Does Shehbaz Sharif’s visit to Beijing mark curtains for CPEC?

Prime Minister Shehbaz Sharif concluded a five-day visit to Beijing with 23 Memorandums of Understanding signed between the two countries and several photo-ops including the army chief, General Asim Munir shaking hands with the Chinese President, Xi Jinping. But one question that begs for clarity is where does the much-touted China-Pakistan Economic Corridor (CPEC) stand today?

The English newspaper, Dawn, posed the same question thus: “It is still unclear what these MoUs will materialise into or if these will propel the corridor project into its second phase for its monetisation to help Islamabad pay back its debt.“

The China Daily ran with a Pakistani columnist writing a virtual obituary for the project, saying that “As the curtains draw on the China-Pakistan Economic Corridor, its profound impact on Pakistan’s economic development and the deepening of diplomatic ties between China and Pakistan cannot be overlooked.“

A random scrutiny of statements, official and unofficial, about Sharif’s visit, show a few pointers, the most important being a Chinese lukewarm attitude towards investing any more in the CPEC unless Pakistan assures physical security for its employees. Sharif, throughout his stay, had to assure and reassure Chinese political leaders and businessmen that security for Chinese personnel was paramount. The security of Chinese workers in Pakistan remains the most pressing concern for Beijing amid increasing attacks on Chinese projects and personnel in the recent past. The Chinese media insisted, during the Sharif visit, that the Chinese government was more interested in safeguarding their personnel working in Pakistan rather than Sharif’s concern for further investments.

Dawn newspaper underlines few other problems bedevilling the project which was termed, not long ago, as the `game changer` by successive governments since Nawaz Sharif signed the first slew of agreements in 2015. The newspaper pointed that the `Chinese investors were wary of venturing into Pakistan for a variety of issues, such as poor governance or bureaucratic red tape. There have been complaints of bureaucratic hassles and frustrations caused by corruption and delays. The delays in arrear payments of $1.8 billion in the power sector have for some time been a deterrent for further investments. The China Daily underlined that creating a conducive business environment was critical for attracting foreign investors.“ Pakistan must continue its efforts to improve the ease of doing business, address regulatory issues, and provide a stable policy framework. A business-friendly environment, transparent regulations, and a predictable policy framework are crucial for instilling investor confidence and promoting economic growth“, the article pointed out.

What neither Sharif or his Chinese interlocutors have chosen to speak is the IMF and Pakistan’s reliance on bailout packages offered by the US-controlled financial body. The IMF is not interested in its funds going to China through debt service payments for the CPEC project. The IMF has told the Sharif government that the next agreement for a bailout could only be possible if there was no outflow to China from Pakistan during the programme period. This has created a serious problem for the Pakistan delegation which is seeking Chinese indulgence to reschedule the debt repayments due in the next three years.

The joint statement issued at the end of Sharif’s visit to Beijing reveal a muted reference to the CPEC. Both sides agreed on three transport projects–the upgradation of Karachi to Peshawar railway line, designated as Main Line-1 with an investment of $6.8 billion, the realignment of the Karakoram Highway (Raikot-Thakot), the upgradation of Khunjerab-Sost Pass and to speed up the completion of the New Gwadar International Airport and the development of the auxiliary infrastructure of the Gwadar Port. These projects have been saddled with excessive delays due to multiple reasons. Experts believe that many of these projects would remain a mirage due to financial problems with the Chinese insisting on Pakistan to invest in these key projects and not expect the Chinese to fund and assist.

As Dawn concluded, “Pakistan needs to tamp down its exaggerated expectations from its all-weather friend.“ Prime Minister Shehbaz Sharif, leading a high-power delegation, has returned with empty hands from Beijing.