We Cannot Rely On China Alone

US and ChinaThese days China is making headlines in our news almost on a daily basis. We Pakistanis in an effort to move away from under the US shadow, somehow feel much better to look to China for help. Noted as a true and an all weather friend, the relationship between the two countries has been described by Hu Jintao as “higher than the mountains and deeper than oceans.” Recent articles in our print media have also been talking non-stop about how China will look after our interests and watch our back and that is what prompted me to explore further into the myth.

Considered to overtake US by 2016, China is well underway to economic prosperity as well. With a population of 1.3 billion and 17.6 percent of this number being the age group of 0-14 years, China has roughly 234 million potential job seekers in the coming years. Please also note that China currently has an unemployment rate of 4.3 percent.

Coming over to Pakistani demographics now, we have a population of 180 million. Out of this 180 million population, 60 percent (roughly 112 million) are between the age group 15-64. We have a literacy rate of 49 percent, and an unemployment rate of 15 percent which is substantial and which puts us only a couple of spaces over Iraq and at the bottom end of the totem pole for unemployment in the world. We have had a demographic explosion and we need a boost in the economy that requires this unemployment rate to be lower than what it is. This means that more jobs need to be created to offset the unemployment percentage.

Now the point I’m trying to make is this: China no doubt is a good friend and alliance with China is important – but let us not indulge in this fantasy world where we think China will overlook its own population of potential jobseekers in the coming years. There are a finite number of jobs and resources available globally to roughly 350 million job seekers combined. China also has a low enrollment rate in school. This means that, unless things change, Pakistan and China will both have growing populations competing for the same jobs in the global economy. China will obviously first look to provide jobs to its own citizens before turning to Pakistan and addressing its economical problems.

We cannot rely on China alone. Pakistan needs to develop good relationships with not just China but other powers including EU, SAARC and US etc. Cutting ourselves off from the US, who remains the world’s largest economy and a major economic partner of China, is limiting our friends and allies and will be detrimental in our effort to expand on all our options in the future. We should be working with all the major economic powers to find areas where our interests overlap and then try to improve our education system and expand our access to markets across the world. This will help us advance our country’s economy, which in turn means better way of living for an average citizen. Depending on just one country and putting all our hopes and dreams on it, hoping that it will be our saviour, is not a good approach economically or otherwise.

I’m Optimistic About The Economy

I’m often accused of being overly optimistic. It’s a trait I inherited from my mother. While my friends’ mothers were always fatalistic about everything, my mother always tried remain hopeful. Where most saw disaster, my mother saw opportunity. So it is with me, I guess. As I continue looking back over the past year, then, I continue to find reasons to be hopeful for 2011 and beyond.

Yes, we’ve had a rough go of it this year. Militants are making potential investors anxious. Historic floods wiped out billions. Load shedding seems to get worse by the day. And yet still, when you look at the entire economic picture, there are clear signs that things are turning around.

Stock Market

The KSE 100 is finishing strong this year, up 25 percent since 1 January to close near 12,000. Growth has been steady throughout the year, including in the final quarter.

KSE 100 chart for 2010

Foreign Direct Investment

Foreign interest is actually partly responsible for driving growth in the KSE 100, with Bestway Group looking to increase shares in United Bank Ltd.

Bandaraya Development Berhad is investing $437 million over a nine-year period in a mixed development project.

China has agreed to increase cooperation in nuclear energy development including the building of two new nuclear reactors in addition to one already operating and another near completion.

Investment by a consortium of Chilean and Canadian companies continues to negotiate with the Balochistan government for an agreement to develop Reko Diq mine in Chagai district.

Ambassador of Finland H E Osmo Lipponen Katja Kalamaki recently acknowledged Pakistan as a potential market for Finnish investors, who have over 400 companies operating in South Asia.

International Trade

Chinese signed trade agreements worth $20 Billion followed by an additional $15 Billion in trade deals.

Malaysia imported $194.72 Million in goods, making it the top importer from Pakistan for the second consecutive term.

Exports surged during November to $1,776 million – 17 percent higher than one year ago and continuing a positive growth trend.

Although the WTO recently rejected EU trade concessions under the GSP facility, overcoming EU concerns to secure the agreement was a great achievement of Zardari, and to its credit the government is also not being fatalistic but continuing to fight for the trade privileges which would mean duty-free access for Pakistani products worth $500 million.

So you see, there is reason to be hopeful. Even the recent IMF extension suggests the international community has faith in the direction the economy has taken. The economic situation is going through a rough patch, but we’ve survived worse and we will come out of 2010 stronger than we were before. Here’s to a happy, successful and prosperous 2011!

The Price of EU Trade Concessions

So many people complained when Zardari continued his trip to EU despite the flooding. There are valid arguments that he could have brought some relief by being with the people in their time of suffering, but even that would have a trade-off because he would have had to cancel a very important diplomatic trip. It was a difficult decision, and one that I’m glad I did not have to make. Honestly, you’re got to have a lot of personal hatred to assume the man doesn’t care for his people. But now, even the Zardari haters are eating a plate of crow.

I wrote at the time that,

Zardari’s trip to London, while mocked by our intelligentsia, has actually resulted in the following:

1. Increased aid from UK for flood victims

2. Repairing diplomatic relations

3. Furthering talks about opening European markets to Pakistani exports

Well, it looks like the much-maligned trip continues to pay dividends. Financial Times reported yesterday that the EU has agreed to waive tariffs on a number of exports, in large part thanks to the help of UK PM David Cameron.

David Cameron, the UK prime minister, and Lady Ashton, EU foreign policy chief, emerged as champions of the Pakistani cause amid reservations from France, Italy, Portugal and Poland that any concessions would come at the expense of their domestic textile industries.

Mr Cameron said: “I believe this was a test for the EU to make sure that when we talk about our external relations we deliver results, not just rhetoric.”

Remember this was just after PM Cameron made some stupid remarks about Pakistan being an exporter of terror and the media hate squads were going crazy saying that Zardari should cancel the trip can cut all ties with the UK. Well, what exactly would that have acheived?

Instead, Zardari decided to take the hard road and head to London where he was able to do some real and lasting good. It’s because he made this hard decision that we were able to get some trade concessions that will help Pakistan to start to rebuild its own economy and get away from the patten of international aid and conditional loans. Isn’t that what we really want?

For this decision, should the president be treated to such vicious insults and accusations, saying that he doesn’t care about his people and that he doesn’t feel their suffering? And yet this was the price he paid for securing these tariff waivers that will help feed a lot more people than a couple of photo shoots and a publicity campaign. That’s what real leadership is, after all – being willing to make the unpopular decision that you know will have the better results.

Now that this episode has come full circle and we are seeing the results of the infamous trip, will the media darlings show the slightest amount of humility and admit that they were wrong? Or is their hatred so visceral that they cannot even show this basic respect? It will be telling to see.

Government Wins EU Trade Concessions

Government efforts to win trade concessions from the EU have paid off according to a report in today’s Dawn.

“The European Council underlines its firm commitment to grant exclusively to Pakistan increased market access to the EU through the immediate and time-limited reduction of duties on key imports,” a statement by the 27 EU leaders said.

“The European Commission is invited to explore options with WTO partners and present finalised proposals in October, taking into account industrial sensitivities in the EU.”

The trade deal is worth €300 Millions in the first year alone.