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China Reform Monitor - No. 1249

Spotlight on China-Pakistan Economic Corridor (CPEC);
Hong Kong economy reeling

Edited by Joshua Eisenman
October 19, 2016

September 19:

Plans for operationalizing the Special Security Division (SSD) to provide security for the 10,000 Chinese personnel working on the China-Pakistan Economic Corridor (CPEC) have been held up by civil-military infighting in Pakistan, the country's 
The Dawn reports. Soon after Chinese President Xi Jinping's visit to Islamabad last year, Pakistan's military announced the formation of the SSD to secure CPEC projects. But a year and a half later there are no agreed rules to govern the SSD. The military envisages the SSD will control the civilian law enforcement agencies in all issues related to the security of CPEC projects and will act as the “first responders” where threats to CPEC arise. The civilian government has remains concerned the proposal could expand military control over civilian law enforcement agencies. There are also differences over who would control the SSD. The government thinks it should be the interior ministry, but the military wants to retain control. The formation of the critical southern wing of the SSD could take about 12 to 18 months, which could delay CPEC projects.

September 28:

Pakistan's Minister of Planning, Development and Reforms Ahsan Iqbal has assured Vice-Chairman of the National Development and Reform Commission Wang Xiaotao that there will be no further delays in the deployment of the SSD. Iqbal said the 6th meeting of the China-Pakistan Joint Cooperation Committee (JCC) on the CPEC would be held by the end of November. The JCC, which Wang and Iqbal co-chair, is intended to meet twice a year to facilitate the formation of expert working groups but was delayed due to a “lack of consensus over lingering issues,” sources in Pakistan's Planning Ministry 
told the Express Tribune. “One of the main Chinese concerns was the delay in the deployment of the SSD for the CPEC. Plans for operationalizing the division have been held up by civil-military wrangling.” There is also a lack of progress on the energy-related projects which, if unresolved, could affect the CPEC timelines. Iqbal "stressed fast implementation of the Gwadar CPEC projects," and the Pakistan wants work on the Eastbay Expressway and Gwadar International Airport to begin ASAP. Vice Premier Zhang Gaoli, who oversees the CPEC, is expected to visit Pakistan to perform ground-breaking ceremonies of Gwadar project.

September 30:

Retail sales in Hong Kong plunged 10.5 percent in August, the 18th consecutive monthly contraction, as the number of mainland visitors continue to dwindle. Retail Management Association chairman Thomson Cheng Wai-hung forecast retail sales would decline for another year before the sector bottoms out, and that even the week-long October 1 National Day holiday would not help. "A bottoming out is nowhere in sight," Cheng said. Yesterday, China's finance ministry announced that the 30 percent consumption tax on cosmetics would be waived for non-luxury products, and the luxury goods tax rate would be cut to 15 percent. The cuts mean mainland consumers are increasingly likely to buy cosmetics at home instead of travelling to Hong Kong, 
the South China Morning Post (SCMP) reports.

October 1:

Iran and Saudi Arabia are welcomed to join the CPEC, the multibillion-dollar flagship project of President Xi Jinping's "One Belt One Road" initiative. "We will welcome both brotherly Islamic countries if they want to be part of CPEC," Pakistan's Minister for Planning, Development and Reform Ahsan Iqbal said. CPEC is a 15-year-long project to be completed in 2030 with a focus on infrastructure including the Gwadar seaport, roads, energy and industrial cooperation. Iqbal said China would provide concessionary financing of $35 billion for the energy sector and another $11 billion for infrastructure development, particularly road construction. He said work on the western route of CPEC was progressing and the 650km Gwadar-Quetta section would be ready by December while the entire western route will be completed by 2018, Pakistan'sExpress Tribune reports.

October 4:

Despite being blocked from participating, a delegation from Taiwan led by Ho Shu-ping, deputy director of Taiwan's Civil Aeronautics Administration, held bilateral talks with a dozen countries on the sidelines of the triennial International Civil Aviation Organization (ICAO) Assembly in Canada. Ho's seven-member delegation attracted wide sympathy for not being able to attend the meeting, due to pressure from Beijing. "Thanks to the support of countries friendly to us, we were able to hold talks with relevant authorities and those in charge of aviation affairs." She said the delegation received "warm support" from fellow countries and they "all agree that aviation safety is without borders and believe that flight safety should never be affected by any factors - including politics." Last month, Taiwan's President Tsai Ing-wen issued a letter to her fellow Democratic Progressive Party members saying "we must do all we can to resist the Chinese pressure and develop relations with other countries." The challenge is choosing those international organizations Taipei can participate in and avoid events that waste effort or humiliate the island, 

Related Categories: China; China and East Asia Program

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