TALLING PROGRESS: UNRAVELING THE CHINA-PAKISTAN ECONOMIC CORRIDOR (CPEC)
Why in the News ?
- The ambitious China-Pakistan Economic Corridor (CPEC) faces a significant impasse, raising questions about its future development.
- Seeking funds of $65 billion, Pakistan’s caretaker Prime Minister, Anwaarul Haq Kakar, embarked on a five-day trip to Beijing, attempting to address disagreements hindering CPEC.
Source: The Sunday Guardian
Genesis of CPEC
- Launched in 2015 during Chinese President Xi Jinping’s visit, CPEC is a flagship project of the One Belt, One Road initiative.
- Encompassing over 50 projects with an investment of $45 billion, it aims to connect Pakistan’s Gwadar port to China’s Kashgar.
Early Challenges (2016)
- Teething issues emerged in 2016, halting several projects due to funding confusion, contractor selection, bidding delays, and tax exemption disputes.
- Gwadar port faced problems, including water supply concerns and uncertainties about funding.
Economic Burden and Loan Challenges
- Projects financed by commercial Chinese loans, insured by Sinosure, impose a substantial economic burden on Pakistan.
- Sinosure levies a 7% debt servicing fee, annual varying interest, and financing fee, leading to concerns about the project’s economic viability.
Local Resistance and Anti-China Sentiments
- Balochistan residents resist the Gwadar port city project, fearing the loss of livelihoods and opposing the use of unskilled Chinese labour.
- Gwadar port lease to China Overseas Ports Holding Company raises local discontent, as Beijing receives 91% of profits compared to Islamabad’s 9%.
Rift Between China and Pakistan
- China halts funding for road projects over corruption suspicions.
- The insistence on Yuan as legal tender complicates the Gwadar port issue.
- China refuses to expand cooperation in energy, water management, and climate change under CPEC in 2022.
Rising Insurgency and Security Concerns
- Local land grabs and resettlement fuel insurgency in Baluchistan.
- Militant attacks on the Pakistani Army protecting Chinese workers add security concerns to the CPEC scenario.
The recent visit by Pakistan’s PM to Beijing aims to restart funding for key projects. However, the fate of the Gwadar port development remains unresolved.