The Stakes of the China-Pakistan Economic Corridor and the Chinese-Pakistani Relationship

The development of the China-Pakistan Economic Corridor (CPEC) is important not only for China-Pakistan relations, but the international community as well. Its conception predates the announcement of China’s One Belt-One Road Initiative (BRI), and for a time came to adopt a certain flagship symbolism of China’s attempts at massive overseas investment. Plans for CPEC were finalized in April 2015, when over fifty agreements and various memoranda of understanding were signed on Chinese investments. These investments totaled $46 billion over the next ten to fifteen years.

Naturally, much has been made of this Chinese investment into Pakistan. While they have historically been close (with China unabashedly siding with Pakistan in many of their disputes against India), CPEC represented a new level of ties. While the United States has given Pakistan billions of dollars of aid over the past few decades, most has been tied to security assistance to combat terrorism. In 2009, Congress passed the Enhanced Partnership for Pakistan Act, which sought to put security and development on two separate paths, allowing for longer-term development planning to be insulated from the unpredictable nature of geopolitics and military events. However, the sums granted to Pakistan through this act, while in the billions of dollars, are dwarfed by the amount China has pledged.

In light of recent events, CPEC has taken on even greater significance. With the election of Donald Trump, the United States adopted a much harder line against Pakistan, with President Trump often publicly criticizing the Pakistani government for providing shelter and support for the Afghanistan Taliban. As the United States-Pakistan relationship continues to fray, many see CPEC as evidence that Pakistan seeks to move closer to China, at the expense of its relationship with the United States. In addition, Pakistan’s new Prime Minister Imran Khan has publicly stated his intentions to reduce Pakistan’s “dependency” on the West. Relations with Pakistan are still critical for US interests, with a nearly unanimous consensus among the US military that Pakistan is an absolute necessity for any acceptable resolution in Afghanistan. 

While many have complained that the United States only views Pakistan through the lens of the Afghanistan conflict, this view is not shared by the Chinese. In Pakistan, they see massive potential, both economic and strategic. The Chinese have long been aware of the risk the “Malacca dilemma” poses to their national security interests, and thus the creation of an overland energy link across Pakistan to the Arabian Sea would significantly alleviate these fears. In addition, China’s history of oppressive actions towards its Uighur population in the West have resulted in the formation of various militant groups who base themselves in Pakistan and Afghanistan, where the weaker rule of law allows them to continue operations. China sees the economic development of Pakistan as beneficial for its own national security interests. A stronger, more developed Pakistani nation will be better equipped to deal with the various organizations that target China. In addition, just as US hegemony is increasingly threatened by a rising China, China is aware of the increasing rise of India. A stronger Pakistan would serve well to distract China’s competitor, with their long history of tensions occupying an oversized amount of attention.  

However, there have been significant hurdles to CPEC, and China’s BRI at large. Partially due to efforts by the United States and India to undermine China’s efforts, along with the situation in Sri Lanka, there has been a growing perception that the Chinese money offered in its Belt-Road Initiative is merely a debt trap. With Pakistan being China’s largest endeavor yet, they have significant motive to ensure that CPEC is carried out properly, to give a confidence boost to other countries who are wavering on their decision to accept Chinese money.

Despite Khan’s eagerness to remove Pakistan’s dependence on the West, it is looking more and more likely that Pakistan will have to approach the IMF for a bailout loan. Khan is understandably reluctant to take this step and has approached its allies seeking loans to match the $12 billion in debt that requires payment. While Saudi Arabia, in the wake of their recent global scandal, provided Pakistan with 6 billion dollars for seemingly nothing in return, China has been more reluctant to support their ally. Khan recently visited China in hopes of securing additional loans, along with potentially renegotiating elements of CPEC, which has contributed to Pakistan’s debt crisis. However, the China trip was marred by a slight scandal (In the subtitles for his speech, the word “begging” was used) and more notably, no declaration of additional funds being secured.

While the China-Pakistan relationship seemingly grew much stronger with the creation of CPEC, the arrival of Khan and the recent years on CPEC operations have made many on both sides wary. For the Chinese, progress on CPEC has stalled with the arrival of the new administration, and Khan’s desire to renegotiate terms or certain elements of the agreements will be reluctantly agreed to, if at all. The Chinese also seemed to be caught off-guard at the levels of local resistance to their projects or involvement and have been frustrated by the Pakistan government’s inadequate response. For the Pakistanis, Chinese involvement has not been as revolutionary as many perhaps were led to believe. The CPEC investment has not led to particularly large job creation, as the infrastructure projects are carried out by Chinese firms employing Chinese workers. In addition, various locals in some regions have had their livelihoods heavily disrupted, most notably in the Gwadar, where China seeks to construct a massive port for shipping and commercial purposes. In Gwadar many rely on fishing to earn their living, and they have been restricted to fishing in the waters for half the week due to construction. In addition, the construction of the port has required many to physically relocate, which means abandoning their homes and potentially their livelihoods.

However, despite any misgivings, Pakistan and China will continue their relationship and CPEC will continue to progress. Pakistan desperately needs investment in its infrastructure, so it can focus on removing itself from its debt crisis pattern. China needs CPEC to succeed for the success of their BRI plan as well as for their economic/national security interests.