china has emerged as Pakistan’s biggest economic partner through the china Pakistan economic corridor (CPEC) often referred to as the “Corridor of opportunities” and rightly described as the game changer. It surely is. Provided Pakistan can capitalized on it and use CPEC to its full potential and benefit from it. As a result of china’s ONE Belt and One Road (OBOR) and CPEC, the ‘all weather friend has risen to all weather strategic cooperation partnership. At a time when Pakistan is in a deep economic crisis, china’s OBOR initiative is a boon for Pakistan.
It is set to open shorter overland and sea routes to enhance china’s connectivity with the Middle East, Africa and Europe. But what is CPEC? Looking at the background, plans for a corridor stretching from the Chinese border to Pakistan’s deep-water ports on the Arabian Sea date back to the 1950s and motivated the construction of the Karakoram Highway beginning in 1959. Chinese interest in Pakistan’s deep-water harbor at Gwadar Port which saw completion in 2006. Expansion of the port then ceased thereafter owing to political instability in Pakistan and the subsequent fall of General Musharaf and the conflict with the Taliban.
Moreover, China Pakistan Economic Corridor is a dream of prosperity which is dreamed by china and will be materialized by Pakistan and its fruits will positively be stretched to Pakistan and as well as to the whole region. Moreover, Jalil Abbas Jilani claimed at Washington in his address that CPEC is the only way which can open the door of fortune in Pakistan as well as in the whole region. It ensures shared economic prosperity for the participating countries through regional connectivity and the development of infrastructure. It is a great visionary concept that positively addresses the regional issues of poverty alleviation and development and ensures peace in the region through economic independence. The leadership of china deserves appreciation for the revolutionary idea of “One Belt One Road” initiative which is beneficial for almost 26 countries. The direct and indirect benefits made this project popular among South Asia and Central Asia, and even some of European countries. Pakistan is a key actor in this mega event and the success of this venture is greatly dependent on Pakistan. Therefore, being a hub of economic activity, Pakistan surely is heading toward great welfare and regional connectivity.
According to the economic survey of 2015, it has been estimated that when the CPEC project was completed in 2017, the value of these projects would be greater than inflow of foreign direct investment in Pakistan since 1970. China committed $50 billion amount to invest in Pakistan under the umbrella of CPEC; among which $ 35 billion will be invested in energy projects and $ 15 billion in infrastructure, Gwadar development, industrial zones and mass transit schemes. However, it is expected that it will be more than 55 billion in the next 5 years.
The entire portfolio will be completed by 2030. However, the State Bank of Pakistan reported that Pakistan received $975.4 million in FDI during the period 2015-2016 and the disbursement of FDI from china to Pakistan was $ 2.1billion and the share of china in FDI grew up to $516 million in Pakistan during the period. Moreover, China has started an infrastructure development plan in Pakistan worth of $46 billion former Finance minister, Ishaq Dar, highlighted the economic benefits of CPEC in the Asian Development Bank summit conference and claimed that in near future Pakistan will be the only choice destination for foreign investors. Moreover, Dr. Miftah Ismail, the current finance minister claimed that different prospective investors have shown their willingness to invest almost 150 billion dollars in different business and manufacturing centers in Pakistan.
However, concerns about CPEC have enhanced the road to major troubles. They include the lack of transparency, high costs, a heavy dependence on Chinese labor, and major debt risks for Pakistan. These worries formed the crux of the US government rebuked in November 2019 by the principal deputy assistant secretary for south and central Asia affairs Alice Wells in a speech at the Wilson Center. The PTI government did express some unease about CPEC. Soon after taking office in August 2018, it announced a review of all perks for Chinese companies and other corruption related concerns. A month later, commerce Minister Abdul Razak Dawood even undertook its review. He said: “I think we should put everything on hold for a year or so until we can get our act together… perhaps we can stretch CPEC out over another five years.
To ward off criticism from several quarters, the Chinese declared that CPEC was not the cause of Pakistan’s current economic malaise. That is true. Every Pakistani government since the 1950s has contributed to the country’s debt burden by borrowing millions of dollars from the West and the IMF.
But what is also true is that when the repayment of the 50 billion dollars in CPEC-Securities, a brokerage house that analyses CPEC-related finances, estimates Pakistan’s debts to china will balloon to 90 billion dollars in the 30 year repayment period.