Baba’s Explainer – BRI and China-Pakistan Economic Corridor (CPEC)

Stated Official Benefits

• China continues to pitch BRBI as project for regional development involving Infrastructure development to enhance transnational and cross-regional connectivity as a priority area for cooperation.
• Economic and trade cooperation among BRIcountries.
• Cooperation and exchanges in cultural, social and other fields.

Advantages of OBOR for China

• The Belt and Road Initiative (BRI) is the most emblematic of China’s economic and industrial might, as of its ambitions for global, political and strategic influence.
• As infrastructure spending at home became less sustainable, China has shifted the emphasis to boost the global competitiveness of domestic businesses.
•  It will help China in developing its western region, ensuring safe navigation over sea
• It will also help China in improving strategic and economic relations with neighbouring and far-west countries.
• China wants to create a new regional order and replace the American-led liberal international order.
•  It will help China secure access to energy and mineral supplies allowing China to overcome the “Malacca Dilemma” (USA dominated Malacca strait though which majority of Chinese trade passes) through access to maritime facilities in the Indian Ocean, granting it an important strategic advantage.
• The large infrastructure investments in the least developed and developing countries have enabled China to leverage its influence around the world, potentially altering the established rules of the global order and challenging western powers
• BRI will strengthen China’s presence in the Eurasian region and puts it in a commanding position over Asia’s heartland.

• BRI is also being seen as a part of China’s debt trap policy, wherein China intentionally extends excessive credit to another country with the intention of extracting economic or political concessions from the debtor country.
• Connectivity and infrastructure development are need of the hour for much of Asia, which lacks both finances required to develop them and the much need capacity to develop them. But Chinese overcapacity may override host countries’ development priorities in project selection.
• Local elites may corner the “spoils” from new projects, thereby exacerbating social tensions.
• There are serious concerns regarding the contracts and jobs since the majority of them will be given to Chinese firms and people.
• Hence, there have been protests by people in several countries over the implementation of BRI.
• The different levels of development and the poor governance conditions of countries along the BRI may affect infrastructure development, trade and investment in those regions.
• Moreover, the political instability in the increasing number of countries like Syria, Yemen, Sudan, etc. along BRI poses serious security issues for BRI.
• China has many sovereignty-related disputes with neighbouring countries such as India which makes them uncooperative with the BRI development.
• Furthermore, the potential ecological and environmental consequences, particularly in developing countries along the BRI, makes the project undesirable for many countries.

• The CPEC is bilateral project between Pakistan and China, intended to promote connectivity across Pakistan with a network of highways, railways, and pipelines accompanied by energy, industrial, and other infrastructure development projects linking the Western part of China to the Gwadar Port in Balochistan, Pakistan running some 3000 km from Xinjiang to Balochistan via Khunjerab Pass in the Northern Parts of Pakistan.
• It will pave the way for China to access the Middle East and Africa from Gwadar Port, enabling China to access the Indian Ocean and in return China will support development projects in Pakistan to overcome the latter’s energy crises and stabilizing its faltering economy.
• CPEC is a part of BRI.

• China’s insistence on establishing the CPEC project through PoK is seen by India as infringing its sovereignty.
  • China is building roads and infrastructure in the disputed territory of Gilgit-Balistan, which is under Pakistan’s control but which India claims as a part of Jammu and Kashmir.
• CPEC Passes through Pakistan-occupied Kashmir (PoK) and Baluchistan, both of which are home to a long-running insurgency where it faces terrorism and security risks.
• CPEC would hamper India’s strategic interests in the South Asian region and can aid Pakistan’s legitimacy in the Kashmir dispute too.
• Also, attempts to extend CPEC to Afghanistan may undermine India’s position as economic, security and strategic partner of Afghanistan.
• Along with China-Myanmar Economic Corridor (CMEC) and CPEC, China is also developing the China-Nepal Economic Corridor (CNEC) which will link Tibet to Nepal. The endpoints of the project will touch the boundaries of the Gangetic plain. Thus three corridors signify the economic as well as strategic rise of China in the Indian subcontinent.
• CPEC project’s lack of transparency and accountability is a cause of concern, as it may be skewed in favour of China economically and strategically.
• The project may undermine Pakistan’s sovereignty as its foreign policy may be dictated by China, complicating the already estranged relations and create political instability in the South Asia;

• China and Pakistan have been relatively careful about this — there haven’t been really major projects abandoned.
• There are “big ticket” projects that have moved ahead much more slowly than planned — such as a number of those at Gwadar — or still haven’t been finalised, such as the major railway line upgrade known as ML-1.
• In fact, the two sides have become somewhat more transparent about what has and hasn’t happened.
• The shorthand version is:
  • a lot of the energy projects were completed;
  • some of the road projects have been completed, others not;
  • the special economic zones were pared down to a smaller number than originally envisaged and have moved very slowly;
  • most of the projects around Gwadar are far from completion.

• Some of the energy projects were promoted very actively by the previous government and could be realised pretty quickly — the coal-fired power stations, in particular.
• Quite a lot did move ahead — $25 billion is no small sum — but there’s just a sense of disappointment that the whole venture adds up to less than what either side had hoped.
• The special economic zones ran into obstacles quite quickly from Pakistani businesses who were concerned that China would be given special benefits that would disadvantage domestic firms.
• There have been issues around land allocations.
• There have been issues around how much financing the Pakistani side would put in for certain projects, with the Chinese side often insisting that they have skin in the game.
• There were uncertainties about the economic feasibility of some of the larger projects — hydro-electric dams and railways, most notably.
• Gwadar is just very difficult as a location, in logistical and security terms.
• Now security threats are creating major problems too.
• These are only a few items on a long list of reasons why some parts moved forward quickly and others didn’t.
• But Pakistan’s overall financial situation was deteriorating by 2018, and combined with the political uncertainties for China, civil-military contention over control of CPEC, and the subsequent Chinese disputes with the government under Imran Khan, CPEC never really found its feet again.