Tuesday, August 12, 2014

KARACHI DIARIES: Know Thy Ally


Published in Economic Affairs / August 2014

Till 1989, the average Pakistani is better off than the average Chinese or Indian for that matter, in terms of GDP / Capita. The graph would change. By 2012, the Chinese would be 6 times better off than their Pakistani counterparts. Their GDP would rise by 30% - the economic reforms in the 1980’s would leave everyone behind; and a talk on China’s exponential growth and towering skyline would trigger an inadvertent comparison with its trusty ally.

Adil Husain, originally from Karachi, and later found in Washington eventually ended up spending 7 year in China, and was recently seen waving a disclaimer in T2F (The Second Floor). The views, he will share are his own. The contrasts he witnesses will be dramatic. And the China from his vantage point would appear in the form of a well mapped chessboard.

As he winds his way back in time, he will be struck by the entrepreneurial spirit of its people, their strong work ethic and the high % of female participation. China is his home away from home and he takes a moment to examine the Chinese blueprint for success that makes it a veritable magnet for foreign investment. Notwithstanding its difficult relationships with Taiwan, HK, Japan, or Korea, trade continues, as does investment.

Adil reminds the audience that these are nations that do not have direct flights, consulates, or even recognize each other’s sovereignty for that matter yet business dealings remain unaffected. A cold pragmatism drives China’s core, and he notes that it is clearly not averse to doing business with former enemies, unlike Pakistan. Maybe the allure of ‘Hello Kitty’ is hard to resist, he quips.

In his expereince, things get done there and quickly. He goes on to talk about a China that always been an important player in global economy. Where crime is non existent; and no one owns a gun. Where there is no ethnic, sectarian or religious tension - not really. Whose citizens feel they have direction, and ensuring a steady inflow of Yaun is the objective. A sense of nationhood, shared purpose and firm belief that they are headed the same way propels society forward.

The Chinese are frugal by nature but are encouraged to spend. Even their factory workers make up to 60G a month. Their bottom up economic reforms meant some cities got richer before others he explains. The luxury goods market would be lost without China in Adil’s view. Today, it has 800 Starbucks - 10 years ago there were none; there is a Cartier every 2 blocks. Both the Chinese Government & its Communist Party prioritize economic growth to stay in power; having stifled political rights / free speech, they must deliver on the economic front, he adds, else their ability to govern could be challenged. The state is therefore ready to act in times of economic downturn, manage crisis, regulate prices, and earn it’s keep.

Then there is the literacy rate - 95% (China): 55% (Pakistan) and policies that prioritize investments in infrastructure, ports, bridges, subways etc. China also boasts an impressive power generation capacity (I million MW) vs. Pakistan (20,000) and has the largest in-store capacity of wind power; and they keep adding to that capacity.

The rosy picture starts to change gradually when it factors in it zero legal, political accountability, rubberstamped courts, loose environmental regulations, a controversial one child policy (which never applied to rural areas) and social media curbs, (Facebook, You Tube, Twitter are banned, & Google products don’t work well). The state, in their defence would proffer a list of home-made alternates to silence any protests. One still needs a visa to visit Tibet (despite a residents permit) and every now and then it is allegedly made off-limits to foreigners. Pollution is a serious concern and face masks are trending. Also, land is state property which can be leased, but that he insists is no different from Defence (Karachi).

According to reports, the Communist Party is still going strong but has wisely let go of rhetoric and vilification of the wealthy. While Adil cannot be a member, and probably wouldn’t want to be either, the average Chinese joins them for practical reasons - university students reportedly earn academic points, businesses can network and form social connections. They meet once in a while and Adil sees it as a club where members gather for coke & pizza. There is nothing afoot, sinister or otherwise in his view. Not everyone joins the Party and there are no compulsions. Most members are pragmatic Chinese businessmen hoping to get an edge over the competition.

He decides to make some predictions about China’s domestic oriented sectors which are likely do well in the foreseeable future. Retail, healthcare, & education drive growth and are the ones to watch out for in his estimation. Though China is not in manufacturing anymore, it is not feasible to relocate the global supply chain from its backyard, and so there it will stay, for a while at least. As for the low quality ‘Made in China’ goods strewn across town - they are apparently for people seeking cheap, bad stuff – here you get what you pay for.

His sketch adjusts for the shifting sands of time and changing priorities when it depicts the famed Pak – China bond that has endured for over six decades. The Chinese people don’t hold Pakistan in high regard, in Adil’s opinion - to them she behaves like North Korea, in need of constant bail outs, weapons, aid, nuclear reactors……forever asking for help to sort out messes of her own creation. He concedes that there are historical ties that bind both nations but most Chinese don’t remember the Pak-Nixon-Mao diplomatic dance circa 1972, or would care about the outdated back room channels used in shaping “the week that changed the world”. To them, the partnership appears largely one-sided, what have you done for me now seems to be the question on their collective minds. This China has more trade with India. There are humiliating visa restrictions on Pakistanis, tourist visas are a no-no, only business ones are granted. And Adil’s cabbie waves a pretend gun and provides helpful sound effects - ‘boom boom’ (not Afridi) to show how well versed he is in all things Pakistani.

The winds of change sweeping through Chinese mainland force it to keep updating its profile. Adil Husain leaves the revised image pinned to the wall.


‘Adil Husain is the President and founder of the Emerging Asia Group, the leading provider of “primary research” based business to business (B2B) market intelligence in Asia’


China Image Source: Jpg

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