphoria regarding CPEC is turning sour. The common man in each of the place is slowly realising that they are being taken for a ride. The ruling class is realizing that they have nothing to show for it except Chinese workers in Chinese machines in their land messing up their environment. While countries will not make an open break this will force them to actively look for alternatives or counters to China. So how does it help?

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Re: Analyzing CPEC

Postby Aarvee » 20 Aug 2019 11:33

Another way OBOR/CPEC screws local countries: import of diseases!

https://www.pigprogress.net/Health/Arti ... s-462822E/

https://www.taiwannews.com.tw/en/news/3764739

I know the peaceful countries dont care about pigs but whats to stop other disease hitching a ride!

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Analyzing CPEC

Postby Peregrine » 28 Aug 2019 21:59

X Posted on the P E S W Thread

Hey, big lender

A new study tracks the surge in Chinese loans to poor countries

Nearly half of China’s credit is hidden, and much of it goes to vulnerable borrowers

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Loan talks with Belarus; funding for bridges in Liberia; a possible gas project in Timor-Leste; accusations of exploitation in Tanzania; a corporate dispute in India; pledges to support the Rwandan private sector. And that was just the past few weeks. Such is the frenetic pace of China’s overseas lending that its outstanding loans have risen from almost nothing in 2000 to more than $700bn today. It is the world’s largest official creditor, more than twice as big as the World Bank and imf combined. Yet tracking the money is hard because of limited transparency in its disclosures.

A new study by Sebastian Horn and Christoph Trebesch of the Kiel Institute for the World Economy and Carmen Reinhart of Harvard University offers the most comprehensive picture yet of China’s official credit flows (including state-owned banks). It adds to concern about whether China has sowed the seeds for debt problems abroad. They find that nearly half of China’s lending to developing countries is “hidden”, in that neither the World Bank nor the imf has data on it.

The problem is most severe for the most vulnerable borrowers: the authors conclude that in its reporting to the Bank for International Settlements, an organisation of central banks, China has disclosed no loans to Iran, Venezuela or Zimbabwe, despite giving them plenty in the past 15 years. They speculate that China avoids cross-border claims by disbursing loans directly to Chinese contractors, so that recipient governments will not misuse funds.

According to the authors, the 50 biggest recipients now have debts with China worth about 17% of their gdp on average (see map), up from 1% in 2005. Strikingly, many were granted debt relief by wealthy creditors in the early 2000s after a wave of defaults. But thanks to China’s largesse they are now on track to reach the same level of debt that they had before the crisis.

Whereas the norm for other official creditors is to lend at concessional terms, about 60% of Chinese loans are extended at higher interest rates and shorter maturities. They often have commodity revenues as collateral. China has started to talk about making its loans more sustainable, but there is little evidence of that so far.

Though China is often depicted as an unforgiving lender, the study finds that it has engaged in at least 140 restructurings and write-offs of external debt since 2000. Moreover, the boom could soon tail off. Chinese economic growth and capital outflows are closely correlated. As China slows its lending floodwaters might recede.

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Re: Analyzing CPEC

Postby Aditya_V » 31 Aug 2019 08:23

China lacks ability to enforce debts, hence trying to get LHD,s and Carrier's in service so that African nations can be made to pay. I think Pakis consider CPEC investments as a grant and will not repay citing Indiaand USA. Guess China will have to just suck its thumbs with respect to CPEC losses

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Analyzing CPEC

Postby Peregrine » 10 Sep 2019 02:22

The curious case of CPEC Authority - Faran Mahmood

ISLAMABAD: Over time, over budget and little oversight; underperformance in the delivery of public sector megaprojects is becoming a ‘norm’ – indicating much deeper systemic problems in planning and execution. In view of that, the government has floated a proposal to establish the CPEC Authority – an action that is as vague as it can be.

It appears that the government is trying to treat the problem of bureaucratic red tape with even more red tape. Our history is full of organisations that were supposed to bring greater efficiency and transparency but they rather made great failure stories. The Board of Industrial Management and Pakistan Banking Council led to decades of financial repression till these holding companies were finally dissolved by the Musharraf regime.

Though the Parliamentary Committee on China-Pakistan Economic Corridor (CPEC) strongly opposed the executive’s proposal to set up a CPEC Authority, it was the chairperson of the Senate Standing Committee on CPEC, Sherry Rehman, herself in the first place who had been advocating the idea of a CPEC authority for streamlined implementation of CPEC projects.

Some quarters of bureaucracy have been pitching the idea since 2016, but it is the timing of the proposal to establish this new vehicle which is of considerable significance. At a time when P-block is reluctant even to approve new CPEC projects such as ML-1, not to speak of fast-tracking them amid constant probes by NAB; this seems to be a cleverly engineered plan by bureaucracy to evade ownership of CPEC projects.

A deep dive into ToRs of the CPEC Authority reveals a striking resemblance with ‘Sarmaya-e-Pakistan’ – a holding company project of the finance ministry that was sent to the backburner earlier this year.

The whole idea of CPEC Authority is against the spirit of the 18th amendment and will worsen the existing old Soviet-style excessive centralisation. What the government fails to understand is that CPEC requires dealing with complex interactions between myriad stakeholders, government bodies and private investors; and there is little room for a one-stop-shop or a central authority to control this organic process.

For example, if CPEC Joint Cooperation Committee (JCC) clears a particular motorway project, say M8, then Ministry of Planning will usually prioritise that project as part of its annual Public Sector Development Programme (PSDP) after the appropriate working-party clears its PC-1 project charter. Then after getting financial concurrence from the finance ministry, the National Highway Authority (NHA) will float a motorway tender(s) that might be won by the Frontier Works Organization (FWO). The Board of Investment (BoI), Public-Private Partnership Authority (PPPA) or Pakistan Development Fund (PDF) may also be involved in case of a need for viability gap funding or P3 deals. Monitoring and evaluation during project implementation are equally complex as different stakeholders have different reporting needs – not to mention different and conflicting agendas.

Not only that, the CPEC Authority will put duplicate structures in place but it will be totally ineffective due to conflict of powers with many institutions. In 2016, a Prime Minister’s Delivery Unit was set up in Islamabad that worked with the JCC of China’s National Development and Reform Commission (NDRC) and the Planning Commission. Though a multi-tier mechanism was in place comprising of five joint working groups, it used to be the Ministry of Finance that called all the shots. There is little chance that this situation will change even if a CPEC authority is set up vide an act of parliament.

It is the need of the hour that officials involved in the planning process move beyond the bureaucratic politics to reinvent CPEC in the face of the current economic crunch. The government in general and P-block, in particular, must come up with sustainable policies with a holistic approach and improve communications between stakeholders by establishing CPEC working groups at different levels.

A national transport policy framework could be a good start in this regard if consensus is achieved between all federal and provincial actors in view of the 18th amendment.

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Analyzing CPEC

Postby Peregrine » 12 Sep 2019 23:58

X Posted on the Terroristan Thread

Backlash against Xi's ‘Belt and Road’could cost China $800 billion: Report – Bloomberg

HIGHLIGHTS

- The report outlined five scenarios for future Belt and Road Initiative investment

- The most optimistic is "global cooperation model" that sees China spending over $1.3 trillion globally between 2010 & 2030

- The most pessimistic is “uni-polar” and weighs the impact of a recession and more aggressive competition, predicting invest might only reach around $ 560 billion


BEIJING: A new report suggested the backlash to China's political and trade policies could shave as much as $800 billion of investment in President Xi Jinping's signature Belt and Road Initiative, amid mounting concerns about the geopolitical price of doing business with Beijing.

The report published on Wednesday from consultancy Silk Road Associates and law firm Baker McKenzie outlined five scenarios for future BRI investment. The most optimistic is a "global cooperation model" that sees China spending more than $1.3 trillion globally between 2020 and 2030. The most pessimistic is "uni-polar" and weighs the impact of a recession, growing nationalism and more aggressive competition, predicting investment might only reach around $560 billion.

The report's release came as Hong Kong kicked off a Belt and Road investment summit on Wednesday attended by several Chinese officials, one of whom urged the city's residents to stop protesting and seize the opportunities offered through China's regional infrastructure spending plans. The Asian financial hub has seen months of unrest that have taken a toll on its economy, including tourism and retail.

With more than 130 countries reported to have signed up to the initiative, estimates for China's current BRI investments vary wildly – from hundreds of billions of dollars to as much as $8 trillion.

The World Bank has suggested China's current spending totals around $575 billion, but predicting future investments by Xi's notoriously opaque government over a decade is difficult. Political opposition to projects in Sri Lanka and Malaysia, among other countries, has led to some projects being revised, curtailed or cancelled, making investments even more difficult to track.

The Asian Development Bank has previously estimated developing countries in Asia need around $26 trillion worth of infrastructure investments between 2016 and 2030.

These are the five scenarios outlined in the report:

Value: $910 billion. Investments stay on the current trajectory and track closely with the current trend of more projects, but smaller average values.

Value: $1.32 trillion. China learns its lessons, reduces political opposition to big infrastructure projects, and negotiates more multilateral funding sources.

Value: $1.2 trillion. A focus on sustainability helps secure new funding sources and helps Chinese firms win major clean energy and water projects

Value: $1.06 trillion. US-China trade tensions persist, leading to a greater exodus from China. Relocated manufacturing centers in Southeast Asia spur Chinese infrastructure investments there.

Value: $560 billion. Political opposition and trade protectionism limit the size and geographic spread of China's infrastructure investments.

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Analyzing CPEC

Postby Peregrine » 14 Sep 2019 15:09

X Posted on the Terroristan Thread

Govt misses deadlines to put CPEC projects on track - Shahbaz Rana

ISLAMABAD: The government has missed the deadlines set to put the delayed China-Pakistan Economic Corridor (CPEC) projects back on track despite the instructions given by Prime Minister Imran Khan but China has once again expressed the resolve to remain committed to the multibillion-dollar strategic initiative.

Pakistan and China on Friday jointly reviewed progress on all the ongoing projects in the 58th Progress Review Meeting, which was held after a gap of 10 months.

Cabinet poised to approve CPEC Authority ordinance

The last joint Progress Review Meeting was held in November 2018. During the tenure of previous Pakistan Muslim League-Nawaz (PML-N) government, the review meetings were held on a monthly basis.

