China refuses to fund fresh CPEC projects in Pakistan

The BRI, known within China as the One Belt One Road or OBOR/1B1R, is a global infrastructure development strategy adopted by the Chinese government in 2013 to invest in more than 150 countries and international organisations.

The CPEC connects China’s Xinjian to the Gwadar port in Pakistan’s Baluchistan on the Arabian Sea, allowing China an additional maritime route to the world.

The estimated cost of the CPEC is around $62 billion, with a completion date of 2030.

India opposes the project as it passes through parts of Pakistan-occupied Kashmir (PoK).

Differences between China, Pakistan

Chinese vice prime minister He Lifeng came to Pakistan for the 10th anniversary of the project in July. The two sides signed the minutes of the Joint Cooperation Committee (JCC) meeting of the CPEC during the visit.
Pakistani media reports suggest that though the JCC meeting was in October last year, the minutes were not signed as serious differences cropped up.
The Express Tribune said China has refused to further expand cooperation in the areas of energy, water management, and climate change under the CPEC.

The Pakistan government highlights the CPEC as a game changer but there is resentment among large sections of the people.

They feel that instead of transforming their lives, the mega project has marginalised them further.

Why locals are not happy

China relies on the Chinese work force for much of the construction and uses the locals only for supply of sand and gravel.

But Pakistani officials say the project has created nearly 200,000 jobs for the local people and built more than 1,400 km of highways and roads.

It has also added 8,000 MW of electricity to the country’s national grid to ease years of power crisis that Pakistanis have suffered and affected industrial production, the government says.

Pakistan hopes the situation will significantly improve once the CPEC is completed and several economic zones and power projects are added.

However, the Chinese did not share that optimism at the JCC meeting, according to reports.

Delay in signing minutes

The JCC is a strategic decision-making body of the CPEC and its 11th meeting was held virtually on October 27 last year on the insistence of the Pakistan Muslim League-Nawaz (PML-N)-led government that wanted to showcase some progress.

The delay in signing the minutes showed differences persisted on many issues.

China’s disagreement to further expand cooperation in areas of energy, water management, and climate change under the CPEC underscores “the challenges that both sides are facing in deepening the economic ties”, The Express Tribune said.

China did not want cooperation in Gilgit-Baltistan, Khyber-Pakhtunkhwa, PoK and cooperation for the promotion of coastal tourism.

It also refused to listen to the financial challenges that Pakistan power companies were facing that delayed payment to China.

In December last year, the main road leading to Gwadar port was blocked due to sit-down protests by locals.

Their demands include access to basic amenities, including water and power, as well as access to sea for fishermen.

Though in the past months there have been no protests, the resentment among the local people remains. The China-Pakistan discord on the CPEC is not new but generally kept behind closed doors.

Beyond alleviating power and connectivity problems, Pakistan has used Chinese money to pay off other lenders, including Saudi Arabia and the UAE.
Over the years, China has become increasingly cautious about investing in Pakistan.

UN data show that China’s exports to Pakistan have been declining since a peak of $15 billion in 2017.

There has been a clear downward trend in manufactured goods and materials. Iron and steel, crucial to infrastructure development, fell by 40 percent between 2016 and 2020.

The situation worsened due to the pandemic lockdown and the Ukraine war in the following years.

China concerned about attacks

A major area of worry for China has been over the attacks on its workers while working at the CPEC projects.

In August, there was an abortive attack on 23 Chinese workers travelling in a bullet proof convoy in Gwadar in Balochistan by militants.

In July 2021, nine Chinese nationals were killed by terrorists near the Dasu hydropower project in north-west Pakistan.

Chinese leaders have often raised the issue of Chinese nationals’ security in Pakistan with the Pakistani authorities.

President Xi Jinping expressed serious concern about this when Shehbaz Sharif, as Pakistan’s Prime Minister, visited Beijing in November last year.
Though Pakistan has tightened security in project sites and where Chinese workers live, sporadic attacks have continued.

The messy US withdrawal from Afghanistan in August 2021 and the return of the Taliban to Kabul has raised more uncertainty.

The ongoing economic crisis in China has also led Beijing to reassess its BRI investments in different parts of the world—including its flagship, CPEC.
Having made so much investment in the mega project, which is also closely linked to President Xi’s world view and China’s role in it, there is little chance that Beijing will withdraw from it.

But, in future, it will make the Pakistan leadership more accountable for every dollar spent by China on the CPEC.