The year 2023 marked the 10th anniversary of the China-Pakistan Economic Corridor (CPEC). Formally launched in 2013, CPEC is the flagship project of the Chinese greater Belt and Road Initiative (BRI). Under this project, China committed to invest $62 billion in various energy and infrastructure projects. This project’s prime objective is to serve both countries’ economic interests and enhance regional connectivity, shortening trade routes for China with direct access to the Indian Ocean through Gwadar port. However, the project is divided into three phases: (a) the short-term phase (2015-2021), (b) the medium-term phase (2021-2025), and (c) the long-term phase (2026-2030). These phases comprise energy, road, and transportation networks, developing economic zones, and Gwadar port. Dubbed as ‘1’ plus ‘4’ the plan is referred to as 1 CPEC and has four projects under it, including Gwadar port, energy, communication, and the establishment of Special Economic Zones (SEZs).
Since it has been a decade since CPEC, it is prime time to analyze what CPEC has achieved and what challenges the project has faced. Starting with the success stories of CPEC, there is no denying facts that it has contributed to and benefitted Pakistan multifaced. CPEC came to Pakistan when Pakistan was battling through the phase of terrorism, and the world was not reluctant to invest in Pakistan. At that time, CPEC was a ray of hope for terror-ridden Pakistan. Under CPEC, China has invested more than $25 billion to date. It has created more than 192,000 direct jobs, with even more indirect jobs.
More than 100 SMEs benefited directly from the CPEC. Under the CPEC, over 6000 MW of electricity was added to the national grid, with over 800 kms of transmission lines and 510 kms of road and highway networks, creating rural and urban synergy and regional connectivity.
The development of Gwadar port, its connectivity with World Island, and the construction of a $230 million Chinese-funded Gwadar Airport. CPEC has helped Pakistan combat energy crises and overcome other losses in the energy sector. Various renewable energy projects have been completed that are contributing to clean energy production.
However, besides these success stories, there are also challenges and disappointments. When CPEC was envisaged in 2013, it used to be called a game changer for Pakistan’s destiny of economy. Unfortunately, despite injecting $25 billion into Pakistan’s economy, the country still faces an extreme economic downturn. It is finding it hard to attract international investors and skipped economic default. Therefore, this situation questions whether or not a decade of CPEC constitutes a real success story.
Upon its launch, Pakistan was facing extreme load-shedding, with summer power cuts peaking at 12-13 hours daily. The government devised a plan for too many power projects under the CPEC umbrella. Somehow, these projects managed to resolve the power crises at a cost. Pakistan had drowned in no lessons from the 1994 and 2002 power policies. In both cases, the excessive number of power plants based on imported fuel in a short time created a supply glut since these projects were based on a ‘take or pay’ basis at high dollar returns terms, creating circular debt problems.
One thought of this high number of power projects was to meet industrial demands to be relocated from China to Pakistan. For that matter, the development of Special Economic Zones (SEZs) was critical. However, these SEZs proved to be a complete flop. These zones have become a real estate play. It has been 12 years since the Special Economic Zones Act 2012 was passed, yet 60% of SEZs are empty. Under CPEC, 9 SEZs were approved, only four are under construction, and five are still on paper.
The institutional framework of Pakistan is quite complicated, contributing to the slowing of CPEC projects.
Under the CPEC, a total of 33 SEZs were to be established. Only nine got approval; four of these nine SEZs are still under construction, and five are yet to be launched. With its state-of-the-art medical facility, the Pak-China Friendship Hospital in Gwadar is projected to be completed by October 2023. Moreover, the 884 MW Suki Kenari hydropower plant is facing continuous delays in the energy sector. It was supposed to be operational by 2022. Unfortunately, it is only 70 percent complete.
Moreover, other energy-related projects are under construction with no specific completion dates. In transport infrastructure projects, only six are completed, five are under construction, and thirteen are yet to start. This slow progress of CPEC has also annoyed Beijing. Beijing has made several complaints regarding the slow pace of CPEC projects. Many projects have stalled, including the Main Line 1 railway project. However, misunderstandings between both sides also contributed to delays.
Controversies have also engulfed CPEC. Gwadar and Balochistan termed the center of CPEC’s project, are not in different conditions. The situation in Gwadar is not much different; Gwadar lacks necessities: water, electricity, and education. A 300 MW coal powerplant was approved for Gwadar to meet its electricity needs, but authorities have not translated it into reality. Due to this differential treatment, protests erupt. For instance, Gwadar “Haq Do Tehreek” protested against the lack of necessities, and despite being at the center of CPEC, this differential treatment is causing unrest in Balochistan’s people. They believe that this project would snatch away their livelihood and freedom. For instance, they protested against the fencing of Gwadar city and the illegal movement of the Chinese Trawler Mafia. Besides this, political figures of Pakistan have used CPEC for their political gains and continue to do so.
Against this backdrop, if Pakistan wants to exploit the true potential of CPEC fully. It has to chalk out a new plan. Pakistan has to revamp its old and outdated energy and industrial policies and work on the institutional framework to remove bottlenecks and red tape. Most importantly, it has to work on its stable and sustainable economy. The country also needs to reduce its trade gap with China, which is in deficit and at $22 billion. Further, the development of Gwadar and Balochistan is crucial, increasing connectivity with the Gwadar port, perhaps the Chinese’s core interest in the CPEC.
The author is a graduate of International Relations from the International Islamic University Islamabad.