Chinese Ambassador Yao Jing and Planning Commission Deputy Chairman Jehanzeb Khan also attended the meeting.

The government had set the end-August deadline for giving approval to the revised PC-I of Eastbay Expressway project and signing a tripartite agreement for starting work on the delayed Kohala power project.

The prime minister had also instructed the planning ministry to approve PC-I of the multibillion-dollar Mainline-I (ML-I) project of CPEC by September 15. Meeting proceedings suggested that all these deadlines had been missed again.

The planning ministry also missed the September 15 deadline set for finalising the debt sustainability report of the ML-I project.

The meeting deliberated on the issues confronting different projects and it was decided to fast-track resolution of the issues for timely completion of all projects, according to a statement issued by the Ministry of Planning after the review meeting.

Minister for Planning Makhdoom Khusro Bakhtiar underlined the need for meeting timelines of the projects and called for further stepping up the momentum in CPEC projects, it added.

The Chinese ambassador stressed that CPEC projects would continue to progress at the expedited pace, as reiterated by PM Imran in his recent meeting with the Chinese foreign minister, for timely completion of all projects.

According to the statement, Yao said CPEC was heading in the right direction, adding that CPEC was quite different from other Belt and Road initiatives as this flagship project manifested the longstanding friendship between the two friendly countries and would bring prosperity and progress for Pakistan.

However, the critical projects have been facing years of delay. Last month, the prime minister directed authorities to expedite work on half a dozen CPEC projects that had been facing significant delays.

The strategic initiative came to an almost grinding halt in the past one year due to the reservations expressed by the cabinet ministers and enhanced fiscal controls under the $6-billion International Monetary Fund (IMF) loan programme. But lately PM Imran started showing interest in CPEC after returning from Washington.

The Planning Commission deputy chairman said the PM had set up a committee to resolve the ML-I project-related issues and the matter might not be discussed in the review committee meeting.

The PM had also directed that the tripartite agreement for the Kohala power plant should be finalised by August 30 and should be signed in the PM Office in the presence of Azad Jammu and Kashmir prime minister.

The review committee discussed the energy projects in detail. The power secretary informed the meeting that a synchronised demand-supply study of CPEC energy projects would be firmed up by October 2019.

The National Electric Power Regulatory Authority (Nepra) said all pending tariff issues including that of Port Qasim and Gwadar 300-megawatt coal-power project would be resolved soon. PM Imran had instructed last month to resolve tariff issues at the earliest.

It was informed that the Gwadar Development Authority, headed by the chief minister of Balochistan, had approved the Gwadar city master plan with some minor modifications. The communications secretary said the Multan-Sukkur motorway would be opened soon for general traffic as work was almost complete.

No date for formal opening of the Multan-Sukkur motorway was finalised, although the motorway might be opened for traffic, except for freight cargo, next week.

China welcomes round-the-clock Torkham border crossing

The meeting also discussed the status of the Orange Line Train project and ongoing projects of Gwadar were also taken up in detail. It was once again reiterated that the Orange Line project would be ready for operations by December.

Progress on the Gwadar Airport was also reviewed and Chinese authorities informed the meeting that due to a lack of water and electricity supply there were serious hurdles in the way of executing the scheme.

The Eastbay Expressway project’s revised PC-I has also remained pending due to delay in finalising financing arrangements to the extent of additional cost.

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Analyzing CPEC

Postby Peregrine » 20 Sep 2019 03:32

X Posted on the Terroeistan Thread Thread

CPEC shelved?

KARACHI: The $50 billion worth China-Pakistan Economic Corridor (CPEC) projects launched amidst lot of fan fare by the PML-N government and they soon became so expedient that practically all political parties lined to take its credit.

Some analysts laid credit of the CPEC projects with the former dictator Gen (retd) Pervaiz Musharraf and the military leadership. It became so sacrosanct afterwards that mere objecting to the project would invite the label of treachery against the country. But then the pendulum swung the other way. After the inauguration of the PTI’s government into the office, the projects first came under scathing criticism of Minister for Trade Razzaq Daud and then Minister for Communication Murad Saeed who accused PML-N’s Ahsan Iqbal of involvement in misappropriations in some CPEC projects and then all of them came to a seemingly grinding halt.

Now it has become a forgone conclusion that the CPEC projects have been shelved for all practical purposes. The former spokesman of Balochistan government’s Jan Muhammad Buledi told Deutsche Welle the incumbent government does not accord any priority to CPEC. Buledi said no progress was witnessed on the CPEC projects for Balochistan in the last one year adding the projects have seemingly been frozen. No development has been undertaken on the land acquired for Gwadar Airport, he said and added same goes with the 300MW electricity generation plant in Gwadar that was to be built by China for which land was also acquired but the development work is yet to start. Gwadar Port remains similarly frozen.

Various circles feel the Chinese leadership is upset with the corruption allegations of the incumbent government. One of the government officials on condition of anonymity told Deutsche Welle ( DW) the Chinese have practically stopped funding for the project, especially after Ministers Razak Dawood and Murad Saeed leveled charges of corruption. He said previously the Chinese used to release loans first and later would ask for procurements, but now they first demand procurement and there is no certainty if any funding would be released for it. And how could the government undertake procurement when they do not have funds. This shows that the CPEC projects are practically over and if at all there is any forward movement worth the name it will be extremely slow.

Some politicians believe that while the allegations of corruption did frustrate the Chinese but some of them believe that certain external powers want the CPEC projects to be slowed or altogether scrapped. PPP’s leader and Deputy Chairman Senate Saleem Mandviwala said when the PPP started these projects they faced immense international pressure against launching them but it did not abandon them. Mandviwala said the former president Asif Ali Zardari visited China on 13 occasions and developed trust and confidence with the leadership. He said the incumbent government is trying to keep both US and China happy which is impossible. The incompetency of the PTI government has given China more reason to be dismayed and in this situation the remaining projects would continue to remain on the back burner.

Many analysts also similarly believe the external pressures are playing a major role in Pakistan back pedaling over the CPEC projects. Suhail Chaudhry, a columnist from Lahore, thinks the CPEC projects would miss deadlines primarily due to to stern conditionalities of the IMF, World Bank and the US. America and the other western powers do not want Pakistan to complete the CPEC projects. Pakistan's plight is compounded by the financial crunch and the IMF package. If Islamabad is unable to achieve the revenue targets the IMF would not release its next tranche sending Pakistan to desperately seek the US help for the IMF funding. At this stage Washington would invoke the CPEC conditions forcing Pakistan with no other option but to slow down the projects, but Pakistan cannot afford to scrap these projects, he said.

An source in the Ministry of Communications confided to DW that several important projects have been put on hold. Development work has stopped on the Karachi-Sukkur motorway. Similarly the Dera Ismail Khan to Balochistan Wester Route has also been abandoned. Work on several critical motorway projects including the Orange Lines and Green Lines project has also been stopped, causing Pakistan to miss its chance of major development, China in the situation is not overly hurt, he said.

Another prevailing popular perception is that the PTI has sacrificed CPEC at the altar of the US regional policies to cultivate Washington on its side. Senior PTI leader Ishaq Khakwani rejected the perception and cited the example of Malaysia. He said negotiations do take place following change of governments on the format of payments and other relevant areas but it is unthinkable that the PTI government would drop the CPEC projects altogether.

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Re: Analyzing CPEC

Postby chetak » 22 Sep 2019 18:07

paki corruption :mrgreen:

the pakis have been raping the amerikis for decades and ripping them off. They are past masters at this game.

they would have simply had the chinese for breakfast and still felt hungry enough to polish off a second and a third breakfast as well.

This also diminishes and weakens iran's ability to coerce and blackmail India on chabahar.

and the paki army has not been so successful in handling the baloch. :wink:



China refuses to lavish money, CPEC comes to a halt





China refuses to lavish money, CPEC comes to a halt

Abhinandan Mishra,
September 21, 2019.

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New Delhi: The China-Pakistan Economic Corridor (CPEC), which was described by Pakistan as its gateway to economic prosperity, has slowly but surely come to a halt. Dogged resistance from Baloch nationalists, missed deadlines and massive corruption among Pakistani policymakers have led to a situation where China is refusing to meet the commitments it had made of investments in CPEC.

When CPEC was announced on 20 April 2015 by the then Pakistan Prime Minister Nawaz Sharif and Chinese President Xi-Jinping, the total investment that Pakistan, by way of loans, was supposed to get from China, was around $46 billion. However, four years down the line, the Pakistan government has got only $26.5 billion, according to informed sources and authoritative documents. The CPEC encompasses 18 major energy projects and five infrastructure projects, including taking measures to operationalise Gwadar port fully. And now Pakistan will be required to pay $40 billion as loan repayment to China over a period of 20 years, that is by 2038.

How Pakistan will pay this humungous amount, given its current economic condition, is a totally different story.

The major focus of CPEC, when it was brought into existence, was building a network of roads, railways and pipelines that included an 870-km road cutting across Balochistan.

The Sunday Guardian spoke to multiple sources in Balochistan, who said that CPEC projects passing through that region were either lying useless, or their construction had been stopped.

Sample this. Construction for the New Gwadar international airport, touted to be the largest airport of Pakistan, construction for which was scheduled to start in mid-2017 and was expected to be completed by 2020, saw its ground-breaking ceremony only in March this year. It is unlikely to get operationalised, if it does ever, before 2023-2024.

Though the road through Balochistan, to connect other parts of Pakistan to the Gwadar port, has been completed, yet it is not being used because of resistance by the Baloch, who have continued to fight for a separate country while ignoring offers of millions of dollar worth of bribes.

Top Baloch leader Dr Allah Nazar Baloch told The Sunday Guardian, “Though they have installed armed checkpoints every 2 km of this particular road, no movement of cargo takes place. The one time they tried, when 50-60 cargo trucks, escorted by multiple armed vehicles and an army chopper, were on their way to the port, resulted in failure as the trucks were not able to reach their destination without being extensively damaged because of the repeated assaults that the Baloch nationalists carried out on them. Since then, no cargo movement has taken place on this route.”


A resident of Gwadar said: “It is of no use. No one uses that road. The port too is very rarely used. Once in a blue moon it sees ships that bring workers and materials. A Chinese ship had sailed from here in March 2018, nothing much after that.”

In August 2017, the Pakistani ambassador to China, Masoud Khalid, in an interview to a Chinese media group, had said that the port would be operationalised within four years.

