The third Belt and Road International Cooperation Summit was held in Beijing on 17 and 18 October 2023. It was attended by 140 countries, 30 International Organizations and 24 Heads of state. This year marks the 10th anniversary of the Belt and Road Initiative (BRI). The BRI was started in 2013 as One Belt One Road Initiative (OBOR). Of all the projects, China has highlighted the China-Pakistan Economic Corridor (CPEC)[i] as the flagship project of the BRI.
The paper critically analyses the developments of the CPEC in the last ten years.
The CPEC is the link between the Silk Road Economic Belt and the Maritime Silk Road. The agreement for the CPEC was signed in 2013 and the terms and conditions were finalized in 2015. In April 2015, Pakistan and China announced their intention to develop the USD 46 billion CPEC that was later upgraded to USD 62 billion.[ii] The CPEC is the core project and Gwadar, Energy, Transport Infrastructure and Industrial Cooperation are part of it. The project took off in 2016. The timeline for the long-term plan envisioned for the CPEC was from 2017 to 2025. In order to implement the CPEC cooperation a ministerial-level Joint Cooperation Committee (JCC) on CPEC Long-Term Planning has been set up.[iii] . There are also short-term projects such as the Havelian-Islamabad link of the Karakoram Highway (USD 930 million), Gwadar International Airport (USD 230 million), Gwadar port (USD 66 million), and a fibre optic project (USD 4 million), and the existing projects to be upgraded are the 1,681-km-long Peshawar-Lahore-Karachi railway line (USD 3.7 billion) and Lahore Mass Transit system (USD 1.6 billion) as a part of CPEC.[iv]
Third Belt and Road Forum (BRF) for International Cooperation and Pakistan
Caretaker Prime Minister of Pakistan Anwar-ul-Haq Kakar attended the third Belt and Road Forum for International Cooperation, in a year that also marks the 10th year of the CPEC projects. The two sides signed 20 agreements and MoUs, it included cooperation on the BRI, infrastructure, mining, industry, green and low-carbon development, health, space cooperation, digital economy, development cooperation and export of agricultural products to China.[v]
The third BRF gave China an opportunity to reaffirmed its ties with Pakistan and showcase development of the CPEC. Xi Jinping stated that over the past ten years, the CPEC has achieved fruitful results, effectively promoted Pakistan's economic and social development, and became an important signature project of the Belt and Road cooperation. An editorial in China Daily stated, “The China-Pakistan Economic Corridor will grow into an important vehicle and foundation for the two countries to support each other in a changing world, and will bring more benefits to people of the two nations through win-win cooperation”.[vi] Further, Consul General of China in Lahore emphasised that third BRF has injected a fresh impetus into high-quality cooperation between China and Pakistan.[vii] Pakistan has attended all the three BRF. On 27 April 2019, at the second BRF, China and Pakistan signed agreements on the CPEC related to upgradation of a Karachi-Peshawar railway line, launching of the second phase of the Free Trade Agreement and establishment of a dry port.[viii]
It may be noted, on 31 July 2023, prior to 3rd BRF, to mark the ten years of the CPEC as a special envoy of Xi Jinping, Chinese Vice-Premier He Lifeng visited Pakistan. During his visit six agreements for promotion of bilateral relations were signed.[ix]
During 11-17 November 2023, China and Pakistan have conducted their “first joint maritime patrol” in the northern Arabian Sea, with the theme of “Joint Response to Maritime Security Threats”. It is also a part of the two countries’ concrete actions to safeguard the CPEC.[x]
Changing Chinese position on CPEC
The lofty claims that China made at the time of launch of the CPEC seem to be declining. Although China has signed new agreements with Pakistan on the CPEC but over a period of time China has become cautious of its investments in Pakistan.
