Published: 07:23 PM, 30 August 2023 Last Update: 07:33 PM, 30 August 2023
Increased liabilities in 10 years of China-Pakistan Economic Corridor project
Gateway of the Gwadar port in Southwest Pakistan's Gwadar. The port is part of the China-Pakistan Economic Corridor. (Photo: cnsphoto) The Chinese President, Xi Jinping, has vowed to turn the China Pakistan Economic Corridor (CPEC) into an “exemplary” project, even as it has failed to make an economic turnaround in the past 10 years. When it was launched in 2013, the CPEC was termed a harbinger of prosperity. However, the ground reality shows that several projects have remained non-starters, while many of those executed are turning into a liability. All this notwithstanding, the Pakistani Prime Minister, Shehbaz Sharif, and Chinese Vice Premier He Lifeng organised a ceremony in Islamabad to mark the tenth anniversary of the project.
As a matter of facts, the CPEC appears to be a major factor to Pakistan’s current economic crisis. While the overall cost of the project is pegged at USD 62 billion, the actual cost is feared to have increased significantly due to delays, project failures, growing debt interest, and financial overruns in past years. Moreover, the unprecedented high inflation, protests from locals, and attacks on project infrastructure have marred any progress. The burden of high-interest Chinese loans against the backdrop of a nonfunctional CPEC project can throw Pakistan into a great economic abyss, as many experts fear the country may fall into a “debt crisis”, like Sri Lanka, if infrastructural projects fail to generate revenue. In the wake of China losing interest, Sharif visited Xi in Beijing to hold talks on the “revitalisation” of the CPEC.
The opacity in the dealing and agreements, hidden project costs, high tax benefits and high returns awarded to Chinese companies have not gone well with the people of Pakistan and government officials alike, who are ever more openly talking about the financial problems the CPEC has created. At the same time, the Beijing government is worried both about Pakistan’s inability to pay up the loan and frequent attacks on CPEC projects and Chinese nationals. As Michael Kugelman, director of the South Asia Institute at Washington-based Wilson Center, recently stated, “in recent years, a combination of Pakistani economic stress and Chinese security concerns have slowed down CPEC’s momentum. Despite the continued soaring rhetoric from both capitals, the corridor’s progress has taken a major hit,” Kugelman put it.
The CPEC has failed to live up to its hype also according to the United Nations Conference on Trade and Development (UNCTD), whereby instead of the promised economic growth, China’s loans may have worsened Pakistan’s economic crisis. As if this were not enough, there have been several fatal attacks on CPEC projects, especially in Balochistan, as local people fear the Chinese projects encroaching upon their lands and livelihoods, something that has led to an increase in militancy activities by separatists, who addressed directly Xi to threaten that “CPEC will fail miserably on Baloch land”, according to some reports. Not surprisingly, many in China see the emergence of extremism as a threat to CPEC-related projects, as security issues are becoming an impediment in taking the whole project forward.
As a Pakistani analyst put it, the whole project was built around a fatally flawed premise, with duty-free imports from China that have driven many local manufacturers to bankruptcy. However, it was the Pakistani leadership that sold the project as a Marshall Plan for Pakistan. Along these lines, he quipped, Europe was ruined by war, but Pakistan is falling on its knees because of its own doing.
>> Source: Geo Politica
