Pakistan official’s criticism of China’s ‘Silk Road’ projects raises worries

A Pakistani soldier stands guard beside a ship carrying containers during the opening of a trade project in Gwadar port, some 700 kms west of Karachi on November 13, 2016. (AFP file photo)
Updated 10 September 2018
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Pakistan official’s criticism of China’s ‘Silk Road’ projects raises worries

  • Commerce Minister Abdul Razak Dawood suggested that all projects in the $57-billion China Pakistan Economic Corridor program were eligible for suspension and review
  • He said that China may have been granted too-favorable terms in many projects by the former government of Nawaz Sharif

KARACHI/ISLAMABAD: A Pakistani official's critical comments about projects funded by China to the tune of billions of dollars rattled investors and sparked worries on Monday of a souring in ties, a day after Beijing's top government diplomat concluded a visit.

Abdul Razak Dawood, the Pakistani cabinet member for commerce, industry and investment, suggested that all projects in the $57-billion China Pakistan Economic Corridor program could be eligible for suspension in a review to be conducted this week under the orders of new Prime Minister Imran Khan.

"I think we should put everything on hold for a year, so we can get our act together," Dawood told the Financial Times in an interview. "Perhaps we can stretch CPEC out over another five years or so."

He added that he thought China had been granted too-favorable terms in many projects by the former government of Nawaz Sharif.

"Chinese companies received tax breaks, many breaks and have an undue advantage in Pakistan; this is one of the things we're looking at because it's not fair that Pakistan companies should be disadvantaged," Dawood said.

Pakistani markets fell in early trading on Monday, with the benchmark KSE 100 index down 477.38 just after midday at 40,374 points, before recovering to close at 40,684, still down 0.4 percent.

Dawood's comments were "mind-boggling" and rare public criticism of China, said Mohammad Zubair, privatization minister in the previous government.

"This is probably the harshest statement about the Chinese in the last 50 years or so," Zubair told Reuters. "Even if there are issues with the Chinese, those issues could be dealt with in private rather than being made public."

Later on Monday, Dawood told domestic broadcaster Geo TV that his statements had been misconstrued and he would clarify them later.

The critical comments were published just after the Chinese government's top diplomat, State Councilor and Foreign Minister Wang Yi, visited Pakistan and the two sides reaffirmed the mutual benefits of the Beijing-funded projects.

While Khan, a former cricket star, has made no secret he plans to review all government projects and expenditure, the finance ministry last month said Pakistan was "fully committed to undertake and complete CPEC projects in their totality."


WTO reviews China bid to slap US anti-dumping trade sanctions

Updated 8 min ago
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WTO reviews China bid to slap US anti-dumping trade sanctions

  • The decision to appoint an arbitrator was reached during a special meeting of the WTO Dispute Settlement Body
  • The use of anti-dumping duties is permitted under international trade rules as long as they adhere to strict conditions

GENEVA: A World Trade Organization arbitrator will review Friday a Chinese request to impose more than $7 billion in annual sanctions on the US over anti-dumping practices, a Geneva trade official said.
The decision to appoint an arbitrator was reached during a special meeting of the WTO Dispute Settlement Body convened to discuss developments in a five-year-old trade dispute between the world’s top two economies.
Beijing had already warned earlier this month that it planned to ask the global trade body during the meeting for permission to impose $7.04 billion in annual trade sanctions on Washington in the case.
China’s representative told Friday’s meeting that measures taken by Washington had “seriously infringed China’s legitimate economic and trade interests.”
A source close to the WTO meanwhile said that the arbitration “was automatically triggered after the United States informed the WTO that it objected to the level of retaliation proposed by China.”
WTO arbitration can often be a drawn-out process, and the results are not expected to be known for months.
China initially filed its dispute against the US back in December 2013, taking issue with the way Washington assesses whether exports have been “dumped” at unfairly low prices onto the US market.
The use of anti-dumping duties is permitted under international trade rules as long as they adhere to strict conditions, and disputes over their use are often brought before the WTO’s Dispute Settlement Body.
In this specific case, China alleged that the US, in violation of WTO rules, was continuing a practice known as “zeroing,” which calculates the price of imports compared to the normal value in the US to determine predatory pricing.
In October 2016, a panel of WTO experts found largely in China’s favor in the case, including on the issue of “zeroing.”
The US, which has repeatedly lost cases before the WTO over its calculation method, said in June last year that it would implement the panel’s recommendations within a “reasonable” time frame.
This past January, the DSB set an August 22 deadline for Washington to bring its practices in line with the 2016 ruling.
According to WTO rules, the plaintiff in such cases can request permission to impose sanctions if the parties have not reached agreement on a satisfactory compensation within 20 days of the WTO deadline.