Chinese Trade collaboration and business opportunities PDF

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Three – Days Short Training Course on CPEC, OBOR / BRI, & The Rise Of China 29-31st January, 2018 RIPP-ETB Campus, Islamabad

Jointly Organized By:

Riphah Institute of Public Policy; Riphah International University

& Gallup Pakistan, Islamabad

Speakers:

Dr. Ijaz Shafi Gillani Chairman Gallup

 Session 1:

 Ms. Tatheer Sherazi Phd Scholar

 Session 2:

 Ms. Uzma Siraj Phd

 Session 3:

 Mr. Jan Sartaj Phd

Session 1:

Dr. Ijaz Shafi Gilani Ms. Tatheer Sherazi

Introduction to the History & Geography of China Geography: China is considered the centre of the world. It is the 4 th largest political unit in the world. In this political ranking of the world Russia is 1 st, Canada 2nd, and USA is the 3rd largest political unit. China’s map is like a roaster. In the South of China, most area is covered with water and vegetation while in the North, Himalayas and deserts covers the area. Gobi desert is located in the north. Total area of China consist of 9.5 million sq kms and its population is around 1.3 billion. $20.853 trillion is the total GDP of China. China is divided into 2 parts: 1) Outer China 2) Proper China. Outer China is the area from where invaders reach China. Great wall of China was established to defend from these invaders and borders. Border of China coincides with 14 countries i.e having 14 neighbouring countries. China consist of 22 provinces, 4 municipalities, 6 administrative zones, 5 autonomous regions out which 3 regions are of Muslims. 6 administrative zones of China are North Western, North, North Eastern, East, South Central, and South Western. East zone is the most populous zone of China. Basic civilization of China starts from yellow river which is one of the 4 major rivers of China. Its climate variates because of the variation of areas and regions. China expands and contracts since it origin and after the expansion of China, names of the expanded regions were placed on peace. Republic of Mangolia was once a part of China but now it is separated. Beijing the capital of China is located in the Central North zone. China is biggest in population size and for such a big population there should be proper water, food and law & order.

History: History of China is divided into 4 periods: 1. 2. 3. 4.

Mythical/ Prehistoric Ancient China (1600 BC – 221 BC) Imperial (221 BC – 1912 AD) Modern Era (1949 to Onwards)

Most lengthy time period of China was Imperial Period.

China had different dynasties in the four periods of their history. Most of the dynasties was present in the Imperial period. Dynasties of China serves China from 2500 BC - 2070 BC to 1949 AD – present. Han was the longest dynasty while Sui was the prosperous dynasty of China. The last native dynasty of China was the Ming Dynasty and the first Foreign Dynasty was the Mangol (Yuan). Foreign trade in China was started in Song Dynasty. Admiral of Navy was a Muslim and a transgender. He established a largest Navy but the imperial denied it.

Dynasties Sequence of China: Shang, Zhou, Qin, Han Sui, Tang, Song Yuan, Ming, Qing Republic, Mao, Deng

Ancient Period:  Shang Dynasty: (A Refined System of Writing) Shang dynasty starts from 1600 BC and ends in 1046 BC. Writing system was started in this dynasty in the form of pictogram. Inscription on bones was also performed in this dynasty.  Zhou Dynasty: (Development of Chinese Philosophies) This dynasty is the period of economic growth, population growth, feudalism growth and technological advancements. This dynasty is divided into 3 periods: 1) Western Zhou Dynasty 2) Spring and Autumn 3) Warning States.

Imperial Period:  Qin Dynasty: (Unified China) Qin dynasty was from 221 BC – 206 BC. Main aim of this dynasty was to restore China and keep order. This was the first and shortest dynasty of imperial period. This dynasty was known for the great building projects e.g Great Wall of China and Terracota Army.  Han Dynasty: (Developed Paper) Han was the longest imperial dynasty starts at 206 BC and ends at 220 AD. This dynasty was known for starting Silk Road Trade. China was connected with Central Asia and Europe. Invention of paper was also started in this dynasty. After 220 AD Han dynasty fell in decline and China’s dark ages starts that continue till 581 AD.

