Chinese investment in Pakistan (2017)

While many laud the government for taking the initiative of the China-Pakistan Economic Corridor (CPEC), some remain cautious of its possible drawbacks for Pakistan. What is important is to analyze what real impact Chinese investment has on our economy – both positive and negative. This month’s issue shares the details of CPEC and highlights its implications for Pakistan.
In my commentary, I share with you the case of politicization of the credit market today where politically connected firms have better access to credit but worse is the fact that the federal government crowds out private sector, dominating 70% of the credit market.

The case of circular debt and rising black economy in the property market is also explored. In the end, we present the snapshot of the economy, which again is not very positive. The balance of trade is still declining with dwindling remittances. The LSM growth is also not up to its potential. One piece of good news is the improvement in Pakistan’s
doing business ranking, largely owing to improved access to credit and the introduction of an electronic “Web Based One Customs Platform” which facilitates the process of importing and exporting.

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