Learning from China Ensuring Economic Take off with Comprehensive Policy Reforms Contributed by Ambassador (Retired) Syed Hasan Javed Introduction Time has now arrived for Pakistan’s Policy makers to undertake the long awaited structural reforms in order to fully harness the spin offs and multiplier effects of US $62 billion (still evolving) China Pakistan Economic Corridor. Nearly US$20billion of Energy and Infrastructure Projects has either been completed or nearing completion within the current year. This would help Pakistan achieve an Economic take off on a sustainable path of development combining Pakistan’s rich natural resource endowments, demographic advantage, geostrategic location, civil and military institutions, Social capital and global best practices. Pakistan has indeed been a victim of Hybrid warfare for a long time making it a hostage of the IFIs (International Financial Institutions), better known as the Breton woods institutions ever since it allowed a World Bank Advisory Group to establish in Pakistan 1954 after joining the Western sponsored Security Alliances. Both failed to provide either an enabling environment for Economic take off or National Security respectively. Pakistan however had to pay a high price for its IFI inspired stunted policies with its dismemberment leading to separation of East Pakistan. The tragedy of 1971 did however teach a vital lesson that our security is ultimately our own responsibility. We however missed the lesson that our Economy is also our own responsibility, not to be run on the advice of Economic Hit men or IFI henchmen. The outcome is that Pakistan continues to be a victim of Hybrid warfare by the Western nations directly or through the IFIs with the help of local Feudal and tribal aristocracy who dominate the Parliament, ensuring that its economy does not take off. The local privileged Political Elite do not allow Reforms to happen by their indifference to undertaking legislative work to accommodate change and innovation to release the energy of the masses. Role of IFI Hit men All developing countries remain a hostage of the International Financial Institutions who have continually impoverished these nations in pursuit of their own interests. Though their henchmen and Hit men, their Policies are aimed at creating Budget deficit, Trade deficit, Current Account Deficit etc.  Their objective is to ensure through bad policies, an environment of bad governance, economic chaos, debt crisis, mass unemployment, anarchy and grounds for Colour revolution. In other cases, their divisive policies promote the centrifugal forces for Insurgencies, Proxy wars, Civil conflicts and Regime change, promoting the Flight of Capital, Brain Drain and perpetuation of political instability. This Template has been perfected so many times in unsuspecting Developing nations in Asia, Africa and Latin America, that it is now an open secret. Many books have been written on this subject. The most recent ones are by John Perkins who wrote on ‘The Secret History of the American Empire’ and the ‘Confessions of an Economic Hit man’. Theoretical Framework in Development Planning                  The World Bank Growth Report: Strategies For Sustained Growth and Inclusive Development published in 2008 summarized the Factors of Success of 13 Countries in Development Planning. It underlined that there is no generic Formula, nor ‘One Size Fits All’. The Factors for success are: a)Making most of Globalization b) Stable Macroeconomic Environment c) High Savings and Investment Rate d) Market Economy e) Committed, Credible and Capable Governments. The same document emphasized that the ‘Bad Ideas’ to be avoided by Development Policy Planners as: Subsidies, Big size Government, Protection to Home Industries, Cuts in Infrastructure Spending, Price Controls, Banning Exports, Anti Urbanization, Ignoring Human Capital, Environment, Restrictions in Exchange Rate and banking system etc. The truth of the matter is that while some of these policy prescriptions carry logic, it is a fact that countries which did not accept WB or IFIs Templates, such as China, India, South Korea, Singapore, Mauritius etc progressed faster than those who remained glued to its policy prescriptions such as Pakistan. Hard decisions cannot be postponed All Developing countries confront the hard questions when it comes to Economic Planning. The major paradoxes in Development Planning are a Matter of Choices for a Paradigm Shift. These questions are as follows: Government Intervention or No Government intervention; Import Substitution