cpec and east india company

Written by Ayesha Zafar 12:59 pm

Are CPEC and East India Company Different?

Over the years, the people of Pakistan have expressed their growing concern over the China-Pakistan Economic Corridor (CPEC). It has become a common misconception in Pakistan that CPEC is just another modern-day East India Company. The author, Ayesha Zafar, compares the two and argues that the objectives of CPEC and the circumstances under which China set foot in Pakistan are different from that of the East India Company. She notes that while the East India Company was imperialist in nature and only benefitted the British Empire, CPEC profits both China and Pakistan. Instead of exploiting Pakistan, it is aiding in infrastructural development, energy production, and alleviating unemployment in Pakistan.

Questioning China’s Intentions

A common concern often raised by Pakistanis about the China-Pakistan Economic Corridor (CPEC) is that it is just another East India Company (EIC), and an attempt by China to colonize Pakistan. Supporters of this argument cite threats of the debt trap, surveillance, security grid, and Chinese domination of local markets convince others of China’s intentions; however, much to their dismay, they have been proven wrong time and again.

We are all part of a globalized world, where states are not only interconnected at different channels but are also interdependent to fulfill their needs. It’s no longer the time when the foreigners coming to your land have sole intentions of invasion and colonization. Nowadays, they neither have the resources nor the potential to do so. In the 21st century, the prime interest of all the states is to gain economic prosperity for which they are keen to have overseas enterprises. This applies to the China-Pakistan Economic Corridor (CPEC) as well; it is entirely based on the win-win philosophy of Confucianism. 

However, all of these concerns regarding CPEC are understandable considering our colonial history and subjugation to foreign powers. Regardless of that, to suggest that CPEC will turn into an East India Company (EIC) in the future and that it is a means to colonize Pakistan is implausible, and unlikely to happen due to several reasons.  

Different Objectives

To understand how CPEC is different from the East India Company, we need to compare the conditions under which the EIC entered into the sub-continent to that of when China stepped into Pakistan. At the time, the East India Company (EIC) made its way to the sub-continent, the Mughals were in power and had no desire to procure foreign investment, while the Britons had their eyes on the rich resources of the region.

With a share of 27% in the world income, the sub-continent appeared to be a “golden sparrow” for Britain whose own share did not compare to it. However, by the time the Britishers left, the region’s share in the world’s economy declined to a mere 3%.

Now, comparing this with China’s entrance into Pakistan, it’s quite clear that Pakistan itself needed such a huge economic investment because Pakistan was not only facing a severe economic crisis at that time but it also experienced huge energy shortages. The security concerns of both states were aligned as well. Therefore, this project proved to be no less than a blessing for the dwindling economy of Pakistan. 

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Increase in Pakistan’s GDP

A 2017 survey suggested that the $62 billion project—CPEC—will increase Pakistan’s GDP from 4.7 to about 6% in 2019. However, a 2020 report from the World Bank, which largely went unreported in Pakistan, forecasted that Pakistan’s GDP will increase by up to 6.43% till 2030 if one takes only the investment on transport infrastructure under CPEC into account.

However, if the impact of some policy measures, like reducing border delays and reduction in tariffs, is included then the World Bank proposes that Pakistan can add as high as 14.06% to its GDP. It further stated, “The impact of a more ambitious set of reforms could magnify the gains from the new infrastructure network.”

China’s FDI in Pakistan

China is investing about $35 billion in energy projects in Pakistan. The 17 projects finalized by 2019, will generate 1700MW of energy, besides them, numerous other projects are also being considered. As a whole, China’s investment is expected to generate 4500MW of energy in Pakistan. Out of this, projects contributing to 10,400 megawatts have been completed, greatly reducing the energy shortages in Pakistan.

Moreover, the Chinese have planned to bring up to $37 Billion in foreign direct investment (FDI) in Pakistan for independent power production (IPP) with a capacity of 50MW. Apart from investment in the energy sector, CPEC also involves building transportation networks, special economic zones, a network of highways, and railways, etc. which are beneficial for the economic growth of Pakistan. 

The general public concern that CPEC will increase job opportunities for the Chinese and Pakistan is not going to benefit from the corridor, is highly mistaken. CPEC is expected to create 2.3 million jobs by 2030 which will equally benefit Pakistanis. At present, CPEC is employing around 75,000 Pakistanis, accounting for 82.5% of the total labor.

Furthermore, the FDI in Pakistan has shown a massive increase from $650 million to $2.2 billion, along with this the per capita annual income rose from $1,334 to $1,641 in the year 2019. Therefore, CPEC as a whole has proven instrumental in creating a robust and stable economy. 

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Demystifying the criticism on CPEC

Strategically speaking, CPEC will open prospects for peace in the region as it will lead to the normalization of ties between Pakistan, Afghanistan, and Iran. Moreover, China’s patronage will help Pakistan in getting rid of the label of “epicenter of terrorism”. As far as the checks and balances are concerned, unlike pre-colonial India, Pakistan has independent institutions looking after the whole process. An example of which is the Supreme Court of Pakistan’s decision to forbid a Chinese firm from taking part in the bidding process of the Dasu hydropower project.

IF we compare the economic policies of imperialist Britain and that of the People’s Republic of China, we find many differences. The British Empire had followed the exploitative economic policy of mercantilism, which is based on the idea of accumulating wealth by extracting resources from the colonies and selling commodities made from the resources back to them.

As stated by the Scottish economist, Adam Smith, the Britons thought in terms of “all for us and nothing for other”. While this kind of economic exploitation was visible in the actions of the East India Company (EIC), China has no such intentions and has always believed in a peaceful rise. It is without any doubt that China has tried to increase its influence by economic means, but it didn’t stick to the EIC’s exploitative ideas. Moreover, China’s 6000 years old history of non-invasion is in itself an indication of its peaceful intentions and desire for cooperation.  

China’s intentions can be gauged by looking at its involvement in the different regions across the world. Unlike the EIC, which had used inhuman means to maintain its power in the sub-continent, China uses its soft power to influence the world. For instance, if we look at Africa, China has contributed a lot to its economic development not only in terms of trade but also via infrastructural projects like building roads, strategic ports, and logistic cells, etc. 

China has established six friendship bridges with Bangladesh and granted 60 million yuan to it. In Sri Lanka, it has invested largely in two major projects—a puttable coal power plant and the Hambantota port—for which it has lent $150 million and $306.7 million, respectively. In Nepal, China invested around €300 million for the establishment of police headquarter in the capital, Katmandu. 

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Recently, it has signed a $400 billion deal with Iran. The deal reserves $280 billion for investment in Iran’s oil, gas, and petrochemicals industries, and another $120 billion for upgrading the country’s transport and manufacturing infrastructure, in return for cheap oil imports from Iran to China for the next 25 years. Thus, all of these initiatives by China are a depiction of its efforts to get itself out of isolation and to expand its influence by using economic means, without any intention to colonize states. 

Conclusion

It is said that “the sun has never set on the British Empire because even God does not trust the British in the dark”. On the other hand, China’s investment in Pakistan in the form of CPEC is entirely based on the dictum of “invest, not invade”.Both Pakistan and China are not only cooperating in CPEC but they also share a history of good relations with each other. The China-Pakistan Economic Corridor is just an effort to move beyond strategic cooperation to economic cooperation. Hence, in light of the above-mentioned arguments, it is fair to say that CPEC will be a game-changer for Pakistan, and all those narratives surrounding CPEC, labeling it as another East India Company, are erroneous. 


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About the Author(s)

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Ayesha Zafar is currently pursuing her bachelors degree in international relations from National Defence University, Islamabad.

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