Pakistan FDI grows despite fears of growing Chinese influence

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The Arabian sea port Gwadar in Pakistan is one of many infrastructure projects in the region to have been built by China. (Reuters)
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A container is loaded on to the first Chinese container ship to depart after the inauguration of the China Pakistan Economic Corridor port in Gwadar. Foreign investment is on the rise in Pakistan but some investors are wary over increasing Chinese influence. (Reuters)
Updated 22 March 2018
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Pakistan FDI grows despite fears of growing Chinese influence

ISLAMABAD: Pakistan expects net foreign direct investment (FDI) to jump about 60 percent in 2017/2018, the chairman of Pakistan’s Board of Investment said. However, some Western investors appear to be put off by China’s growing influence in the South Asian nation.
Chinese companies are building roads, power stations and a deep-water port in Pakistan after Beijing offered more than $50 billion for Pakistani infrastructure as part of China’s vast Belt and Road initiative.
Chinese investment has helped spur Pakistan’s economic growth to more than 5 percent, its highest in a decade, while also increasing Beijing’s clout in Pakistan. It comes at a time when Islamabad’s relations with the US, a historic ally, are strained over Pakistan’s handling of militants and the conflict in Afghanistan.
Naeem Zamindar, a state minister responsible for promoting foreign investment in Pakistan, said some Western investors appeared reticent because of a misconception that Chinese companies would get “exclusive advantages” and concessions that would not allow for an even playing field.
“A perception was created that the Chinese are taking over. The fact of the matter is that this is not true,” Zamindar told Reuters in his office in Islamabad.
“Pakistan’s government is very clear: we want investors of all hues to come in and participate in building this economy — whether American, English or Japanese.”
Zamindar said that some Chinese companies building power stations had obtained soft loans, with money that had been provided by Beijing, which made such terms a condition of its financing for projects that were part of the China-Pakistan Economic Corridor (CPEC), a key leg of the Belt and Road infrastructure network.
But for the second phase of CPEC, in which a series of Special Economic Zones (SEZs) will be set up to boost Pakistan’s industries, Chinese companies will not receive preferential treatment, Zamindar added.
“That is completely non-discriminatory,” he said, adding that Pakistan’s Special Economic Zones Act stipulates no country or company will get preferential treatment within the SEZs.
“The (SEZ) concessions are published and are on the website, open to all.”
Zamindar said net FDI for the financial year 2017/2018 (July-June) is expect to reach about $3.7 billion, with Chinese companies providing up to 70 percent of the new investment.
Net FDI has been gradually rising since 2014/2015, when it plummeted to less than $1 billion. It rose to $2.3 billion last year, according to central bank data.
Foreign direct investment is separate from the China-Pakistan Economic Corridor investments. More than 20 CPEC projects worth nearly $27 billion are currently being implemented, a senior government official told Reuters, meaning either work has begun on the projects or financing deals have been completed.
Zamindar said militant attacks were sharply down in recent years and security was much improved, but some investors are unaware of this and had an outdated “negative image” of Pakistan.
Yet overall interest in Pakistan had jumped, Zaminder said, and he would tour Britain, the US, France and Saudi Arabia in coming weeks to promote the opportunities available in the country of 208 million people and a fast-expanding middle class.
“We are open for business.”


Trump threatens tariffs on all $505 billion of Chinese imports

Updated 20 July 2018
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Trump threatens tariffs on all $505 billion of Chinese imports

WASHINGTON: US President Donald Trump said in an interview released Friday he is willing to hit all Chinese goods imported to the US with tariffs if necessary.
“I’m ready to go 500,” the Republican leader told the US network CNBC, referring to the $505.5 billion in Chinese imports accepted into the US in 2017.
“I’m not doing this for politics, I’m doing this to do the right thing for our country,” Trump said.
“We’ve been ripped off by China for a long time,” he added.
After weeks of apparently fruitless negotiations, the US early this month imposed 25 percent tariffs on approximately $34 billion of Chinese mechanical and technological products — sparking an immediate response from Beijing, which said it would hit back dollar for dollar.
China accused the US of starting the “largest trade war in economic history.”
A second tranche of $16 billion in products is under review and could soon be added to the US measures.
In the full interview released Friday Trump reiterated his claim that the US is “being taken advantage of” on issues including trade policy.
“I don’t want them to be scared. I want them to do well,” the US president said of China. “I really like President Xi a lot. But it was very unfair.”
The US-China spat is the largest and broadest of several trade fights picked by Trump.
The growing share of international trade under threat has raised the prospect the escalating trade war could harm the global economy by disrupting companies supply chains, pushing firms to hold off on investments and making goods more expensive for consumers.
In excerpts of the interview released on Thursday Trump had broken with the long-established executive branch practice of not commenting on the Federal Reserve’s decisions out of respect for its independence.
“I’m not thrilled,” Trump told the network in an interview excerpt aired Thursday. “Because we go up and every time you go up they want to raise rates again.”