The one incident that perhaps sounded the death knell of CPEC’s projects in Balochistan was the attack on Pearl Continental hotel, the reality of which, claim Baloch leaders, Pakistan continues to hide even now.

On 12 May this year, Baloch nationalists carried out a deadly attack on Pearl Continental hotel, built atop hill overlooking the Gwadar port. It was the only five-star hotel in the region and hence was used by top officials working with CPEC, including Chinese and Arab investors. This hotel, locals say, is the best guarded establishment of the region with an armed roadblock at every 1 km on its way.

In a fire-fight that lasted approximately 44-48 hours, three Baloch armed individuals, according to the Pakistan government, killed five people, all Pakistani nationals, before they were neutralised by the Pakistan armed forces, who used fighter helicopters as well.

However, as per Allah Nazar Baloch, at least 80 people, all Chinese and Arabs, but not men belonging to the Pakistan armed forces, were killed in the attack.

“The attackers were heavily armed. Each one of them carried a huge number of hand grenades apart from assault rifles. One grenade can destroy everything under a 12 sq feet radius. These attackers told their friends, till the time they were communicating—before the communicating lines were disconnected by the army—that they had killed a large number of Chinese and Arab nationals who were staying in the hotel. The entire area was cordoned off for days by the army so that the actual number of the dead never came out. I can say with authority that the number of Chinese and Arab nationals who died in the attack was almost 80,” he told The Sunday Guardian.

This one attack, according to observers, has severely dented China’s intention to invest further in CPEC as it raised serious questions on how capable the Pakistan army was to defend itself and its assets in what can easily be called the most militarised zone of their country.

This was not the only attack. Baloch militants have been able to carry out repeated attacks against Chinese assets and local contractors and their equipment and machinery on a daily basis, something that is not allowed to come out in the local media.

“The Pakistani military had convinced China on several occasions that CPEC was a security-proof project. Yet, their convoys, even now, travel under the protection of gunship helicopters. The attack on Pearl Continental made it clear that the Pakistan army cannot ever subjugate Balochistan. This attack played a final role in ending the project,” said a Gwadar-based journalist. According to him, Gwadar was right now filled with army personnel and intelligence agency officials. “It is a ghost town,” he said.

“The money that was meant for infrastructure projects, has been diverted for security purpose. The majority of the projects are running way behind schedule, many have been dumped because of lack of security cover,” he added.

Corruption, too, played a big role in making sure that CPEC was doomed from the start. Now, things have reached such a stage that Pakistani politicians are publicly talking about how corruption has dented the CPEC.

Earlier this year, Pakistan’s Minister of Communications, Murad Saeed had told the media about the large-scale corruption that was taking place while implementing the mega infrastructure projects all across the country.

Earlier in September 2018, Abdul Razak Dawood, Pakistan’s minister for commerce, industry and investment, had said that all CPEC projects could be suspended until a review was completed, while criticising the previous government headed by Nawaz Sharif for granting China “too favourable” terms on many projects.

Even a former spokesman for the provincial government of Balochistan, who spoke to The Sunday Guardian, said that CPEC was a dead project. “Land has been taken for Gwadar airport, but no work has been done on it. A 300 MW power plant was also supposed to come up in Gwadar, the land for which was also purchased, but no work is visible. There is stagnation at Gwadar port. I think the project is almost gone,” he said.

According to him, the general consensus was that large-scale corruption has forced China to pull back from CPEC and Balochistan.


“They even did not invest the amount that they had initially promised. Pakistan is not China where you can be assured of meeting the deadline or be ready to pay for missing the deadline. Corruption and Baloch resistance have killed the project. China is not a fool that it will continue to spend more money in a place where there is no surety that even if all the projects are completed, though delayed, they will be allowed to function at an optimum level by the Baloch. China should thank God if it manages to get anything out of this project,” he added.

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Re: Analyzing CPEC

Postby chola » 23 Sep 2019 11:40

^^^ LoL. Can there be a better outcome?

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Re: Analyzing CPEC

Postby ArjunPandit » 23 Sep 2019 15:32

^^chetak ji chola ji how can there be a paki corruption, when the chinese companies are executing the project by bringing their men and muterial...only place it could be a corruption is the cpec protection force raised by army....otherwise is it the dark energy of paxstan...matlab paxtan ki hava main hi karaption hai..
chola ji a better outcome could be some in paxstan being given a vacation to gobi and preferably preceded by an educational tour of the xinjiang provinces

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Re: Analyzing CPEC

Postby chetak » 23 Sep 2019 19:12

ArjunPandit wrote:^^chetak ji chola ji how can there be a paki corruption, when the chinese companies are executing the project by bringing their men and muterial...only place it could be a corruption is the cpec protection force raised by army....otherwise is it the dark energy of paxstan...matlab paxtan ki hava main hi karaption hai..
chola ji a better outcome could be some in paxstan being given a vacation to gobi and preferably preceded by an educational tour of the xinjiang provinces


we should just wait for the CPEC loan interest payments to kick in.

almost pretty much of the paki deep state and the armed forces including it's assets have a fairly high cheeni component to keep them in ready state.

The hans, after occupying the paki house, they have coiled themselves around the paki neck and all those decades ago, when the pakis gave up Aksai chin to the hans it was in the hope that the han dragon would eat them last. The hans did not give them much choice then.

geopolitics and geography have dealt the pakis a good hand and they have played that hand for all its worth. All the trump cards that they held so far have been frittered away except the afghan trump card and they are looking to maximize that and now, of all the times, the pakis find themselves in a very deep financial hole of their own making and the amerikis have the only shovel as well as the only ladder.

The cheeni have only a noose to offer and the Indians, at long last, have been woken up from their centuries of slumber and are kicking the paki butt.

the cashmere art 370 abrogation is also a black swan event for the hans. After 70 odd years the risk analysis document for such an event must be a slim and musty tome buried in some remote and dusty records office and they must be scrambling to get it out and study it.

Meanwhile, Modi is dancing on the world stage with the ameri president.

Irony does not come any better than this.

It will get a lot worse before it gets better.

This is the trailer.

Picture abhi baki hai.

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Re: Analyzing CPEC

Postby ArjunPandit » 23 Sep 2019 19:18

^^^these words are sweeter than honey..but i am still wondering how did pakis did corruption? was there a payment to jernails???this is to anlayze cpec..and of course pakistani expertise in making money out of land..which would put even gurgaon brokers to shame..

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Re: Analyzing CPEC

Postby Bart S » 23 Sep 2019 19:27

ArjunPandit wrote:^^^these words are sweeter than honey..but i am still wondering how did pakis did corruption? was there a payment to jernails???this is to anlayze cpec..and of course pakistani expertise in making money out of land..which would put even gurgaon brokers to shame..


Payment to Jernails
Money siphoned to defence/security projects in the name of CPEC
Payment and siphoning off resources by politicians with inner-city transporting projects being done under CPEC

And that is not even considering corruption by Chinese companies who ripped the Pakis off (no doubt by paying off influential people) by inflating costs and installing substandard equipment. Not only are their power plants running the most outdated equipment, for example, but their cost of electricity is about 40% higher than the neighborhood and their capital expenditure around 1.5-2x of what other countries paid when open, competitive bidding was allowed.

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Re: Analyzing CPEC

Postby manjgu » 23 Sep 2019 22:01

a very tough competition as to who is a bigger bast..d and who will rip whom ..chinis vs pakis ! both made of each other ...

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Analyzing CPEC

Postby Peregrine » 02 Oct 2019 16:37

Gwadar Port opens for transit trade - Kalbe Ali

ISLAMABAD: Gwadar Port has been opened for transit trade and the first ship in this regard is set to arrive next week, a sub-committee of the Senate Standing Committee on Maritime Affairs was informed on Tuesday.

Officials of the Ministry of Maritime Affairs briefed the sub-committee regarding transit trade and transshipment. The body was informed that the Afghan Trade Transit (ATT) Module required some changes that have been applied and after initial testing it is ready for application.

The senate body was informed that the first ATT shipment would arrive on Oct 8, next week at Gwadar port, which will gradually increase.

Convener of the sub-committee Senator Kauda Babar, who hails from Gwadar, pointed out towards the lacunas in planning and development of the area.

The officials acknowledged that Gwadar Port’s main competitors would be Singapore and Dubai ports, since incentives such as no cargo demurrage charges and three months storage facility would surely divert business to Gwadar.

The sub-committee also discussed the storage facilities for fish processing within or outside the port, the committee was assured that additional taxes would not be imposed on the Chinese companies to establishing such facilities and investments in this regard.

The sub-committee discussed legal framework, rules and regulations pertaining to fish dumping and reprocessing facilities at Gwadar Port to local and foreign investors including the Chinese companies. Senator Babar said,“the major firms will be asked to adopt a resolution to employ local population for jobs at such facilities.”

It was also decided that there has to be a national level policy regarding fishing trawlers and a uniform mechanism has to be formulated for all provinces, as marine fishing is conducted in off the coast of Sindh as well as Balochistan. The sub-committee informed that the revised PC-1 of Eastbay Expressway Project at Gwadar was being submitted to Ecnec for approval.

Probing the matter of internet connectivity and quotation of Rs14 million issued by PTCL for works relating to Optic Fibre connection and installation, the committee was informed that PTCL has now agreed for the said setup.

The matter is being handled by PTCL and China Overseas Ports Holding Company Pakistan (Pvt.) Ltd. (COPHC) and the members noted that distance from the gate to the pole was around three kilometres as opposed to 6.4 km that have been quoted.

“Charges are therefore exaggerated,” Senator Babar added.

The meeting was attended by Senators Moula Bux Chandio and Muhammad Akram as well as senior officers from the Ministry of Maritime Affairs, Information Technology and Telecommunications, Gwadar Port Authority Federal Board of Revenue, PTCL and others..

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Analyzing CPEC

Postby Peregrine » 06 Oct 2019 16:08

X Posted on the P E S W Tread

PM to offer PSM to China

ISLAMABAD: Prime Minister Imran Khan has decided to offer handing over Pakistan Steel Mills (PSM) to China through government to government deal and exploring options to finance multi-billion dollars railways Mainline (ML-1) during his upcoming visit of Beijing.

More : PM to visit China for discussing CPEC expansion

Pakistan’s top leadership will give assurances to Chinese side that China Pakistan Economic Corridor (CPEC) would not slow down, but its next phase would be pursued with zeal and vigour despite passing through under the IMF programme.

