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Context matters. By now we know that the Chinese promise of $46 billion worth of investments is too big given the FDI trends in Pakistan. But just how big is the number from the context of China? This column will take a look at that after contextualising the number from Pakistan's perspective to refresh collective memories.
Before we embark on that journey, here is what you should keep in mind. According to the State Bank of Pakistan (SBP) definition, FDI inflows/outflows include cash received for investment in equity; intercompany loan; capital equipment brought in/out; and reinvested earnings. This means that loans taken from banks or financial institutions at home or abroad are not included in FDI per se - though in a broader context it may still be construed as having made an investment.
Assuming 80:20 debt-to-equity for power projects (estimated to be worth around $34bn) and 70:30 ratio for all other projects, Chinese FDI in Pakistan should average about $700 million per year over the next 15 years. Let's now contrast that Chinese FDIs trends in Pakistan.
The latest SBP data say that total FDI inflow from all the countries in the world stood at $824 million in Jul-Apr 2015. Of that, Chinese inflow stood second highest at $203 million. The central bank data also show that annual net FDI inflows from fiscal year 1985 to 10MFY15 totalled $36 billion. That's from all over the world, of which inflows from China totalled only $1.8 billion.
Data from global trade and investment data repository called United Nations Conference on Trade and Development (UNCTAD) has similar picture to present - though the numbers vary from that of SBP and are just a little outdated.
According to UNCTAD's World Investment Report 2014, the total stock of FDI inflows in Pakistan from all the countries in the world stood at $27.5 billion by the end of 2013. Of that, only $2.3 billion is from China, according to UNCTAD data. So clearly, $46 billion is a big number from Pakistan's context.
Now let's see how big is the number from China's context? According to UNCTAD data, total Chinese outward FDI stock (that is all over the world; since FDI records began) stood at $660 billion as of 2013. Of that $377 billion was invested in Hong Kong, which is practically its own backyard.
The next two big destinations of Chinese FDI were the Cayman Islands, and the British Virgin Islands where total stock of Chinese FDI stood at $42 billion and $33 billion respectively in 2013. But then these are tax haven investments so we must put these outside the equation. The biggest stock of investment that China has anywhere in the world, therefore, is the US where total Chinese investments stood at $21.8 billion as of 2013.
Seen from this context the $46 billion promise look like a dizzying number. Even the estimated equity portion of it, which would be $10.4 billion under the conservative assumption mentioned above, seem too big to be true. Still, there are many who think this time it may be different. More on that later!

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