Reportedly, China is being careful in investing in new projects in Pakistan. China has turned down Pakistan’s suggestions to add more projects related to energy, climate change, electricity transmission lines and tourism under the CPEC. China has declined a Pakistani proposal to build a 500-kilovolt transmission line to connect the southern port of Gwadar to the national electricity grid from Karachi. China also asked Pakistan to drop its objection to a 300-megawatt coal-fired power plant from Gwadar to another location.[xi]
China’s reluctance was also evident when it delayed the signing of the decision of the 11th meeting of the JCC. The meeting took place on 27 October 2022 but the minutes were signed only on 31 July 2023.[xii] China did not agree to many of the measures that Pakistan proposed; the final draft shared with China by Pakistan and the final minutes signed were different from the original one.[xiii]
China is facing many challenges in Pakistan, such as political instability, attack on Chinese workers and debt issues. Pakistan has been in a state of political flux that has in turn led to civil unrest in the country. Chinese citizens are being targeted.[xiv]
At the third BRF, Xi Jinping raised this issue, to protect the hundreds of Chinese workers and engineers working on CPEC infrastructure projects from Pakistan-based militant attacks. In 2021, nine Chinese workers were killed in a bomb attack on a bus in northern Pakistan. In 2022, a suicide bomber killed Chinese teachers in Karachi. China is concerned about these attacks as the Pakistani government has not been able to put an end to these attacks.[xv] In 2023, 23 Chinese citizens working at the port of Gwadar were attacked by a Pakistani separatist group in a convoy.[xvi] There are demands by provinces to have more of local participation in the CPEC projects otherwise China could be another “East India Company”. The projects under the CPEC are essentially for the benefits of Chinese and not for the local people.[xvii] Stella Hong Zhang, a China public policy postdoctoral fellow at the Harvard Kennedy School’s Ash Center, said that “China priority was in the connectivity projects” but Pakistan wanted much of the initial CPEC financing to go towards energy. [xviii]
According to AidData’s research, under the aegis of BRI, China is spending over eight times more in Pakistan than the US. [xix] Yet another report by Committee for the Abolition of Illegitimate Debt (CADTM) highlighted that the loans under the CPEC have been considered economically unviable, and subsequently, Pakistan is now having a hard time meeting its repayment obligations. It may be noted that all the Chinese loans of both government and commercial banks make up nearly 30 per cent of Pakistan’s external debt of about 100 billion. Major amount of debt is under the CPEC. From July 2021-March 2022, over 80 per cent of Pakistan’s bilateral debt service went to China. The IMF wants Pakistan to renegotiate the CPEC energy deals even before it agrees to assist Pakistan.[xx]
Conclusion
Although the BRI has become the lynchpin of the Chinese Foreign Policy, the success of the project is questionable. Overall, there are economic and structural problems with the CPEC. Beijing is trying to infuse life in the project by signing new agreements, but the projects are in a phase of impasse. The future of the CPEC is uncertain and the “strategic glue” appears to be weakening.
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*Dr. Teshu Singh, Research Fellow, Indian Council of World Affairs (ICWA)
Disclaimer: Views expressed are personal
Endnotes
[i] CPEC, Secretariat Ministry of Planning Development & Special Secretariat, https://cpec.gov.pk/ (Accessed on 1 November 2023)
[ii] Atul Aneja, Xi comes calling to Pakistan, bearing gifts worth $45 billion, The Hindu, https://www.thehindu.com/news/international/Xi-Jinping-visit-to-Pakistan-preview/article60317649.ece Accessed on 1 November 2023)
