For decades, Pakistan and China have been ‘all weather friends’. No wonder when Pakistan is in deep trouble, it seeks help from China. This is real motive behind Pakistan’s Prime Minister Shehbaz Sharif’s [72] recent visit to Beijing. He arrived in China on Thursday, 6th June. He is in China at the invitation of Chinese Premier Li Qiang. This marks his first visit to China since the establishment of the new Pakistani government early this year. This visit comes days before Pakistan presents its annual budget and applies for a new International Monetary Fund [IMF] loan.
He is in China to elevate their friendship to new level as deeply troubled Pakistan needs help from all sides. Today Pakistan is cash-strapped country that badly needs investments and aids. This is a five-day tour which began on Thursday. At Thursday’s event, Shehbaz recounted his first visit to China way back in 1981 and complimented the remarkable development that China has achieved over the past decades, while stressing that Pakistan wants to learn from China’s progress.
This is Sharif’s first visit to China after he took over as the Prime Minister for the second time. In March 2024, the government led by Pakistan Muslim League-Nawaz [PML-N] was sworn in. It should be recalled that the China Pakistan Economic Corridor [CPEC] was unveiled in 2013, and a little later Xi Jinping announced the Belt and Road Initiative [BRI]. In the same vein, it must also be noted that India has been a big opponent of the CPEC as it runs through India’s territory that is Pak-Occupied Kashmir [PoK]. The CPEC is intended to link Xinjiang with Gwadar port in Pakistan.
The $62 billion CPEC is an integral part of the BRI, a dream project of Xi Jinping. It is supposed to facilitate construction of power plants, road and rail networks and the deep-sea port at Gwadar. This will provide China a direct access to the Indian Ocean through highways running through the PoK and down the length of Pakistan. It was actually launched on 25th April 2015 by Jinping and Nawaz Sharif. The transport network will reduce time and cost transporting goods and energy such as natural gas to China by circumventing the Strait of Malacca and the South China Sea. It must also be noted that by the end of 2010s, it achieved a number of successes for Pakistan, especially in terms of infrastructure projects. Under the CPEC, Pakistan’s first solar energy plant was inaugurated in May 2015!
Now the negative side of the CPEC. It proved to be a significant burden of Pakistan’s economy. Five years into the programme, debt owed to China made up more than one-fourth of Pakistan’s total debt as it struggled to make its external payments. Though the project gave a boost to job creation in Pakistan, promises that it would bolster Pakistan’s industrial sector and increase exports remained largely unrealized into the early 2020s. Not only this, some construction projects, especially in the province of Balochistan, faced setbacks from violence by local militants who were opposed to the CPEC projects in their area.
Even the Chinese are not very happy with the way the CPEC is progressing. They are quite worried about the corruption in Pakistani’s society and are hassled by the red-tape culture in Pakistan. Add to this, the political uncertainties in Pakistan. Then there is the angle of regional rivalry. The businessmen from Punjab and Sindh who made a fortune in Balochistan, did not invest in the infrastructure of the unfortunate province of Balochistan. This amounts to betrayal as these businessmen had agreed to do so. Not only businessmen, even the federal government of Pakistan did not bother to better the conditions in Balochistan. Is it any surprise then that many Balochs are dead-against the projects under the CPEC?
Let us not forget the security situation in Pakistan equally worries China. The Chinese businessmen are scared about their personnel working in Balochistan. Many a times, the Chinese engineers are kidnapped and the employers have to pay ransoms! This is not good for healthy business climate and investor confidence. Despite this ground-reality, Sharif is keen on attracting more investments which is badly needed by Pakistan’s economy. Unfortunately the conditions in Pakistan does not inspire investor’s confidence. The CPEC was expected to generate 20 lakhs employment opportunities for Pakistanis, in reality only 2.5 lakh jobs have been created, a huge gap between promise and reality.
This dissatisfaction has one more angle. The Chinese were supposed to work with local companies in partnership which the Chinese are not willing. Since the Chinese companies enjoy tax exemptions, they prefer to import anything and everything from China, including labour. This does not create jobs and business opportunities for the locals. It has added to the woes of both Pakistani and Chinese authorities as both want the CPEC to take-off.
Serious doubts about the revival of the CPEC are in the air. Some senior commentators argue that the talk about revival is more for public consumption. Revival or no revival, Pakistan faces a unique dilemma vis-à-vis the IMF. In March 2024, the IMF agreed to release $1.1 billion out of the sanctioned $3 billion bail-out package. At present Pakistan is negotiating a fresh package of $ 8 billion. The IMF is worried that this money will be used to service the debt to China. It wants assurances from Pakistan. This in turn means restructuring the repayments plans to China. This is what Shehbaz Sharif is in China for and bolstering the CPEC is not really the priority as of now.
(The author, Avinash Kolhe, is a Mumbai-based retired professor of Political Science.)
