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Why CPEC Faces Challenges in Pakistan

Jun 02, 2022
  • Sajjad Ashraf

    Former Adjunct Professor, National University of Singapore

Security cooperation has long defined Pakistan’s relationship with China, as their economic ties lag far behind military engagement. Since 2015, their economic relations, focused on the China-Pakistan Economic Corridor (CPEC), a set of projects that are part of Beijing’s Belt and Road Initiative (BRI), have assumed new significance. The overall investment in the CPEC is currently estimated at $62 billion – the largest single coordinated development initiative ever undertaken in Pakistan’s history. 

The CPEC is meant to help Pakistan take off economically. This program has been deemed a “gamechanger” for Pakistan’s economy, yet it has not kept up with its projected timeline. Reports indicate that in recent years the pace of CPEC projects has been slowing down in Pakistan and the Chinese counterparts, despite their legendary patience, are not happy.

The CPEC was also supposed to harmonize inter-provincial relations in Pakistan. However, Balochistan – the home of CPEC’s flagship project in Gwadar – feels left out.   

The presence of Chinese personnel onsite is proving to be an easy target for terrorists who oppose the project. The recently ousted Imran Khan government has been blamed for slowing down the implementation of the CPEC. The causes of slowdown go deeper. 

Externally the CPEC has been under attack from India and the U.S. . The Indian objections are based ostensibly on India’s unilateral claims over the Jammu and Kashmir state through which some CPEC road works traverse. In reality, India sees the project as China’s geo-strategic advancement and influence in the Indian Ocean. It challenges India’s ambition, backed by the U.S., of playing the regional hegemon.

The United States has remained the principal critic of China’s Belt and Road Initiative (BRI) of which the CPEC is an essential component. The U.S. believes that China’s ultimate goal is to utilize Pakistan’s strategically positioned deep-sea port, Gwadar, for energy security and its power projection into the Indian Ocean. In its global competition with China, the U.S. seems to want to deny the Chinese this advantage. CPEC and BRI thus signal a strategic and economic advantage for Pakistan and China. Wary of China’s expanding global role, the U.S. has warned Pakistan against deeper engagement with China, while China challenges Washington over its support of India. The growing U.S.-Indian strategic relationship in the last decade is evidence of the United States’ support of Indian naval power to counter the growing Chinese influence in the Indian Ocean. 

The U.S. accuses China of “debt trap diplomacy” which allegedly allows China to gain access to Pakistan’s strategic assets. Parallels of grave economic predicament are usually drawn between Pakistan and Sri Lanka. However, at least in Pakistan’s case, the system failed to follow up with industrialization timelines designed to create jobs and generate revenue to pay back the Chinese loans.  

The region of Balochistan is rich in minerals and it comprises 48 percent of Pakistan’s land. There are multiple oil and gas pipelines in this region stretching from Russia, Central Asia and Iran, making it of interest to powers suspicious of Sino-Pakistani collaboration in the CPEC. 

There are outside powers known to support terrorist activity to subvert the project. Therefore, the CPEC remains controversial within Pakistan, too. Multiple connectivity links are being built between China’s Xinjiang province and Gwadar port in Balochistan – that includes three highways: western, central and eastern. In addition, there are energy pipelines to fuel growth both in China and Pakistan. 

Notwithstanding the external reasons for delay in implementation of the CPEC there are essentially domestic issues that have caused hiccups in its planning and execution. In Pakistan’s dysfunctional democracy there is no introspection over why CPEC progress has stuttered from the word ‘go.’ 

As a part of political point scoring the Pakistan government in 2015 promoted the CPEC as a gift from China. All details were kept secret from the public, which led to suspicion over the project and its costs. In reality, much of the funding was concessional loans from the Chinese commercial banks. For China it was ‘a partnership’ with shared responsibilities between the two. This duality of the concept itself led to conflicting implementation strategies. Consequently, Pakistan never handled the enterprise in its proper context. Almost all subsequent problems are directly linked to this faulty political sell by the then government. Pakistan’s declining capacity to share the costs are now causing disappointment and delays. 

Today Pakistan, like Sri Lanka, finds itself in serious economic trouble as a result of ignoring important timelines and adopting unsustainable policies that have prevented revenue generation. Without the money coming in it is hard to pay back any investment. That is the quagmire Pakistan finds itself in now. Critics of China’s investment should understand this fact on the ground too. 

In the end, it boils down to a different way of work between the Chinese seriousness and dedication as against Pakistan’s chaotic democracy, lack of commitment and incompetence that causes bottlenecks in the implementation of the multibillion-dollar projects. The state machinery is not up to the task. That is why the road to CPEC becomes longer and longer by the day.

With stakes so high, China and Pakistan cannot afford further delays, which means playing into the hands of its detractors. The U.S. will use it as an opportunity to criticize China. The project is critical for China in its drive for acquiring energy security. It will contribute to China's ambition of becoming the world’s largest economy. Pakistan, apart from immense benefits accruing, cannot afford to let the project be delayed further, otherwise its economy will not be able to bear further financial burden.

Pakistan needs to gear up quickly to match China’s seriousness, remain China’s ‘iron brother’ and avoid the fate of Sri Lanka.

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