China wants Pakistan to align its policies with CPEC

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In a major development, China has asked Pakistan to align its development policies as well as internal reform agenda with the China-Pakistan Economic Corridor (CPEC) project to reduce delays resulting from bureaucratic red-tape for the speedy execution of projects, an official source said.

China has asked for an early finalisation of phase two of the Free Trade Agreement (FTA-II), operationalisation of the already approved Exim Bank, Land Port Authority and one window operations in federal and provincial capitals for CPEC related projects.

Initially, these demands were made to the Planning Commission but now the other line ministries, as well as provinces are well aware of the demands. China has asked for an alignment of policies with the CPEC to expedite industrial infrastructure building and upgrading regulatory and policy support system for attracting foreign direct investment, the source added.

Pakistan and China have an operational FTA under which bilateral trade has increased manifold during the last decade. Both countries have nearly finalised a draft of the FTA-II, but the final signing hinges upon Beijing’s extra concessions for Pakistani products. The Chinese say linking of the FTA-II with CPEC will open doors for enhancing Pakistani exports to China.

China wants amendments in laws and regulations to have priority in the provision of utilities, facilitation, and incentives, along with institutional arrangements between federal and provincial governments for the smooth implementation of CPEC projects. They want the government to accelerate the acquisition of land and necessary infrastructure for establishing special economic zones, according to the source.

The government is already considering an incentive package for the industrial sector, as China has stressed incentives for setting up new industry along the CPEC route. However, the source said, both the governments will have to provide policy support for the relocation of Chinese industry to special economic zones in a B2B format.

It is important to mention that a special security division comprising of 9 army composite battalions (9,229 personnel) and wings of Civil Armed Forces (CAFs), which consists 4,502 personnel, has been raised. The Pakistan Navy has raised Task Force 88 to ensure secure trade and maritime security, while the Pakistan Marine Battalion has been tasked with ensuring the security of the Gwadar port.