Pakistan signed agreements aimed at establishing a China-Pakistan Economic Corridor (CPEC), in April 2015, which was led by the Pakistan Muslim League-Nawaz. The compilation of infrastructure projects, the flagship of China’s global Belt and Road Initiative, was called a “game changer” for Pakistan. Some 3.5 years on, on the other hand, a new government in Pakistan, led by Imran Khan’s Pakistan Tehreek-i-Insaf party, is taking steps to extend it back.
Throughout the tenure of ex- Prime Minister Nawaz Sharif, criticizing the economic corridor project was almost similar to criticizing Pakistan itself.
Abdul Razak Dawood, who’s the bud of a business family and the minister for commerce and industry, told that the new government would re-examine all CPEC projects. He further added that the agreements were unjust to Pakistani companies and must be put on hold for a year. So that they could be revised if compulsory.
The move and Dawood’s comments repeat the growing hatred against CPEC in Pakistani power circles. Though Dawood afterwards said his quotes had been taken out of framework. Chinese Foreign Minister Wang Yi also met his Pakistani counterpart, Shah Mehmood Qureshi, in New York and maintained that “China and Pakistan are all-weather strategic partners”.
Still, the Pakistani government has gone on to postpone 455 development projects. Few of which are part of CPEC, on the unconvincing excuse of seriousness. The China-Pakistan Economic Corridor is a US$62 billion collection of projects funded by Beijing. How could Pakistan attain its goal of dropping public spending by delaying Chinese-funded projects? More likely, it is a way to scale down CPEC without raising the ire of its all-weather friend.
Pakistan bided Saudi Arabia to become a part of the CPEC programme and to expand a huge refinery complex near the Chinese-funded Gwadar port. Expressively, Khan chose Saudi Arabia, not China, as the first country to trip after taking office. Later, Pakistan said Saudi Arabia would not become a “collateral strategic partner” in the CPEC programme; however its purpose to weaken the power of China is clearly identifiable.
Why is Khan’s government intent on scaling down CPEC and China’s influence? One above mentioned cause is the growing reaction among the decision-making leaders in Pakistan that the agreements are unfair. Such concerns have been raised over the past three years; however the new government is taking them sincerely.
According to the little financial details of CPEC that are accessible, Pakistan is not benefiting drastically from the programme. Apparently, though China has lent Pakistan US$26 billion-US$30 billion for power and transport projects that are part of the economic corridor, not a single dollar has entered Pakistani banking channels.
As an alternative, Chinese banks give the loans to Chinese companies, which buy equipment in China and use it in Pakistan. Thus, instead of gaining economic benefits, Pakistan is running up huge debts and risking fiscal default.
The new government has another reason to roll back CPEC: specifically, this is not its baby. Relatively, it was a project started under the old government, which got a lot of political mileage from it. Politically, it makes no sense for the present management to energetically follow its predecessor’s project.
Temporarily, Pakistan’s foreign reserves are decreasing and it has asked the International Monetary Fund for aid. Pakistan is hoping for up to US$15 billion in IMF loans, but faces another CPEC-related difficulty.
The way of the China-Pakistan Economic Corridor will become clearer once Khan visits China in the first week of November. If Beijing manages to get Khan’s full support, he may stop scaling down the project. On the other hand, given the developments of the past few months – from China’s lack of interest in bailing out Pakistan to allegations of injustice – there is a doubt to be any change in government thinking.