The much controversial China-Pakistan Economic Corridor (CPEC) has come to a standstill with China rethinking about its committed investment plans. China had initially pledged a total of $60 million for CPEC, but the changing scenarios are forcing China to be cautious about it. CPEC, a periphery of the Belt-Road Initiative (BRI) aims at building railways, roads, ports and special economic zones (SEZs). Recently, there were reports of Pakistani army taking over the CPEC project since there were attacks on Chinese engineers and its associated projects. There is a bill in Pakistan’s parliament that will give the powerful military a firmer hold over the initiative and its related multi-billion dollar contracts.
The Boston University researchers said, “The belt-tightening is believed to be in line with Beijing’s so-called “rethink strategy” for its US$1 trillion BRI, which is under broad fire for “structural weaknesses” including opacity, corruption, over lending to poor countries resulting in “debt traps” and adverse social and environmental impacts, BRI is an ambitious plan of Chinese President Xi Jinping, which aims at connecting China to every corner of the earth via rail, road, air and sea. Importantly, BRI creates new routes for China’s strategically vulnerable fuel imports shipped by sea mostly from the Middle East.
It is yet to be seen how diminished Chinese lending will impact the CPEC, however several important related projects are now stalled or are running behind schedule due to a lack of financing. Of 122 announced CPEC projects, only 32 have been completed as of the third quarter of this fiscal year. Others believe documented corruption by Chinese companies involved in the CPEC, particularly in the power sector, has impelled Chinese financial authorities to cut down their lending exposure to Pakistan.
CPEC project is facing continuous attacks from the Balochistan rebels and the corridor has to pass through a larger length in the province. Pakistan’s rising debt, which is currently at 107% to the GDP, is also forcing China to reduce its further infrastructural spending in the Islamic republic. With China slowly backing away from the CPEC project, it needs to be seen whether the military establishment is able to convince China about the continuation of investment.