[iii] Long Term Plan for China-Pakistan Economic Corridor (2017–2030), https://cpec.gov.pk/brain/public/uploads/documents/CPEC-LTP.pdf (Accessed on 12 November 2023)
[iv] Suchitra Karthikeyan, Why has the China-Pakistan Economic Corridor stalled? | Explained, The Hindu, 16 November 2023,
https://www.thehindu.com/news/international/pakistan-and-china-cpecs-journey-from-glittering-ambition-to-virtual-stall/article67479859.ece (Accessed on 18 November 2023)
[v] Joint Press Statement between the People’s Republic of China and the Islamic Republic of Pakistan, https://mofa.gov.pk/joint-press-statement-between-the-peoples-republic-of-china-and-the-islamic-republic-of-pakistan/ (Accessed on 11 November 2023)
[vi] Wang Shida, All-weather friends, China Daily, 6 November 2023, https://www.chinadaily.com.cn/a/202311/06/WS654823b9a31090682a5ec84d.html (Accessed on 8 November 2023)
[vii] Third BRF cements Sino-Pak ties, says envoy, The News, https://www.thenews.com.pk/print/1124119-3rd-brf-cements-sino-pak-ties-says-envoy (Accessed on 3 November 2023)
[viii] China-Pakistan sign host of deals under CPEC during PM Imran Khan's visit, Economic Times, https://economictimes.indiatimes.com/news/international/world-news/china-pakistan-sign-host-of-deals-under-cpec-during-pm-imran-khans-visit/articleshow/69083620.cms?from=mdr (Accessed on 10 November 2023)
[ix] PTI, Pakistan & China ink six agreements to expedite cooperation under 2nd phase of CPEC, The Indian Express, 31 July 2023, https://indianexpress.com/article/world/pakistan-china-ink-six-agreements-under-2nd-phase-of-cpec-8869848/ (Accessed on 15 November 2023)
[x] Liu Xuanzun, China, Pakistan hold first joint naval patrol to safeguard China-Pakistan Economic Corridor, Global Times, 16 November 2023, https://www.globaltimes.cn/page/202311/1301985.shtml (Accessed on 17 November 2023)
[xi] Adnan Aamir, China spurned Pakistan's proposals for new Belt and Road projects, Nikkie Asia, https://asia.nikkei.com/Spotlight/Belt-and-Road/China-spurned-Pakistan-s-proposals-for-new-Belt-and-Road-projects (Accessed on 1 November 2023)
[xii] Adnan Aamir, China spurned Pakistan's proposals for new Belt and Road projects, Nikkie Asia, https://asia.nikkei.com/Spotlight/Belt-and-Road/China-spurned-Pakistan-s-proposals-for-new-Belt-and-Road-projects (Accessed on 1 November 2023)
[xiii] Shahbaz Rana, CPEC expansion plan in doldrums, The Express Tribune, 26 September 2023, https://tribune.com.pk/story/2437871/cpec-expansion-plan-in-doldrums (Accessed on 1 November 2023)
[xiv] Adnan Aamir, China spurned Pakistan's proposals for new Belt and Road projects, Nikkie Asia,
https://asia.nikkei.com/Spotlight/Belt-and-Road/China-spurned-Pakistan-s-proposals-for-new-Belt-and-Road-projects (Accessed on 1 November 2023)
[xv] Deutsche Welle, Is China’s investment in Pakistan slowing down?, The Indian Express, 12 October 2023,
https://indianexpress.com/article/explained/explained-global/china-investment-pakistan-8978474/
(Accessed on 1 November 2023)
[xvi] Controversy grows over China’s BRI investment in Pakistan, 4 October 2023, https://www.railfreight.com/railfreight/2023/10/04/controversy-grows-over-chinas-bri-investment-in-pakistan/?gdpr=deny (Accessed on 11 November 2023)
[xvii] Syed Irfan Raza, CPEC could become another East India Company, Dawn, 18 October 2016, https://www.dawn.com/news/1290677 (Accessed on 15 November 2023)
[xviii] Adnan Aamir, China loaned Pakistan $21bn than reported, study finds, Nikkie Asia, November 9, 2023, https://asia.nikkei.com/Spotlight/Belt-and-Road/China-loaned-Pakistan-21bn-more-than-reported-study-finds
(Accessed on 22 November 2023)
[xix] Sarah Zaman, Is China Responsible for Pakistan's Debt Problem?, Voice of Asia, 4 August 2023, https://www.voanews.com/a/is-china-responsible-for-pakistan-s-debt-problem-/7211897.html
(Accessed on 22 November 2023)
[xx] Ayaz Gul, China Begins Construction of Pakistan's Largest Nuclear Power Plant, Voice of Asia, https://www.voanews.com/a/china-begins-construction-of-pakistan-s-largest-nuclear-power-plant-/7181016.html (Accessed on 13 November 2023)