A few days ago, Chinese and Pakistani delegations met during seventh meeting of the Joint Cooperation Committee (JCC) in Islamabad; the objective was to finalise the Long Term Plan (LTP) for CPEC. The contents of the Long Term Plan remain confidential, though a report in Dawn a few months ago hinted at the larger official focus for Pakistan and China until 2030.
Following the above JCC meeting, Khurram Hussain, a staff member at the Dawn, has asked a serious question through media to Ahsan Iqbal, the Minister for Planning, who is responsible for the CPEC-LTP: do the Chinese want to float Yuan as a legal tender in Gwadar?
According to Hussain’s story, the Chinese have raised the same issue during previous JCC meeting as well, which Pakistan has refused then. If China has raised the issue again during this JCC meeting in November 2017, it shows their seriousness. Hussain’s questions revolve primarily around Pakistan’s response.
Two sets of questions need to be examined further. The first one is Gwadar specific. Gwadar is not a big city. It is not even a big town. It is a small sleepy coastal town with a population around 100,000 or even less than that. According to the 2017 census, the entire district of Gwadar has a population around 260,000.
What are the larger Chinese interests in Gwadar? Why do they want Yuan to be a legal tender in a port town? What kind of business are they expecting in Gwadar, which would necessitate Yuan to be a legal tender? Obviously, this would also mean a large number of Chinese presence in Gwadar? What is the number that the Chinese are expecting? And for what purposes?
According to the available information, the Chinese are expanding the port facilities in Gwadar and also building a new Airport.
The second set of questions is related to beyond Gwadar in Pakistan. If China-Pakistan Economic Corridor has multiple projects in the mainland, will the Chinese next explore a similar option in rest of Pakistan as well? Certainly, the Chinese have every right to explore strategies to strengthen their economic presence and also their currency. The US, UK and EU have been pursuing a similar approach. If the US sees the acceptability of dollars as an international currency as a part of strategic interest, China’s aspiration to make Yuan a global currency should also be seen in the same perspective.
The issue here is not China’s global objectives. It is narrowly limited to the Chinese interests in making Yuan a legal tender in Pakistan – and the broader purpose it would serve. Officially, the CPEC is pushed as 55 billion USD project, with numerous sub-projects. Do the Chinese have a bigger plan than the above?
A more substantial question, besides the above two, would be: will China follow up with a similar push in Sri Lanka and Nepal? Perhaps, it has already started the process. Indian currency in smaller denominations is accepted in Nepal and Bhutan. The objective is more to facilitate local trade and tourism. What will be the Chinese objectives?
The Chinese objectives and their possible implications for India in Beijing pushing for Yuan as a legal tender in the region, needs to be explored further.
According to available public information, Pakistan has not acceded to the Chinese demand. As the CPEC gets more prominent, will Islamabad be in a position to say no to Beijing?
Though the State projects the CPEC as an El Dorado, clearly there are multiple challenges for Pakistan