The Rise of Chinese investment in Pakistan; Development or Track to Economic Subordination?

Abstract

Economic horizons in the Global South have been transformed by the emergence of Chinese investment under the Belt and Road Initiative (BRI) especially in countries that have been strategically oriented such as Pakistan. Although this is usually packaged as development partners, Chinese investment casts very critical challenges to the way their companies operate, how they conduct business in the market, and how well they conform to the interests of the host country. This paper will look at the economic effects of Chinese investment into Pakistan and assess whether their activities are neo-imperialism characteristics like those that were once practiced by the western multinationals in Africa and Latin America. The study examines two major dimensions based on a qualitative document study analysis which consists of how the Chinese Investment(s) together with their operating companies affect the labor market and the local industries in Pakistan and how their conduct compares to the historical examples of economic imperialism. The results show that Chinese companies are overrepresented in the strategic managerial positions with the local employees holding minor and low paying jobs. Also, the Chinese Investment has taken over markets through the national support and foreign influence and this has led to the crowding out of the local businesses and reduced the competitiveness of the Pakistani industries. Comparative study of the African and Latin American experience suggests that the Chinese Investment does not eliminate the exploitative systems of Latin American and African experience, instead it replicates them. These are labor hierarchies, monopolies and false corporate social responsibility. The paper finds that unless policy frameworks are strong, Chinese Investment risks will entrench the economic dependency in Pakistan and not bring equitable development in the country. 

Keywords: Investment, MNC’s, Belt & Road Initiative (BRI), Foreign Direct Investment (FDI), Corporate Social Responsibility (CSR), Monopolistic Tendencies