CPEC is unique in the sense it's not just about connectivity between Pakistan and China. It is connectivity between Pakistan with Afghanistan, Uzbekistan and Iran and China and Iran and China and Middle East and to ensure success we are expanding our cooperation to industry and agriculture now in the next phase to create jobs and increase exports.
Many Pakistanis don't understand the true role of CPEC as a trade corridor for Pakistan. Let me give you an example.
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In 1965, Singapore gained independence from Malaysia. Lee Kuan Yew implemented major reforms in Singapore's economy, developing an export-oriented economy and focusing on labor-intensive industries, primarily traditional handicrafts. These economic measures stabilized Singapore and provided basic living needs for its people, but they were not enough to make them prosperous.
In 1978, China began its reform and opening-up policy. Relations between China and Western countries became friendly, and trade began. At the time, goods trade was primarily carried out by sea. These ultra-large transport fleets began to crisscross China with Europe, the Middle East, and other destinations.
However, China lacked large deep-water ports at the time, making it impossible for large ships to dock in China. Therefore, Singapore became the ideal transit point. All large ships would unload their cargo at Singapore ports. The cargo would then be loaded onto smaller ships for shipment to China. At the same time, Singapore vigorously developed its financial services and tourism industries.
All of these are related to trade between China and Western countries. Logistics, financial services, and tourism account for over 70% of Singapore's total economy.
In 1995, China began construction of the Yangshan Port. Once completed, large ships could reach China directly without transiting through Singapore. This move was met with strong opposition and criticism from Singapore, as it would severely undermine Singapore's role as a trade hub.
Realizing its inability to change this situation, Singapore began shifting its economic strategy. Currently, Temasek, Singapore's sovereign wealth fund, not only holds extensive stakes in Singapore but also invests heavily in various Chinese companies and banks. They also make significant investments in China. Many large Chinese companies are now controlled by Singapore, and they have penetrated every corner of the Chinese market. However, we no longer have the ability or interest to distinguish between them.
We know that Singapore's defense is entirely dependent on the United States. However, economically, China and Singapore are completely integrated. China cannot boycott or sanction Singapore, nor can Singapore boycott or sanction China. If leaders of both governments consider adopting hostile policies toward the other, they must carefully consider the consequences. This will be more conducive to the healthy development of bilateral relations.
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Trade routes are a quick way to boost a country's economy.
1. Middle Eastern oil can be quickly transported to Gwadar Port via ships of all sizes and then delivered to China via pipeline. Chinese goods can also be shipped to Pakistan by land (highways/high-speed rail), and then from Pakistan to the Middle East via short-sea shipping or other routes.
Pakistan can earn lucrative transit fees.
2. China and Middle Eastern countries face significant language and cultural differences. Pakistan does not face these challenges. Therefore, Pakistani companies are ideal intermediaries for these transactions, including currency conversion.
At the same time, the trade routes are also very beneficial to China. It binds China and Pakistan closely together.
As for China's other commercial activities in Pakistan, such as building power plants, opening factories, and making commercial investments, these are merely products of bilateral relations and general commercial principles, and do not bind China and Pakistan strategically. In other words, China can do these things in Pakistan and elsewhere. By comparison, conditions in Southeast Asian countries are far more favorable than in Pakistan. Based on the most basic principles of commercial interests, capital will naturally flow to places with better environments.
But, CPEC's strategic role as a trade channel is difficult for other countries to replace. The best option for China is to establish a trade channel between China and Middle Eastern countries through Pakistan. However, if this trade route is delayed in opening, China will have to find a way to open an alternative route. Although the cost of these alternative routes is higher than that of CPEC, it is better to have them than not.
