Who benefits more from the China-Pakistan Economic Corridor: China or Pakistan?


For many years, Pakistan Prime Minister Imran Khan was critical of CPEC project launched by Chinese President Xi Jinping. PHOTO/Thomas Peter/Pool/AFP

When it comes to debts, Islamabad should consider that Beijing may be a less sympathetic creditor than the West.

Since being officially launched by Chinese President Xi in April 2015, the China-Pakistan Economic Corridor has attracted some $25 billion investment into Pakistan’s roads, ports, power plants and fibre optic cables. Given the power imbalance between China and Pakistan and also Beijing’s reputation for an unswerving focus on its own national interests, it has been widely assumed that China was always going to secure the most benefits.

In some respects, it has. The terms of specific deals have been so beneficial to China that Pakistan will face a major challenge repaying the debts it is amassing. Not only that, in some cases China has apparently even brought in its own prisoners as a workforce rather than providing Pakistanis with much-needed jobs.

Internal politics

But a major new study by the Carnegie Endowment for International Peace has suggested that Pakistan has also enjoyed some success in securing its objectives in relation to CPEC. Perhaps it should not be such a surprise. After all, for many decades Pakistan has outmanoeuvred successive United States administrations, securing huge quantities of aid whilst not changing its national security policies of building a nuclear bomb and supporting pro-state violent jihadists. The Carnegie report suggests that China too has discovered that when you deal with Pakistan, it is not all one-way traffic.

When CPEC first got underway, Nawaz Sharif wanted China to focus on the energy projects that had been a key feature of his 2013 election manifesto. To some extent, this suited Beijing too. After all, if it was to relocate factories to Pakistan, it would need the energy to supply them.

But Carnegie found that the minutes of the Joint Cooperation Committee which oversaw CPEC clearly indicated that the early focus on energy projects was initiated by the Sharif government. In part, because it wanted to secure political support for the whole initiative, China agreed to these priorities and many of the early CPEC investments went to energy projects, most notably coal power plants.

The Pakistani government also exerted influence over decisions about which locations would benefit from Chinese investment. Whilst Nawaz Sharif was in power, many major projects were steered towards his political heartland of Punjab province, Pakistan. Khyber Pakhtunkhwa meanwhile missed out. This to some extent suited the Chinese who saw great development potential in Punjab province, in part because it was cheaper to work in a province with a road network of sorts already in place.

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