Corridor Calculus

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Corridor Calculus : China Pakistan Economic Corridor & China's Comprador Investment Model in Pakistan 248 unused and are proving to be a huge financial drain on Sri Lanka. Not just Sri Lanka, but the experience of African and Latin American countries, which have received huge Chinese 'investments' are finding out that the cheap Chinese money isn't all that inexpensive, or, for that matter, benign. Given the striking similarity in the investments made by China in Africa and Latin America and the investments it is making in Pakistan, there is a good chance that Pakistan too could end up saddled with huge loans and obligations (see next section), in addition to infrastructure projects that don't quite turn out to be the 'game-changer' and 'fate-changer' they are being touted to be. In Africa, most of the Chinese 'investments' are actually concessional loans — some of these loans are actually far from concessional and have very stiff terms — and often the payment for infrastructure projects is in terms of natural resources. One of the clauses in-built in all Chinese projects is that 70% of the personnel working on them will be Chinese. The African countries are dumping grounds for Chinese products which force local businesses to shut shop. Nearly a million Chinese have settled in African countries which has led to tensions and clashes between them and local authorities. There is a striking resemblance between the labour and settlement policies followed by the Chinese businesses and the erstwhile colonial rulers. The bulk of Chinese 'investments' are in four African countries — Nigeria, Angola, Ethopia and Sudan — and the Chinese are not averse to using their leverage over some of these countries to influence the policies of their ruling establishments in standing up to international trade and human rights norms. Worse, the money that China pumps in to some of the African countries constitutes a substantial chunk of their GDP — Sudan 249 and Zimbabwe, for example — and helps to prop up unpopular rulers. Many of these conclusions were also corroborated by a Brookings study which busts many myths of the 'benign' and development-oriented nature of Chinese investments in Africa. The study, which focuses on investments by small and medium private Chinese firms, quotes an op-ed piece by a 248 Irfan Husain, 'No free Chinese lunch', Dawn 02/05/2015, accessed at http://www.dawn.com/news/1179363/no-freechinese-lunch 249 Codrin Arsene, 'Top 10 misconceptions about Chinese investment in Africa', www.congoforum.be, accessed at http://www.congoforum.be/en/analysedetail.asp?id=146236 58
Corridor Calculus : China Pakistan Economic Corridor & China's Comprador Investment Model in Pakistan former governor of Nigeria's Central Bank who wrote: “In much of Africa, they [Chinese] have set up huge mining operations. They have also built infrastructure. But, with exceptions, they have done so using equipment and labour imported from home, without transferring skills to local communities. So China takes our primary goods and sells us manufactured ones. This was also the essence of colonialism.” According to the study, the Chinese investments are generally in countries with weak governance where incentives for profit are higher. Overall, the Chinese investment stock in Africa is just around 3% and their investments are driven by profit-motive 250 and not any altruistic reasons of developing Africa. The exploitative and extractive model of Chinese investments in Africa is also manifest in Latin America. China has stepped into the breach in the relationship of many of these countries with the US, first as a saviour with budgetary support and massive infrastructure investments, and once established, followed, nay outdone, the Americans in foisting its own rules and its own political strings on these countries. In Ecuador, for instance, 90% of the oil exports are guaranteed to be delivered to China, and mostly go into repaying Chinese loans which come at steep interest payments and conditionalities that involve using Chinese companies, equipment and personnel. In the oil sector in Ecuador, the Chinese also charge between $25–50 on each barrel of oil they extract. With oil prices plunging, servicing the loans has become difficult and the Chinese are extending loan terms in exchange for extending the years for which the natural resources are pledged to China. The labour policies and the segregation of Chinese and local workers in Ecuador is of the same type as in Africa, and this brings with 251 it its own tensions. Chinese mega-projects in Latin America, especially in the railway sector, are all aimed at building a reliable logistics system that serve the Chinese economy by supplying raw materials and providing access 250 Wenjie Chen, David Dollar and Heiwai Tang, 'Why is China investing in Africa: Evidence from the firm level', Brookings Institution, August 2015, accessed at http://www.brookings.edu/~/media/research/files/papers/2015/08/why-china-isinvesting-in-africa/why-is-china-investing-in-africa.pdf 251 Clifford Kraus and Keith Bradsher, ' China's global ambitions, cash and strings attached', New York Times 24/07/2015, accessed at http://www.nytimes.com/2015/07/26/business/international/chinas-global-ambitions-with-loans-and-stringsattached.html?_r=0 59
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Corridor Calculus

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