Signs of unease emerging between China, Pakistan over future of CPEC: Report
Amid lack of progress on the China-Pakistan Economic Corridor (CPEC), subtle signs of unease have emerged between the two countries over the future direction and funding of mega projects, under increasing scrutiny of media and the public.
According to a report published in Modern Diplomacy, the outcome of recent meetings between the two countries reveals significant scaling down of Pakistan's expectations regarding the inclusion of more projects under CPEC phase II.
Fabien Baussart in an opinion piece for Modern Diplomacy said "While the country has for long portrayed USD 6.8 billion Main Line-I project to be the main artery of the Pakistan Railways and tried to convince China for financing the project, the Chinese side has tried to avoid any commitment for funding."
Pakistan has unable to secure any favourable consideration including the concessionary loan at an interest rate of one per cent, said Baussart while adding that China is only willing to offer a mix of commercial and concessional loans to fund the rail project backed by suitable guarantees by Pakistan.
"Although it is the largest among the lot, ML-1 is not the only project facing significant delays. According to Pak CPEC Authority, so far, 17 projects worth USD 13 billion have been completed while another 21 projects having an estimated cost of USD 12 billion are under implementation," the report said.
Baussart further argued that despite high publicity, hardly any Chinese investors are showing interest in setting up of units in the Special Economic Zones being established as part of industrial cooperation under CPEC.
The report further said the hype created by Islamabad through projecting CPEC as a panacea for all problems is losing steam.
"The project not only lacks clear direction to steer through but continues to struggle due to absence of coordination among various executing agencies. The realization is gradually dawning upon various government agencies that Pakistan's economy has failed to achieve any real benefit from the CPEC," the report said.
Adding to that, the Senate Special Committee on CPEC informed the upper house of parliament earlier this month that the Pakistan planning, development and special initiatives ministry does not have the capacity to coordinate and manage projects like CPEC.
The committee stated in a report that the ministry clearly lacks vision and critical thinking as an institution, adding that several lapses in the project due to mismanagement and lack of strategic planning were pointed out in the last two-and-a-half years, The Express Tribune reported.
In 2015, China announced an economic project in Pakistan worth USD 46 billion. With the CPEC, Beijing aims to expand its influence in Pakistan and across Central and South Asia in order to counter the influence of the United States and India.
The CPEC would link Pakistan's southern Gwadar port (626 kilometres west of Karachi) in Balochistan on the Arabian Sea to China's western Xinjiang region. It also includes plans to create road, rail, and oil pipeline links to improve connectivity between China and the Middle East.