Decade Down the Road: China-Pakistan Economic Corridor's Unmet Promises
Ambitious Infrastructure Plan Falls Flat 10 Years Out
Overt Operator
July 28, 2023
The China-Pakistan Economic Corridor (CPEC), Beijing's bold plan to strengthen economic ties with Pakistan through extensive infrastructure investment, is now a decade old but has yet to fulfill its ambitious aims.
Launched as a pioneering initiative under China's Belt and Road Initiative (BRI), the CPEC was an audacious endeavor. It garnered a hefty $35 billion pledge from China for energy projects and a further $10 billion for transportation.
During a recent commemoration marking the project's 10-year anniversary, Ahsan Iqbal, Pakistan’s Minister for Planning, Development and Reforms, declared that $25 billion worth of projects had been completed. He affirmed that the government's present focus is on the completion of projects initially earmarked for completion by 2020.
Iqbal accentuated the construction of 13 power projects and a 4,000-megawatt electricity transmission line. At CPEC's inception, the Pakistani government anticipated a power requirement of an additional 4,000 megawatts to fulfill demand that year. Presently, it's estimated that CPEC projects supply around a third of the power for Pakistan's electrical grid.
"CPEC effectively helped Pakistan in improving the major transport networks from north to south and laid the foundation for a resilient infrastructure including ports, airports and roads and Orange Line Metro Train in Lahore," Iqbal said.
However, Haroon Sharif, former head of Pakistan’s Board of Investment, voiced skepticism about the job creation associated with these projects. Sharif contends that the government's statistics are not based on third-party assessments, hence their credibility is questionable.
Sharif differentiates between temporary and permanent jobs in CPEC projects: temporary laborers are engaged until the completion of projects, followed by permanent workers who manage the operations.
As the CPEC project celebrates a decade, most of its projects, which commenced in 2013 with 2020 deadlines, are reported to have been completed. Yet, nine special economic and industrial zones anticipated to attract Chinese investment are still under construction or have yet to break ground.
This month's anniversary ceremony saw Iqbal attribute delays in the completion of these zones to the previous government, though without providing specifics. Sharif, on the other hand, links the slowdown to political turmoil in Pakistan and the impact of COVID-19, which led to border closures by China.
Chinese Foreign Ministry spokesperson Zhao Lijian has dismissed reports suggesting that the pandemic has impeded CPEC progress. However, Ammar A Malik, senior scientist at AidData, argued that delayed completion of the industrial zones has indeed slowed Chinese investments.
Malik emphasizes the vested interest China has in its Pakistan investments and suggests that the lack of progress in certain areas could be a cause for concern.
"It is in China’s interest that Pakistan achieve political and economic stability," Malik stated, as quoted by media reports, stressing that Pakistan should not take China's interest and support for granted.
In 2013, China displayed interest in relocating some of its industries to Pakistan, drawn by lower production costs. Yet, the lack of progress on the industrial zones has led many Chinese investors to redirect their expansion plans to countries like Cambodia, Laos, and Vietnam, where production costs are comparatively lower than China
Despite this setback, Iqbal assures that the current government is committed to accelerating all CPEC projects. However, Ashfaque Hassan Khan, a Pakistani-based economist, highlighted that the nation's chronic power shortages have hampered Pakistan's ability to fully leverage Chinese investment.
Khan maintains that China's confidence in Pakistan will be restored only with the establishment of political and economic stability and a positive investment climate perceived by other foreign investors.