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Khurram Husain // DAWN: April 17, 2025
HOW should Pakistan choose between the US and China? So far, a choice has not been foisted upon us, but the time is coming when it will be. Before that time arrives, it is a good idea to devote some structured thinking to the matter and be prepared to act.
Not too long ago, a piece of advice was offered by Hina Rabbani Khar, one-time minister of state for finance and foreign minister of the country and an otherwise very smart individual whose words deserve to be taken seriously. In an internal memo that was leaked in April 2023, she cautioned against trying to appease the West and underlined the importance of maintaining the “real strategic” tie-up with China, despite mounting Western pressure. In a separate interview, Khawaja Asif echoed much the same thinking, emphasising the difficulty Pakistan faces in undertaking a rupture either way — with the US or with China.
But the time is drawing near when not making a choice will become harder and harder and it becomes necessary to make one. The imperatives driving the American trade war against China are powerful, and rooted in the emergence of China as a great power over the past quarter of a century, a fact that is not going to change any time soon regardless of what trade measures the Trump administration takes. The current round of the trade war may possibly settle down a bit, following an agreement between China and America. But the pause will be temporary before frictions flare up once again, because the underlying dynamic of a growing China and stalling America will still be there.
Those in power understand how difficult this choice is for Pakistan to make. Pakistan earns its capital by participating in the markets of America and the European Union, and it spends this capital to purchase consumer goods as well as intermediate goods and machinery from China. We run a trade surplus with the US and EU and our largest trade deficit with China. On top of this, we get our bailouts from American-led institutions, with some top-ups from the Gulf kingdoms and a brief episode of rescue lending by China (which has now ended). Even these top-ups were dependent on Pakistan having an IMF relationship first.
Second, and very importantly, Pakistan has long been the largest buyer of Chinese arms in the world. According to data from the Swedish think tank Sipri, Pakistan bought $5.28 billion worth of arms from China in the five years between 2019 and 2024. This was 81 per cent of Pakistan’s total weapons imports during this period, up by 7 percentage points from the previous five-year period before 2019.
With this arms relationship comes longer-lasting maintenance, upgrades and training relationships. Pakistan is critically dependent on Chinese supplies of spare parts to keep its stock of Chinese arms operational. This makes a rupture even more difficult to contemplate.
More than half of Pakistan’s bilateral external debt is owed to Chinese entities. This figure rises further if one takes liabilities into account as well, but for now let’s look only at the official obligations. Of $41.7bn in total external debt owed to bilateral creditors, $23.7bn is to China (including $8.2bn of swaps and deposits with the central bank). This is slightly less than a quarter of the total external debt of the country, a staggeringly high exposure through multiple instruments, and owed to multiple entities within China.
Given these exposures, it would be nearly impossible for Pakistan to make a clean break. Even an orderly reduction of these exposures, undertaken slowly over a longer period of time, would take many years to make any significant impact. Whichever way we look at it, Pakistan is deeply embedded with both the US and China.
So how would Pakistan handle matters when the time comes to choose? So far the country has successfully parried attempts to force a choice on it. For example, one unwritten condition coming with the IMF loans — something the IMF denies in its official capacity — is not to make Chinese debt repayments or service liabilities of Chinese investments in Pakistan during the programme period. This is one reason why Pakistan has accumulated large arrears with regard to its Chinese projects since 2019, and seeks rollovers of all maturing Chinese debt obligations as they come due.
In times to come, this demand could well be dilated upon. And Pakistan could find that not making a choice will be costlier than making one.
One obvious answer to the coming dilemma is to reduce our reliance on the episodic bailouts that Pakistan keeps needing every few years. That is where a significant share of the leverage that America has over Pakistan comes from. Other than the need for these bailouts, the debt exposure to the US is large, but indirect as it comes through multilateral creditors. And the trade exposure is also large, but in low-value-added products that are not likely to become a major sticking point in the superpower’s trade policy in the future. Those things can be managed much more easily.
From China’s perspective, it seems that Pakistan has lost its shine. The country enjoyed some goodwill in China because of its role in helping bring about a thaw with the US, and its support during the years when China was shut out of the world. It also earned some goodwill in the speed and efficiency with which some CPEC projects were executed, earning the nickname of ‘Punjab speed’.
But all that is gone now. With the deaths of Chinese personnel at the hands of terrorists, coupled with repayment difficulties, China has wearied of Pakistan’s chronic demands for capital. The bailouts Pakistan requires every few years have now become the country’s Achilles heel, and unless we resolve this problem comprehensively, it will be the single biggest complicating factor in the stark decisions that lie ahead.
