CPEC in focus again

Dr. Tahseen Mahmood Aslam describes the rejuvenation of a signal project

CPEC in focus again – It is interesting to observe that a crucial project initiated by China that was beneficial to Pakistan is still facing uncertainty even after ten years. A decade is enough a time frame to successfully complete broad-based project like China-Pakistan Economic Corridor (CPEC) but this did not happen in this joint Pak-China venture. Since its inception attempts have been made to disrupt the project and the latest attempt in this respect was made on 13 August when two terrorists were killed by the security forces when they attacked a military convoy escorting Chinese workers to a port project in Gwadar. This incident was confirmed by the Chinese consulate general stating that a Chinese convoy from the Gwadar port project was hit by roadside bombs and gunfire on its way back to the port area from the Gwadar Airport. It pointed out that no Chinese citizens were killed or injured in the attack. The Majid Brigade, a wing of the banned Baloch Liberation Army (BLA), claimed responsibility for the attack that resulted in two-hour exchange of fire.

This incident compelled the Chinese foreign ministry to emphasise that any attempt to sabotage its friendship with Pakistan or the CPEC will not succeed. While pointing out that China has asked Pakistan to upgrade security measures, closely follow the security situation on the ground, guard against security risks and keep themselves safe, the Chinese side asserted China will continue to work with Pakistan to jointly guard against and counter the threats of terrorism and effectively protect the safety of Chinese personnel, institutions and projects in Pakistan. The Chinese side also affirmed that no matter how the international landscape and the domestic situation in Pakistan may change, the ironclad friendship between China and Pakistan will always remain rock-firm and unbreakable and that China stands ready to work with Pakistan to advance their all-weather strategic cooperative partnership, build an even closer China-Pakistan community with a shared future in the new era and bring more benefits to the two countries and two peoples.

The accident-prone CPEC was actually presented as a collection of infrastructure and other projects throughout Pakistan and various parts of it were under construction since 2013. It was consistently drummed as a vital initiative intended to rapidly upgrade Pakistan’s required infrastructure and strengthen its economy by the construction of modern transportation networks, numerous energy projects and special economic zones. The project heralded the visit of Chinese strong man Xi Jinping in 2015 though details were worked out in 2013 with the CPEC becoming partially operational in 2016 when Chinese cargo was transported overland to Gwadar port for onward maritime shipment to Africa and West Asia. It is also a fact that Pakistan has so far received $25.4 billion in direct Chinese investment in various transport, energy, and infrastructure schemes under the flagship connectivity and investment corridor project that is part of Beijing’s Belt and Road Initiative (BRI) revealing the outstanding flexing of economic muscle by China.

A word about the founding principle of CPEC known as One Belt, One Road (OBOR) would be appropriate here to bring to fore that the basic thrust of the debate emanates from two different strands of thought. At the geopolitical level OBOR is seen as a manifestation of China’s ambitions to become a global power to be reckoned with. The existing power structure in the region was threatened by the rising influence of China on the scene particularly when Pakistan, a long-time ally of the US started drifting gradually towards China while India, long held as a traditional friend of Russia began strengthening its links with the United States. It was quite obvious that CPEC was to bear the brunt of the rivalry between contestants and accordingly it hit snags that became difficult to remove. Some of the criticism and skepticism about CPEC originated from the fear of China possibly using Gwadar in the future as a strategic naval base in a critical sea fare lane in the Gulf.

This strategic aspect of the rivalry has become cumbersome particularly when viewed in the backdrop of US-China trade war that has shown hardly any signs of slowing down and chances of thaw in this respect appearing remote. On the face of it OBOR is primarily aimed at enhance the competitiveness of Chinese goods and services by reducing the transaction costs and expediting delivery time. China is already flooding the international markets with its relatively cheap goods and has become the top exporting nation of the world. Though there exists a trade war between America and China and currently Chinese comparative advantage may be compromised and its position as a magnet for a global supply chain would not be certain.

Despite the obvious advantages of CPEC there was a systematic campaign orchestrated by some Pakistanis reverberating in other not-too-friendly countries, that CPEC is designed for the benefit of the Chinese and their eventual economic domination of Pakistan. They mentioned that a fragile and highly indebted economy with weak exports, dependent upon foreign assistance and prone to periodic external payments crises, would not be able to meet the additional debt obligations and repatriation of profits created by CPEC. It was implied that China is entrapping Pakistan by providing expensive loans and credits for projects of dubious economic value and if Pakistan is not able to repay the debts, China will take over Gwadar port, land and assets in Pakistan, as they have done in the case of Hambantota port in Sri Lanka. It is required to clarify that such campaign is misplaced as out of a total commitment of $50 billion, 70 per cent – or $35 billion – would be coming to Pakistan in the form of Foreign Direct Investment (FDI) and it is quite clear that Pakistan desperately needs foreign investment.

Now it is reported that CPEC has been duly revived and is entering its second phase as was borne out by the visit of Chinese vice premier to Pakistan. The Chinese minister Lifeng has played a prominent rolein China’s international economic relations and implementation of the Belt and Road Initiative, of which CPEC is a flagship project. As the chairman of China’s National Development and Reform Commission from 2017 to 2023, he was instrumental in the planning and execution of multiple CPEC projects in Pakistan. By sending him to Pakistan, it is pointed out that China and Pakistan had achieved many early harvests in the project which led to new impetus to the latter’s socio-economic development and laid the foundation for regional integration and connectivity.

To indicate the intensity of revival of CPEC, China and Pakistan signed six agreements for the promotion of bilateral cooperation. The agreements would lead to investments in agriculture and IT, enabling Pakistan, with China’s support, to export items according to the requirements and standards of the Chinese government. Apparently, it appears that CPEC has somehow received tacit acceptance of international financial agencies that is certainly a good omen. In order to realise these opportunities and mitigate the risks, the government has to undertake several policy and institutional reforms and streamline its bureaucratic processes. In the absence of such measures, benefits may turn out to be lower than calculated and the risks may be heightened. The Weekender