CPEC: A boon or burden?

The China Pakistan Economic Corridor, commonly known as CPEC, has added much required economic substance to the excellent political relationship between the two countries. A mix of energy projects, economic free zones and infrastructure improvement in Pakistan, it is a flagship project of China's Belt and Road Initiative (BRI). Spread over many years, this ambitious project would also cater to the growing energy needs of western China and provide it with a shorter and reliable commercial route to the Middle East and Africa. It represents convergence of Sino-Pak bilateral interests.

However, the gigantic project, which started in 2015 and would continue for some years, has brought in its wake a number of challenges a well. Since multiple projects are its components, each one has a different financing source and method. Negotiating financing and repayment details for each component were quite demanding. Then there were external and internal challenges. India, which considers South Asia as its backyard, views Chinese presence in the Pakistani port of Gawadar with suspicion. Ever since this project was launched, Pakistan’s northern areas and its largest province Balochistan saw an escalation in terrorist activities.

External challenges to CPEC become more explicit when seen through the prism of Indo-US co-operation to contain China. Paradoxically, the same co-operation in the Pacific has added to the importance of CPEC. Internally, Pakistani provinces were competing with each other for a greater share of roads and economic zones under this mega undertaking. Social media was extensively used to portray that the entire scheme would enable China to whisk away Pakistani resources, particularly from Balochistan. Much of that propaganda has abated as people see for themselves the benefits of improved infrastructure.

Geostrategic alignments are changing globally. Recent developments indicate growing Sino-Pakistan collaboration in various fields. The two nations cooperated closely and effectively to stem the tide of COVID-19. A recent virtual meeting between representatives of Pakistani political parties and the Chinese Communist Party lent full support for CPEC. That shows that the political parties, opposition included, are with the ruling Pakistan Tehreek-e-Insaf (PTI) as far as CPEC projects are concerned. Similar support was expressed during a recent meeting in China between Foreign Ministers Qureshi and Wang Yi. This meeting took place in the context of annual Sino-Pakistan Strategic Dialogue. President Xi Jinping will visit Pakistan soon. This is a bilateral relationship that is now blooming.

It has been said that CPEC loans would add hugely to Pakistan’s debt burden. But this fear was dispelled by the Foreign Ministry spokesman recently saying that the loan portion only amounted to $4.9 billion. Obviously, the rest of $60 billion plus pumped into CPEC is grants and investments. The energy plants, motorways and economic zones will all generate incomes. These projects will create thousands of jobs for Pakistanis. CPEC is truly a gamechanger. The mega project reduces the oil transit route from the Middle East to China from 12,000 kilometers via the Strait of Malacca to 2,400 kilometers. It would benefit not only China and Pakistan but also many regional countries through reduced transportation costs.

In 2016, Pakistan raised a Special Security Division to safeguard CPEC projects. This indicates Pakistan’s deep commitment to this mega project which would be completed by 2030. Its successful completion is crucial to Pakistan’s future development. CPEC includes a huge project to rebuild 1,800 kilometers of railway track from Peshawar to Karachi that would double the speed of trains. Completion of energy projects would bring to an end the power load shedding for both households and industrial units. New road networks would improve connectivity within Pakistan and benefit domestic trade.

Youth is a major component of Pakistan’s 220 million population. Every year, about 2 million additional Pakistanis enter the job market which is already congested. CPEC would create those job opportunities but that also brings the challenge of preparing adequately skilled labor force for the upcoming projects. Our youth, particularly in Gilgit Baltistan and Balochistan should benefit from this opportunity. CPEC brings in its wake a good opportunity to address regional income disparities in Pakistan and lift people in the underdeveloped areas, out of poverty.

Pakistan as a country has great economic potential and strategic location. It is this location that attracted Chinese interest in CPEC. This was the time when western economic assistance to Pakistan was fast shrinking. This was the time when Pakistan’s economic growth was stagnating. Initially, CPEC did pose challenges like inter-provincial rivalries, security threats and social media activity to promote doubts. But as it progressed, the benefits of this project started becoming more prominent. CPEC is a catalyst that could move the Pakistani economy to the take off stage.

*Javed Hafeez is a former Pakistani diplomat with much experience of the Middle East. He writes weekly columns in Pakistani and Gulf newspapers and appears regularly on satellite TV channels as a defense and political analyst.

Twitter: @hafiz_javed