Chinese Investments in Pakistan Face Ongoing Friction

Chinese state media often describe the China-Pakistan Economic Corridor (CPEC) as a “flagship project” of the Belt and Road Initiative (BRI), and Pakistan’s city of Gwadar as a “flagship project” of the CPEC. The CPEC has attracted tens of billions of dollars in Chinese investment for construction of a network of highways, railways, and energy pipelines for transporting goods from Xinjiang through Pakistan to the Arabian Sea via the Gwadar port. But over a decade after these initiatives began, investments have slowed alongside a host of chronic issues that appear to have intensified, as several recent articles attest. This week in ChinaFile, Pakistani journalist Akbar Notezai described the local backlash against Chinese presence in Gwadar and the broader region

“Instead of resolving our woes, the CPEC projects and the arrival of Chinese in Gwadar have further doubled up our issues,” said [local politician] Maulana Hidayat-ur-Rehman in an interview in Gwadar. One issue that is causing particular resentment is the security infrastructure that has been built up together with the port development: There are a number of security checkpoints that locals have to go through when moving around Gwadar port and the surrounding district. These checkpoints have had more impact on people’s daily lives than anything else. “There is no CPEC in Gwadar, except security check posts that exist in the name of CPEC in Gwadar. So, if you ask me, CPEC projects in Gwadar are the name of security check posts.”

[…] According to [Maasi Zainab, a female protest leader in Gwadar,] when important Chinese visitors arrive at the port town, Pakistani military personnel stop local fishermen from going out to sea. Those who have already set sail are not allowed to dock until the VIP movement ends, and they sometimes end up waiting as long as 12 hours. While waiting in their boats offshore near the town, they are unable to deliver their catch to market.

“Under these circumstances, how can we earn a livelihood for our children?” Zainab says. [Source]

Last month, Maulana Hidayat-ur-Rehman won an election in the Gwadar constituency of the Balochistan provincial assembly. Rehman is the leader of the Gwadar Rights Movement, which has argued that the BRI has not sufficiently benefitted local communities, whose grievances he contends have been ignored by the federal government. Previously, he staged regular protests at the port, and his election may complicate China’s BRI projects in the region. (For more on the tensions between Balochistan and Pakistan’s federal government, and on the local socio-economic conditions, see the People’s Map of Global China project profile of the Gwadar Port and Free Zone.)

“Perhaps the experience over the decade since [the CPEC’s inception] might be better characterised as one of resistance than progress,” wrote Syed Fazl-e-Haider in The Interpreter, published by Australia’s Lowy Institute. Last month in Pakistan’s Dawn newspaper, Muhammad Ali Shaikh assessed a decade of the CPEC and Gwadar’s role as the topmost priority sector of the project. While he concluded that it still has great potential for Pakistan’s development, he highlighted several issues with the CPEC from the perspectives of different parts of Pakistani society:

While the [CPEC] project has been largely portrayed as a panacea for all the ills and evils plaguing Pakistan, there have been fears and doubts as well in various sections of society. The first and foremost concern has been about the almost complete opacity of the CPEC. Weary of what had happened to the Hambantota port in neighbouring Sri Lanka in 2015, people want to know the extent and the terms and conditions of Pak-China financial agreements.

Voicing concerns about the lack of transparency, the then governor of the State Bank of Pakistan, Ashraf Mahmood Wathra, had lamented in 2015 that, “I don’t know, out of the $46 billion, how much is debt, how much is equity, and how much is in-kind.” If the governor of the State Bank does not have information, what can be said about the rest of the country’s citizens?

[…] Yet another cause of concern is that the execution of almost all the projects went to Chinese contractors, who brought in most of their executive and technical manpower from China, except low-tier staff that was recruited locally. The question raised is that, when Pakistanis have to foot the bill of these projects, why are they being denied business and employment opportunities. [Source]

Chinese state media have made a noticeable effort to portray the CPEC in a more positive light. In February, Xinhua ran an article titled, “Experts expect Pakistan’s Gwadar to become energy hub via tech-oriented, social development,” and the Global Times ran one titled, “CPEC running on fast lane: Multiple projects underway in Pakistan to help local economy.” Another Xinhua headline from November read, “CPEC empowers women, boosts education, promotes economic growth in Pakistan.” In a feature from last December titled, “Projects supported by China catalyze transformation in Pakistan’s Gwadar,” Xinhua painted a glowing picture of the CPEC framed by Chinese benevolence:

Arifa Haleem, a resident of Pakistan’s southwest Gwadar district, has witnessed a prolonged struggle in her community with the scarcity of clean drinking water since her childhood until a desalination plant, a generous gift from China, brought about a transformative change in her life.

The coastal district of Gwadar faces an ongoing challenge due to the salinity of its water source, which poses difficulties for the local population. However, the plant under the framework of the China-Pakistan Economic Corridor (CPEC) has solved the longstanding issue.

[…] It had been a long desire of local residents to drink clean water. The Chinese brought happiness to the lives of the Pakistani people who will not only benefit from the plant but also deem it as the sweetest gesture from Chinese friends, Haleem told Xinhua. [Source]

The threat of violence has also created impediments to success. Rebels from Balochistan claimed an attack on the Chinese consulate in Karachi in 2018, another attack on Chinese tourists at a hotel in Gwadar in 2019, and yet another attack on the Chinese Confucius Institute at Karachi University in 2022. Last August, militants attacked a convoy of vehicles carrying Chinese engineers on their way to Gwadar port. In October, Islamabad-based journalist Haroon Janjua reported for DW on the pessimistic attitude of many experts towards the state of the CPEC:

“The CPEC slowdown can be attributed to both economic and security factors. Pakistan’s worsening economic crisis, and China’s own recent slowdown, have dampened prospects for new projects,” Michael Kugelman, a South Asia expert at the Washington-based Woodrow Wilson International Center for Scholars, told DW.

[…] “The overpromising and under delivering have remained a crucial factor, coupled with inherent capacity issues, and instability on the political and security fronts,” said Azeem Khalid, a Pakistan-China relations scholar at COMSATS University Islamabad.

Khalid told DW that he believes the tangible benefits of CPEC for the Pakistani people have been limited, while the burden of public debt and payments to Chinese companies has surged.

“It is safe to assert that the hype surrounding CPEC was more a product of propaganda than a reflection of reality. China, aided by elements within Pakistan’s media and academia, vigorously marketed the project, leading to inflated expectations,” he said. [Source]

In September, Mariyam Suleman Anees, a writer from Gwadar, wrote in The Diplomat about the friction between Pakistan and China over Gwadar investment projects has provided an opening for greater U.S. presence in the region:

While China is supporting Pakistan at present, the persistent delays in CPEC project completion and security threats to Chinese nationals in Pakistan may push China to reconsider its “all-weather” friendship with Pakistan. Islamabad is well aware that its relationship with Beijing could change.

[…] Many view the recent visits of U.S. officials and their meetings with the local people as not just routine diplomatic visits but a process of building trust, an American outreach amid Pakistan amid China’s declining interest.

From Pakistan’s side, as much as it relies on China, it also needs U.S. strategic support and in particular, support for resumption of the IMF loan packages, assistance for reconstruction of infrastructure damaged by the 2022 floods, and continuous assistance with humanitarian programs, especially in the area of education. Around 800 Pakistanis travel to the U.S. every year under different education and exchange programs.

While the pretext of the recent American visits is largely about humanitarian assistance, officials repeatedly speak during the visit of the significance of the bilateral relationship and the importance of deepening ties, which many interpret in strategic terms. [Source]


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