Due to Pakistan’s ongoing economic hardship, “the Chinese have become wary of putting in more money since they know it is a financial black hole,” according to Jeremy Garlick, an associate professor of international relations at Prague University of Economics and Business, who was quoted in a story.
Pakistan Prime Minister Shehbaz Sharif had to return from China empty-handed following a five-day official visit last weekend, despite his hopes of bagging more lucrative energy and infrastructure projects as his country struggles with an economic crisis, according to a report.
Sharif met with President Xi Jinping and other high-ranking officials, but not much real progress was achieved. This seeming change raises questions about China’s intentions towards Pakistan and the future of the highly anticipated $50 billion China-Pakistan Economic Corridor (CPEC), which is a crucial part of Beijing’s massive Belt and Road Initiative.
As a result of Pakistan’s ongoing economic hardship, “the Chinese have become wary of putting in more money since they know it is a financial black hole,” Nikkei Asia quoted Jeremy Garlick, an associate professor of international relations at Prague University of Economics and Business.
Since CPEC is meant to be a crucial component of the BRI, “China needs to maintain the facade that CPEC is working,” Garlick continued.
Nikkei Asia reports that Islamabad formally requested last month an additional $17 billion in Chinese financing for energy and infrastructure projects. Following an important meeting of the committee tasked with deciding on future investments in the China-Pakistan Economic Corridor (CPEC), this proposal was made.
Before his arrival, Pakistani authorities had stated that Beijing will publicly unveil an improved version of the multibillion-dollar deal. This was Sharif’s first trip to China since taking office in March.
The Chinese response, however, was not quite rapturous. A joint statement with 32 points that was released over the weekend revealed that Pakistan had received very little in the way of concrete advantages, with the report adding only a vague mention of an improved economic cooperation pact.
Stella Hong Zhang is a China public policy postdoctoral scholar at the Ash Centre at the Harvard Kennedy School. Nikkei Asia reported Zhang as saying, “Earlier CPEC investments in the power sector were rushed by political needs, and might not have been optimal.”
Low on funds Recently, Pakistan took a big step towards restructuring the roughly $15 billion in debt it owes Chinese energy companies operating power plants inside its borders. Islamabad is negotiating a $6 billion to $8 billion bailout with the International Monetary Fund when this request was made.
The intricacy is increased by worries about security. After a string of deadly Islamist strikes that alarmed Beijing and cast doubt on upcoming investments, Pakistan pledged to protect Chinese personnel and enterprises.
However, despite these difficulties, a few small successes were made. China committed to gradually advancing the $6.7 billion Main Line 1 (ML-1) Railway project. China is only funding the first of three stages of this project, which would improve Pakistan’s railway network between Peshawar and Karachi in the north and south.
Additionally, a deal was reached to modernise a portion of the Karakoram Highway, which connects China and Pakistan via arid mountainous terrain that is sometimes impassable in the winter owing to heavy snowfall.
