Seems a legit analysis.
However it can't be as dark as you paint it.
It will good if someone from our side gives a sane reply.
I'm no economic expert so the likes of me can be downplayed by your analysis.
Taking it with a pinch of namak.
A couple of points in addition to what the OP has written which was spot on:
1. The grand design of China is not only oil from the Middle East through Gwadar to Xinjiang but to establish a naval base there to dominate the Strait of Hormuz through which 45% of the world's seaborne oil shipments flow. In order to maintain and supply this naval fleet, the only viable option is via the CPEC. This logistics artery will also then allow the Chinese to dominate parts of East Africa, the Arabian Sea and the Indian Ocean. Gwadar has been handed over to China on a 40 year 'operational' lease which is extendable ad infinitum. In other words, all operations in Gwadar are now under Chinese control.
2. China is disposing off its coal based power plants as it has to lower its greenhouse gas emissions as per the norms agreed to. These coal fired plants would be shipped to Pakistan and needless to say, will be an environmental disaster. China wants to palm off its polluting industry to Pakistan for it to handle while it turns to non polluting nuclear power instead!
3. The cost per unit of electricity which would also include solar and wind power (both of which are frightfully expensive) would be between Rs 18 -20 PKR, putting into question affordability and viability.
4. The $11-billion amount for infrastructure purposes is a Chinese loan whereas the $35-billion investment for the power sector is yet to be converted into a concrete term sheet.
5. Though Pakistan will acquire a new asset in terms of infrastructure, it has to first mobilise its own industry and trade sectors to make the best use of the corridor.
Else, it will be a road and pipeline largely meant for Chinese business – on Pakistan’s taxpayers’ cost – and protected by the Pakistan Army at Pakistan's cost.
6. The term-sheet for Chinese investment in the power sector does not seem very promising at the moment. The federal government’s sovereign guarantee has been called in several times by IPPs over the last few years. The Chinese most likely may not give it its due value.
7. The next alternative for them as a guarantee is a revolving letter of credit backed by the Pak government. That is almost a non-starter for the government as it will imply special privileges to Chinese investors and no bank can offer revolving letter of credit for the life cycle of a power project, running over decades.
8. If Pakistan cannot overcome its power crisis, and prepare a trade-centric economic vision, they stand to benefit little from PCEC in terms of additional business opportunities apart from temporary jobs.
9. Industrial parks and economic zones would be set up primarily for and by the Chinese. Except for restricted local rural employment, the profits of these companies which would be ploughed back to China.
10. A net rise in the import bill will result as land connectivity with China improves (especially under the operation of a Free Trade Agreement) which would mean mounting trade deficits for Pakistan. The cost of transportation from hubs in Pakistan to the Kashgar region would be an average of Rs 4 Lakhs PKR per 10-ton truck. Thus, transportation of low value Pakistani goods would be nonviable.
11. Further, a net increase in the import bill will only be a small part of the problem. Most of the envisioned projects will incur liabilities in foreign exchange (for capital and fuel imports, debt servicing, profit repatriation and wages), while their earnings will be in rupees; the currency mismatch, unless offset by a strong jump in exports, could prove to be a large drag on the country’s balance of payments position.
All in all, it's not as if 'rivers of gold' are about to flow in Pakistan as some Pakistani commentators have mentioned. The (CPEC) road ahead is not all hunky dory!
My two bits!
Now I did not exactly state in my previous message that Pakistan has the largest reserves of oil and gas in the world, however we have enough deposits to meet our own needs. The reason why this does not happen, because the government does not provide enough incentive for companies to explore and feasibly extract these resources, partly because a strong lobby is against it. You can ask other members to verify in what I am trying to say. Now if you cannot understand this fact, then please join a special school needs school
