Outline
- Introduction:
- Past and Present of CPEC:
- Merits of CPEC:
- Political merits.
- Economic merits.
- Social merits.
- Technological merits.
- Demerits of CPEC:
- Environmental demerits.
- Indian factor.
- Great power politics.
- Loss of the other creditors.
- Damage to the Local Markets.
- Unexplored Area of CPEC:
- Promotion of tourism.
- Advancement of education.
- Flourishing pharmaceutical industries.
- Exploring sustainable methods.
- Is CPEC a Debt Trap?
- Conclusion:
According to the research paper “Employment outlook of CPEC a meta-analysis,” CPEC has already created 80,000 employment through various projects that have started since 2013 and has the potential to produce 1.2 million additional direct jobs through its currently approved projects. The China-Pakistan Economic Corridor (CPEC), the BRI’s flagship project, has come to represent Pakistan’s peaceful and prosperous progress. Being a close neighbour and having a cordial relationship with China, Pakistan is fortunate to have received the best cooperative agreement under BRI, which has laid the groundwork for the development of infrastructure, the construction of energy projects and industrial zones, the modernization of agricultural infrastructure, the development of Gwadar port, and many other noteworthy accomplishments. Furthermore, the significance of seaports and corridors has increased significantly as a result of the geoeconomics dominance in global politics. The significance of CPEC is in the regional context given the shifting geopolitical landscape. East Asia and South Asia will be connected via the corridor. Pakistan has the chance to connect with the economies of South, East, and Central Asia through CPEC. The workforce in Pakistan would be trained through the joint ventures with Chinese businesses. Pakistani businesspeople will be exposed to the international market thanks to Chinese products in local markets. This industrial competition will raise product standards and open up new markets for the regional sector. Unquestionably, this project has many benefits, but it also has some drawbacks that can be avoided if the proper precautions are carefully followed.
Before delving deep into the merits and demerits of CPEC, we need to know the past and present of this project.
The Karakoram Highway was built in 1959 thanks to a 1950s-era concept for a corridor connecting China with Pakistan’s ports. In 2002, China started to show interest in Gwadar Harbour. In 2006, it created Gwadar Port. However, due to political unrest in Pakistan with the overthrow of General Pervez Musharraf and clashes with Taliban insurgents, the port’s growth was put on hold. Asif Ali Zardari, the president of Pakistan at the time, and Premier Li Keqiang of China resolved to increase their mutual connectivity in 2013. An agreement between the two countries to work together on a long-term plan for the China-Pakistan Economic Corridor. Mamnoon Hussain, the president of Pakistan, travelled to China in February 2014 to talk about his country’s intentions for an economic corridor. The complete extent of the project was developed by Nawaz Sharif’s administration after he met with Premier Li Kequiang in China two months later to discuss additional ideas. With regard to its $45.6 billion energy and infrastructure projects in Pakistan as part of CPEC, the Chinese government declared in November 2014 that it intended to provide financing to Chinese enterprises.
The project is currently moving along as planned, according to several official sources. According to the most recent data available, Pakistan’s exports to China surpassed $1.605 billion in the first five months of 2022, an increase of 5.42% over the same period last year. According to the Commercial Counsellor for Pakistan at the Pakistani Embassy in Beijing in 2022, the China-Pakistan free trade agreement will expand the market for services. Within the next five years, bilateral trade between the two nations will surpass $50 billion.
Following the discussion of the origin and the current status of CPEC, we see discuss in the detail the merits of this project. First, we will see the political merits of CPEC that include dispelling an image of a terrorist state and deeper alliance with of the great world power.
After China’s participation with Pakistan through CPEC, Pakistan’s early 2000s reputation as a terrorist state was effectively destroyed. The author of the book “Pakistan’s Enduring Challenges” claims that Pakistan is dealing with an uptick in terrorism and militancy, which is made worse by US drone programme that violate Pakistan’s sovereignty. The world received the much-needed message that Pakistan is worthy of global investment with the announcement of CPEC in 2013.
In addition, Pakistan sees great strategic value in CPEC. The author Moonis Ahmar claims in a research paper from the Institute of Strategic Studies in Islamabad titled “Strategic Meaning of the China-Pakistan Economic Corridor” that the CPEC will strategically connect the two nations by supplying millions of tonnes of goods via the Gwadar port from China to the Middle East, Africa, and Europe. The development of oil and gas pipelines via that corridor will aid in supplying China’s energy requirements. Being able to export its commodities more quickly and across shorter distances to the Middle East, Africa, and Europe will benefit China both strategically and economically.
After having discussed the political merits of CPEC, we will move on to explaining the economic merits of the project. Economic merits include, trade boost, energy security, and industrial and agricultural development.
