Pak PM Visits China

PAK PM VISITS CHINA

Pakistan’s Prime Minister Shehbaz Sharif is on a five-day visit to China, his country’s biggest and most important ally.

The second phase of the China-Pakistan Economic Corridor (CPEC) is expected to be formally announced during the visit.

ABOUT CPEC

During an April 2015 visit to Islamabad, Chinese President Xi Jinping and Pakistani PM Nawaz Sharif unveiled the $46 billion (Now $ 62 Billion) CPEC.

The corridor links Xinjiang with Gwadar, and also passes through Pakistan-occupied Kashmir (PoK) where China is investing in a number of projects.

Often described as a flagship project of the Belt and Road Initiative (BRI), the stated goal of CPEC is:

• To transform Pakistan’s economy by modernizing its road, rail, air, and energy transportation systems;
• To connect the deep-sea Pakistani ports of Gwadar and Karachi to China’s Xinjiang province and beyond by overland routes.

PHASES OF CPEC

First Phase

Various agreements such as energy, infrastructure, port development and the railway line construction have been signed i.e., first phase focused on infrastructure creation.

Second Phase

The second phase primarily revolves around Special Economic Zones development and industrialisation.

THE CPEC STORY SO FAR

The first phase of CPEC focused on infrastructure, energy, and port development projects. Progress has been patchy.

• Data from the CPEC website show that of the 21 proposed power projects, 14 have been completed, two are under construction, and five are yet to start.
• Of the 24 proposed transport-related projects (rail and road), six have been completed, but no work has started on 13.
• Only four of the nine proposed Special Economic Zones (SEZs) — designated areas with lenient trade laws to promote growth — have seen any progress, and no SEZ is complete.
• Not much is happening in Gwadar. Most of the projects around the port were “far from completion”.
• According to the official Chinese news agency Xinhua, CPEC had brought direct investment of $25.4 billion to Pakistan until 2022.

THE ROADBLOCKS

• Concerns about corruption and red tape in Pakistan,
• The political tumult that the country has been going through, and
• The poor security situation in Balochistan province where Gwadar is located.
  • The project has triggered violence in the restive province, and tens of Chinese nationals have been killed in terrorist attacks since 2018.
    • At least five Chinese working on various CPEC projects have been killed in attacks by Baloch militants this year so far.
  • To the historically marginalised Baloch people, Gwadar appears as a symbol of continued economic injustice. CPEC-related infrastructure has not generated quality jobs for local people in the province, and has failed to bring any economic dividends to the impoverished population.

IS CPEC GENERATING JOBS?

CPEC was estimated to generate more than 2 million employment opportunities for Pakistanis, government data say less than 250,000 jobs have been created so far.

WHY?

The Chinese approach of not partnering with local companies is not going to help create new job opportunities for millions of Pakistani youth. Since Chinese companies are tax-exempt, they bring everything from China, including labour, and hence they will have no reliance on Pakistani businesses to fulfil their demands.

PAKISTAN’S RISING DEBT

According to the International Monetary Fund, China holds roughly $30 billion of Pakistan’s $126 billion external debt, up from just $4 billion in 2013, prior to the announcement of the CPEC.

An IMF report also found that between July 2021 and March 2022, more than 80% of Pakistan’s bilateral debt service went to Beijing.

Many in Pakistan and outside fear that this debt burden is not just unviable, it also effectively makes Pakistan a Chinese client state.

PAKISTAN’S BAILOUT PACKAGE

In March, the IMF agreed to release a $1.1 billion tranche of its $3 billion bailout package to Pakistan.

The government is currently negotiating for a fresh package of $6-8 billion, but a sticking point has been Pakistan’s standing debt obligations, especially to China.

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