China and the World

Just the tonic

Pakistan’s donkey dealers benefit from the China-Pakistan Economic Corridor

Donkey-w

Media coverage of the $62 billion China-Pakistan Economic Corridor (CPEC) has focused on Chinese investment in oil and gas pipelines, a key port in Gwadar and a much-needed network of roads, railways and power stations.

In the longer run, expect more of China’s consumer goods to reach Pakistan’s 180 million people. But what will Pakistan sell the Chinese in return? Pakistani economists have warned that unequal trade flows look likely to exacerbate the country’s already dire balance of payments problem. But the government of Khyber Pakhtunkhwa – the mountainous province where Osama Bin Laden was killed – has identified at least one commodity that the Chinese can’t get enough of: donkeys.

Manufacturers in China need about 4 million donkey skins a year to make a traditional medicine called e’jiao – a blood-enriching agent that sells for as much a Rmb315 a gram (more expensive than gold at today’s price). But China’s donkey supply is dwindling, dropping from 9.7 million animals in 1998 to about 5 million today, according to figures compiled by the Ministry of Agriculture. The price of donkeys has doubled in the last three years so e’jiao producers are sourcing from abroad, causing sharp price rises in many markets. In countries where farmers rely on donkeys for transport and farming the effect on local communities can be devastating, say aid agencies. Countries like Burkina Faso and Niger have banned export of donkeys and donkey hide until they can find a way to supply China without disadvantaging their own people.

Pakistan also has a donkey-hide ban in place, but for another reason: farmers have been killing donkeys for their skins and then selling the meat as beef and lamb (donkey meat is haram or forbidden in Islam). Under a new scheme intended to circumvent improper sales, Pakistan’s donkeys will be exported live by road through the Karakorum mountains to Kashgar in Xinjiang, western China. “Exporting live animals [means] leaving behind no carcass or other residues which may be unlawfully and unethically utilised” explains Khyber Pakhtunkhwa’s government.

Asul Khan, the civil servant behind the scheme, says his province can provide 45,000 donkeys immediately and can increase that to 90,000 a year with investment in breeding programmes. The trade will help alleviate poverty in the troubled northwestern region. In 2014 the Pakistani Taliban attacked a school in the provincial capital killing more than 140 children and teachers.

However, it is Baluchistan, the southern province that has gained the most attention for its role in the CPEC, housing the Chinese-built megaport at Gwadar on the Arabian Sea. Unrest in the province has already been deadly for Chinese workers on CPEC projects, with 44 killed between 2014 and 2016, according to the Pakistani army. The majority were victims of roadside bombs and attacks on construction camps launched by Baluch separatists, Reuters said.

In 2015 the Pakistani army created a special 10,000-stong force to help protect CPEC projects; nor has the violence stopped the building programme. Last November the first shipment of Chinese goods was dispatched from Gwadar as part of a trade convoy that started out in Kashgar in western China and passed through Pakistan under armed guard – a 3,000km journey in total. Pakistan’s Prime Minister Nawaz Sharif was there to watch the convoy arrive, claiming that the economic corridor would offer “great opportunities for the people of the region as well as investors from all over the world”.

For the plan to prosper in both countries, Pakistan will need to ship more of its own goods back to China, and the government of Khyber Pakhtunkhwa is an early pioneer, visiting Beijing this week to promote its donkey project and look for further investment in infrastructure and energy schemes.

“Chinese companies and businessmen are welcome to take advantage of an investment-friendly atmosphere in the province for mutual benefits of the people of two countries,” the province’s Chief Minister Pervez Khattak said.


© ChinTell Ltd. All rights reserved.

Brought to you by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.