or No Import Substitution; Subsidies or No Subsidies; Reliance on Foreign Aid? FDI or No Foreign Aid/ FDI; Heavy Industries or No Heavy Industries; Promote Comparative Advantage or no Comparative Advantage. Generation of Low Savings or High Savings; Reliance on indigenous fuel or Imported Fuel-- Type of Fuel Mix; Agriculture or Industry; Commodity or Services; Bread or Butter etc. The Common Failures in Development Planning in Developing Countries have been as: Leadership crisis; indifferent Political Elite; Failures to use Comparative/Competitive Advantages; Failures to learn From Economics of Mistakes; Failure to undertake Proto Industrialization; Failure to Promote Inclusiveness; Failure to understand ‘Opportunity Cost’; Failure to promote Merit, Rule of Law and Free Enterprise; Failure to Reform and Innovate etc. Development Experience of China Since 1978, China’s story is unique as it achieved its economic miracle of lifting the largest number of people (at least a billion) out of poverty in the shortest period in human memory with its own home grown Reforms and not by those dictated by the International Financial Institutions. In fact, the World Bank established its Office in China in 1987, when the Chinese Reforms and Open door Policies had already taken firm roots. The Summary of  major factors of China’s Success in developing its unique Model are as follows: Honest Collective Leadership, End of Class Barriers, Inclusiveness, Mass Education, Existence of Excess Capacity, Large Size of Market, Imitation/Innovation Programs, Investment in Human Capital, Mobilization of Overseas Chinese, Endless Supply of Labor, Simplification of Rules and Procedures, Merit, Rule of Law and Free Enterprise, Harnessing favorable International situation (Globalization), Reduction in Size of Government, Proto Industrialization/SMEs, Legal Reforms, Governance Reforms, Agriculture Reforms, Industrial Policies and SEZs, Investment in R&D, Export Culture, Economic Diplomacy Initiatives, Ease of Doing Business, Development of Hard and Soft Infrastructure, Political Stability and Continuity of Policies, Able and Capable Government, Public Trust, Mindset Change, Positive Role of Media, One Child Family, High Savings Rate/Fixed Capital Formation, Enhancement in total Factor Productivity, Commitment to Modernization, Foreign Policy Reforms, Thousand Friends Zero Enemies, Postponement of Disputes Resolution, Revival of Soft Power Values, Culture of Learning, Knowledge and Best Practices, ideal Civil Military Partnership, Strong government, National Solidarity,  No Influence of IFI Hit men or IFI Policies/Advice. Etc. Pakistan needs to learn Fishing, and not just ask for Fish With its current governance structure, Pakistan is not fully prepared to harness CPEC in the contemporary era of globalization. The various Stakeholders have instead made CPEC a ‘Mela’ or Fair/Festival true to our folklore traditions; Others see it in lyrical terms with Biryani and Honey, Moon and Stars, Mountains and Oceans. Cronyism, reigns supreme in every sphere of governance. We are not able to match the Chinese spirit of hard work, discipline, time management, organization, mobilization and work ethics. No wonder, more and more Pakistani Firms without value addition, global market connectivity and Innovation are dying ‘peaceful death’ or re-locating. Natural selection and Creative destruction are not always bad, as long as new Players keep entering the market. There is however no Implementation Machinery for facilitating Chinese Private Sector’s MOUs, Deals, Contracts and Agreements. There is absence of Follow up action on Official MOUs and Agreements. Pakistan needs to attract new Chinese Investors with additional Incentives Package and improve the knowledge, technical and ethical capacities of the relevant Ministries, Departments and Entities. CPEC is meant to help Pakistan ride on China Wave in order to surf the next phase of globalization. Pakistan should not be allowed to remain a Captive Monopoly market for the existing Investors, forever. The major blunders by the Government in handling of CPEC has been its failure to mobilize the Private Sector and the Overseas Pakistanis; Protecting the Environment and engaging the local Communities as well as its failure to launching of 33 Special Economic Zones (SEZs), nine of which had already been prioritized. Now it is stated that 3 of these at Dhabeji, Faisalabad and Rashakai will be launched soon. Pakistan needs to prepare to build at least 50 Industrial Parks, Science and Technology Zones and SEZs along the