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Why Pakistan is celebrating 10 Years of CPEC: What have Chinese given us other than loans and debt trap

5 minutes read

Why Pakistan is celebrating 10 Years of CPEC: What have Chinese given us other than loans and debt trap

5 minutes read

Key Points

  • Pakistan is celebrating its 10-year anniversary of China-Pakistan Economic Corridor (CPEC, marking a decade of economic cooperation between Pakistan and China.
  • Concerns persist regarding the lack of transparency surrounding China’s investments in Pakistan, with unclear distinctions between loans and grants.
  • Pakistan’s debt situation raises questions, as approximately 30% of its external debt is owed to China, and the terms and categories of these loans remain undisclosed.
  • While CPEC was initially seen as a transformative project, concerns have been raised about the lack of information available to the government of Baluchistan, highlighting issues with transparency and implementation.
  • Efforts to revolutionize the agricultural sector, such as the recently inaugurated Land Management and information Center, show promise, but overreliance on foreign investments in agriculture raises concerns about Pakistan’s future trajectory.

Dr. Qamar Cheema in his recent podcast said that Pakistan is currently celebrating its 10-year anniversary of the China-Pakistan Economic Corridor (CPEC, marking a decade of economic cooperation between Pakistan and China. However, amidst the festivities, there remains a lack of transparency regarding the nature of China’s investments in Pakistan. While it is known that substantial funds have flowed into the country, estimated at around $25-26 billion, the distinction between loans and grants remains unclear.

CPEC falls under China’s ambitious Belt and Road Initiative (BRI), aimed at enhancing regional connectivity and infrastructure development. However, India has recently hindered or halted progress on CPEC during a SCO summit, highlighting the challenges faced in regional connectivity. Additionally, concerns have been raised about Pakistan’s debt situation, with approximately 30% of its external debt owed to China. While some deny being trapped in a debt cycle, the lack of evidence regarding the terms and categories of these loans and investments raises questions about transparency.

He highlighted that transparency, accountability, and merit are key principles of democracies. Therefore, it is essential for Pakistan to adhere to these standards and provide clarity on its financial obligations to China. Celebrating 10 years of CPEC without a comprehensive understanding of the debt and repayment terms is concerning.

The Minister of Investment, Chaudhry Saliq Hussain, claimed that the Chinese funds were acquired for Foreign Direct Investment (FDI). However, the extent to which China’s involvement has affected the delayed IMF deal remains unknown. Some speculate that China’s influence may have influenced the negotiations, causing the IMF to scrutinize Pakistan more closely.

Dr Qamar stressed that initially, CPEC was regarded as a flagship project that would transform the fate of Baluchistan, generating employment opportunities and fostering development across various sectors. However, the lack of information available to the government of Baluchistan itself raises concerns about the project’s transparency and implementation.

While CPEC was viewed as a promising initiative with potential benefits for Pakistan’s energy sector, infrastructure, road development, and the creation of industrial zones, not all investors and businesspeople were satisfied. Many Pakistani investors rejected opportunities to engage in business and investment with China, preferring to pursue partnerships in Europe and other countries due to cultural differences.

Pakistan has offered incentives and guarantees to Chinese investors, expecting high returns. However, as the country becomes increasingly indebted to China, it is crucial to evaluate the long-term implications. The first phase of CPEC focused on road and energy infrastructure, but progress in the second phase has been limited, with a lack of development in the past five years. Export deficits and the need for domestic manufacturing highlight the need for a balanced approach that considers both successes and failures.

Dr Cheema was of the view that the lack of prominent Chinese leadership visiting Pakistan during the anniversary celebrations raises further concerns. Rather than celebrating blindly, caution is required to analyze the cultural, agricultural, and technological policies that have not been adequately addressed through Chinese cooperation. Pakistan’s significant trade deficit of $20 billion with China and the lack of progress in domestic manufacturing are pressing issues that need to be addressed.

Efforts to revolutionize the agricultural sector, such as the establishment of the land management and information center of excellence, recently inaugurated by PM Shehbaz Sharif, show promising signs. The involvement of the Pakistan Army and funding from Saudi Arabia indicates a commitment to agricultural development. However, the dependence on foreign investments in agriculture while struggling to export in other industries raises alarm bells about Pakistan’s future trajectory.

Furthermore, other countries like Saudi Arabia, the Emirates, Bahrain, Qatar, and China are investing heavily in agriculture-related projects, further shifting Pakistan’s focus away from industrial exports. This overreliance on the Chinese basket for economic stability without a comprehensive strategy raises concerns about Pakistan’s future prospects.

While Pakistan emphasizes its geo-economics approach, practical steps are necessary to bring about tangible change. Merely introducing new terminologies and rhetoric is insufficient. Pakistan must carefully evaluate its position, consider its future, and ensure that loans acquired ultimately lead to reduced unemployment, inflation, increased exports, and improved revenue generation for the country.

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