 Sui Dynasty: (Reunification) Sui dynasty was from 581 AD – 618 AD. This was the short and intense dynasty. Rulers of this dynasty was the known as the great conqueror.  Tang Dynasty: (Height of Civilization) Tang dynasty was from 618 AD – 907 AD. This was the golden age for poetry, painting, tricoloured glazed pottery.  Song Dynasty: (Literature and Advancement) 960 Ad – 1297 AD was the period of Song dynasty. This dynasty was known for the four major inventions i.e Paper, Printing, Compass, and Gun powder.  Yuan Dynasty: (First Foreign Rule) This dynasty was known for the Mongol Rule that constitute from 1279 AD – 1368 AD. In 1206 AD Genghis Khan unified all the tribes in Mongolia.  Ming Dynasty: (Last Native Rule) 1368 AD – 1644 AD was the period of Ming dynasty. This was the last ethnic Chinese dynasty sandwiched between two foreign dynasties. Naval base was established in this dynasty.  Qing Dynasty: (Golden Age of Prosperity) Qing dynasty was from 1644 AD – 1911 AD. Emperor Kangxi and Qianlong were the two most famous emperors of this dynasty. China was reduced to being a semi-colonial semi-imperial country since the first Opium War in 1840.

Modern China Era:  Republic, Mao, Deng were the three dynasties of Modern Era. Great Developments of China: The two great developments of China was The Great Canal and The Great wall. The Great Canal was built for agriculture purposes and was a sign for growth of the country while The Great Wall was established for the purpose of protection and a sign of prosperity. The Great Canal connects the North and South.

Session 2:

Dr. Ijaz Shafi Gillani Ms. Uzma Siraj

Study of Chinese History World Economic History: World economy starts on little steps. No clash of narrative occur as only one narrative was present. Globally enrolled narrative was of mainly China. Important civilizations mostly move around the rivers. In 1800, Europe literacy rate was only 10% and a literate person means a person able to sign. Stone Age: In 19th century according to the cost of dollar GDP per capita was established. Sub-division of Stone age:  Paleolithic was the geographical age of the stone age which starts from 50,000 BC and ends at 10,000 BC.  Mesolithic starts with 10,000 BC. This age was known for the domestication of plants and animals and the formation of settled communities.  Neolithic starts at about 10,200 BC. Pottery and farming techniques was developed in this period. This was the last part of stone age. Bronze Age: This age was characterized by the use of bronze. Time period of this age was 3000 BC – 1000 BC. Long distance trade was started in this age. Main trading items were spices, metals and textiles. Trade and industry played major role in ancient bronze age civilization. Population of the world reach around 50 million at the end of Bronze age. Iron Age: Tools and weapons were produced by ferrous metallurgy specifically carbon steel. Time period of this age was 1000 BC – 500 BC. This was more advanced age than the former two. Population growth rate increases with the start of this age. Period of Development: (500 BC – 500 AD)

Period of Development was 500 BC – 500 AD. This was known as Martyred Period or Dark Period for Christians. India and China emerged as the biggest economy in this period and accounted for almost 50% of the Worlds economy. Gold and silver coins were also introduced. Expedition to foreign lands and long distance trade with Roman Empire was also started. Population reached to 25o million. Middle Ages: This period ranges from 500 AD – 1500 AD. This is the rising period for Christians and the strength time for Europe. Improvements in technique and technology began to emerge. Europe became an important centre for the collection of knowledge related to agriculture and forestry. For long distance traveling horse shoes were introduced. Development in the production of farm tools such as ploughs, hand tools, and horse shoes. Economic system of this era was Merchant Capitalism. Four modes of human history are:    

Hunter- Gatherer Mode Agrarian Mode Industrial Growth Mode Sustainable Mode

Use of new basic materials, chiefly iron and steel were introduced. Use of new energy sources, including fuel and motive power were also introduced. Government also introduced industries due to access of resources. Natural resources were more importantly used in this era. 3 Famous inventions are:  Steam Engine  Machines to spin and Weave Cotton  New processes to smelt and refine iron and steal using coal instead of wood fuels. Industrialization starts from Central and Northern Europe. Western Europe had overcome its most glaring technological deficiencies by 1870. Before the Industrial Development, China and India had world’s largest cotton Industries. British invest so much time and money on R&D thus the development shifts to British and Industrial Revolution starts. By 1913, 3 continental countries had out-paced Britain as their share rose to 23% and Britain’s share dropped to 14%. At the same time, North American share increased from 15% - 33% of world manufacturing.