The CPEC will greatly benefit Pakistan’s trade. According to data made public by China’s General Administration of Customs, Pakistan’s exports to China reached $67 million in the first two months of 2022, an increase of over 23% from the same period last year. Shorter and viable roots are crucial for simple trade. CPEC successfully fulfills this need as well. Furthermore, Cheng Xizhong, Visiting Professor at Southwest University of Political Science and Law, asserted that Pakistan is likely to eventually replace India as China’s primary trading partner in South Asia if bilateral trade between the two countries grows at the current rate of 20–30% annually.
In addition to boosting trade, CPEC offers Pakistan a reliable source of energy security. Energy security is crucial for the expansion and development of the economy. To support industrial activity, power businesses, and promote economic progress, stable energy supplies are required. Safdar Mehmood claims that around $35 billion has been invested in the energy sector, which will generate 10,500 MW of electricity. In addition, during CPEC’s Phase I, 5320 MW of electricity was delivered to the national grid, and seven projects are almost finished.
CPEC also plays a significant role in Pakistan’s industrial and agricultural sectors. Numerous agricultural initiatives are now in progress. For instance, one soil enhancement project uses the addition of organic manure to increase soil fertility and crop productivity. Agribusiness cannot operate without water, therefore dam projects like the Diamer Bhasha Dam and Gomal Zam Dam will serve as water reservoirs. In terms of industrial development, it can be said that the following economic zones—Rashakai in KPK, Dhabeji in Sindh, M-3 Allama Iqbal in Punjab, and Bostan in Baluchistan—are in an advanced level of development.
In addition to political merits, CPEC has social benefits for Pakistan in the form of jobs creation and various social welfare projects.
The Pakistani people now have several work options because to CPEC. CPEC is a huge comfort in this sense, especially given the 4.5% unemployment rate that is now prevalent. Dr Wang Xu, Executive Deputy Director of the Centre for South Asian Studies at Peking University, claims that by 2022, CPEC would have directly or indirectly created 500,000 new employment in Pakistan, in addition to the more than 70,000 jobs it has already generated.
Additionally, CPEC’s social welfare initiatives are assisting Pakistan’s underprivileged populations. Such initiatives are urgently needed in Pakistan right now, where the poverty rate is over 38%. Dr. Wang Xu claims that a number of social welfare projects have been finished that directly benefit the local community’s needs for water, healthcare, education, and professional skill development. Furthermore, even during the Covid-19 outbreak, these projects continued.
Apart from social merits, many technological developmental projects are underway through CPEC manifested in the form of modern infrastructure and digitization.
Pakistan is undergoing a digital transition thanks in large part to CPEC. The adoption of digital technology by a company to digitise non-digital operations, products, or services is known as “digital transformation.” Fibre optics technology is advantageous in this regard. Gilgit-Baltistan (GB) and K-P are connected via an 820-km cross-border optical fibre cable that was already operational in 2018. The Digital Terrestrial Multimedia Broadcast (DTMB) pilot experiment is now complete. The DTMB standard would convert the PTV terrestrial network from analogue to digital transmission (it has already been accepted by China, Hong Kong, and Cuba). The Murree Rebroadcast Station (RBS) is finished.
In addition, a lot of effort has been done in the area of contemporary infrastructure. For instance, the dry port project has been expedited because the feasibility study is complete. The metro bus system in Rawalpindi and BRT Peshawar are both operational inner-city mass transport programmes. The Lahore Orange Metro Train is almost finished, and Quetta Mass transport and the Karachi Circular Railway are past the feasibility stage. The four provincial CPEC projects are as follows: a) the development of the Keti Bunder seaport; b) the road connecting highways M-8 and N-85; c) the Chitral CPEC link road from Gilgit-Shandur and Chitral-Chakdara; and d) the road connecting Mirpur, Muzaffarabad, and Mansehra with the CPEC route. Every project is currently in PC-1.
In fine, it can be stated that CPEC has turned out to be a very fruitful project for the overall development of Pakistan. However, this does not mean everything is hunky-dory. There are certain demerits of this astronomical project too.
Environment and ecosystems are threatened by CPEC projects. Although CPEC projects have assisted in addressing power shortages and outages throughout Pakistan, much of this was done using coal power, according to an article by South Asian Voices, CPEC & Environmental Sustainability. China has emerged as a significant investor in the global coal power business, contributing up to $21-38 billion in foreign investments that may not be subject to strict environmental regulations. There are currently a many of legal national and international frameworks in place for CPEC projects, including land use plans, resettlement policy frameworks, and environmental and social impact evaluations. However, the CPEC agreement does not explicitly include any frameworks for addressing climate change, environmental protection, or other aspects of sustainability in growth. As one of the nations most susceptible to climate change, Pakistan must address these problems through appropriate environmental and mitigation legislation as well as regulations that establish a foundation for the country’s long-term sustainable growth.
