Since January, the Coronavirus pandemic has shaken the globe and wreaked havoc on the economy and societies world over. After the outbreak of this virus in neighboring Iran, Pakistan could not remain free from it. In Pakistan, this virus made its mark on 26th February and since then the crisis has gradually exacerbated. As of 23rd March, Pakistan had 873 confirmed cases of Coronavirus and 6 people have died.
Just like the rest of the world, Coronavirus or COVID-19 has locked down most of Pakistan. Markets, educational institutions and most of the government offices are shut down in major towns of the country. The government is contemplating a full-scale mandatory lockdown in the country. This situation has paralyzed the economy of Pakistan and with it, the progress on $50 billion worth China-Pakistan Economic Corridor (CPEC) has also been suspended. Since CPEC is the flagship project of President Xi’s Belt and Road Initiative (BRI), the situation in Pakistan is hurting the economic interests of China.
CPEC stopped and China’s economic loss increased
Since the outbreak of the coronavirus in China, Pakistan gradually closed down work on all the projects of CPEC. Initially, the fear was that Chinese personnel, who had gone home for Spring Festival holidays, might transmit the virus in Pakistan once they returned. Consequently, the government stopped the Chinese personnel on holidays from returning home. This stopped work on CPEC projects, starting with Lahore Orange Line Metro Train project. Even the Chinese personnel who had not gone to China recently were put in quarantine and stopped from working. The Chinese diplomats had to scale down their activities, starting from Chinese Consulate-General in Lahore canceling all meetings from January.
As time progressed, the Coronavirus crisis deteriorated all over the world, and Pakistan also increased restrictions on the movement of Chinese personnel based inside the country. Gwadar Port Authority, the body regulating Gwadar port, announced a ban on the entry of incoming Chinese personnel until the crisis is over. This substantially affected the progress of the Gwadar Port development, which is the center stage of CPEC. Hence, CPEC projects have effectively been stopped, but governments of China and Pakistan do not admit this publically.
It's pertinent to mention that CPEC has proved to be nothing less than a challenge for China since its inception in April 2015. Initially, it was made controversial by the internal politics of Pakistan, then the new government tried – albeit unsuccessfully – to revise its terms. Later on, this project faced an aggressive onslaught by United States’ top diplomat for South Asia Alice Wells. Against this backdrop, the coronavirus crisis has proven to be a huge blow for the project and it will be very hard for it to recover, if and when normalcy is restored.
China-Pakistan Trade plummeting
Apart from CPEC, China has vibrant trade relations with Pakistan. According to World Bank Statistics, the trade volume between both countries stood at $16.35 in the fiscal year 2018-19. China is Pakistan’s biggest exporter, with $14.54 billion in the aforementioned trade volume comprising of the products exported by China to Pakistan. However, the lockdown due to the Coronavirus and the suspension of economic activities has also taken its toll on trade between both countries.
Trade with China has effectively been suspended for the last three months. This trade suspension has drastically affected the trade volume between both countries. According to the Federation of Pakistan Chambers of Commerce and Industries (FPCCI), Pakistan’s trade volume with China has reduced by 25 percent so far. Officials of FPCCI claimed that the reduction in trade volume will increase if the trade activities are not restored anytime soon between Islamabad and Beijing.
This reduction might not be a big deal for the $14 Trillion economy of China, but it will cripple the already struggling economy of Pakistan. This goes against the strategic interests of China, which wants an economically strong Pakistan for the success of BRI, and also as a counterbalance to the rise of India. With a negative blow to its trading capacity, Pakistan will find it hard to even pay for its imports, let alone counter-balance India. Therefore, the sudden outbreak of the COVID-19 pandemic has severely affected the geopolitical interests of South Asia vis-à-vis Pakistan.
China’s friendly image in Pakistan improving
While the coronavirus crisis has badly hit the economic interests of China in Pakistan, it has helped China with its image. For the last 6 decades, China has been considered as an iron brother by Pakistan. This perception was further solidified during this crisis. Pakistan was among the very few countries that passed a resolution in its senate to show solidarity with China in its battle against the coronavirus. Even though China was the source of the pandemic, Pakistani citizens did not harbor any negative feelings towards the Chinese. Chinese personnel present in Pakistan during the crisis were treated very well, due to China’s image of big brother for Pakistan.
Moreover, Pakistan was one of the few countries that chose not to evacuate its citizens from Wuhan to show solidarity with China. In the third week of March, Pakistan’s President Arif Alvi became the first head of state to visit China to express solidarity. President Alvi appreciated the resolve of the Chinese in the tough battle against the Coronavirus. This was a diplomatic victory for China.
Furthermore, China is making more efforts to further solidify its friendly image in Pakistan. China has offered to send thousands of Coronavirus testing kits, face masks, ventilators, etc. to help Pakistan against the coronavirus. Pakistan is struggling to contain the outbreak due to a lack of resources and its flawed and broken government systems. This assistance in the hour of need will go down very well among the Pakistani public. Rather than facing the blame of starting the coronavirus pandemic, China will emerge out as a benefactor and ever-trusted ally of Pakistan, in the minds of the Pakistani public.
This improvement in image will help further China’s economic and geopolitical interests in Pakistan once the pandemic subsides. After the help provided by China in this crisis, Pakistani citizens who were critical of CPEC will be more likely to support it, which will help China in smoothly completing the projects under CPEC and strengthen the BRI. Similarly, with a friendly image, China can increase its footprint in Pakistan without substantial local resistance, and it will be a huge strategic gain for Beijing.
China has been able to control the further spread of COVID-19. Still, a second wave cannot be ruled out. However, Pakistan is just beginning its battle with controlling the outbreak of the coronavirus. It’s hard to guess if and how Pakistan will be able to tackle this challenge, but if the ongoing virus leads to an apocalyptic situation, there will only be more loss for Beijing.