CPEC 2.0: The Promise and the peril


COMPOSER/Leea Contractor

As Pakistan navigates changing power equations in the world, and the crisis in Kashmir, the China Pakistan Economic Corridor (CPEC) stands out as the one possible silver lining for Pakistan. However, while CPEC is still one of the largest bilateral investment projects underway anywhere in the world, today its momentum in Pakistan is being regularly questioned. The scale of the promise is so large that it invites anxiety as well as awe in its sweep. With early harvest projects worth 18.9 billion dollars already underway in Pakistan in its first leg, the planning by Islamabad should bring much higher infows than timelined right now. Yet it simultaneously tests the Pakistan government’s capacity to use the opportunity to its advantage.

China’s ability to pull 800 million people out of poverty in four decades through economic reforms has presented a compelling model for Pakistan to follow. However, given a tough series of IMF-induced measures for stabilisation, economic growth in Pakistan seems to have slowed down even more. Even though the centre is adamant that there has been no slowdown on CPEC goals, the sense in the provincial capitals is different.

Among the big signature projects, infrastructure and energy top the wishlist. While Thar coal has generated power that now feeds into the national energy grid, officials claim that Islamabad’s full-throttle drive on CPEC has been eased up and work on the projects pushed down the priority list. Yet at the same time, the economic impact of CPEC is seen as potentially so game-changing, that it cannot be ignored. With the precipitous slide of an overvalued rupee, and public finances straining at crippling deficits, the prospect of Chinese-led investment growth is the only rainbow on a horizon clouded by high economic stresses for a fast-growing population. In best-case estimates, in fact, it is believed that Chinese investment can potentially stimulate an eight to 10 percent increase in Pakistan’s GDP by 2030. In worst-case futures, that number may well be unreachable, given Islamabad’s current inability to operationalise promised reform.

Furthermore, even though Pakistan’s new economic policy focus seems to be geared towards operationalising these promised reforms, the goals that it has espoused have remained blurry and do not align with parliamentary and public reporting. Separating myth from reality and setting clear goals for inclusive planning at the federal, provincial and grassroot levels should be a top priority for the government. As a democratic country with multiple languages and ethnicities that find expression in a huge traditional and social media, even small confusions or communication gaps can create severe cascades of backlash at all tiers of governance. For example, community level politics is critical to navigating trade union tensions. In Gwadar, the lack of consultations with the local fishermen in the building process of terminals and jetties that displace their livelihoods and boats has been a major cause for tensions. It is precisely this ambivalence that has hampered the transfer of knowledge and caused the failure in connecting nodes at the downstream institutional level.

The scale of Chinese investment in the China Pakistan Economic Corridor is so large that it invites global awe. But as CPEC moves into its second phase, there is also anxiety that the project is deliberately being slowed down and that its promise may not be fulfilled. What needs to be done to put it back on track?

Moreover, while some of the Pakistani concerns pivot around transparency, repayment terms and capacities, most of them do not question the intent of the embrace. Provinces within Pakistan that voice complaints either do so because of Islamabad’s growing institutional opacity or simply because they want more of the pie.

Dawn for more

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