In his upcoming scheduled visit of China from October 07, 2019, the prime minister has decided to take up five issues for enhancing economic cooperation under CPEC. Pakistan will offer China to get PSM, finalise deal on modernisation of ML-1, financing of Bunji hydropower project, agriculture and social sectors-related projects in and outside the ambit of CPEC.

Related : Has CPEC been shelved?

“Yes, the government will seek assistance for construction of Bunji dam,” top official sources told The News here Saturday.

The Chinese side wants to see progress for establishment of CPEC Authority so the government intends to go ahead with promulgation of presidential ordinance anytime around the upcoming visit of Imran Khan to China.

On the other side, the parliamentarians have asked the government to avoid path of promulgation of ordinance as it would undermine the Parliament. Now it is yet to be seen how the government finally decides to move ahead on CPEC Authority as the Chinese side does not want to make things related to CPEC controversial. Another ordinance is also on the cards where Gwadar Port will become enabled to deal transit trade. The FBR has agreed to grant taxation concessions to Gwadar Port and presidential ordinance will be issued anytime.

On issue of cash-bleeding PSM, official sources said that the premier got worried in the wake of continuous and uninterrupted losses on monthly as overall accumulated losses went up to Rs220 billion. The Privatisation Commission has sought application for financial adviser in order to explore options to revive the PSM and then run it on professional lines.

“The government is exploring different options including G2G deal with China as the government cannot absorb losses on consistent basis,” said sources, and added that the premier decided to offer China to handover PSM with full management control to revive this sick unit.

Financing of ML-1 for modernisation of rail line from Peshawar to Karachi will be another agenda item of the premier during his upcoming visit as both the countries so far failed to finalise financing deal of this much-awaited project. “Pakistan is finding it quite hard to finalise loan deal when the country is running under the IMF programme,” said the official sources.

The premier will make last ditch effort to find out solution to this problem and both sides might explore option to construct this multi-billion dollars project on BOT basis, but Pakistan will have to give total management control of rail line to Chinese side.

For construction of Bunji dam, the sources said, Pakistan would seek financial assistance from China to move ahead on this project on fast-track basis. The agriculture-related projects would also come under discussion. Social sector projects, especially scholarship for Pakistani students, would also be materialised.

The sources said that it was not known how the government wanted to move on establishment of special economic zones (SEZs) as it’s a critical area where Pakistan can attract Chinese companies for relocation and could become part of international supply chains for boosting up its exports in months and years ahead.

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Analyzing CPEC

Postby Peregrine » 17 Oct 2019 01:13

Cross Posted on the Terroristan Thread

Repairing damage caused to CPEC - Kamran Yousaf

Prime Minister Imran Khan was in Beijing last week. He was accompanied by key ministers, the Army Chief and the head of the ISI, suggesting the visit was not ordinary. This was not the first visit by PM Imran to China. In fact this was his third tour to Beijing this year alone. But the significance of the latest trip was that it happened against the backdrop of certain key developments. First, since the Pakistan Tehreek-e-Insaf (PTI) government took charge in August last year, there was little or no progress on projects under the China-Pakistan Economic Corridor (CPEC). All the projects, which have either been completed or were in the implementation phase, were initiated during the Pakistan Muslim League-Nawaz (PML-N) government.Not a single CPEC project has been initiated under the PTI yet.

When PM Imran took charge, initially his government deliberately slowed down CPEC as it suspected corruption in projects signed by the PML-N government. That approach caused a lot of concerns back in China. What added to the confusion were statements made by some senior PTI ministers questioning CPEC. The other concern expressed by the PTI government was that many CPEC projects were not mutually beneficial for the country. Hence, it wanted to strike a better bargain in future ventures in efforts to ensure that Pakistan’s economic and business interests are protected. At the same time there was a sense amongst policymakers that Pakistan must maintain a balance in its ties with China and the West, particularly the United States.

When US President Donald Trump started warming up to Pakistan after years of troubled relations, Islamabad thought it was a good opportunity to readjust its foreign policy. During PM Imran’s maiden visit to the White House in July, the Belt and Road Initiative (BRI) was one of the talking points which of course did not get much media traction. The US has been closely following the BRI and CPEC. The Trump administration minced no words in expressing its opposition to CPEC. The US says it does not object to infrastructural investment by China but questions whether such projects meet international standards. Washington argues that such investments should be transparent, sustainable and should produce benefits for the country.

Although the US would not say it explicitly, the real reason for its opposition stems from the fear that China is trying to impose a new economic world order through the BRI. Since discussions between Pakistan and the US sides in the White House and Pentagon took place behind closed doors, no outsiders knew what exactly might have transpired over CPEC. But officials who have the knowledge of the subject say Pakistan attempted to address Washington’s concerns and even invited the US to join CPEC. Pakistan was hoping that improved ties with the US would enhance its options and increase leverage with China for negotiating future CPEC projects.

However, after the initial bonhomie, Pakistan soon realised that the Trump administration is not interested in offering anything substantial that may give Pakistan an incentive to go slow on CPEC. Also brewing tensions with India after its unilateral and illegal annexation of the disputed Jammu and Kashmir region have necessitated close cooperation between Pakistan and China. All these factors pushed Pakistan to seek greater cooperation with China. The joint statement issued after PM Imran’s visit noted that the Pakistan side underscored that CPEC was a transformational project. The government also recently established the CPEC Authority to oversee the “expeditious implementation” of CPEC projects. This means the PTI government is now making serious efforts to repair the damage caused to CPEC during its first 14 months in office.

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Analyzing CPEC

Postby Peregrine » 17 Oct 2019 22:04

X Posted on the Terroristan Thread

CPEC and the wages of mismanagement - Durdana Najam

During Prime Minister Imran Khan’s visit to China, on October 8, 2019, no particular mention was made on the halting pace of the China-Pakistan Economic Corridor (CPEC). Though Khan expressed his desire to emulate the Chinese model of beating corruption, through either hanging or incarcerating the fraudulent, he could not openly confess about the CPEC becoming victim of corruption itself. Corruption has become both an anomaly and a noose that could choke Pakistan’s efficiency to deliver on economic front. Ever since the drive against the so-called corrupt bureaucrats, a reluctance to perform has made them incapacitated. A general perception is that the National Accountability Bureau (NAB) has unleashed a witch-hunt in the name of accountability.

It is too early to predict the effectiveness of the CPEC Authority in materialising the government’s objective of executing the CPEC projects without hurdles. Not that it is the CPEC that has run into snags. [b]Every developmental project in the country has faced bureaucratic, administrative and financial bottlenecks.

CPEC has been hailed in Pakistan as a game-changer. The experts and the dreamer of the project believed it to change the economic calculus of the country and usher it into a new era of prosperity and development. Originally it was a $46 billion project which has now gone to $60 billion. The current CPEC portfolio consists of 43 projects, of which 22 are under implementation. Another 157 projects of the corridor will be gradually completed in the next 12 years.

Though this vast infrastructural network of the project would lift a substantial number of people from poverty, it is difficult to perceive as to how this corridor alone will pull Pakistan out of its economic woes, such as the low tax-to-GDP ratio and dwindling export, without the government changing its way of managing the economy. Unless Pakistan has decided to become China’s client state, CPEC alone should not be the only economic issue concerning Pakistan.

The CPEC is a recent phenomenon in the Pakistan-China relationship spanning 70 years. And appallingly, during these seven decades, except Pakistan, almost every country in the region has benefited from China’s rising stature as the economic power.

The bilateral trade between India and China has reached $7.70 billion in 2019. Philippines’ trade volume with China is three times higher than that of Pakistan. Vietnam, which is half of Pakistan’s economy, has four times higher bilateral trade with China. Bangladesh’s export to China has been recorded at $3.3 billion in July 2019, as compared to Pakistan’s that stands at $1.9 billion.

China may have found a way to keep India in the dark over trade deficit

GUIDANCE : A data deep dive According to Commerce ministry data, China saw its trade surplus with India go down from $59.3 billion to $57.4 billion in 2018. During the same year, Hong Kong's trade deficit with India — which stood at $3.9 billion in 2017 — turned into a $2.7-billion surplus on the back of rising exports to India. Combined figures showed India's trade deficit with Hong Kong and China expanded to $60.1 billion in 2018 from $55.4 billion the year before.


Pakistan’s lopsided economic relation with China was usually attributed to the lingering energy crisis, infrastructural and logistical problems, and corruption. With CPEC resolving much of the first two issues, an improvement was expected in trade relations. It was not to be, because the real spanners, mismanagement in capacities and the subsequent inefficient use of resources, were not removed. People are hired, on a political basis, on posts that do not match their caliber. Notwithstanding financial misappropriation, politicians have been treating state institutions as employment exchanges to deliver on their electoral promises.

While we choose to arrest people on financial corruption, we refuse to admonish them for displaying indifference towards institutional integrity. Frequent movement in goalposts makes financial misappropriation relatively easier. In fact, they both breed on one another.

It is just not enough for Pakistan to make multiple visits to China for the restoration of faith and revival of enthusiasm on CPEC. The right way to follow through the progress path on CPEC is to revive and renew faith in the corridor at the home turf, among the vying domestic partners.

This corridor has a cost to it, which Pakistan will have to pay off. Already the accumulating debt has been a cause for concern and one of the major reasons for Pakistan’s balance-of-payments crisis.

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Re: Analyzing CPEC

Postby chetak » 18 Oct 2019 12:42

RCEP for china seems to be the new and devious route of the CPEC as far as India is concerned.

It's a by hook or by crook approach.

we should beware of both the hong kong as well as the RCEP implications as far as the balance of payments issue is concerned.

the hans are hurting very badly and desperately need the Indian markets as well as the money they pull out of it.

with our own economy in a downturn, we simply cannot afford to be bled by the hans who will use every trick in the book to sell their stuff.

our complacent baboo(n)s are not on the ball.

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Analyzing CPEC

Postby Peregrine » 06 Nov 2019 18:20

X Posted on the Terroristan Thread

Pakistan, China agree to expand CPEC scope - Shahbaz Rana

ISLAMABAD: Pakistan and China on Tuesday agreed to set a new direction of the China-Pakistan Economic Corridor (CPEC) for future cooperation in high economic impact areas by largely shifting away from infrastructure projects, except the $9 billion Mainline-1 projects.

