China's $46 Billion Route In Pak Could Flood Country With Cheap Chinese Goods

As Pakistan opens itself to China's Silk Road plan and billions of dollars worth of investment projects, the head of the bank owned by the Abu Dhabi Group is warning of an influx of cheap goods that may leave millions in the South Asian nation jobless.

While the Chinese investments and loans worth more than $46 billion will bring new industrial activity and a need for services, Pakistan may be unprepared for a rush of wares from its larger neighbor that it can't compete against, said Atif Bajwa, chief executive officer at Bank Alfalah Ltd., the country's sixth largest lender.

"There is going to be an influx of cheap goods coming in which will negatively affect our own industry, so what is our policy to address that?" Bajwa said in an interview in Karachi, Pakistan's commercial hub. "If we don't compete effectively through our industrial policy with that then we are not certain of our own future."

The administration of Pakistan's Prime Minister Nawaz Sharif is targeting a growth rate of about 5.7 percent in 2017, the fastest pace in a decade, riding on the wave of Chinese projects in new power plants and roads as part of a so-called China-Pakistan Economic Corridor. More than three quarters of the investments in Pakistan will be implemented this year.

Ahsan Iqbal, Pakistan's planning minister, in an interview in the capital Islamabad late on Friday dismissed Bajwa's doubts.

"These are misfounded fears," Iqbal said. "We will build up Pakistan's industrial zone capacity so we can increase our exports."

Despite his concerns, Bajwa believes there is every reason to be optimistic if the world's sixth most populated nation can protect local industry, with the bank focusing on small and medium sized businesses.

"Along these new roads and along these new industrial activity that will be developed, there will be a need for services," he said. "Meaning you will need hotels, restaurants, logistics and various other service industries to support this whole activity."

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)