Several observers view the current state of Pak-China relations as one of complete economic dependence of one country on another. As a highly unequal partnership that leaves both countries in a complicated and tough spot with no resolution in sight. That is a point Sriparna Pathak and Rakshith Shetty made in their article for The Diplomat, where they argued that Pakistan’s relations with China are at a very critical stage.

CPEC has successfully addressed the most pressing issues in Pakistan, including energy needs and infrastructure gaps.

The authors highlight how high debt levels from CPEC projects, stalled infrastructure projects, cost overruns, and Pakistan’s security issues have negatively impacted the relations. They also point out the slow progress of CPEC’s second phase and China’s frustration with Pakistan’s security measures. Importantly, they suggest that Pakistan’s efforts to diversify partnerships could potentially lead to a significant shift in Pak-China ties and regional stability in South Asia.

Even though they mentioned some facts, their arguments are not fully supported by the evidence they present. This article critically responds to the point that Pakistan’s reliance on Chinese loans and lack of security measures are significantly delaying Pak-China relations and have implications for the region.

First, the claim that Pakistan’s reliance on Chinese loans is having a negative impact is misleading. Although Pakistan has received loans from China, its overall debt situation has improved. According to the recent State Bank of Pakistan release, the federal government’s total debt stock fell to 65.57 trillion by the end of September 2024 from 70.362 trillion in the last week of August 2024. This significant decrease in domestic and external debt levels points towards Pakistan’s improving financial stability.

Saad Hanif, head of research at Ismail Iqbal Securities, said that external debt remained stable with a minor increase, which can be attributed to the government’s long-term debt policy, which aims to provide more stability and reduce financial risks.

Moreover, several indicators have projected financial progress. The International Monetary Fund (IMF) projects that Pakistan’s inflation rate, which dropped from 29% to 12.6% this year, will decline to 10.6% by 2025, according to the IMF’s Director for the Middle East and Central Asia, Jihad Azour.

Pakistan’s external Current Account Balance recorded a surplus of $ 1.21 billion during the first half of fiscal year 2024-25 as compared to a deficit of $ 1.397 billion during the same period last year. These positive economic indicators demonstrate that Pakistan’s economic situation is more nuanced than the picture of desperation painted by the authors.

Furthermore, loan usage under CPEC has significantly transformed Pakistan’s infrastructure outlook, job market, and business opportunities. CPEC has successfully addressed the most pressing issues in Pakistan, including energy needs, bridging connectivity and linkages among cities, and upgrading the existing infrastructure.

China’s cautiousness with CPEC is being misinterpreted as skepticism.

The CPEC is already in phase 2, and it has successfully delivered 38 projects in its first phase of worth $25.2 billion. These projects have improved Pakistan’s infrastructure, created job opportunities, and enhanced business prospects. Gwadar Port is developed to accommodate ships up to 50,000 deadweight tonnes, providing vital access to the Persian Gulf and serving as a transshipment point for Gulf countries.

In the energy sector, 17 power projects were completed that added 8,800 MW to the national grid, two coal mines, and a +660 kV HVDC transmission line. With Chinese help, Pakistan has started constructing the “Chashma-5” (C-5) nuclear power plant. The C-5 deal of $ 4.8 billion was concluded in June 2023.

According to the Ministry of Planning, C-5 can produce 1200MW of electricity. This project not only contributes to Pakistan’s energy needs but also creates job opportunities. This project, funded by China, demonstrates the mutual benefits of the economic relationship between the two countries.

Even though most of CPEC 2.0 is currently aspirational, the completed projects and those in the pipeline show a clear path to progress. These developments should instill a sense of optimism about Pakistan’s economic future.

Secondly, despite the security concerns and challenges, the iron-brotherhood has proved resilient and has remained committed to avoiding mistrust. The Chinese foreign ministry spokesperson Lin Jian firmly stated they won’t let any efforts to sabotage CPEC succeed. This determination was practically proven when, after just a few months of this deadly attack on Chinese personnel in Bisham, district Shangla KPK, CPEC advanced into its second phase (CPEC 2.0). To counter the threat emerging from the terrorism orchestrated by either TTP or BLA, Pakistan is already executing two military operations, including Operation Azm-e-Istehkam and the ‘comprehensive military operation.’

Pakistan’s engagement with Saudi Arabia, the United States, and other partners does not indicate that it is drifting away from China. Rather, it is a pragmatic approach to ensure regional stability and economic growth. Pakistan remains committed to its ‘all-weather’ friendship with China, recognizing it as a cornerstone of its foreign policy.

China’s cautiousness with CPEC is being misinterpreted as skepticism. In reality, China prioritizes project viability and security guarantees to ensure CPEC’s sustainability. In October 2024, the partnership between Pakistan and China peaked upon the arrival of Chinese Premier Li Qiang on a two-day visit, 14 and 15 October, at the invitation of PM Shehbaz Sharif. This was the first-ever highest official visit from China in the decade. The visit reinforced the everlasting brotherhood. The visit ended with an agreement to boost mutual trust and the timely completion of the major project under CPEC.

Pakistan remains committed to its ‘all-weather’ friendship with China, recognizing it as a cornerstone of its foreign policy.

Disregarding and overlooking these positive events and realities while taking the negative ones at face value would surely create the notion that Pakistan-China ties are falling apart and Pakistan is falling into desperation. However, keeping the complete picture in mind will help contextualize the bilateral complications in the framework of the two countries’ strong will to cooperate.

Disclaimer: The opinions expressed in this article are solely those of the author. They do not represent the views, beliefs, or policies of the Stratheia.