The writer is a business and economy journalist.
Published in Dawn, April 17th, 2025
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[This column summarises the history of trade wars and the double standards of Western powers to maintain their hegemony in the world]
Sakib Sherani // DAWN: April 17, 2025
THE ‘Liberation Day’ import tariffs announced by President Donald Trump on April 2 mark a tectonic shift in the global economic as well as geopolitical order.
The ‘Trump tariffs’ are far more than just about re-balancing trade or an effort to contain a geopolitical rival. It is the manifestation of a nativist, anti-globalisation and thinly veiled xenophobic mindset that is unlikely to roll back despite the interim pause and exemptions, or the long-term costs.
Most of the commentary in Pakistan has been narrowly focused on the potential first-order effects on the country’s exports, ignoring the wider dynamic unleashed by the inward pivot by the US. (Even on trade, the partial-equilibrium analysis so far has ignored the second- and third-order effects that are likely to be set in motion despite the temporary pause in tariffs for non-retaliating countries.)
The pivot underway in the US is one for the history books, marking the end of an era. Some international economic commentators have, rightly in my view, placed the consequences of the ‘Trump tariffs’ at par with the Ming dynasty’s historic own-goal in the 15th century with the Edict of Haijin, when China decided to shut itself off from the world.
What has also been ignored so far in the commentary here is that there is a long history of America in particular, and of the West more generally, conducting its affairs completely contrary to its stated ‘ideology’, or contrary to what it preaches to the rest of the world. And global trade is no exception. The conventional wisdom that it is for the first time that the US has suddenly moved away from ‘free trade’ is without historical basis.
As the title of this article, borrowed from Prof Ha-Joon Chang’s provocative book, suggests, the West has not only vigorously used protectionism as an economic development strategy for itself, but it has also actively conspired throughout history to prevent developing countries from achieving ‘developed’ status.
One of the main tools at its disposal to pursue the latter objective has been the so-called ‘rules-based order’ constructed after World War II, which used the World Bank, IMF and the World Trade Organisation to force developing countries to eschew protection for domestic industries and to completely open up their markets for competition from better-placed Western companies.
This deliberate and cynical strategy has prevented the development of an industrial base in some of the poorest countries in the so-called Third World, blocking a potential pathway to economic development. At the same time, these resource-rich countries have been consigned to exporting raw materials to the advanced economies, which more often than not are extracted (exploited) by Western transnational corporations, while becoming unwitting markets for Western products and services.
Perhaps the two most egregious examples from history of the West using military power to force other countries to open their markets and accept ‘unequal treaties’ are the Opium Wars in China, and Commodore Matthew Perry’s sailing into Tokyo Bay with US warships in 1853 to force the Japanese to open their ports for American ships, their major cities for placement of US diplomats, and their entire country for trade.
More recent examples of Western countries using ‘gunboat diplomacy’ to secure their economic interests include the CIA coups to overthrow prime minister Mohammad Mossadegh in Iran in 1951 after he nationalised the Anglo-Iranian Oil Company (now BP), and against president Jacobo Árbenz in Guatemala in 1954 after he introduced land reforms that hurt the interests of United Fruit Company, a large US corporation.
The US unease with the economic rise of China, and its desperation to ‘de-couple’, should be seen in this rich historical context. Those of us growing up in the 1980s would recall a very similar angst expressed in America about the rise of another Asian economy.
Unlike China today, which is labelled by the US as a ‘strategic competitor’, thus attempting to justify the use of restrictive and unfair trade practices of its own, the target for America’s ire back then was none other than a close ally — Japan. Fear of American companies being forced to shut down by more competitive Japanese exporters, or of Japanese investment ‘taking over’ America, was whipped into a nationalist and near-xenophobic frenzy.
This culminated in a slew of measures by America designed to restrict access by Japanese firms to the US market, and to force them to relocate production to the US mainland. These measures included Voluntary Export Restraints, Section 301 Trade Actions, and the ‘Super 301’ (1988 Trade Act). Growing concerns in the 1980s and 1990s about foreign acquisitions of US assets — especially by Japanese companies — also led the US to introduce specific laws and regulations aimed at vetting and, in some cases, restricting foreign investment in strategically sensitive areas.
These included the Exon-Florio Amendment (1988), which gave the president the authority to block foreign acquisitions of US companies if they “threatened national security”, and provided for review of individual deals by the Committee on Foreign Investment in the United States.
