Pakistan’s economy is hamstrung by the failure of successive governments to get to grips with the lack of infrastructure. Having pledged 43 billion US dollars in dozens of energy and infrastructure projects, the China-Pakistan Economic Corridor (CPEC) is one of the largest commercial initiatives in South Asia. China and Pakistan have collaborated cautiously at political and strategic levels. Now, the two nations are expanding their bilateral alliance and trade economically as well.
With COVID-19 increasing Pakistan’s existing hurdles, there is an urgent need to boost its faltering and unsteady economy. Despite decades of mismanagement and a feeble socio-economic infrastructure, Pakistan does enjoy an important strategic location. The most vociferous depiction of this reality came to shape in the form of the China Pakistan Economic Corridor. Pakistan’s honeymoon period began with high hopes that CPEC would meet and overcome the prevailing energy crisis, presenting multiple job opportunities and promises of much-needed investment.
CPEC is a potential game changer that could transform economic growth and inject some prosperity and capital into Pakistan’s frayed socio-economic fabric. However, it is unlikely to come to fruition in either short or medium terms. Mega infrastructure projects like CPEC all too frequently run aground, either falling prey to a lack of vision or stalling on political tussles. If that happens to CPEC, it would be a sad outcome for Pakistan that desperately needs some good news and results.
While CPEC is promulgated as a win-win project for both countries, China seems to reap more of the benefits. With CPEC costs rising, Pakistan risks falling into a deeper turmoil of debt. China is expecting to stand stronger after the pandemic, taking the initiative to persistently implement its plans to extend its future investments, influence and grip deeper into South Asia.
Now, the conflict is about global dominance and Pakistan’s financial security is hanging in the balance. There are a couple of things that one needs to know about CPEC. First, many in the US view the initiative as a threat. The US still has the world’s largest GDP but China is gaining ground. Take, for example, the fact that the US was the largest exporter of goods and services in the world until 2013 when China surpassed the US and the two world powers have been neck to neck since. Second thing to know is that China is giving huge loans to countries where it is investing in and some recipients are not in a position to pay them back.
Where does Pakistan fit into all of this? China’s biggest belt and road project is taking place over here. The plan is to build up Pakistan’s infrastructure on a grand scale. Once completed, China could use these ports, highways, pipelines and railways for accessing the entire Indian Ocean and continue to supplant the presence of the US in Pakistan. But for Pakistan, there are a lot of catches which are driving an already economically handicapped country off the cliff. For example, in one initiative, China is building a series of hydro-wind and coal power plants, but, as part of the agreement Pakistan has to buy electricity from China at a price that costs a hefty return on investment and pay back the debt. The country is already far behind on payments, giving Chinese authorities more leverage.
Despite the inherent strength that Pakistan’s strategic and geographic location provides to CPEC, it may increase our economic woes. China, like other Western predecessors, is playing the role of a global hegemon. It is better to be skeptical of the reality now than to tremble at the impacts of CPEC later.