CPEC: Health Silk Road
by Haroon Sharif
It is difficult to calculate the real impact of COVID-19 pandemic on the global economy. According to World Bank’s Global Economic Prospects report, the global economy probably shrank by 4.3% in 2020 due to the ongoing pandemic.
China’s economy grew by 2.3% last year - the slowest pace in four decades. China’s strict lockdown measures, targeted support to businesses and rapid vaccination drive have put the economy back on a growth path with 6.5% growth in the last three months of 2020.
Launched in 2013, Belt and Road Initiative (BRI) strategically focused on leveraging the physical proximity advantage by reaching out to 138 countries. By early January 2020, BRI had planned to invest more $3 trillion in 2,971 projects.
While this plan had to slow down due to geo-politics and low capacity in partner countries, the ongoing pandemic has had a major impact on the overall progress due to closing of borders and air travel restrictions.
Covid-19 restrictions on Chinese workers and construction suppliers have been one of the major factors in slowing down the pace of implementation of many projects in Pakistan, Cambodia, Indonesia and Myanmar.
In the case of the China-Pakistan Economic Corridor (CPEC), a flagship of BRI, Pakistan government’s focus has rightly shifted to Covid-19 response which has resulted in a slowdown of both the infrastructure development as well as industrial ventures.
Most importantly, both countries need to sit together and agree on priority investments in a post pandemic world.
Pakistan is concerned about its debt obligations to multi-lateral and bi-lateral partners, shrinking fiscal space for development projects and revival of growth under the IMF program.
Speaking of debt, Pakistan needs to do a serious thinking about managing the potential threat of its rising debt to an unsustainable level with low GDP growth projections between 2-3 percent in 2021-22.
The overall debt of Pakistan has reached 94% of GDP and with the expected fall in tax revenue due to Pandemic, further fiscal pressures are inevitable. Continuation of high fiscal deficits and higher cost of borrowing have led Pakistan into a situation where nearly half of its revenues go to interest repayments.
Whereas, China has started looking for strategic adjustments in its project implementation approaches, terms of financing and aligning future investments with Social Development Goals including reducing the carbon emissions.
In this context, one of the win-win proposition will be to invest in human development infrastructure by launching Pakistan as a pilot country for the Health Silk Road (HSR).
In May 24, 2020, Wang Yi, China’s Foreign Minister said the prospect of BRI comes from constantly exploring new areas of cooperation. China will work with other countries along the Belt and Road to vigorously promote cooperation on the Health Silk Road (HSR) as after the epidemic, the need for cooperation in the field of public health will increase significantly. China’s commitment to BRI projects remained unchanged.
Chinese President Xi Jinping pledged that a Covid-19 vaccine from China will be made a “global public good”. Following this, the Chinese government also announced that the vaccines will be made available in an equitable manner and at a fair and reasonable price.
Unlike the United States, China has joined COVAX partnership to ensure timely and affordable availability of Covid-19 vaccine to poor countries.
China’s National Biotech Group, a subsidiary of Sinopharm, is conducting third phase trials in several partner countries including Argentina, Bahrain, Egypt, Jordan, Morocco, Pakistan and UAE.
Many of these partner countries have entered in to agreements with China for procurement and local production of Covid-19 vaccines. Pakistan has received over one million vaccines dosages from China so far and more shipments are being procured. It will a major development if China and Pakistan announce joint production of vaccine under CPEC.
While China has already donated Personal Protection Equipment (PPE) and hospital supplies to Pakistan, perhaps the time has come to scale up investments in the healthcare sector through the proposed “Health Silk Road” with CPEC being its pilot corridor. Like in the rest of the world, the current crisis has exposed serious shortcomings in Pakistan’s public healthcare capacities.
In case of Pakistan, where 59% of population is under the age of 30, it will be imperative to increase and sustain public financing in health, education and skills development for this young labor force.
There is every possibility that when both countries talk about infrastructure during their next Joint Coordination Committee (JCC) meeting, they will discuss hospitals and laboratories along with other ports and highways.
With China’s plans to develop its western regions, Pakistan’s skilled labor force could be a major advantage for both countries. For China, this will be an opportunity to step into a very large healthcare market which could expand to the rest of South and West Asia.
The health sector offers huge and sustainable opportunities with both social and commercial returns in most places.
According to the World Health Organization, Pakistan is ranked 66th amongst the high-burden-of-disease countries. Despite its heavy burden of communicable as well as non-communicable diseases, Pakistan’s expenditure on public health is only 0.91 percent of its Gross Domestic Product.
The country has one doctor for 957 people and one hospital bed for 1,580. The government run hospitals can only cater to 30 percent of population and the private healthcare facilities cover the rest.
China’s investments can help with the capacity of large hospitals, pharmaceutical production, research and distribution pharmacy chains.
Prime Minister Imran Khan’s government is already working on reforming the healthcare system with a particular focus on access to health services to the poor and marginalized segments of the society.
Such investments from China will not only complement these efforts but also strengthen the health value chain for potential future shocks. More importantly though, it will lead to the much-needed ownership of CPEC among the ordinary people of Pakistan.
There has been a discussion about trickling down benefits of CPEC investments on the livelihoods and wellbeing of people. Health sector initiatives will strengthen and widen the ownership of CPEC as a transformational initiative among general public in Pakistan.
Strategically, it will be a brilliant signal to the western world which has been constantly raising questions about debt trap, environmental impact and lack of transparency in CPEC.
Pakistan’s National Command Operation Centre (NCOC) leads on the country’s Covid-19 response and is chaired by the Planning Minister who is also leading on CPEC.
While NCOC is busy with dealing with the potential spread of the disease, the Ministry of Planning should start work on a major health sector upgradation plan with the help of private sector experts.
This plan should underpin the next meeting of JCC to determine post pandemic priorities for CPEC. A substantial improvement in health indicators of a young population will have a far-reaching impact on productivity enhancement and shared regional prosperity.
Haroon Sharif is currently a visiting fellow at Institute of Development Studies (IDS) at the University of Sussex, UK. He is also a Senior Advisor to the UN on Finance for Development. He remained Pakistan’s Minister of State for Investment in 2018-19 and led the Industrial Cooperation partnership under CPEC.