Chinese History: Population of China was 437 million during Qing Dynasty i.e 1/3th of the total world population in 1820 and had fallen to 1/4 th by 1913. In 1820, China constitute 32% of the total world GDP that was decline by 1913 to 9%. It was the world’s largest economy in 1820. After 1911, warlord domination, political fragmentation, and civil war occurred. In 1927, The Nationalist (Kuomintang) party unified. OPM was the cause of China’s decline. Communist Era: In 1949, China became communist and in Mao Era policy of China was unstable. Great Leap Forward (1958 – 1960) is the year when there is 20% increase of economy. Criticism on Mao was started in China. In order to cope with this criticism he introduced the term Cultural Revolution (Bring youth towards Nationalism). Cultural Revolution: The period of Cultural Revolution was 1967 – 1969. This revolution had been set in motion by Mao in August 1966. Factories were placed in the hands of revolutionary committee, consisting of representatives of party. 14% decline in industrial production in 1967 was a serious effect of this revolution.

Session 3:

Dr. Ijaz Shafi Gillani Mr. Jan Sartaj

Political System of China & Fundamentals of One Belt One Road (OBOR) Chinese Political System: Sun Yat-Sen played key role as a national leader. There was a power struggle between Nationalist and Communist. Establishment of People Republic of China: Defeat of Kuomintang and communist paved road to power. There first step was to established the organs of government. Communist party was developed in 1921 and CPPCC (Chinese People’s Political Consultative Conference) was held in 1949. Mao argued that since China is a colonial and semi-feudal, its principal enemies were imperialism and semi-feudal forces. This program was declared that China was a democratic dictatorship of four classes:    

Workers Peasants Petty Bourgeoisie National Bourgeoisie

To make the civilization universal, western made expansion while China consider honour/ respect. China was divided into Han China and Non-Han China. Government Structure In China:  Prime Minister is the head of State Council.  Secretary General is the head of Communist Party.  President is the head of Republic. Hundred Flower Period: Mao introduced Hundred Flower Campaign to ease the tension within Chinese society. In May 1956, he made a speech including a phrase ‘Let a hundred flowers bloom; let a hundred school of thoughts content’. This hundred flower

Campaign seemed to disprove the idea that China could move gradually toward communism.

Fundamentals of OBOR: One Belt One Road (OBOR) is a development strategy proposed by Chinese Government that focusses on connectivity and cooperation between Eurasian countries, primarily People’s Republic of China, the land based Silk Road Economic Belt and the ocean going Maritime Silk Road. OBOR is not a project but a strategic initiative. A criticism rose on OBOR name that there should not one way road in China. This criticism shifts the name OBOR to BRI (Belt Road Initiative) that is now its official name. Main Goals of Belt: 4 main goals of One Belt One Road are: 1. 2. 3. 4.

Policy Coordination Facilities Connectivity Unimpeded Trade Financial

Worldwide OBOR Projects: Total Projects: 2,238 Project Value: $ 1,485,910,000,000 In Pakistan: Total Projects in different Sectors: 60  Energy Sector Total Projects: 31 Projects Value: $ 29,470,000,000  Transport Sector Total Projects: 18 Projects Value: $ 11,500,000,000  Technology & Miscellaneous Sector Total Projects: 11 Financially, Pakistan is not a part of OBOR Initiative. CPEC paved way for socio-economic development for all provinces of Pakistan. Eastern route of the CPEC in Pakistan is from Peshawar – Islamabad – Lahore motorway. The route extends from Multan – Sukkur is financed by China.

