The China-Pakistan Economic Corridor (CPEC) was the flagship project proposed within the larger Belt and Road Initiative (BRI) in 2015 involving capital investment of US$46 billion in the beginning and later enhanced to $62 billion toward constructing roads, ports, electricity production and industrial zones and other connectivity and infrastructural development work in Pakistan.
The project was intended to establish connectivity between China’s resource-rich Xinjiang Uighur Autonomous Region and Pakistan’s strategic Gwadar Port on the Arabian Sea.
The CPEC mega-project has received intensive scrutiny from Western and Indian observers because of its alleged strategic dimensions. However, both Pakistan and China, despite occasional hiccups over issues such as debt burdens and corruption, arguably have a common stake in defending the project.
First, Islamabad’s ability to recover from its ailing economy has dwindled perceptibly since the US administration suspended most security assistance, which has, in turn, pushed it to seek immediate Chinese assistance.
Second, implementation of the project might strengthen Pakistan and China from a strategic perspective (enhanced naval strength in the Indian Ocean and bilateral military cooperation) even though it pushes the former toward more debts and the latter to sanction fresh loans without recovery.
Third, issues pertaining to debt burdens and strategic ambitions might have been more exaggerated than real, which both countries have been trying to dispel.
Apart from these confusions relating to the larger purpose of the CPEC, there have been some objections pertaining to the way the project is being implemented. Both countries are moving ahead with the project notwithstanding unclear real and motivated objections.
A report published recently by The New York Times alleged that China had hatched a secret plan to build fighter jets and other military hardware in Pakistan as part of the $60 billion project and the Pakistan Air Force and Chinese officials were putting the final touches to the secret proposal. Pakistani Foreign Office spokesman Mohammad Faisal retorted: “The China-Pakistan Economic Corridor (CPEC) is a bilateral economic project and has no military dimensions.” China and Pakistan are reportedly building the J-17 Thunder, a multirole combat aircraft.
Faisal also said: “The CPEC has helped Pakistan improve its economy, particularly energy and infrastructure sectors have improved under it. The CPEC is a bilateral economic project, which is not against any country.”
Similarly, the Pakistani Ministry of Planning, Development and Reform responded to allegations pertaining to CPEC debt burdens. According to the ministry, “To date, 22 projects are progressing in various stages of implementation. Government of Pakistan financial liability is only to the tune of US$6 billion, [consisting] of low-interest loans and grants in infrastructure projects spread over a 20-to-25-year payback period. Therefore, giving the impression [of a] US$40 billion as liability on Pakistan is false, baseless and distorted.”
New Delhi expressed concerns regarding CPEC’s alleged violation of India’s sovereignty and territorial integrity, particularly with reference to inclusion of the Gilgit-Baltistan region in the project without its consent, although Beijing has said it was purely economic and development work and did not alter its stance on Kashmir (a bilateral issue to be resolved between India and Pakistan).
India recently objected to the launch by Pakistan and China of a luxury bus service through the disputed area, linking Lahore to Kashgar in China’s Xinjiang province.
Maintaining Beijing’s earlier official position, Chinese Foreign Ministry spokesman Lu Kang reportedly said that this cooperation with Islamabad had nothing to do with the territorial dispute and would not change its principled stance on the Kashmir issue.
Stiff opposition has allegedly been resonating pertaining to implementation of the project from within the province of Balochistan. The cabinet of the government of Balochistan has reportedly expressed annoyance over the very small share that the province has received out of the total investment committed under a host of projects within CPEC for the country. Further, the projects that were committed to have not witnessed much progress.
There are allegations as well that measures undertaken to implement the East Bay Expressway project, which is part of CPEC and will connect Gwadar Port with Mekran Coastal Highway through the 930-hectare Gwadar Free Trade Zone, has led to the termination of fishing activities in the port area and fishermen have been deprived of their livelihoods.
The Pakistani leadership also reportedly appeared to hold divergent views on the project for a while, turning CPEC more into a mysterious project shrouded sometimes by allegations of corruption, opacity, indebtedness and economic crisis and sometimes by applause for its infusion of economic vitality.
There were news reports that the Pakistani government under Prime Minister Imran Khan would review CPEC as Khan had expressed serious reservations and protested against the Nawaz Sharif government’s alleged involvement in corruption and lack of transparency in the negotiations on CPEC. Thus when Khan came to power, many people reportedly believed that he would review the project and bring in more transparency given his rhetoric on corruption, economic crisis and employment opportunities (Khan promised to create 10 million jobs after coming to power).
Railways Minister Sheikh Rashid Ahmad reportedly called for investigation into a CPEC power project on the ground of corruption. It was further reported that the government of Khyber Pakhtunkhwa province, while rejecting a Chinese proposal to include it within CPEC, opted for Asian Development Bank (ADB) loans to finance the Peshawar bus project.
Meanwhile, Beijing warned the Khan government to remain vigilant toward Western media, which allegedly projected a distorted image of China and about its mega initiative.
In the midst of these reports, Chinese and Pakistani leaders alike were seen expressing solidarity with the project and with its intended benefits. Pakistan’s army chief, General Javed Bajwa, reportedly stated to Chinese Ambassador Yao Jing that CPEC was the economic future of Pakistan and its security would never be compromised.
However, this statement about the economic effectiveness of the project by an army general not only pointed to the army’s overriding influence over the civilian administration within Pakistan, it particularly raised suspicions whether the project had strategic dimensions.
On the other side, Prime Minister Khan responded to the news reports on Pakistan’s desire to review CPEC not only by dismissing them as false, but reiterating Islamabad’s commitment to the implementation of the project. He described the country’s friendship with Beijing as a cornerstone of Pakistan’s foreign policy during his meeting with Chinese Foreign Minister Wang Yi in Islamabad, who was on a three-day visit to the country.
Beijing reportedly agreed a loan package of $6 billion to Pakistan with a view to keeping its foreign-currency reserves ticking and averting an economic crisis plunging to a level that would compel Pakistan to turn to the International Monetary Fund for loans. It was reported that seeking IMF loans would be tantamount to disclosure of financial transactions that would lay bare corruption and opacity issues related to CPEC.
Pakistani and Chinese leaders have defended the project on questions over whether it benefited the Pakistani economy by stating that CPEC included new projects under the long-term plan in such sectors as agriculture, tourism, mineral processing, oil and gas and services that would fuel employment opportunities.
Further, Pakistan has dispelled the debt allegations by pointing to the involvement of private companies who acquire their own financing to carry out CPEC projects. For instance, the energy projects are reportedly being implemented under the Independent Power Producers (IPPs) mode and therefore, debt would be borne by the investors instead of any obligation on part of the Pakistani government.
Thus despite allegations, doubts and protests, the project moves on, raising eyebrows in several quarters.