Islamabad reinforced its decision to fence the Pak-Iran border after the Pak-Afghan border aimed at securing the CPEC from external threats and consolidating internal security gains.

Minister for Planning Khurso Bakhtiar announced to perform the groundbreaking ceremony of the $9 billion ML-I project, which had been facing a four-year delay.
The decisions to expand the CPEC scope to copper, gold, oil, and gas sectors were taken during the 9th Joint Cooperation Committee (JCC) meeting that was co-chaired by Planning Minister Makhdoom Khusro Bakhtiar and National Development and Reform Commission (NDRC) Vice-Chairman Ning Jizhe.

“The JCC meeting was fruitful, discussions successful and the agreed framework is promising”, Chinese Ambassador Yao Jing said, while addressing a joint press conference along with the planning minister.

The Chinese ambassador said that the JCC had set a new direction for the CPEC.

He said that the discussions also took place to shift the Chinese manufacturing unit to Pakistan and providing Chinese financing facilities for future projects.

“If we could put all energies and Pakistan could provide enabling environment, the newly agreed framework has the potential to transform Pakistan from low-income to a middle-income country in the next five to six years,” Bakhtiar hoped.

He said it was decided to expand the CPEC to copper, gold, oil, gas and affordable housing sectors.

Bakhtiar said that only the oil and gas sectors have the potential to attract $8 to $10 billion Chinese investment in the next three years.

The planning minister stated that copper and mineral development would benefit both the countries as China remained one of the largest copper importers.

He maintained that the revival of Pakistan Steel Mills with the help of China could also reduce the import bill by $4 billion.

The minister said that a joint committee for finalising the financing modalities of ML- I was approved by the JCC. He said that the Karachi Circular Railways project remained the priority of the government.

Bakhtiar noted that CPEC could not be the replacement of public sector development and Pakistan Tehreek-e-Inasf (PTI) government would focus only on those projects that had a high impact on Pakistan’s economy.

He observed that the modalities of using Chinese currency would be finalised in an expert group that would comprise officials of central banks from both the countries.

The minister declared that Pakistan’s security challenges had roots in its neighbourhood and to meet the challenges, there was a need to completely fence the country’s borders with Afghanistan and Iran.

He said that border fencing with Afghanistan would be completed by next year, while the Iran border would be fully fenced in two to three years.

“Until there is 100% border fencing, Pakistan’s security cannot be 100% guaranteed,” Bakhtiar said.

During the proceedings, a ceremony was held wherein Multan-Sukkur Motorway of the eastern corridor was inaugurated and Gwadar Master Plan was approved and signed.

The ceremony also witnessed the signing of two MoUs – one between the All-China Federation of Trade Unions (ACFTU) and the Ministry of Planning for further strengthening the worker exchange and another on Healthcare between Ministry of Health and Research Development International (RDI).

In his opening remarks, Khusro Bakhtiar said that Pakistan appreciated the Chinese leadership for the support it had resolutely extended for the cause of Jammu and Kashmir.

“The CPEC will be a gateway of progress and prosperity for a bright future. 2019 was a significant year for China-Pakistan Economic Corridor as several significant milestones were achieved or will be achieved by the end of the year,” he added.

The minister said that the Government of Pakistan had taken several important decisions during the current year that paved the way for finalisation of the Gwadar Master Plan and preliminary design of ML-1 project, operationalisation of Gwadar Port and free zone.

“We made steady progress in the resolution of matters regarding finalisation of tariffs for the completed energy projects, Gwadar Port concession agreement, and Kohala hydropower project,” he said.

Bakhtiar reiterated that the remaining portion of the eastern corridor from Sukkur to Hyderabad (M6) would be completed in BOT (built, operate and transfer) mode under the umbrella of public-private partnership and urged Chinese companies to take an active part in the bidding process.

He recommended that JCC accorded priority to the remaining portion of the western corridor and the provincial projects proposed in previous JCCs.

“This year in March, the Zhob–Quetta section of the western corridor was inaugurated and now the remaining portion of DI–Khan–Zhob is a priority for the Government of Pakistan,” he said.

He highlighted that ML-1 was a top priority for Pakistan and the stage was set to take the discussion to the next level and formulate a joint project financing group.

“The government has established CPEC Authority which will serve as a one-window for all CPEC-related issues so that we can fasten the pace of the projects and remove all bottlenecks for efficient implementation of the projects,” Bakhtiar observed.

The minister expressed optimism that the huddle would have a meaningful consultation to formulate the roadmap for cooperation in the second phase of CPEC and hoped it would yield tangible progress towards a shared goal of making CPEC a resounding success.

NDRC Vice-Chairman Ning Jizhe said that the delegation from China for 9th JCC was the biggest as compared to previous ones which proved China’s commitment to take cooperation with Pakistan to new heights.

He stated that high consideration would be given to socio-economic and industrial cooperation in the second phase of CPEC.

Jizhe underscored that bilateral economic cooperation would proceed as planned for the mutual benefit of both the brotherly countries.

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Re: Analyzing CPEC

Postby Deans » 06 Nov 2019 21:38

chetak wrote:RCEP for china seems to be the new and devious route of the CPEC as far as India is concerned.

It's a by hook or by crook approach.

we should beware of both the hong kong as well as the RCEP implications as far as the balance of payments issue is concerned.

the hans are hurting very badly and desperately need the Indian markets as well as the money they pull out of it.

with our own economy in a downturn, we simply cannot afford to be bled by the hans who will use every trick in the book to sell their stuff.

our complacent baboo(n)s are not on the ball.


Hopefully the rest of RCEP (without India) gets screwed by China. That's the only way they will wake up.

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Re: Analyzing CPEC

Postby chetak » 07 Nov 2019 20:49

An old article

how rajapaksa's greed got SL into a potentially dangerous situation and a cunning chinese chokehold from which there may never ever be an escape.


How China Got Sri Lanka to Cough Up a Port





How China Got Sri Lanka to Cough Up a Port


A cargo ship navigating one of the world’s busiest shipping lanes, near Hambantota, Sri Lanka, in May.

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A cargo ship navigating one of the world’s busiest shipping lanes, near Hambantota, Sri Lanka, in May.Credit...Adam Dean for The New York Times

By Maria Abi-Habib
June 25, 2018

HAMBANTOTA, Sri Lanka — Every time Sri Lanka’s president, Mahinda Rajapaksa, turned to his Chinese allies for loans and assistance with an ambitious port project, the answer was yes.

Yes, though feasibility studies said the port wouldn’t work. Yes, though other frequent lenders like India had refused. Yes, though Sri Lanka’s debt was ballooning rapidly under Mr. Rajapaksa.

Over years of construction and renegotiation with China Harbor Engineering Company, one of Beijing’s largest state-owned enterprises, the Hambantota Port Development Project distinguished itself mostly by failing, as predicted. With tens of thousands of ships passing by along one of the world’s busiest shipping lanes, the port drew only 34 ships in 2012.

And then the port became China’s.

Mr. Rajapaksa was voted out of office in 2015, but Sri Lanka’s new government struggled to make payments on the debt he had taken on. Under heavy pressure and after months of negotiations with the Chinese, the government handed over the port and 15,000 acres of land around it for 99 years in December.

The transfer gave China control of territory just a few hundred miles off the shores of a rival, India, and a strategic foothold along a critical commercial and military waterway.

The case is one of the most vivid examples of China’s ambitious use of loans and aid to gain influence around the world — and of its willingness to play hardball to collect.

The debt deal also intensified some of the harshest accusations about President Xi Jinping’s signature Belt and Road Initiative: that the global investment and lending program amounts to a debt trap for vulnerable countries around the world, fueling corruption and autocratic behavior in struggling democracies.

Months of interviews with Sri Lankan, Indian, Chinese and Western officials and analysis of documents and agreements stemming from the port project present a stark illustration of how China and the companies under its control ensured their interests in a small country hungry for financing.

• During the 2015 Sri Lankan elections, large payments from the Chinese port construction fund flowed directly to campaign aides and activities for Mr. Rajapaksa, who had agreed to Chinese terms at every turn and was seen as an important ally in China’s efforts to tilt influence away from India in South Asia. The payments were confirmed by documents and cash checks detailed in a government investigation seen by The New York Times.

• Though Chinese officials and analysts have insisted that China’s interest in the Hambantota port is purely commercial, Sri Lankan officials said that from the start, the intelligence and strategic possibilities of the port’s location were part of the negotiations.

• Initially moderate terms for lending on the port project became more onerous as Sri Lankan officials asked to renegotiate the timeline and add more financing. And as Sri Lankan officials became desperate to get the debt off their books in recent years, the Chinese demands centered on handing over equity in the port rather than allowing any easing of terms.

• Though the deal erased roughly $1 billion in debt for the port project, Sri Lanka is now in more debt to China than ever, as other loans have continued and rates remain much higher than from other international lenders.

Mr. Rajapaksa and his aides did not respond to multiple requests for comment, made over several months, for this article. Officials for China Harbor also would not comment.

Estimates by the Sri Lankan Finance Ministry paint a bleak picture: This year, the government is expected to generate $14.8 billion in revenue, but its scheduled debt repayments, to an array of lenders around the world, come to $12.3 billion.

“John Adams said infamously that a way to subjugate a country is through either the sword or debt. China has chosen the latter,” said Brahma Chellaney, an analyst who often advises the Indian government and is affiliated with the Center for Policy Research, a think tank in New Delhi.

Indian officials, in particular, fear that Sri Lanka is struggling so much that the Chinese government may be able to dangle debt relief in exchange for its military’s use of assets like the Hambantota port — though the final lease agreement forbids military activity there without Sri Lanka’s invitation.

“The only way to justify the investment in Hambantota is from a national security standpoint — that they will bring the People’s Liberation Army in,” said Shivshankar Menon, who served as India’s foreign secretary and then its national security adviser as the Hambantota port was being built.

An Engaged Ally
The relationship between China and Sri Lanka had long been amicable, with Sri Lanka an early recognizer of Mao’s Communist government after the Chinese Revolution. But it was during a more recent conflict — Sri Lanka’s brutal 26-year civil war with ethnic Tamil separatists — that China became indispensable.