CPEC Route with the help of China to produce exportable products for the Chinese market. Major Comprehensive Policy Reforms The major Comprehensive Policy initiatives could include Electoral Reforms with limitations for Legislators to One time membership of Parliament or Provincial Assemblies to enable induction of new blood; Reduction in the Civil Service and restructuring of Ministries, Departments and Autonomous bodies to lessen mounting Non-development expenditure; End of Job Quota System, with only 10 percent reserved for Backward areas in order to improve the quality of Governance, Judicial Reforms with introduction of ‘Intermediation Mediation Courts’ to reduce the burden on higher courts; Restructuring and privatization of WAPDA, PIA and Pakistan Steel Mills in order to end Subsidies; Documentation of Economy for domestic resource mobilization; Expansion in Taxation base; Standardization, Simplification of Tax Rules to increase Fiscal revenue; Ease of doing Business and Simplification of Rules and Procedures to attract investment; Modernization of Agriculture to enhance quantity and quality of output; Rural industrialization to generate employment; Development of Rural Credit Market to help rural population; Land Reforms to curb absentee landlordism; Irrigation Canals dredging to improve water availability; Construction of  major Hydel Reservoirs and Dams to store flood water; Policies for Overseas Pakistanis to harness their potential for nation building and industrial development; Police Sector reforms to improve law and order and improve public service delivery.etc The other major areas of Comprehensive Reforms could include Industrial Policy Reforms to restore the trust of the Private sector, Launching of Special Economic Zones, Industrial Parks and Township Village Enterprises, Small and Medium Enterprises(SMEs) to generate mass employment opportunities; Additional incentives Policy Packages to attract Foreign Direct Investment(FDI); Energy Sector Reforms for expansion in capacity and conservation of energy, Policies to promote Renewable Energy; Development of Mining and Mineral Resources; Tourism Promotion Policy incentives, Marine sector or Blue Economy development;  Standardization of Education System, Higher Education; Administrative Structure Reforms(with addition of new Provinces); Development of Commercial Business Districts(CBDs) in major city Centres; Financial and banking sector Reforms; Effective Local government and Municipal Reforms to empower local bodies; Green Environment Policy Initiatives; Culture Values Revival Initiatives, Social sector reforms to encourage Voluntarism, Community participation; Housing Sector Reforms to promote development of Townships; Health sector reforms to promote private sector investment in hospitals, clinics, diagnostics centres and local pharmaceutical industries, Science and technology sector reforms to enable the transfer of technology/prototypes from abroad for SMEs, Policies to promote Civil-military collaboration in defence production etc Pakistan’s national security is dependent on its economic take off which can only be ensured by promulgating home grown Comprehensive Policy Reforms, in all sectors of life. This calls for hard decisions, strong leadership and united people. If Pakistan wants to be counted among the major Power in the 21^st Century in realization of the dream of its founding Fathers and millions who sacrificed their lives for creating this country, there is no room for blame game. The CPEC will remain ‘Supply Side Economics’, without Comprehensive Policy Reforms, unable to trigger Economic Take off. It can become a reality if all existing assets and resources in the country i.e human, material and intangible are fully harnessed. There has been no sufficient attention to the development of professional capacities. There has been more focus for electoral gains on ‘Media management, Ribbon-cutting and China cutting’. But more important of all the failures of the government has been the lack of political will and its inability to undertake Comprehensive Policy Reforms to improve governance and introduce innovative initiatives for Economic take-off. Precious time has already been lost. The only narrow space available is 2018-2020. These Policy Reforms can be promulgated urgently as Presidential ordinances which can be sanctified as Acts when the Parliament comes in session. There is enough precedence in this respect. Pakistan is the best blessed and placed country for the future. It has the capacity to grow fast and surprise the world.