Getting CPEC right could lift Pakistan out of poverty

The recent spurt in activity connected with China-Pakistan Economic Corridor (CPEC) has silenced many sceptics who were claiming that the Imran Khan led government is either not serious in pursuing the “flagship project of the BRI” (Belt and Road Initiative) for the lack of ability to cope up with the demands of such a high profile project. Some argued that Chinese are pulling back due to disillusionment with Pakistan’s weakening commitment on corruption.

Over the last two years of IMF-imposed austerity, Pakistan’s crippling current account deficit and the incoming PTI government’s re-evaluation of the CPEC projects slowed the pace of construction of some of the projects. In certain cases delays were the consequence of work stoppages due to Covid-19. While some high visibility infrastructure projects were held in abeyance for now but given the priorities of the PTI government, social sector and industrial parks projects were listed in priority in what is now said to be Phase II of the CPEC. Despite the hiccups one thing that remains true is the unqualified commitment of both China and Pakistan to this “flagship project” within the BRI.

The idea seems to have been first conceived during the 1950s which led to the construction of Karakoram Highway during the 1960s, an all weather road connecting China and Pakistan, facilitating trade and overland travel. This was an extraordinary achievement given the mountainous terrain.

The CPEC project, in its present form was launched in 2015 with President Xi Jinping becoming the driving force behind the BRI. Gwadar being the end point of CPEC holds a special place with nearly $1 billion investment reserved for its development. The port with a capacity of 70,000 tonnes ship and the 2,200 acres free trade area have been completed and handed over to the Chinese for a 43 year lease. This includes manufacturing and logistics hubs that are exempt from local and federal taxes of Pakistan.

Speeding up CPEC projects

For China and Pakistan’s world vision the potential CPEC payoffs are clear. For China it is the ambition to develop infrastructure to trade across Eurasia, Africa and beyond. Mindful of the day when the US could disrupt its energy supplies, China foresaw Pakistan’s deep water natural harbour at Gwadar for development as a port which could in time be connected to western China through, rail, road and pipeline network. Trump’s presidency and its belligerence towards China has necessitated the need for speeding up the CPEC connectivity projects. For Pakistan, jettisoned by its traditional friends, the CPEC brings hope of economic and political dividends. Pakistani analysts believe that deepening ties with China will deter Indian misadventure against the country and will also offset rising US pressure.

One of the biggest problems in project development and execution grew out of Pakistan’s peculiar federal system especially after a lot of power was devolved to the provinces under the 18th constitutional amendment. This adversely affected speed and uniformity of action among various federal units. This problem has now been solved through creation of an autonomous ‘CPEC Authority’ to coordinate and mange all CPEC related activities. Headed by a retired 3 star general, the Pakistan Army has added speed and direction to the CPEC implementation.

Political support for the CPEC at the national level is now unwavering among the political parties. Earlier conflict of interests seem to have been resolved for now after the Chinese Communist Party and several Pakistani political parties engaged with each other to build a consensus. There is nonetheless, local opposition over the lack of consultation and concern for their perspective and over the likely inequitable distribution of prospective benefits for the natives, especially in Baluchistan. While the benefits of the CPEC may take years to come to fruition, critics argue that Pakistan government instead of listening and accommodating local aspirations has responded with intimidation of the local communities.

Connecting the country

A critical component of the CPEC is laying down of the new 1250 Km railway line (M-1) from Gwadar to Khunjrab at the border between China and Pakistan and the modernisation of the British era 872 Km Karachi to Peshawar track. When completed the railway lines would connect some of the least developed districts of Baluchistan to bring them into the national economy. The industrial parks, which these railway lines will connect, will generate employment and help uplift them.

The Gulf oil producing countries, the largest energy suppliers to China, should be direct beneficeries when Gwadar port, its pipelines, rail and road network is fully operational. It will be economical to transport these resources directly to China and also to bring in much needed Chinese merchandise for the Gulf markets and beyond.

Western sceptics accuse massive Chinese investments in the developing world as a debt trap, more so in countries like Pakistan. Much of the Chinese money to Pakistan is in the form of grants and concessional loans with relatively flexible payment schedules. The chellange is now to see how quickly Pakistan can put its house in order by streamlining its administration, eliminating corruption, reforming its societal norms and more. With over 60 per cent of population between the age of 15 and 29 according to the UNDP, if the country gets it right, Pakistan could be poised to leapfrog out of poverty.

Sajjad Ashraf served as an adjunct professor at the Lee Kuan Yew School of Public Policy, National University of Singapore from 2009 — 2017. He was a member of Pakistan Foreign Service from 1973 to 2008 and served as Pakistan’s consul general in Dubai during the 1990s.