Mr. Rajapaksa, who was elected in 2005, presided over the last years of the war, when Sri Lanka became increasingly isolated by accusations of human rights abuses. Under him, Sri Lanka relied heavily on China for economic support, military equipment and political cover at the United Nations to block potential sanctions.

The war ended in 2009, and as the country emerged from the chaos, Mr. Rajapaksa and his family consolidated their hold. At the height of Mr. Rajapaksa’s tenure, the president and his three brothers controlled many government ministries and around 80 percent of total government spending. Governments like China negotiated directly with them.

So when the president began calling for a vast new port development project at Hambantota, his sleepy home district, the few roadblocks in its way proved ineffective.

From the start, officials questioned the wisdom of a second major port, in a country a quarter the size of Britain and with a population of 22 million, when the main port in the capital was thriving and had room to expand. Feasibility studies commissioned by the government had starkly concluded that a port at Hambantota was not economically viable.

“They approached us for the port at the beginning, and Indian companies said no,” said Mr. Menon, the former Indian foreign secretary. “It was an economic dud then, and it’s an economic dud now.”

But Mr. Rajapaksa greenlighted the project, then boasted in a news release that he had defied all caution — and that China was on board.

The Sri Lanka Ports Authority began devising what officials believed was a careful, economically sound plan in 2007, according to an official involved in the project. It called for a limited opening for business in 2010, and for revenue to be coming in before any major expansion.

The first major loan it took on the project came from the Chinese government’s Export-Import Bank, or Exim, for $307 million. But to obtain the loan, Sri Lanka was required to accept Beijing’s preferred company, China Harbor, as the port’s builder, according to a United States Embassy cable from the time, leaked to WikiLeaks.

That is a typical demand of China for its projects around the world, rather than allowing an open bidding process. Across the region, Beijing’s government is lending out billions of dollars, being repaid at a premium to hire Chinese companies and thousands of Chinese workers, according to officials across the region.

There were other strings attached to the loan, as well, in a sign that China saw strategic value in the Hambantota port from the beginning.

Nihal Rodrigo, a former Sri Lankan foreign secretary and ambassador to China, said that discussions with Chinese officials at the time made it clear that intelligence sharing was an integral, if not public, part of the deal. In an interview with The Times, Mr. Rodrigo characterized the Chinese line as, “We expect you to let us know who is coming and stopping here.”

In later years, Chinese officials and the China Harbor company went to great lengths to keep relations strong with Mr. Rajapaksa, who for years had faithfully acquiesced to such terms.

In the final months of Sri Lanka’s 2015 election, China’s ambassador broke with diplomatic norms and lobbied voters, even caddies at Colombo’s premier golf course, to support Mr. Rajapaksa over the opposition, which was threatening to tear up economic agreements with the Chinese government.

As the January election inched closer, large payments started to flow toward the president’s circle.

At least $7.6 million was dispensed from China Harbor’s account at Standard Chartered Bank to affiliates of Mr. Rajapaksa’s campaign, according to a document, seen by The Times, from an active internal government investigation. The document details China Harbor’s bank account number — ownership of which was verified — and intelligence gleaned from questioning of the people to whom the checks were made out.

With 10 days to go before polls opened, around $3.7 million was distributed in checks: $678,000 to print campaign T-shirts and other promotional material and $297,000 to buy supporters gifts, including women’s saris. Another $38,000 was paid to a popular Buddhist monk who was supporting Mr. Rajapaksa’s electoral bid, while two checks totaling $1.7 million were delivered by volunteers to Temple Trees, his official residence.

Most of the payments were from a subaccount controlled by China Harbor, named “HPDP Phase 2,” shorthand for Hambantota Port Development Project.

China’s Network
After nearly five years of helter-skelter expansion for China’s Belt and Road Initiative across the globe, Chinese officials are quietly trying to take stock of how many deals have been done and what the country’s financial exposure might be. There is no comprehensive picture of that yet, said one Chinese economic policymaker, who like many other officials would speak about Chinese policy only on the condition of anonymity.

Some Chinese officials have become concerned that the nearly institutional graft surrounding such projects represents a liability for China, and raises the bar needed for profitability. President Xi acknowledged the worry in a speech last year, saying, “We will also strengthen international cooperation on anticorruption in order to build the Belt and Road Initiative with integrity.”

In Bangladesh, for example, officials said in January that China Harbor would be banned from future contracts over accusations that the company attempted to bribe an official at the ministry of roads, stuffing $100,000 into a box of tea, government officials said in interviews. And China Harbor’s parent company, China Communications Construction Company, was banned for eight years in 2009 from bidding on World Bank projects because of corrupt practices in the Philippines.

Since the port seizure in Sri Lanka, Chinese officials have started suggesting that Belt and Road is not an open-ended government commitment to finance development across three continents.

“If we cannot manage the risk well, the Belt and Road projects cannot go far or well,” said Jin Qi, the chairwoman of the Silk Road Fund, a large state-owned investment fund, during the China Development Forum in late March.

In Sri Lanka’s case, port officials and Chinese analysts have also not given up the view that the Hambantota port could become profitable, or at least strengthen China’s trade capacity in the region.

Ray Ren, China Merchant Port’s representative in Sri Lanka and the head of the Hambantota port’s operations, insisted that “the location of Sri Lanka is ideal for international trade.” And he dismissed the negative feasibility studies, saying they were done many years ago when Hambantota was “a small fishing hamlet.”

Hu Shisheng, the director of South Asia studies at the China Institutes of Contemporary International Relations, said that China clearly recognized the strategic value of the Hambantota port. But he added: “Once China wants to exert its geostrategic value, the strategic value of the port will be gone. Big countries cannot fight in Sri Lanka — it would be wiped out.”

Although the Hambantota port first opened in a limited way in 2010, before the Belt and Road Initiative was announced, the Chinese government quickly folded the project into the global program.

Shortly after the handover ceremony in Hambantota, China’s state news agency released a boastful video on Twitter, proclaiming the deal “another milestone along the path of #BeltandRoad.”

A Port to Nowhere
The seaport is not the only grand project built with Chinese loans in Hambantota, a sparsely populated area on Sri Lanka’s southeastern coast that is still largely overrun by jungle.

A cricket stadium with more seats than the population of Hambantota’s district capital marks the skyline, as does a large international airport — which in June lost the only daily commercial flight it had left when FlyDubai airline ended the route. A highway that cuts through the district is traversed by elephants and used by farmers to rake out and dry the rice plucked fresh from their paddies.

Mr. Rajapaksa’s advisers had laid out a methodical approach to how the port might expand after opening, ensuring that some revenue would be coming in before taking on much more debt.

But in 2009, the president had grown impatient. His 65th birthday was approaching the following year, and to mark the occasion he wanted a grand opening at the Hambantota port — including the beginning of an ambitious expansion 10 years ahead of the Port Authority’s original timeline.

Chinese laborers began working day and night to get the port ready, officials said. But when workers dredged the land and then flooded it to create the basin of the port, they had not taken into account a large boulder that partly blocked the entrance, preventing the entry of large ships, like oil tankers, that the port’s business model relied on.

Ports Authority officials, unwilling to cross the president, quickly moved ahead anyway. The Hambantota port opened in an elaborate celebration on Nov. 18, 2010, Mr. Rajapaksa’s birthday. Then it sat waiting for business while the rock blocked it.

China Harbor blasted the boulder a year later, at a cost of $40 million, an exorbitant price that raised concerns among diplomats and government officials. Some openly speculated about whether the company was simply overcharging or the price tag included kickbacks to Mr. Rajapaksa.

By 2012, the port was struggling to attract ships — which preferred to berth nearby at the Colombo port — and construction costs were rising as the port began expanding ahead of schedule. The government decreed later that year that ships carrying car imports bound for Colombo port would instead offload their cargo at Hambantota to kick-start business there. Still, only 34 ships berthed at Hambantota in 2012, compared with 3,667 ships at the Colombo port, according to a Finance Ministry annual report.

“When I came to the government, I called the minister of national planning and asked for the justification of Hambantota Port,” Harsha de Silva, the state minister for national policies and economic affairs, said in an interview. “She said, ‘We were asked to do it, so we did it.’ ”

Determined to keep expanding the port, Mr. Rajapaksa went back to the Chinese government in 2012, asking for $757 million.

The Chinese agreed again. But this time, the terms were much steeper.

The first loan, at $307 million, had originally come at a variable rate that usually settled above 1 or 2 percent after the global financial crash in 2008. (For comparison, rates on similar Japanese loans for infrastructure projects run below half a percent.)

But to secure fresh funding, that initial loan was renegotiated to a much higher 6.3 percent fixed rate. Mr. Rajapaksa acquiesced.

The rising debt and project costs, even as the port was struggling, handed Sri Lanka’s political opposition a powerful issue, and it campaigned heavily on suspicions about China. Mr. Rajapaksa lost the election.

The incoming government, led by President Maithripala Sirisena, came to office with a mandate to scrutinize Sri Lanka’s financial deals. It also faced a daunting amount of debt: Under Mr. Rajapaksa, the country’s debt had increased threefold, to $44.8 billion when he left office. And for 2015 alone, a $4.68 billion payment was due at year’s end.

Signing It Away
The new government was eager to reorient Sri Lanka toward India, Japan and the West. But officials soon realized that no other country could fill the financial or economic space that China held in Sri Lanka.

“We inherited a purposefully run-down economy — the revenues were insufficient to pay the interest charges, let alone capital repayment,” said Ravi Karunanayake, who was finance minister during the new government’s first year in office.

“We did keep taking loans,” he added. “A new government can’t just stop loans. It’s a relay; you need to take them until economic discipline is introduced.”

The Central Bank estimated that Sri Lanka owed China about $3 billion last year. But Nishan de Mel, an economist at Verité Research, said some of the debts were off government books and instead registered as part of individual projects. He estimated that debt owed to China could be as much as $5 billion and was growing every year. In May, Sri Lanka took a new $1 billion loan from China Development Bank to help make its coming debt payment.

Government officials began meeting in 2016 with their Chinese counterparts to strike a deal, hoping to get the port off Sri Lanka’s balance sheet and avoid outright default. But the Chinese demanded that a Chinese company take a dominant equity share in the port in return, Sri Lankan officials say — writing down the debt was not an option China would accept.

When Sri Lanka was given a choice, it was over which state-owned company would take control: either China Harbor or China Merchants Port, according to the final agreement, a copy of which was obtained by The Times, although it was never released publicly in full.