In addition, a concerted campaign took place via Congressional hearings and media coverage to amplify public pressure against Japanese exports as well as investment (much like China has been demonised in the US for the past decade).
These efforts culminated in the infamous Plaza Accord of 1985, under which the US coordinated with its allies to force Japan to massively appreciate the Japanese yen. This laid the basis for the downfall of the Japanese economy and the lost decades that have followed. In the current iteration, pro-Trump US strategists have floated the idea of a follow-up ‘Mar-a-Lago Accord’ to weaken the US dollar.
One consistent lesson from history is that Western powers will go to any length, including staging wars and coups against foreign countries, and imposing unequal treaties, to secure and protect their economic interests. Like democracy and human rights, free trade is just another useful beating stick and expendable slogan.
The writer has been a member of several past economic advisory councils under different prime ministers.
Published in Dawn, April 17th, 2025
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[ہزاروں خواہشیں ایسی کہ ہر خواہش پہ دم نکلے ،،،، بہت نکلے مرے ارمان لیکن پھر بھی کم نکلے]
Naeem Sadiq Published April 17, 2025
UZBEKISTAN has 6.84 million children between the ages of six and 17 years. Every child is enrolled and there are no out-of-school children. Uzbekistan law mandates parents to ensure that their children regularly attend schools from Class 1 to 11. Failure to do so can lead to fines up to 5,100,000 soms (approximately Rs110,000) or arrest for up to 15 days. All schools use ‘E-Dars’, a digital attendance recording app, which records attendance for teachers and students. Chess is a compulsory subject in primary schools and taught by qualified teachers. Creditably, the Zindagi Trust in Pakistan has also adopted the chess tradition in its schools. But that is where all comparisons end.
Pakistan has about 65m children between the ages of five and 16 years. Of these, an estimated 26m to 28m children (approximately 40 per cent) do not have access to schools. Around 77pc of the school-going children suffer from ‘learning poverty’, ie, not having the knowledge, understanding and skills corresponding to their age or grade. The daily arrival of 18,917 newborns makes this an increasingly insurmountable task. Slowing down this unstoppable ‘out-of-school’ tsunami calls for several specific, sustained and non-traditional responses.
Begin by making a national commitment (currently missing) on two fundamental issues — controlling our runaway population and providing schooling to every child in Pakistan. While there have been excellent reports by the Annual Status of Education Report and the Education Management Information Systems, we need far more accurate and specific data for every child in Pakistan. This ought to include name, age, child registration certificate, years of schooling (if ever enrolled), current status (student, employed, idle), class, school, and name and address of parents of every child in every union council (UC) of Pakistan. Unless we have accurate data, our entire discussion will remain hypothetical and unrealistic. Employ 100,000 or so men and women to collect this data in two to three months.
Make ‘educating every child’ a national movement, delinked from all party politics, personal publicity and political bribes (free laptops, ration bags or electrical scooters). Order all schools to use a standard (student and teacher) tracking and monitoring app, such as Railer, TeacherKit, EduPage or MyClass Attendance. Reduce the number of school hours to three and operate three shifts in every school. Reduce the number of subjects and use a preloaded tablet connected to a TV screen in each class for teaching maths, science and English.
Use open-source educational platforms that give offline access like Khan Academy, Kolibri, and PhET Interactive Simulations, allowing students to learn through videos, quizzes, and experiments. Given Pakistan’s shortage of trained teachers, AI-powered solutions like Khanmigo offer a scalable and cost-effective means to rapidly enhance teaching quality. The recent collaboration between The Citizens Foundation and the Khan Academy for integrating Khanmigo teaching assistant to support educators is a praiseworthy initiative. Khanmigo’s bilingual support could allow teachers to instruct in both English and Urdu.
Pakistan could increase and modify a large part of BISP funds to create education-related incentives. These could be rewards for parents who limit their children to two and whose children show regular attendance in school, with girls receiving twice the incentive amount. The nature of other incentives could be cycles for girls where the school is at a distance, free uniforms and books, free, wholesome and healthy meals at school, laptops for children who showed over 95pc attendance till Class 10, free bus system to transport children to schools and national awards and commendations for parents whose children show regularity and excellence in schools.
Can we not extricate ourselves from the compulsion of needless pampering of our bureaucrats and politicians and instead increase the education budget by 50pc? Building more schools and improving the existing structures can be done without foreign assistance. Incentivise corporates to build schools as a part of their corporate social responsibility. Promoting compulsory education and family planning ought to be made essential aspects of Friday sermons. Enact laws that mandate parents to ensure that their children regularly attend schools from Class 1 to 10. Digitise the entire schooling data and make it accessible on a national website for real-time monitoring. The chairman of each UC and the assistant commissioner ought to be personally held accountable to ensure that every child in their jurisdiction is indeed a school-going child.
