What Happened to the China-Pakistan Economic Corridor?

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What Happened to the China-Pakistan Economic Corridor?

Six months after a supposed revival, the project has been in headlines for all the wrong reasons.

What Happened to the China-Pakistan Economic Corridor?

Pakistan Navy soldiers patrol in Gwadar port, Monday, April 11, 2016.

Credit: AP Photo/Anjum Naveed

The China-Pakistan Economic Corridor (CPEC), one of the most ambitious components of Beijing’s Belt and Road Initiative, was announced to great fanfare in 2015. Since then it has consistently been held up as a “gamechanger” for Pakistan’s economy. But the road to completion has proved long and winding. Reports indicate that the pace of CPEC projects has been slowing down in Pakistan in recent years.

At the same time, China is the only country that is heavily investing in Pakistan. The slowdown of CPEC thus does not augur well for a cash-strapped country like Pakistan, which is plagued by countless issues, some due to its own conceived policies.

In Pakistan’s case, CPEC has continually been discussed ever since its announcement back in 2015, despite the fact that there has not been a major development in years. The lack of progress has led to numerous reports about CPEC being at a near standstill in the country. A case in point is a recent Bloomberg video report on CPEC as an example of “how China’s flagship Belt and Road project stalled out.”

The Bloomberg video discusses CPEC in general, with a particular focus on the port city of Gwadar. It is interesting to note that Gwadar, despite being the epicenter of multibillion dollar projects, lacks basic necessities like reliable access to water and electricity, let alone other facilities. Official circles in Beijing and Islamabad may dub the report as yet another example of “Western propaganda,” as they often do when a foreign media report is not in their favor, but it points out to several factors that have gone wrong, ultimately pushing the CPEC projects in Pakistan onto the backburner.

Among other things, the port town of Gwadar was recently in the news for all the wrong reasons: it was being fenced off as a security measure. The authorities had to stop work on the fence after much uproar by Baloch nationalist groups, including protests. If the fence is ever completed, it can understandably further compound the anxiety of Baloch nationalist groups opposed to the CPEC projects in their home Balochistan province. Some have even suggested that the fencing is part of a masterplan to separate Gwadar from Balochistan and bring it under direct federal control.

There have been sporadic attacks in Gwadar and elsewhere in the province and the country to discourage Chinese investments in the province. China wants assurances as far as the security situation is concerned. But sealing off an entire town for the purpose of guaranteeing Chinese security is precisely the wrong approach. Even from a purely economic perspective, it can backfire in the longer term by giving a wrong impression of Pakistan that could discourage future potential investments and business. By fencing a port town, even if on the request of Chinese investors, it becomes clear to business world, including the Chinese, that the country is unsafe and insecure for would-be investors.

It is a good step to put an end to fence construction in Gwadar, which the authorities have so far done. The authorities want to make Gwadar investment friendly, but in the long-term the best way to pave the way for CPEC-related developments is to protect the constitutional rights of local people. Instead, the locals feel left out of development and are apprehensive about their future in Gwadar, worried about being displaced by the fast-changing pace of construction. And this was before the recent work to begin fencing the port town. The local opposition is a big part of why the CPEC-related projects in and outside of the port town, let alone other places in the country, have been slowed down.

After a brief hiatus, last year geopolitical developments in the region provided vigor to CPEC projects in Pakistan. As a result, two new deals for hydropower projects in Pakistan-administered Kashmir were signed in quick succession, along with an agreement on a special economic zone (SEZ) in Faisalabad. These moves gave cause for CPEC supporters to assert that the projects in the country are, once again, moving in the right direction. With the signing of the new deals, officials from both countries were content that CPEC had returned to its previous pace, leading to a flurry of articles – including in The Diplomat – underscoring the steps taken by Prime Minister Imran Khan’s government to revive CPEC projects, which had noticeably slowed down since he assumed office in 2018.

But the lack of developments related to CPEC projects since then suggested that the steps of 2020 were due to the likely pressure from Beijing. Since the signing of the news deals in 2020, the eerie silence on CPEC has once again returned, with little progress on projects. This is in stark contrast to the pace of CPEC developments under the former Prime Minister Nawaz Sharif, particularly in his home province of Punjab.

Both Beijing and Islamabad are aware of the hurdles on the part of the successive Pakistani governments. The CPEC authority in Pakistan was created at China’s request to better coordinate CPEC projects among stakeholders from both sides. Run by retired General Asim Saleem Bajwa, the new authority, in the process of becoming enshrined in law, will plan and coordinate the smooth implementation of the CPEC projects, collectively worth $70 billion. But some independent analysts in Islamabad are of the view that the CPEC authority will shift the related projects once for all from the hands of the civilian government to military authorities in Pakistan.

The slowdown of CPEC in Pakistan has provided an overt opportunity to the opposition parties, especially the Pakistan Muslim League-Nawaz party led by Sharif. Opposition leaders have repeatedly criticized the current government for being responsible for stalled-out projects.

The current government is trying hard to overcome the opposition by focusing its attention on the CPEC projects’ revival. In late December, China and Pakistan held a meeting focused on increasing the momentum of CPEC projects, during which they took the opportunity to proclaim that both sides “are satisfied with the progress and committed to turn this mega project into a role model for the rest of the world to follow.” The meeting was held through a Joint Working Group on International Cooperation on the China-Pakistan Economic Corridor (CPEC), which met for the second time in China’s Xinjiang region on December 25, 2020.

The Khan government has been now striving hard to work hand in hand with their Chinese counterparts, hoping to overcome any damage done from past criticisms of CPEC. But unfortunately, more than the current ruling party’s unaddressed reservations about CPEC, it is their inefficiency and incompetence that is becoming the cause of bottlenecks in the implementation of the multibillion dollar projects, coming precisely at a time when Chinese investors are growing less interested in unprofitable but politically correct projects. This is why the road to CPEC becomes longer and longer by the day.