China Merchants got the contract, and it immediately pressed for more: Company officials demanded 15,000 acres of land around the port to build an industrial zone, according to two officials with knowledge of the negotiations. The Chinese company argued that the port itself was not worth the $1.1 billion it would pay for its equity — money that would close out Sri Lanka’s debt on the port.

Some government officials bitterly opposed the terms, but there was no leeway, according to officials involved in the negotiations. The new agreement was signed in July 2017, and took effect in December.

The deal left some appearance of Sri Lankan ownership: Among other things, it created a joint company to manage the port’s operations and collect revenue, with 85 percent owned by China Merchants Port and the remaining 15 percent controlled by Sri Lanka’s government.

But lawyers specializing in port acquisitions said Sri Lanka’s small stake meant little, given the leverage that China Merchants Port retained over board personnel and operating decisions.

When the agreement was initially negotiated, it left open whether the port and surrounding land could be used by the Chinese military, which Indian officials asked the Sri Lankan government to explicitly forbid. The final agreement bars foreign countries from using the port for military purposes unless granted permission by the government in Colombo.

That clause is there because Chinese Navy submarines had already come calling to Sri Lanka.

Strategic Concerns
China had a stake in Sri Lanka’s main port as well: China Harbor was building a new terminal there, known at the time as Colombo Port City. Along with that deal came roughly 50 acres of land, solely held by the Chinese company, that Sri Lanka had no sovereignty on.

That was dramatically demonstrated toward the end of Mr. Rajapaksa’s term, in 2014. Chinese submarines docked at the harbor the same day that Prime Minister Shinzo Abe of Japan was visiting Colombo, in what was seen across the region as a menacing signal from Beijing.

When the new Sri Lankan government came to office, it sought assurances that the port would never again welcome Chinese submarines — of particular concern because they are difficult to detect and often used for intelligence gathering. But Sri Lankan officials had little real control.

Now, the handover of Hambantota to the Chinese has kept alive concerns about possible military use — particularly as China has continued to militarize island holdings around the South China Sea despite earlier pledges not to.

Sri Lankan officials are quick to point out that the agreement explicitly rules out China’s military use of the site. But others also note that Sri Lanka’s government, still heavily indebted to China, could be pressured to allow it.

And, as Mr. de Silva, the state minister for national policies and economic affairs, put it, “Governments can change.”

Now, he and others are watching carefully as Mr. Rajapaksa, China’s preferred partner in Sri Lanka, has been trying to stage a political comeback. The former president’s new opposition party swept municipal elections in February. Presidential elections are coming up next year, and general elections in 2020.

Although Mr. Rajapaksa is barred from running again because of term limits, his brother, Gotabaya Rajapaksa, the former defense secretary, appears to be readying to take the mantle.

“It will be Mahinda Rajapaksa’s call. If he says it’s one of the brothers, that person will have a very strong claim,” said Ajith Nivard Cabraal, the central bank governor under Mr. Rajapaksa’s government, who still advises the family. “Even if he’s no longer the president, as the Constitution is structured, Mahinda will be the main power base.”

Tuan
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Re: Analyzing CPEC

Postby Tuan » 07 Nov 2019 22:04

Why Presidential candidate Gotabaya Rajapaksa would be a threat to national, regional and global stability? This New York Times article tells it all.

chetak wrote:An old article

how rajapaksa's greed got SL into a potentially dangerous situation and a cunning chinese chokehold from which there may never ever be an escape.


How China Got Sri Lanka to Cough Up a Port





How China Got Sri Lanka to Cough Up a Port


A cargo ship navigating one of the world’s busiest shipping lanes, near Hambantota, Sri Lanka, in May.

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Analyzing CPEC

Postby Peregrine » 17 Nov 2019 20:03

CPEC and Pakistan’s debt burden

The CPEC mega project worth $62 billion is considered to be a game-changer for Pakistan. The progress of CPEC has, however, been affected in the wake of the economic crisis since 2018.

There have been reservations among international donors that CPEC loans have resulted in enormous imports of Chinese equipment and materials, leading to a higher debt burden for Pakistan in 2018. In this context, it is important to examine Pakistan’s debt sustainability and dependence on Chinese loans.

Pakistan’s total external debt and liabilities increased by $31.6 billion between FY15 and FY18, to reach $96.7 billion by September 2018. Owing to higher borrowing in order to finance the fiscal deficit, current account deficit in 2017-18 increased to $19 billion (5.9 percent of GDP), leading to depletion of foreign exchange reserves and financial crisis in 2018.

The increase in the public external debt was primarily due to disbursements from IFIs, China, foreign commercial banks and the Sukuk bond proceeds, and on account of revaluation losses issued during this period. Notably, the country relied more on China, both in terms of CPEC-related and short-term commercial loans. The increased borrowing from China, both CPEC-related and commercial, at $3.9 billion and $4 billion, respectively in 2016-17 and 2017-18 has important implications for debt sustainability.

These commercial loans were for balance of payments support with a maturity of 2-3 years and a floating rate based on LIBOR. It is noteworthy that most of these Chinese loans of a total $6.6 billion (or 2.1 percent of GDP) are front loaded as debt service payments over the next three years. This has increased the country’s gross financing needs along with vulnerability of the balance of payment account during 2018 and 2019.

The heavy reliance on Chinese loans is clearly reflected by the rising share of China in total disbursement. As a result, the share of disbursement from China (both bilateral and commercial) increased substantially from 9.4 percent in 2013-14 to 39 percent in 2016-17 and surpassed the share of multilateral of 29 percent in 2016-17.

The increased borrowing from China, both CPEC-related and commercial, at $3.9 billon and $4 billion, respectively in 2016-17 and 2017-18 has important implications for debt sustainability. Chinese foreign loans together with domestic borrowing increased the fiscal deficit to an unsustainable level and worsened the country’s debt profile rapidly in a short period of one year. As a result, Pakistan’s debt-to-GDP ratio increased significantly by 6 percentage points from 67 percent of GDP in 2016-17 to 73 percent of GDP in 2017-18 – well beyond the debt sustainability limit of 60 percent of GDP defined under FRDL Act 2005.

The growing unsustainable debt burden, together with increased payment difficulties in debt servicing, has now adversely impacted the economic and financial sustainability of CPEC projects. Fiscal consolidation in 2019-20 through scaling down of public investment spending, including the CPEC-related PSDP projects, coupled with interest rate rise under the IMF programme have slowed down CPEC progress.

According to an IMF program document, Pakistan has to pay back $37 billion to both bilateral and multilateral creditors over the IMF programme period, 2019-22.
Out of the total repayment, Pakistan will have to pay back $14.7 billion to China as repayment of bilateral and commercial debt during this period. In the current fiscal year 2019-20, total external debt servicing will be $14.9 billion (or 62 percent of exports earning), increasing the vulnerability of the balance of payment account.

Increased debt servicing has reduced the fiscal space for development expenditure, in particular the CPEC-related infrastructure projects which are vital for restoration economic growth and employment creation which has been contracted due to the stabilization dosage of the IMF programme.

Though reduction in current account deficit is achieved now, a further worsening of economic growth combined with high inflation will have adverse consequences for the people and inevitably for the standards of living of the poor and squeezing middle class. Pursuing policies that reduce the debt-servicing burden needs to be emphasized.

The current debt servicing burden can be reduced through rescheduling and re-profiling of Chinese loans. Immediate policy decisions are, therefore, required to initiate discussion with our all-time friend China for re-profiling of Chinese loans in order to reduce the debt burden on the economy. The reduced debt burden will provide fiscal space to allocate expenditure in order to accelerate the progress on CPEC projects. We must remember that CPEC will not be a game changer unless we complete it and use it for our advantages.

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Re: Analyzing CPEC

Postby Rsatchi » 17 Nov 2019 21:50


Peregrine
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Analyzing CPEC

Postby Peregrine » 22 Nov 2019 18:57

X Posted on the Terroristan and P E S W Threads

US urges Pakistanis to pose tough questions to China on CPEC

WASHINGTON: The Trump administration has urged Pakistanis to ask tough questions to China on the China Pakistan Economic Corridor, as a top American diplomat launched a blistering attack on the multi-billion dollar project which the official claimed is going to take a toll on Islamabad's economy.

The China Pakistan Economic Corridor (CPEC) is a planned network of roads, railways and energy projects linking China's resource-rich Xinjiang Uyghur Autonomous Region with Pakistan's strategic Gwadar Port on the Arabian Sea.

The CPEC was launched in 2015 when President Xi Jinping visited Pakistan and it now envisages investment of over $50 billion in different projects of development
in Pakistan.

"We hope Pakistanis will ask Beijing tough questions on debt, accountability, fairness and transparency... Ask the Chinese government why it is pursuing a development model in Pakistan, that significantly deviates from what brought China its own economic success," Principal Deputy Assistant Secretary of State for South and Central Asia Alice Wells said on Thursday in a major policy address.

"Why doesn't the Pakistani public know the price for CPEC's most expensive project, or how it's being determined on debt?"

"What are the long-term effects in Pakistan of Chinese financing practices?" the top American diplomat asked in her remarks on China's Belt and Road Initiative (BRI) in South and Central Asia, with emphasis on the CPEC.

In her speech at the Woodrow Wilson International Center for Scholars, Wells said that the CPEC is a main initiative of the One Belt One Road project intending to bring Pakistan closer to China by addressing infrastructure needs, but potentially at an unsustainable cost to Pakistan.

"Together with non-CPEC Chinese debt payments, China's going to take a growing toll on the Pakistan economy, especially when the bulk of payments start to come up in the next four to six years. Even if the loan payments are deferred, they're going to hang over Pakistan's economic development potential hamstringing Prime Minister Khan's reform agenda," Wells said.

In July, the IMF had said Pakistan was facing "significant economic challenges" due to weak and unbalanced growth and that its economy is at a critical juncture where it needs an ambitious and bold set of reforms.

At the time, Pakistan had a currency reserve of less than $8 billion, enough only to cover 1.7 months of imports.

Wells said, "Inflated pricing of power and development projects is not good for the Pakistani people. The CPEC almost always takes the form of burdensome loans or financing with Chinese state-owned enterprises and the Chinese government profiting. This is hardly the 'peace and win-win cooperation' OBOR is supposed to facilitate."
China is a member of the G20, but has not implemented G20 infrastructure standards, or adopted Paris Club practices of greater concessions and grant aid, she alleged.