The writer is an industrial engineer and a volunteer social activist.
naeemsadiq@gmail.com
Published in Dawn, April 17th, 2025
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DAWN EDITORIAL : 17 April 2025
THE generous ‘incentives package’ for Pakistani expats, announced by Prime Minister Shehbaz Sharif, is yet another symptom of the Dutch disease afflicting Pakistan’s economy. In our case, however, the disease is not linked to natural resources, which mostly remain unexplored, but to the growing reliance on workers’ abroad to stay afloat.
Amid drying up foreign loan and aid flows, the dependence on remittances has had a major role in crowding out manufacturing and exports, leading to deindustrialisation over more than a decade. The package for overseas Pakistanis comprises special courts to address their cases, age relaxation in government jobs, medical college quotas for their children, relief in banking and business transaction taxes, green channel facilities at airports, civil awards, etc. It is intended to salute their contribution, in the shape of remittances, to Pakistan’s development. Separately, the government has lifted the 3pc federal excise duty on real estate transactions, which will indirectly benefit the expats, who are major investors in the property sector, as well as the developer mafia.
How does it make any sense to incentivise consumption and unproductive real estate investments — which form the core of our economic troubles — by them? Media coverage of the two-day Overseas Pakistanis Convention did not reveal any inclination on the part of the 1,200 participants from across the world to set up manufacturing units or invest in their motherland’s farm economy.
No doubt, in recent years, remittances have provided critical support to the current account. But they have also been a double-edged sword. On the one hand, they help us pay our burgeoning import bills and compensate for the dwindling foreign official and private inflows as well as stagnating exports; on the other, they are largely responsible for the rapid increase in imported consumption, unplanned urban sprawls, currency volatility, anti-export bias, etc.
With foreign investment having bottomed, remittances should be channelled into productive sectors to boost output and exports for a durable solution to the recurring balance-of-payments crisis. This can be done by making investment in industry and agriculture attractive through cost reductions, removal of policy distortions, creation of a business-friendly clime, tax reforms, policy consistency, etc. The policies governing these sectors should apply to all: local and foreign investors, as well as overseas Pakistanis. If the government wants to give incentives, these should be for those expats who are willing to bring their money home to invest in productive segments of the economy, not just in property. What is reflected in the incentive package is a Dutch disease that has made us lazy. Instead of fixing the economy through long-term structural reforms, our policymakers and politicians are again looking for shortcuts to achieve an economic turnaround.
Published in Dawn, April 17th, 2025
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DAWN EDITORIAL: 17 April 2025
FEARS that mob attacks on international fast-food franchises would end up in tragedy have come true, after police say a worker at a foreign chain was shot dead in Sheikhupura earlier this week. The killing occurred after a TLP anti-Israel protest had wound up. Law enforcers say two men targeted a foreign chain, firing shots from the outside, resulting in the death of Asif Nawaz, a restaurant worker who was reportedly present in the outlet’s kitchen. Earlier, several foreign eateries in various cities and towns of Sindh and Punjab had been vandalised by mobs; disturbing footage on social media shows men armed with clubs invading an outlet in Rawalpindi, as workers and patrons, including women and children, take cover. All of this is being done ostensibly in solidarity with Palestine. However, the murder and bullying of innocent people only besmirches the just Palestinian cause. The authorities must crack down on this violent behaviour before more tragedies occur.
Sadly, extremist outfits are using the name of Palestine to stay relevant in society. Some of the groups involved have also been attacking religious minorities, particularly in Punjab. The attacks on food outlets have continued, despite leading clerics calling upon people to keep boycotts peaceful. There is no denying that Israel is carrying out a genocidal war in Gaza. However, murdering innocent people, and attacking firms assumed to be supporting the Zionist state, is indefensible. Consumers are free to non-violently boycott brands they feel may be supportive of Israel. But there can be no space for the ferocious vigilantism of extremist groups, which use emotive issues to stay in the headlines. These same groups also weaponise the sensitive issue of blasphemy to forward their dark agendas. The state must arrest and bring to justice those involved in the Sheikhupura murder, while the elements involved in attacking eateries elsewhere also need to be traced and punished. There can be no tolerance for such vile behaviour.
Published in Dawn, April 17th, 2025
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