Game Changer: China’s Massive Economic March Into Pakistan By Hussain Nadim

given Pakistan’s fragile democracy, instability, a growing insurgency in the Baluchistan region (where Gwadar port is located), and dissident voices, many will wonder if these projects will see the light of day.

Game Changer: China’s Massive Economic March into Pakistan

Hussain Nadim

The China-Pakistan Economic Corridor (CPEC) is nothing short of a “fate changer,” said Pakistani Federal Minister Ahsan Iqbal, the man behind the historic project. The excitement appears to be mutual, as China has shown equal enthusiasm for the project throughout a two-day visit [4] by Chinese President Xi Jinping to Islamabad, which culminated on Tuesday.

Over 51 agreements and MoUs [5] were signed between the two countries worth over US$46 billion, the largest ever investment in the history of Pakistan by any country.

The major component of the CPEC includes power projects worth US$35-37 billion for energy-starved Pakistan, and massive infrastructure development throughout the country through concessional loans of US$7-8 billion, with the lowest interest rates in the international market. A chunk of the investment will be used [6] for the development of a 3000km rail, road, and oil pipeline network stretching from Kashgar in China all the way down to Gwadar port on the Arabian sea, operated by the state-owned China Overseas Port Holding Company.

CPEC is part of an expanding network of corridors that will link China’s eastern industrial zones with markets in Central Asia, the Middle East, Africa and Europe. This will allow China to rapidly develop its interior [7] and western provinces, which have “missed” the Chinese economic miracle.

The CPEC also holds symbolic value because it sits at the crossroads of China’s Silk Road Economic Belt [8] and Maritime Silk Road [9], cutting the travel time and distance of freight, especially oil imports, by thousands of kilometers to China. Moreover, in terms of geopolitics, the CPEC fills the last slot for China to complete a web of economic networks in the region. With major investments already in place in Sri Lanka, Burma and Bangladesh, China is shredding any Indian hopes of playing hegemon.

It’s a surprise, given India’s strong linguistic, historical and cultural links with Bangladesh, Pakistan and Sri Lanka, that New Delhi missed the opportunity for economic integration with South Asia, allowing China to take the advantage.

But China’s economic inroads into Pakistan and its recent involvement in Afghanistan benefit the US, which has historically maintained a strong influence over Pakistan. With the US desperate to end its presence in Afghanistan, China is beginning to play a central role [10] through its economic corridors in stabilizing the region for a US withdrawal, a win-win for both China and the US.

For Pakistan, a country in a perpetual state of war since the 1980s and which has suffered near economic collapse due to the War on Terror, CPEC is an opportunity to boost it’s sluggish economy.

‘At a time when no country was ready to invest in Pakistan due to security concerns, China has come forward to make an enormous investment that has a potential to transform Pakistan forever’, said Federal Minister Ahsan Iqbal. CPEC aligns with the Vision 2025 [11] economic plan of the Pakistani Government, which has regional connectivity as one of the seven pillars of Pakistan’s future economic growth.

The symbolism of this project is that it comes as investment, not aid. The latter is generally considered wasteful by authorities in Pakistan for having no real on-the-ground impact on poverty or development. ‘Most of the aid goes to the non-governmental sector, and the bulk goes back to the donor countries’, stated Ahsan Iqbal in an interview with AFP [4].

Such an enormous project comes with severe challenges, especially in terms of how much will eventually be delivered [12]. And given Pakistan’s fragile democracy, instability, a growing insurgency in the Baluchistan region (where Gwadar port is located), and dissident voices, many will wonder if these projects will see the light of day.

For Federal Minister Ahsan Iqbal, who recognizes these challenges, the most important thing is to keep pace with China on the CPEC. According to him, “CPEC is the shortest but not the only supply chain route available for China,” and hence, if Pakistan is not able to implement and meet China’s swift development, the CPEC will not go ahead as planned.

CPEC will face many hurdles, both domestically and from regional powers that may see it as a threat. However, with a multi-billion dollar Chinese stake in the project, and Pakistan looking at it as a lifeline for survival, optimism remains high in both countries.

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