China’s prominent Belt and Road Initiative (BRI) has faced several crises in recent years. To most disastrous among all the failures however, has been the China-Pakistan Economic Corridor (CPEC) which has been facing massive obstacles, especially since Pakistan political establishment failed to safeguard the lives of hundreds of Chinese workers in the country. Apart from security challenges, the multi-billion-dollar infrastructure project has also fallen ill to the perils of the Pakistani economy. The 62-billion-dollar initiative, which began in 2013 has seen quite a few roadblocks over the years including underutilization of project funds, extreme corruption, economic turmoil leading to risky investments among others. The CPEC connects Xinjiang in China to the Gwadar port in Baluchistan, which was seen by the Chinese as providing them with an alternative maritime route.
However, despite the enormous investment in infrastructure projects such as roads, ports, and energy facilities, the economic benefits of CPEC have not materialized as per the expectations of both China and Pakistan. Thus, to assess the failures of the projects, it is first important to decipher how both the countries failed in utilising the opportunity and in what capacity.
Factors leading to the failure of CPEC
As per data released through a prominent study conducted by Aid Data, China has been financing these infrastructure projects through loans from Chinese developmental banks, which has in return increased Pakistan’s total external debt. This has also led to Pakistan’s trade deficit widening significantly since the initiation of CPEC. As per Aid Data, the terms of these loans have been a major hinderance in developing the projects to their full capacities. With high interest rates and opaque terms, Pakistan’s ability to repay its debts and the risk of debt dependency on China has led to various projects failing to meet the deadline for completion. The much-hyped Gwadar city/port project is a case in point. To date, no project has been launched even though multi-billion-dollar investments have been granted to the Pakistani government coupled with years of Chinese labour being present in the city to undertake construction work. The lack of a response from Pakistani side in securing the security parameters of the project sites as well as the underutilization of funds has rather turned the Gwadar mega-city project as a lesson for failure all across the world. The recent death of Chinese workers due to a suicide blast in Pakistan has further aggravated the already strained relationship between the two countries.
Furthermore, China is also understood to have pushed Pakistan to scrap the CPEC Authority amid reports of a growing rift between the all-weather friends over the slow pace of the project.
These aspects have also led to Beijing rejecting to expand ongoing projects due to the high risk they possess. For Instance, the Communist Party of China (CPC) recently rejected to the inclusion of a 500kv transmission line to Gwadar to link the seaport city with the national grid in the CPEC framework.
The CPC has also reportedly refused Pakistan’s proposal to include Water Resources Management and Climate Change along with Urban Infrastructure Development in the CPEC framework. Furthermore, outstanding debt towards the Chinese power companies has over breached the limits of PKR 300 billion, leading to the Chinese companies shutting down power projects under the CPEC. Overall, a total of 37 per cent of the added capacity of CPEC power projects, which is around 1980 MW, has been shut down, causing the Pakistani citizens an energy crisis in the country.
Chinese assistance to Pakistan has very well exceeded all other international creditors combined and is known to be three times higher than the IMF’s assistance to the debt-ridden country. An outstanding loan of more than $30 billion towards China amounting to nearly 30 per cent of Pakistan’s total external debt has further plagued the country’s prospects of any economic recovery.
The perils of China’s strategic patience or Pakistan’s economy
The friction among local businessmen in Pakistan was mostly fuelled by the mandatory requirement of being forced into buying This was also much in turn fuelled by the requirement of Pakistani companies being forced into buying equipment from China for the execution of CPEC projects, thereby further aggravating its debt burden. Moreover, the lack of any transparency in the planning and implementation of CPEC projects has been a constant issue, leading to public distrust and scepticism in both countries.
With the present scenario looming large over all Chinese investments in Pakistan, it seems only viable to deem the CPEC a disastrous failure. The inability of Pakistan’s political establishment in utilising the opportunity for its own development coupled with the poor assessment of geo-political interests by the Chinese counterparts has led to both countries dwindling into a lose-lose situation. To expect any form of all-weatherly friendship to further engage in cooperation must be a misjudgement among analyst. If Pakistan’s economy is to recover, it must first rid its country of all Chinese investments that have only further hampered its own economy. For China, it must realise that the so-called strategic patience it has showcased with Pakistan, has only presented the utter failure of its own foreign policy decision-makers, showcasing how little it understands the realities of its own neighbourhood.
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