In addition to negative environmental effects, CPEC is fostering regional animosity. This kind of unhappiness develops when people feel abandoned or marginalized. The ‘Haq Do Tehreek’ movement in Gwadar was started by Maulana Hidayatur Rehman. The Maulana sought security for fishing communities, the right to fish in their waters, and a restriction on large trawlers in Gwadar. The local unemployed were represented by the clergyman. Demand for little to no use of security forces in day-to-day operations was generally met. Gwadar attracts exceptional attention since it is hailed as the “crown jewel” of the CPEC. The upcoming airport, which will be the biggest in the nation when finished, is 60% built. In a few months, test runs are most likely to be conducted. It is not surprising that Gwadar has come up in discussions in the area as a deep sea port with great potential for connectivity between East and West via the Arabian Sea. However, maintaining peace on the ground is necessary to realize this potential.
CPEC has also increased Indian animosity towards Pakistan. It is argued in a report by the Stockholm International Peace Research Institute (Sipri) titled “Silk Road Economic Belt – considering security implications and the EU-China cooperation prospects” that there is significant concern in India that China, which has maintained its neutrality on Kashmir since 1963, can no longer do so given the growing importance of its economic and security interests in these territories. India does not want China to act as a mediator in these disputes. In addition, India opposes the China-Pakistan Economic Corridor (CPEC) because to its concerns over the possible globalisation of the Kashmir conflict and the rise of China’s influence in the Indian Ocean.
Pakistan is susceptible to becoming entangled in the great power conflict in addition to Indian enmity. For instance, Alice Wells, the top US diplomat, criticised CPEC in 2019 for what she called burdening Pakistan with debt while favouring Chinese state-owned firms disproportionately. She criticised the project’s lack of openness and notably brought up the ‘expensive’ cost of the planned ML-1 upgrade. Additionally, she asserted that the US strategy of fostering commerce and FDI provided a “better” option to the Chinese strategy of investment through state-run firms. This precedent now emphasises how serious the situation is. Since Pakistan needs the IMF and World Bank, two institutions where the USA has the most influence, it cannot jeopardize its relations with the USA in favour of China.
Pakistan is losing other creditors as a result of its over-reliance on CPEC in addition to great power politics. Japan is one of these creditors. In 2018, Japan intended to invest heavily in a tunnel being constructed as part of CPEC, but China objected, causing Pakistan to decline the proposal. A wide variety of creditors is advantageous. As Covid-19 has effectively demonstrated in the context of supply-chain mechanisms, if a country depends on the money of a single country, then any interruption in that country will have a significant impact on the debtor country.
Additionally, CPEC is proven to be quite detrimental to the regional industries. Local firms are concerned that SEZs will harm Pakistani sectors by lowering their competitiveness, despite the government’s promises that they will boost the economy. Local businesses, chambers of commerce, and business associations appear to be very worried about the future. For instance, the textile sector is concerned that the surplus of Xinjiang-produced textiles may lead to future intense rivalry. Following the previous cotton crisis, the local sector already had to rely on costly imports of raw materials, and any increase in demand for raw materials from the neighbouring China will drive up costs and restrict supply. Similar concerns are held by other industries, which fear that massive Chinese businesses with huge economies of scale may eat them up. Environmental experts worry that Pakistan’s open-gate policy towards China may encourage the importation of filthy businesses and lead to environmental degradation.
In summary, although CPEC is a game-changer for Pakistan, it has also some negative facets that require attention. Apart from that there are certain areas in the project that are either completely neglected or require greater share of focus. These areas include, promotion of Tourism, advancement of education, flourishing healthcare sector, working on eco-friendly techniques.
Firstly, the Pakistani tourism industry might benefit greatly from the CPEC. As a result of CPEC, tourism will experience a major uptick. Many of the world’s tallest mountains, including K2, as well as a diversified landscape of mountains, glaciers, lakes, and valleys can be found in Pakistan. Along with more than 50 other peaks over 7,000 metres, it also has five summits above 8,000 metres. Mountain climbers from all over the world will come to Pakistan as soon as the CPEC is operational. CPEC, which would present new investment opportunities after the building of roads and railroads to connect the two nations, has increased Chinese investment in Pakistan’s tourism industry. The former defence attaché for China in South Asian nations, Cheng Xizhong, thinks there are other approaches to boost the tourism industry.
Secondly, under the auspices of CPEC, certain specific partnership for education should be carried out. The gender difference in the percentage of students that enroll in school, both boys and girls, as well as the availability and use of funding for operating various schools, colleges, and universities are just a few of the issues that the education system in Pakistan is dealing with. With Pakistan’s youth bulge in mind, there is a need to prioritise the building of new schools, technical and vocational training facilities, and higher education institutions while also renovating the existing ones. If it is in line with SDG 4, CPEC can aid in raising education standards all across Pakistan. The federal government has attempted to assist provincial governments in boosting teacher recruitment and student enrollment ratios, particularly with regard to girls, in order to increase the nation’s overall literacy rate while trying to achieve SDG 4. However, CPEC has also made progress in the same direction, realising the importance of improving technical education facilities in far-off places like Gwadar and FATA. 25 solar schools have already been established to support the neighbourhood communities.
