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The so-called high-powered collaboration between the People’s Republic of China and the Islamic Republic of Pakistan under the China-Pakistan Economic Corridor, a 3000km long Chinese infrastructure network project undertaken in Pakistan, now appears to take a significant shift, facing certain challenges.
The CPEC is currently confronted with significant obstacles, with many projects experiencing delays or coming to a complete halt. The Severe difficulties faced by the CPEC currently were noted on September 26, 2023, by a reputed media agency. These issues mostly result from the severe economic hardships that both nations are experiencing.
Surprisingly, China has declined to increase its engagement with Pakistan within the CPEC in important areas like energy, water, tourism, and climate change. This choice demonstrates both waning enthusiasm and a reconsideration of their partnership in the light of complex economic realities.
Reasons for Hesitations
Due to Pakistan’s crippling debt burden and the approaching possibility of financial default, Chinese investors are showing signs of hesitation in funding new projects in Pakistan. Furthermore, China criticises the International Monetary Fund (IMF) for imposing onerous requirements in order to resume a six billion rescue programme. The circumstances may worsen Pakistan and its economic problems and draw attention to Chinese loans.
According to a news media report, China, at present, holds approximately USD 30 billion of Pakistan’s total external and foreign debt, which stands at USD 126 billion. Despite numerous attempts to revive stalled Pakistani projects and initiate new ones, the future of the CPEC appears uncertain and due to Pakistan’s fragile economic condition, Chinese reluctance to provide further financial support.
The article by a news agency is solidly based on the conclusions of the CPEC 11th Joint Cooperation Committee, which serves as the project’s strategic decision-making body. The fact that conference minutes were not included and signed until July 31, 2023, despite the fact that the meeting itself took place in October 2022.
Other Reasons
According to thorough records, China is rejecting a number of Pakistani proposals in a variety of fields, including energy, water management, climate change and tourism in places like Gilgit Baltistan, Khyber Pakhtunkhwa, POJK (Pakistan Occupied Jammu and Kashmir) and coastal regions.
Moreover, regarding the Gwadar Power Plant, Pakistan has made significant concessions to appease China but has failed as the Communist nation did not endorse the Pakistan position, which highlighted concerns over escalating international coal prices, soaring electricity costs, liquidity and foreign exchange challenges from Pakistan
Pakistan is a prominent recipient of Chinese investments in infrastructure and energy. Now, it finds itself burdened by Beijing with nearly one of its extensive external debts owed to the Chinese.
Ammar Habib Khan, a well-known Pakistani economist who works for the Atlantic Council in Washington, USA, as a non-resident senior fellow, said that Pakistan and its inability to revitalise the economy through the CPEC is mostly due to this financial load. Beijing and Islamabad strenuously dispute the idea that China’s economic assistance to Pakistan and other BRI (Belt and Road Initiative) beneficiaries is a debt trap.
The Chinese-Pakistan Economic Corridor is currently facing serious obstacles, most notably China’s waning commitment, which was made clear on September 16, 2023. A piece released by a media agency highlighted the problems faced by both countries.
China’s reluctance to increase its involvement in crucial areas reflects an evaluation amid complex financial issues. Due to the growing debt of Pakistan, the CPEC struggles with halted projects and investor reluctance.
About the CPEC
CPEC stands for China-Pakistan Economic Corridor, which is an important component of the total six corridors of the larger Belt and Road Initiative (BRI) project. It is basically a series and networks of roadways, railways and super-highways whose southern end is the coastal city of Gwadar, and it runs all the way through Pakistan and ends at Kashgar, the northernmost node of the corridor in the Xinjiang Province of China. It has been specially built to prevent China’s Malacca Dilemma in strategic studies.
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