Nickeled & Dimed

Penny for your thoughts?

We are accepting articles on our new email:

The China Pakistan Economic Corridor – A Game-changer for Pakistan or a Project Doomed to Fail?

By Ishani Sharma

The Pakistani and Chinese governments signed the proposal for the China-Pakistan Economic Corridor, commonly known as the “flagship” project of China’s BRI initiative. The CPEC stretches over 3000 km and aims to connect the two major elements of the BRI: the Silk Road Economic Belt in the north at Kashgar, Xinjiang, and the Twenty-First Century Maritime Silk Road in the south at Gwadar Port, Balochistan. The primary objective of the CPEC is to enhance economic development in Pakistan by improving regional connectivity through the construction of roads, railways, airports, ports, oil and gas pipelines, power plants etc. Given the numerous benefits expected from the megaproject, CPEC, which has been regarded as a “game-changer” for Pakistan and a “corridor that must not fail” for China, it is critical to assess the situation on the ground before making any unrealistic claims about what CPEC can bring about.

Security Lapse

One issue that is highly vital in bringing CPEC to fruition and realising the many benefits expected from it is security. Even while China aspires to achieve security through development and has thus undertaken numerous development projects in Pakistan under the CPEC, the prospect of achieving development in the absence of security and stability remains bleak. This has been vividly demonstrated in the instance of Pakistan, where several factors threatening the country’s security present a serious impediment to the completion of the CPEC project. Gwadar district’s, Balochistan, has long been under attack by rebels, separatists, and even Islamic extremists. The insurgency has been exacerbated by a sense of neglect instilled in the locals by the government, which is well-founded given that 70% of the people in Balochistan live in poverty, 1.8 million children do not attend school, the maternal death rate in the region stands at 785 out of every 100,000, while Pakistan’s maternal death rate stands at around 278 per 100,000, and approximately 15% of the population suffers from Hepatitis C or Hepatitis B. Statistics indicate that the Balochistan province has been overlooked by the government of Pakistan, resulting in an extremely poor state of health, education, and employment in the region. Given the devastating state of life in Balochistan and the growing threat of terrorism in the region, the people of Balochistan are extremely sceptical of the CPEC project, believing it to be merely a tool to exploit the region’s natural resources to feed into the development of the country’s other provinces or to be exploited by foreign investors such as China. Again, their concerns are based on past experiences, in which, despite the exploration of natural gas in the Sui region of Balochistan, substantial parts of the province still remain deprived of it.

Furthermore, Baloch separatists have explicitly opposed CPEC from the outset, describing it as a threat to Baloch identity as it could result in a demographic shift that would turn the Baloch into a minority within their own province as a consequence of the mass arrival of Chinese and people from other parts of Pakistan, particularly the Punjab province. Due to a sense of neglect from the Pakistani government, concerns about resource exploitation, and a yearning for secession, Balochi nationalists have not shied away from expressing their dissatisfaction with the project by carrying out violent attacks against the project and Chinese workers. In May 2019, Baloch rebels attacked Gwadar’s sole luxury hotel, where officials from Pakistan and China normally stayed. In Balochistan, there have been kidnappings and killings of Chinese workers, as well as attacks on tankers transporting fuel to a Chinese company operating on a mining project. Recently, the Balochistan Liberation Army carried out multiple attacks on security checkpoints, and alone in January 2022, over 41 soldiers and civilians were killed as a result of the insurgents’ incessant attacks. Evidently, Balochistan in general, and Gwadar in particular, as a strategic target of the separatists, is suffering from a significant security lapse, which is a huge hindrance to the realization of the region’s development projects. Pakistan’s approach of increasing military personnel in the region and accusing India and Afghanistan for supplying support to the separatists appears to be a strategy to avoid the broader problem of recognising the various concerns of the residents in Balochistan, which is the fundamental cause of the conflict.