"Both of these actions would ensure greater transparency in lending practices as a part of CPEC," she said.

The CPEC, she said, relies primarily on Chinese workers and supplies rather than giving that business to Pakistan companies and workers.

"Pakistanis — particularly enthusiastic youth — are more than able and willing to work on projects that will benefit their country," she asserted.

Wells said OBOR lacks transparent financing practices. Failure to repay can lead to nsustainable debt burdens, which can result in surrendering of assets and diminishing sovereignty.

Chinese Ambassador to Pakistan Yao Jing has repeatedly characterised CPEC, a game changer for Pakistan.

"In fact, the ambassador said that China wants to see its relationship with Pakistan serve as an example for its relations with other States," she said.

Making a few observations on cost, debt, transparency and jobs, Wells said according to Pakistani government statistics for each megawatt generated by a completed CPEC thermal energy project developers spent an estimated, $1.5 billion. In comparison, the cost per megawatt of building non CPEC thermal plant is half of that, or $750 million, she said.

What are the long-term effects in Pakistan of Chinese financing practices, and what are the burdens that have fallen on the new government to manage with now with an estimated $15 billion in debt to the Chinese government, and another $6.7 billion in Chinese commercial debt?

"Because it's clear, or needs to be clear that CPEC is not about aid," she said.

Slamming China on transparency, Wells said lack of transparency can increase the cost and cost of corruption, resulting in an even heavier debt burden for Pakistan. Instead of creating jobs in Pakistan, she said CPEC is bringing in Chinese workers who earn money in Pakistan, take the wages back to China, leaving very little in the local economy.
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Rohit_K
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Re: Analyzing CPEC

Postby Rohit_K » 24 Nov 2019 22:06

ISPR's Instagram-Bajwa is back, this time as...

Gen Asim Saleem Bajwa to be appointed as CPEC head
https://dunyanews.tv/en/Pakistan/519963 ... -CPEC-head

ISLAMABAD (Dunya News) - The federal cabinet has decided to appoint retired Commander Southern Command Lt. General Asim Saleem Bajwa of Pakistan Army as head of the Pak-China Economic Corridor (CPEC). A summary has been sent to federal cabinet for approval, which will be accepted in the next meeting. According to sources, he will be appointed for four years.

General Asim Saleem Bajwa is a retired Pakistani Three-star general who was Commander Southern Command prior to that he also served as Director General of the Inter-Services Public Relations (ISPR) , he served as DG ISPR from 2012 to 2016 preceding Major Gen. Asif Ghafoor. Bajwa has been honored with the Tamgha-e-Basalat and Hilal-e-Imtiaz for his military services.


Insta link - https://www.instagram.com/asimbajwa13

pankajs
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Re: Analyzing CPEC

Postby pankajs » 24 Nov 2019 22:50

It took them so long to realize this!

https://asia.nikkei.com/Spotlight/Belt- ... d-projects
Pakistan seeks Iran, Saudi help for Belt and Road projects
In addition, Pakistan is trying to guarantee that the projects, if completed, will generate enough revenue to pay off what could be $60 billion in China-held debt. To this end, Islamabad is pitching the corridor to Iran, Saudi Arabia and other countries that might benefit from faster trade routes into and out of China.

Abdul Hafeez Shaikh, the prime minister's adviser on finance -- a position that makes him the de facto finance minister -- on Monday renewed the country's Belt and Road commitment and spelled out his future strategy to keep Pakistan from stumbling under the debt load. For the first time, he said the success of the CPEC rests on Pakistan persuading some of its neighbors to join the huge undertaking. {Many on this forum would have told that on day one.}

"We need all the revenue we can get to make this project financially feasible," the senior official said. "Just Pakistan on its own cannot generate the revenues to afford the huge debt, which will come if all the CPEC-related projects are undertaken." {Many on this forum would have told that on day one.}

<snip>

Zubair Khan, a former commerce minister and now an independent commentator on economic matters, told Nikkei that Pakistan persuading its neighbors to use the corridor will not be enough. He said the added traffic would raise revenue and ease Pakistan's debt load but added that if the nation is to pay off corridor-related debt it will have to earn more from exports. {Many on this forum would have told that on day one.}

<snip>

Moreover, Western diplomats said, Pakistan's future CPEC partners will have to include India -- the largest economy in South and Central Asia -- if corridor revenues are to be substantially lifted. But since gaining their independence in 1947, India and Pakistan have used the border they share to turn a cold shoulder toward the other. {Many on this forum would have told that on day one.}

"If Pakistan wants to turn this [initiative] into a regional project of some kind, India will be a prime candidate, with the size of its economy," a Western diplomat in Islamabad said, speaking to Nikkei on condition of anonymity. "India will have a strong interest in joining CPEC and having access to Central Asia. But right now, relations [between India and Pakistan] are so tense that it is hard to imagine them cooperating." {India will NOT join the CPEC under the current configuration}

vishvak
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Re: Analyzing CPEC

Postby vishvak » 24 Nov 2019 23:18

China is a member of the G20, but has not implemented G20 infrastructure standards, or adopted Paris Club practices of greater concessions and grant aid, she alleged.
..
The CPEC, she said, relies primarily on Chinese workers and supplies rather than giving that business to Pakistan companies and workers.

Shows where and how exactly the money is going ie pakilands to China

kit
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Re: Analyzing CPEC

Postby kit » 25 Nov 2019 00:22

pankajs wrote:It took them so long to realize this!

https://asia.nikkei.com/Spotlight/Belt- ... d-projects
Pakistan seeks Iran, Saudi help for Belt and Road projects
In addition, Pakistan is trying to guarantee that the projects, if completed, will generate enough revenue to pay off what could be $60 billion in China-held debt. To this end, Islamabad is pitching the corridor to Iran, Saudi Arabia and other countries that might benefit from faster trade routes into and out of China.

Abdul Hafeez Shaikh, the prime minister's adviser on finance -- a position that makes him the de facto finance minister -- on Monday renewed the country's Belt and Road commitment and spelled out his future strategy to keep Pakistan from stumbling under the debt load. For the first time, he said the success of the CPEC rests on Pakistan persuading some of its neighbors to join the huge undertaking. {Many on this forum would have told that on day one.}

"We need all the revenue we can get to make this project financially feasible," the senior official said. "Just Pakistan on its own cannot generate the revenues to afford the huge debt, which will come if all the CPEC-related projects are undertaken." {Many on this forum would have told that on day one.}

<snip>

Zubair Khan, a former commerce minister and now an independent commentator on economic matters, told Nikkei that Pakistan persuading its neighbors to use the corridor will not be enough. He said the added traffic would raise revenue and ease Pakistan's debt load but added that if the nation is to pay off corridor-related debt it will have to earn more from exports. {Many on this forum would have told that on day one.}

<snip>

Moreover, Western diplomats said, Pakistan's future CPEC partners will have to include India -- the largest economy in South and Central Asia -- if corridor revenues are to be substantially lifted. But since gaining their independence in 1947, India and Pakistan have used the border they share to turn a cold shoulder toward the other. {Many on this forum would have told that on day one.}

"If Pakistan wants to turn this [initiative] into a regional project of some kind, India will be a prime candidate, with the size of its economy," a Western diplomat in Islamabad said, speaking to Nikkei on condition of anonymity. "India will have a strong interest in joining CPEC and having access to Central Asia. But right now, relations [between India and Pakistan] are so tense that it is hard to imagine them cooperating." {India will NOT join the CPEC under the current configuration}


Precisely the reason why India WILL NOT and SHOULD NOT do anything with CPEC unless POK is returned to India.

Peregrine
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Analyzing CPEC

Postby Peregrine » 25 Nov 2019 01:43

X Posted on the Terroristan Thread

Gentle BR-Fites :

I trust you will appreciate that China does not need Gwadar to have a Pipeline to Xinjiang , Kazakhstan and Turmeninstan as they already supply Oil and Natural Gas to China,since China has Constructed an Oil and Gas Pipeline from the Myanmar Port of Kyaukpyu - about 75 Miles South West of the Port of Sitwe - Old Name "Akyab" - to Kunming. This port has an Oil and Gas Terminal initially to Transport Oil and Natural Gas from Offshore Oil and Gas Fields as well as from Iran, Iraq and possibly West Africa with the Terminal handling capacity to receive Oil Tankers with a carrying capacity of up to 300.000 Tons.

IMHO Xinjiang will mainly use the CPEC Highway to Export Xinjinag Cotton Goods and other Goods to India and may be Saudi Arabia and Iran as there is to my knowledge a road to Iran via a Highway from Turkmenistan as Part of CPEC-OBOR system.

The CPEC-OBOR System is only to get China's Tentacles to perform a Humbantota Type Land Grab Operation to the various countries encircled by the System.

BTW : As per the Terroristani Economic Survey 2018-19 - CHAPTER 13 - Transport and Communication

Commercial Activities
Gwadar Port has handled last year around 7.156 Metric Ton cargo from 53 ships. The Chinese Operator is working on increasing the number of ship calls at the port. Two ship-liners (COSCO & Sino-Trans) are calling regularly at
the port. From 7th March, 2018 weekly container service has been started by COSCO.

The following is the Magnificent Performance of the Eminent Golden Port of Gwadi-wadi-yaar:

Table 13.14: Summary of trade/Cargo Data from March 2018 to February 2019

Total Cargo : 7,156 Metric Ton

Total Import 375.482 Metric Ton

Total Export 3401.105 Metric Ton

Important : Please note the Terroristanis are very weak in Math-e-matics as Evidenced by the above Phigures

Total Export 3401.105 Metric Ton

Thus, the Port of Gwadi-wadi-yaar has already BUILT A PILE OF CHINAWALA DEBT in its Annual Accounts
for this year and possibly the preceding say Two years as also for quite some time to come!

I look forward to your views. :rotfl:

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Aditya_V
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Re: Analyzing CPEC

Postby Aditya_V » 04 Dec 2019 15:09

Best description of what CPEC is

629 Pakistani girls sold as brides to China

DharmaB
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Re: Analyzing CPEC

Postby DharmaB » 05 Dec 2019 20:19

Very optimistic and interesting analysis from Rizwan & Gora...

https://www.youtube.com/watch?v=eZ2be0NBkp8


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