Chinese President Xi Jinping’s Gamble in PakistanPosted: April 27, 2015
Pakistan can be regarded as a violent, lawless and run-down place with great risk of infiltration of Islamic extremists. It is in economic difficulties as no one in the world is willing to take the risk in investing in it.
According to quanzhan.com’s report on April 23, due to the risks, Pakistani President Mamnoon Hussain told Chinese President Xi Jinping when he met Xi on April 22 that the Pakistani government has approved the plan to establish an armed force of 10,000 personnel specialized in protecting Chinese workers in Pakistan.
That proves the high risks in investing in Pakistan.
Why Chinese President is willing to invest more than $6 billion in a country no businessmen in the world are willing to take the risk to invest there?
Xi’s investment is a gamble with a huge stake!
First, it is a political instead of a commercial investment aimed at ensuring the safety of China’s trade lifelines to the Middle East and Europe. Compared with China’s annual trade volume of around $700 billion with Europe and the Middle East the $6 billion investment in a few years is not a big amount.
Moreover, Xi has certainly analyzed the risks and potential gains there. The investment risks in Pakistan are mainly due to infiltration of Taliban from Afghanistan in its fighting with US troops. When US troops leave Afghanistan, Taliban will leave Pakistan.
Moreover, like China in the past, poverty and lack of education are the major causes of political instability. China has the experience in bringing prosperity to poor and uneducated people. Moreover, overseas Chinese were able to develop economy and become rich in Southeast Asia when there was political instability there.
There is the chance for China’s success in doing so. The economic rewards will be quite substantial as labor is very cheap there. China is in dire need for cheap labor as labor has become increasingly expensive in China.
Where there are risks, there is opportunity. Due to Pakistan’s strategic importance to China, Xi has to take the risks.
Source: qianzhan.com “What is China’s iron brother Pakistan? Pakistani President: There will be 10,000 troops to protect Chinese workers” (summary by Chan Kai Yee based on the report in Chinese)