Given that CPEC has largely been a state-led project with no input from locals and has a perceived lack of transparency, people in Gwadar and elsewhere in Pakistan are wary of the project because, as previously stated, it aims to provide unskilled employment while skilled Chinese workers would be employed for higher-paying jobs. This, understandably, does not sit well with the country’s professional workforce. In light of these concerns, inhabitants in the Gwadar region have launched a number of protests, seeking basic necessities such as water and electricity, uninterrupted access to the sea for fishing, and a prohibition on deep-sea trawling. As stated by Notezai, the Chinese-funded project has become entangled with decades-old Baloch grievances against the Pakistani state as a result of these sit-ins and protests. It is crucial to note that the local resentment is not limited to Balochistan, as media reports indicate clashes between Chinese employees and local police officers in Punjab, the heartland of the Pakistani army. People across the country have been resentful of CPEC, as seen in the case of the Sahiwal Coal Power Plant project, in which many people were forced to give up agricultural land and, when they refused, were charged with terrorism. Furthermore, some Sahiwal locals have experienced health problems that have been linked to water contamination caused by the coal-fired power station. Given the resentment of local residents in the form of protests and clashes, as well as insurgent attacks and the threat of terrorism that stretches from Xinjiang to Gwadar and includes groups such as the East Turkestan Islamic Movement (ETIM), Tehreek-e-Taliban Pakistan (TTP), Lashkar-e-Jhangvi (LeJ), Daesh (ISIS), and others, this creates a dangerous environment for the CPEC. Hence, rather than blaming India’s RAW or expanding military presence in areas of turmoil, Pakistan must address the concerns of the population in order to complete its “game-changing” project successfully.

Economic Concerns

Along with a security lapse impeding the smooth completion of the Chinese-funded project, there is considerable criticism of the project’s ostensible benefits, with many in Pakistan viewing the CPEC as a weapon for China to pursue its interests at the expense of Pakistan. Thereby, it is critical to investigate whether Pakistan will actually be able to reap the widely touted economic benefits of CPEC, which is intended to boost its development and pave the way for it to become a regional power. According to the terms, Pakistan, together with China, must invest its fair share in various projects, with a total investment of roughly 15-20 billion USD. Given the country’s current financial crisis, where the debt-to-GDP ratio has reached 83.42% and total external debt is over 127 billion USD, it goes without saying that Pakistan will find it extremely difficult to raise funds for CPEC-projects. Furthermore, because China is building coal-fired power plants in Sindh, Baluchistan, and Punjab, and Pakistan is a signatory to the Paris Climate Agreement, it will be even more challenging for the country to seek funds for such projects from other countries or multilateral institutions. Given the poor state of the Pakistani economy and the country’s heavy debt, it is tough to rule out the possibility of CPEC trapping Pakistan in a debt trap.

Additionally, the domestic business community in Pakistan is concerned about Chinese companies entering Pakistani markets with cheaper alternatives, offsetting domestic firm growth. Their concern is understandable considering that, since the 2006 Sino-Pak Free Trade Agreement, Pakistan has received no benefits and, instead, its own businesses have had to face the brunt of foreign competition, as seen by its trade deficit with China of a whopping 7.89 billion USD in 2019-20. As a result of increased competition from Chinese enterprises, native industries in Pakistan would be demolished, inflicting a serious blow to the country’s economic progress. Furthermore, the practicality of the much-touted energy projects that boast of providing Pakistan with energy security and resolving its acute energy crisis must be questioned. Notably, Pakistan has promised a 27.2% return on Chinese investment in energy projects and is obligated to acquire electricity from Chinese enterprises at a fixed rate. This implies that in order to give a 27.2% return on investment, electricity end-users, i.e. the Pakistani population, will have to pay more for their electricity usage. Interestingly, Pakistan already has the highest electricity rates in South Asia, and the government has imposed a 1% security tax to ensure the completion of the CPEC projects by 2030. Hence, as is obvious, ordinary residents would have to bear the project’s costs in the form of increased foreign corporations, higher power rates, and increased taxes, which would directly influence their cost and, as a direct consequence, their standard of living. This is in stark contrast to what the authorities have promised out of the CPEC, which is supposed to usher in a ‘golden age’ for Pakistan. Because of the aforementioned concerns, as well as growing resentment toward the CPEC and pervasive corruption, the development of the CPEC projects has slowed, with various reports indicating that progress of the CPEC initiative in the country has come to a halt. Given the foregoing, it would not be unreasonable or far-fetched to argue that the CPEC is essentially a tool for China to extend its economic and geopolitical influence, albeit at the expense of the people of Pakistan.

Ishani Sharma is a student at Jindal Global University

Image credits –

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: