How China’s marble exploits hurt Pakistan’s value-added economy
Chinese companies take what they want at source, dodging duties and bypassing Pakistan's processing industries, which could be a major contributor to the country's fast-falling value-added exports if properly supported
Whether you prefer to blame bad governance or a lack of indigenous entrepreneurialism in Pakistan, it is hard to escape the conclusion that the country’s natural resources are now being plundered by Islamabad’s trusted friend, China. The results are damaging for the country’s economy and for local businesses.
China has shown enormous appetite for Pakistan’s onyx, granite, and black gold marble. But Chinese companies are taking what they want at source and bypassing Pakistan’s processing industries, which could otherwise be a major contributor to the country’s fast-falling value-added exports.
Most of Pakistan’s marble exports go to China – but these exports consist mainly of rough-hewn, freshly-excavated blocks. Raw slabs are hauled up from quarries and tested to ascertain the magnitude of cracks in the mines. Mines with cracked marble tend to be ignored in favor of those that promise bigger, uncracked slabs.
There is very little in the way of monitoring what Chinese companies are taking away. The Pakistani government has no regulatory framework to oversee the export of the country’s God-given geological endowments, with the results that buyers are skilled at dodging export or regulatory duties.
“The Chinese buyers go for the square slabs, while the local quarrymen tend to excavate oval-shaped blocks which reduce to smaller bits after buyers’ orders are fulfilled,” a local marble exporter and retailer named Shakil Khan told Asia Times. The smaller pieces have no attraction for the big buyers and are used locally in handicrafts and small tiles, he added.
Pakistan has three provinces – Khyber Pakhtunkhwa, Baluchistan, and Punjab – that are rich in marble resources, although reserves also exist in Sindh and parts of Gilgit-Baltistan. The Trade Development Authority of Pakistan (TDAP) estimated in 2010 that Pakistan had marble and onyx reserves to the tune of 300 billion tons (as against India’s mere 1,931 million tons of marble), and also granite reserves of 1,000 billion tons. The country has 30 different kinds of marble, including – in Khyber Pakhtunkhwa alone – ziarat, super-white, off-white, Badal, Zebra, pink, Nowshera, jet-black, Bampokha and golden marble.
A study by the State Bank of Pakistan (SBP) reveals that “China is the biggest [exporter] of marble from Pakistan; however, the marble exported to China also includes semi-processed marble, which is then re-exported from China after value addition, which is hurting Pakistan’s marble industry to a significant extent.”
“The marble exported to China also includes semi-processed marble, which is then re-exported from China after value addition, which is hurting Pakistan’s marble industry to a significant extent”
Zahid Shinwari, president of the Sarhad Chamber of Commerce & Industry (SCCI), in Peshawar, told Asia Times: “Prior to the financial crisis of 2008, Europe, US, and the Middle East were the traditional export markets for Pakistani marble and granite but exports to these destinations reduced by almost 70% after the crisis hit the global market.”
He said that local marble exporters then turned to China, which preferred raw marble instead of finished products. “The Chinese pick only the rare and quality stuff like onyx, black gold marble and high-quality granite from the market. Local processing units don’t have the high-tech processing equipment here to treat these costly marble products.”
In 2016, bilateral trade between Pakistan and China stood at US$19.2 billion, but Pakistan’s share of that was a paltry US$1.9 billion. In August this year, the two nations finalized a trade pact, with 18 Chinese companies signing some 38 trade agreements that pave the way for the export of US$325 million worth of goods – including electrolytic copper, chrome ore, zircon ores, coarse copper, hazelnut, sauces, crustaceans, and marble blocks. Grievances expressed by Pakistan’s business community over disparities built into a previous China-Pakistan Free Trade Agreement (FTA), signed in 2006, were supposedly addressed in the 2016 agreements.
Ehsan Ullah Khan, a former chairperson of the Pakistan Stone Development Company and one of the country’s leading marble exporters, told Asia Times, however, that the government itself endorsed the export of raw marble from Pakistan when it signed these agreements with China. He said that Pakistan’s surplus marble reserves could only boost its value-added exports if the government adopted a growth-oriented strategy.