‘High-powered’ collaboration between China, Pakistan under CPEC diminishes due to economic realities

The so-called ‘high powered’ collaboration between Beijing and Islamabad under the China-Pakistan Economic Corridor (CPEC), a 3000 km Chinese infrastructure network project undertaken in Pakistan now appears to take a noticeable shift, facing significant challenges, the Daily Asian Age reported.
The CPEC is currently confronted with significant obstacles, with many projects experiencing delays or coming to a complete halt.

The severe difficulties the CPEC is currently encountering were noted on September 26 by the Express Tribune, a well-known Pakistani newspaper. 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 framework in important areas including energy, tourism, water management, and climate change. This choice demonstrates both waning enthusiasm and a reconsideration of their partnership in light of complex economic realities, The Daily Asian Age reported.

Due to Islamabad’s crippling debt burden and the approaching possibility of financial default, Chinese investors are showing hesitation when it comes to funding new projects in Pakistan. Furthermore, China criticises the International Monetary Fund (IMF) for imposing onerous requirements in order to resume a USD 6 billion rescue programme. This circumstance may worsen Pakistan’s economic problems and draw attention to Chinese loans.

According to the Daily Asian Age report, China, at present holds approximately USD 30 billion of Pakistan’s total external foreign debt, which stands at USD 126 billion. Despite numerous attempts to revive stalled projects and initiate new ones, the future of CPEC appears uncertain due to Pakistan’s fragile economic state and China’s seeming reluctance to provide further financial support.

The Express Tribune’s article is solidly based on the conclusions of the CPEC’s 11th Joint Cooperation Committee (JCC) meeting, which serves as the project’s strategic decision-making body. The fact that the conference’s minutes weren’t signed until July 31 despite the fact that the meeting itself took place in October 2022 highlights how acrimonious the negotiations were on both sides.

According to thorough records, China rejected a number of Pakistani proposals in a variety of fields, including as energy, water management, climate change, and tourism in places like Gilgit-Baltistan (G-B), Khyber-Pakhtunkhwa (K-P), Pakistan-occupied Kashmir (PoK), and coastal regions.