Pakistan's PM Sharif to Visit China to Reinforce Future of CPEC Amid Debt Dilemma
19:47 04.06.2024 (Updated: 19:49 04.06.2024)
© AP Photo / K.M. Chaudary
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The visit comes at a time when Pakistan's reliance on its alliance with Beijing has deepened, particularly in the context of the China-Pakistan Economic Corridor (CPEC), a transformative multibillion-dollar project that holds immense promise for Pakistan's economic resurgence.
Pakistan's Prime Minister Shehbaz Sharif is set to embark on a five-day official trip to China on June 4, marking a significant milestone in the strategic partnership between the two nations.
At the core of Sharif's scheduled meetings with Beijing's top leadership lies the discussion surrounding China's ambitious Belt and Road Initiative (BRI) flagship project China-Pakistan Economic Corridor (CPEC).
CPEC aims to establish a network of infrastructure and energy projects spanning from Gwadar Port to Xinjiang province, fostering connectivity, trade, and economic development between the two countries and beyond.
Why Does Pakistan Need CPEC?
The importance of CPEC for Pakistan is based on the state's longstanding economic challenges, including infrastructural deficits, energy shortages, and unemployment, Khalid Mahmood, a former high-ranking diplomat in Pakistan's Foreign Service and political analyst, told Sputnik.
According to the expert, with a list of some 95 big projects, CPEC's scope is vast, with the energy sector receiving the lion's share of investment, totaling around $33 billion.
He further said that these investments are poised to address Pakistan's chronic energy crisis, enhance industrial productivity, and stimulate economic growth.
"Just yesterday, the Federal Minister for Planning and Development Ahsan Iqbal said that Gwadar will become an internationally acclaimed world-class port city, which will have tremendous opportunities for its people. In Gwadar, we have seen that China has not only developed the port facility, but has contributed towards socio-economic development of the people, setting up a state of the art modern hospital and technical training institution," Mahmood explained.
He added that among the projects CPEC has undertaken are smaller initiatives considered "vital," that have helped thousands of people living in the Gwadar region with solar panels to provide them with electricity, which is scarce due to limited infrastructure in the area.
Meanwhile, the CPEC offers the potential for job creation and skill development for the youth of Pakistan. As unemployment has recently hit an all-time high in the country, many young professionals try to move abroad for better job opportunities but the corridor aims to retain the talent. Furthermore, technology transfer also helps lay the groundwork for a sustainable and inclusive economic revival.
According to the former diplomat, by bolstering transportation networks, power generation capacity, and industrial zones, CPEC not only promises short-term gain but also long-term prosperity and regional integration.
However, the journey towards realizing its full potential is not without challenges.
Pakistan’s Foreign Reserves and Militancy Threat
The debt burden on Pakistan’s dwindling foreign reserves has paralyzed a country heavily reliant on imports. Some observers like Institute of Strategic Studies Islamabad political analyst Shahid Shah predict that the state is falling into heavier debt to China.
"Pakistan's central bank currently has $9 billion, which is just enough to cover two months of import. The cash crisis has forced Islamabad to reach out to close allies, including China, to save its economy and Islamabad used the CPEC to develop a series of power projects, despite warnings of accumulating more debt. As of December 2023, Pakistan's total external debt is $131 billion and that is quite alarming," Shah told Sputnik.
While there were initial successes with construction of power plants, roads and setting up of economic zones around Gwadar, the CPEC had a bumpy ride in Pakistan since 2015 due to the country’s frequent political, economic and security crises.
Another major impediment is the security threat posed by attacks on Chinese workers and infrastructure in Pakistan by various militant groups operating in Balochistan and KPK provinces.
In March, five Chinese engineers were killed by a suicide bomber near the Dasu hydropower project. The incident was the third deadly attack on or near Chinese interests this year. Just months before that incident, nine Chinese engineers were killed in an attack by militants in Khyber Pakhtunkhwa (KPK), where they were working on another hydropower plant.
Pakistani counterterrorism police have arrested at least 12 suspects in connection with the suicide bombings that killed Chinese nationals in multiple raids. Despite that, such incidents not only undermine the security of CPEC projects but also tarnish Pakistan's image as a reliable investment destination.
Talking about the threat to Chinese nationals working on CPEC projects, former diplomat Mahmood said, "To address this critical issue, Pakistan and China must adopt a multi-faceted approach encompassing security cooperation, community engagement, and diplomatic efforts. Strengthening security measures, enhancing intelligence sharing, and deploying specialized task forces can mitigate security risks and ensure the safety of Chinese personnel."
Pakistan to Reaffirm Commitment to CPEC
According to the former diplomat, Sharif's upcoming trip to Beijing will aim to foster closer ties with China by reassuring Pakistan's commitment to the CPEC. It also underscores the significance of the bilateral strategic partnership and the pivotal role of the project in Pakistan's economic revival.
"It is unfortunately not easy to get things done in Pakistan so the current government will need to really work hard to facilitate the Chinese to carry out their work in safety. I think that is what Sharif will focus on and discuss with his Chinese counterparts because for Chinese companies to run their businesses if they were to relocate to Pakistan they need to feel safe and supported," Mahmood stated.
Similarly, Shah added that Pakistan must reaffirm its commitment to protecting foreign investments and upholding the rule of law, sending a clear message that attacks on Chinese personnel will not be tolerated.
He believes that close coordination between law enforcement agencies, judiciary, and diplomatic channels is vital to quickly address security challenges and maintain investor confidence in CPEC.
As pointed out by the political analysts, the prime minister will aim to harness the potential of CPEC so that Pakistan can overcome its economic challenges and unlock new opportunities for growth with the help of China.