OBOR/CPEC & PAKISTAN In 2014, China initiated a massive economic development project called One Belt One Road (OBOR). This initiative involves China spending over $3 trillion during the next several decades on infrastructure investments in 68 countries. The goal is to recreate the old Silk Road, which flourished during the Han Dynasty in China between 207 BCE and 220 CE. This ancient Silk Road connected China with the Middle East, Africa, and Europe using caravan routes through Central and South Asia. When completed this new Silk Road initiative will link China to Europe and Africa using roads, railways, airports, fiber-optic connections, and seaports. The initiative will also develop major industrial, agriculture, and energy centers in the participating countries, all linked to Chinese institutions. One of the most important countries in this initiative, perhaps the most important, is Pakistan. Pakistan borders China’s Xinjiang Province in the north, albeit at an elevation of over 15,000 feet. It therefore provides China with a potential corridor through the Karakoram Highway to the seaport at Gwadar in Baluchistan on the Indian Ocean. The Pakistan part of the larger project is referred to as the China-Pakistan Economic Corridor, CPEC. China plans to spend at least $60 billion on infrastructure developments in Pakistan itself, although some of this money would be loans to Pakistan, which Pakistan will be obligated to repay. CPEC will include the construction of industrial parks, agricultural farms, railways, airports, roads, a fiber-optic network, energy-generating projects, including one of the world’s largest solar farms, and a high speed train between Karachi and Peshawar that will travel over 160 km per hour. All of these projects will be built according to Chinese plans, with Chinese labor, and connected to Chinese businesses. The project will also build a new telecommunications network linking Pakistan with China, and through China to Europe. This telecommunications connection will bring Chinese and Western culture, movies, and television to Pakistan. CPEC also includes a number of initiatives in Pakistan that are not only of an economic nature, but projects that also have cultural and civic implications. The Safe Cities initiative, for instance, is primarily designed to safeguard Chinese workers from Pakistani terrorists, but it will also transform many of Pakistan’s cities. The Safe Cities project includes building new safer buildings in urban centers, training local police and military on anti-terrorist and bomb detection

techniques, and the use of lighting and cameras to create safe zones in all Pakistani cities. The project has already begun in Islamabad, but the city of greater concern is Peshawar, where the Pashtun population is particularly militant and which is the center of the Taliban insurgency. Peshawar has experienced a number of terrorist attacks in the past year. While this project will no doubt create safer cities, many are concerned that much of the traditional areas of some of these historic cities will be destroyed to build newer, albeit safer, neighborhoods. Some of the CPEC projects are already underway. Working on extending and improving the Karakoram highway has begun and Chinese workers are now working on expanding the port in Gwadar. There will soon be over 15,000 Chinese workers in Pakistan. Although the road from the Chinese border to the port of Gwadar is not yet finished, trucks are now travelling from Kashan, Xinjiang Province, China to Abbottabad in Pakistan. Other parts of the project, including the Safe Cities project, are also already under way.

Implication of OBOR/CPEC & Pakistan: On the one hand the $60 billion investment will bring resources to Pakistan. Pakistan can certainly use better roads and an up-dated and efficient railway system, and the project may help modernize Pakistan’s traditional, outdated, and very inefficient agricultural system. However, it is now becoming clear that CPEC is hindered by the very nature of Pakistani society, particularly the provincial tensions and the lack of effective leadership in Islamabad. The Chinese governmental structure is highly centralized with the power mostly in Beijing, while the Pakistani governmental structure is decentralized with greater power and autonomy in the provinces. The two systems are struggling to work together and the Chinese are already puzzled at Islamabad apparent inability to make and enforce decisions. It is also likely that the project will create class anger and antagonism in Pakistan. Despite the presence of two very large cities, Karachi and Lahore, Pakistan is largely a rural society in which 66 percent of the population lives in the countryside. Most of the rural population lives in small villages as farmers or as indentured laborers on large agricultural estates. There is growing unrest among these rural

villagers over what they perceive as inequitable treatment from Islamabad. This rural population is unlikely to receive much benefit from CPEC since most of the investments are directed to the cities or to the wealthier areas. Conclusions: The OBOR is destined to establish new routes linking Asia, Europe, and Africa. The idea of ‘One Belt One Road’ primarily based on monetary value, but has strategic implication. It aims for the joint development project, common prosperity and energy sustainable use. The China Pakistan Economic Corridor will greatly inherit the benefits as well as the dividends from the overall Chinese dream. The benefit will go beyond $ 60 Billion in energy and infrastructure projects once they are completed. The OBOR has been perceived by Chinese planner and their well-wishers as a game changer for the entire region and beyond. Pakistan has to avail the window of opportunity not only in context with the infrastructure and energy sectors but establisihn industrial/economic zones for the realistic socio-devleopemnt of the country which must be reflected through 3% growth in GDP in the years to come.

Way Forward: In the case of skill development, there will be a need for skilled human resource in all related industries, including the manufacturing and service sectors. Extensive collaboration with relevant Chinese counterparts interested in investing in Pakistan is to be explored. To make appropriate decisions at the organizational and personal level to learn and think carefully about cross border trade, Chinese way of doing business, Chinese cultural and ethical values, and the advantages that could arise from CPEC without compromising Pakistan’s national interest. This project’s success may depend on the ability of China to convince the Pakist...