By Ayesha Saba

ISLAMABAD, Jul 22: China's shift from labour-intensive to capital-intensive industries will offer Pakistan a significant space to enter a labour-intensive industrialization development phase, reports WealthPK.

China’s move to shift its labour-intensive industries to save the production cost will open up employment opportunities for Pakistan's inexpensive labour force and in turn contribute to higher export revenues.

Talking to WealthPK, Dr. Liaqat Ali Shah, Executive Director and Head of Policy Division at the CPEC Authority, said, “In the past four decades, the Chinese economy has grown at an unprecedented pace, transforming a predominantly agricultural economy into an industrial powerhouse. China is shifting from labour-intensive to capital-intensive industries, freeing up 85 million jobs that will move to other countries”.

Dr liaqat said, “Due to the flow of investment, opportunities through trade, cross-border employment opportunities, and technological advancements, this global expansion and integration has not only benefited China, but also the rest of the world through positive spillover effects of economic growth.”

The CPEC Authority official further said Chinese labour was graduating from low-paying to high-paying jobs, and along with the introduction of improved labour laws, the labour costs were also rising sharply. The average labour cost of an operational hour in the coastal and inland regions of China is thrice the cost in Vietnam and Pakistan, he added.

These pressures, he said, were compelling the Chinese manufacturers to look elsewhere to relocate, and for now, the Chinese focus seems to be on Vietnam, Myanmar, Cambodia, Indonesia and Bangladesh.

“Pakistan can leverage its natural endowments and low-cost human resource to attract the Chinese industries, because relocating light manufacturing units from China can be used as a tool to kickstart industrialization and structural transformation in Pakistan,” said the CPEC official.

“Pakistan has 220 million population and is one of the most strategically significant countries in the region. The geo-strategic position of Pakistan will play a vital role in the future regional economic outlook. Pakistan aspires to improve its economic ties with China through trade, investment, and technology transfer. For China, the strategic location of Pakistan is vital in formulating its future strategy in the region through the Gwadar Port.”

Dr Liaqat further said, “China-Pakistan Economic Corridor is a focal point of our joint efforts to achieve common development, and we should use this economic corridor to drive our practical cooperation with a focus on Gwadar Port, energy, infrastructure development, and industrial cooperation.”

The fact that 60% of Pakistan's labour force is under the age of 40 can contribute significantly to the country's economic expansion and increase middle-class households' disposable incomes, he continued.

Availability of trained and affordable labour, simple access to raw materials, competitive energy prices, and cheap freight costs are just a few of the financial benefits that the SEZs in Pakistan may provide to investors, he said.

Pakistan has a clear edge to attract the Chinese investors in view of the successful launch of the CPEC, a flagship project of the Belt and Road Initiative (BRI). Pakistan is also increasing trade with the US and Europe while simultaneously concentrating on the most dynamic regions of the world, such as Asia. Pakistan also seeks to promote regional integration in South Asia, which provides high returns and low production costs.

Credits: INP-WealthPk