Thirdly, the healthcare industry can greatly benefit from CPEC. Building healthcare facilities is one way CPEC may support the health sector. People’s medical requirements can be satisfied by building BHUs, trauma centres, burn centres and medicine stores close to CPEC projects. The issue of a shortage of safe drinking water facilities in rural places can be solved by installing tube-wells and water filtration plants as part of CPEC, notably in Sindh and K-P.
Fourthly, with CPEC, Pakistan can develop a number of sustainable methods. As the China-Pakistan Economic Corridor (CPEC) develops, it may significantly contribute to the nation’s efforts to lessen the effects of climate change. “The cooperation between Pakistan and China under CPEC in the fields of energy, transport, agriculture, and industrial production has helped Pakistan boost green, low-carbon sustainable development,” said Romina Khurshid Alam, convener of the National Parliamentary Task Force on SDG, in a 2023 interview with Xinhua.
After having fully understood both the merits and demerits, and unexplored areas of CPEC that can be beneficial for Pakistan immensely, it pertinent to discuss some reservations that the west pose regarding it. These reservations include, CPEC and BRI a debt trap and an attempt at colonizing the developing countries like Pakistan.
The US and several other Western nations appear to be scared of China’s Belt and Road Initiative and are thus attempting to fabricate a story to undermine it. Rex Tillerson, a former US secretary of state, drew a stark comparison between US aid and loans in Africa and that of China on the eve of his first (and only) official visit to the continent. According to Tillerson, “The United States pursues, develops sustainable growth that strengthens rule of law, institutions, and increases the capacity of African countries to stand on their own two feet.” Contrast this with China’s strategy, which promotes dependency through opaque contracts, exploitative lending practises, and shady business dealings that ensnare nations in debt and undermine their sovereignty.
Before continuing, let’s define debt-trap diplomacy. Debt-trap diplomacy refers to the practise of a creditor country purposefully providing a smaller debtor country with excessive credit with the aim of obtaining economic or political concessions when the smaller country is unable to pay back the loan. The Western ruling class continue to make such claims notwithstanding the reports from numerous Western institutions stating that Beijing is not involved in this terrible game. For instance, evidence reveals that China has not, at least to now, engaged in questionable financial practises in the Pacific that would support claims of debt trap diplomacy, according to a Lowy Institute paper titled “Ocean of Debt?”
China is a rising global force that recently surpassed the United States as the second-largest economy. The BRI is also not a recent project, which has been accused of increasing the indebtedness of poor countries. But the world’s less developed nations have been plagued by the debt problem for years. For instance, even before than the ambitious BRI was introduced, the total amount of external debt for all developing nations was estimated to exceed $4 trillion in 2010.
Additionally, the external debt burdens of the nations influenced by the United States have increased dramatically. For instance, in September of this year, Brazil’s external debt reached $567.1 billion, Mexico’s national debt was approximately $661.25 billion, and Argentina’s debt was approximately $280.62 billion.
Following the discussion of all the important facets of CPEC, it is time to conclude the analysis of the subject.
It can be stated that as a link between East Asia and South Asia, the China-Pakistan Economic Corridor (CPEC) is a representation of Pakistan’s peaceful and prosperous progress. The rest of the world receives a message from CPEC that Pakistan is strategically important and deserving of investment. The CPEC has a significant positive impact on Pakistan’s commerce, energy security, industrial and agricultural sectors, job creation, social welfare programmes, modern infrastructure, and digitization. However, it is also associated with some detrimental effects. The CPEC’s projects are putting the region’s ecology and ecosystem in peril, deficient in environmental protections, and escalating tensions between India and Pakistan. Pakistan is losing other creditors as a result of its excessive reliance on CPEC, and local businesses are concerned about increased competitiveness and environmental harm. There are also some locations that have been overlooked or uncharted. CPEC has the potential to advance tourism, increase Chinese investment in the nation’s tourism sector, and collaborate on educational initiatives. CPEC can help to improve healthcare, education, and climate change mitigation through the construction of healthcare facilities and the adoption of sustainable practices. Other than that, other major world powers are working to make this endeavour pointless and ineffective. The US, along with other Western countries, is attempting to make up a narrative to discredit China’s Belt and Road Initiative, which has long been charged with raising the debts of developing countries. Pakistan’s socioeconomic struggles will not magically disappear like a genie in a bottle. It’s time to roll up our sleeves and address the issues related with CPEC. If this project goes out of hands, then what other option does Pakistan have?