No CPEC 2.0? China gives Pakistan cold shoulder on new major investments | External Affairs Defence Security News

Soldiers from the Pakistan Army during Operation Zarb-e-Azb in North Waziristan in 2015. Image courtesy of the Pakistani Inter Services Public Relations Directorate.

After a five-day official visit this past weekend, Pakistani Prime Minister Shehbaz Sharif departed China virtually empty-handed, as Beijing effectively dashed Islamabad’s hopes that it was preparing for another round of significant investments in Pakistan, particularly through a resuscitation of the CPEC.

According to reports from Pakistani media last month, Sharif was scheduled to attend the official opening of the second phase of the China-Pakistan Economic Corridor (CPEC-II) when he visited China beginning on June 4. Sharif’s attempt to land more lucrative energy and infrastructure deals from China coincides with Pakistan’s ongoing economic downturn. Sharif visited China for the first time since taking office in March.

Nevertheless, Nikkei Asia revealed on Tuesday that the Pakistani side was only able to make some minor advances despite discussions with Chinese President Xi Jinping and other top Chinese officials in Beijing, along with Sharif and his retinue of cabinet ministers.

The article also stated that there was no evidence to support Pakistani authorities’ claims that an enhanced version of the CPEC agreement will be publicly launched in Beijing.

China apparently responded with indifference, as evidenced by the 32-point joint statement released this weekend, which showed that Islamabad had made very little progress. In actuality, the statement made only a passing reference to an updated agreement on economic cooperation between China and Pakistan.

“The two sides recognised that CPEC has been a pioneering project of the Belt and Road Initiative,” according to a joint statement. “After the successful first decade of CPEC, the two sides are committed to carrying out the eight major steps for supporting high-quality Belt and Road cooperation, forging a ‘upgraded version’ of CPEC by jointly building a growth corridor, a livelihood-enhancing corridor, an innovation corridor, a green corridor and an open corridor.”The $62-billion China-Pakistan Economic Corridor (CPEC) project was first introduced in 2015 and involved building Pakistani roads, power plants, and the Gwadar harbor. The 3,000-kilometer Chinese infrastructure network known as the China-Pakistan Economic Corridor (CPEC) is a part of China’s Belt and Road Initiative (BRI), and it aims to link China’s Xinjiang Uygur Autonomous

Pakistan has achieved some minor progress, as shown by the joint statement. The $6.7 billion Main-Line-1 (ML-1) railway project will proceed in phases, as promised by China. The three-phase project aims to upgrade the rail network between Peshawar, in northern Pakistan, and Karachi, a port city in the country’s south. Beijing, however, has only consented to the project’s initial phase.

A compromise was also reached by all parties to modernize a section of the Karakoram Highway, which crosses rugged territory to link China and Pakistan. In the winter, a lot of snow causes the highway to close.

In May, Pakistan had requested an additional $17 billion of Chinese energy and infrastructure projects.

However, experts cited by Nikkei Asia suggest that Beijing’s lackluster response may become the new normal as it becomes less interested in funding Pakistan and the much-discussed CPEC project.

The associate professor of international relations at Prague University of Economics and Business, Jeremy Garlick, stated in an interview with a Japanese media, “We will not see big investments, nor will we see China (completely) withdrawing from cooperation with Pakistan.”

Beijing is reportedly reluctant to invest further in Pakistan because of “long-term poor economic circumstances,” viewing the country as “a financial black hole,” according to Garlick.

For instance, Pakistan recently demanded that the more than $15 billion in debt due to Chinese energy companies, who run the nation’s power plants, be restructured.

Low on funds Pakistan and the International Monetary Fund are also negotiating a $6–$8 billion rescue.

But “China needs to maintain the facade that CPEC is working,” Garlick continued.

The Japanese journal was informed by Quaid-i-Azam University Islamabad assistant professor Muhammad Shoaib that further developments regarding Chinese investments in Pakistan would probably be gradual. He went on to say that things will stay that way. Shoaib predicted that CPEC would remain a significant project “in terms of rhetoric only”.

The security environment in Pakistan has been one of the main obstacles for CPEC. Following several deadly militant strikes over the weekend, Islamabad pledged to guarantee the security of Chinese laborers and projects in Pakistan.

Pakistan provided comfort following reports that Beijing was dissatisfied with Islamabad’s attempts to safeguard Chinese nationals employed in the country, even after Pakistani law enforcement officials had concluded their investigation into the terrorist incident in Dasu.

The attack, carried out by the Tehreek-i-Taliban Pakistan (TTP) in March, killed five Chinese nationals.

As reported earlier this month by the Pakistani magazine Dawn, China has actually urged Pakistan to conduct a massive counterterrorism operation like to the two-year-long ‘Operation Zarb-e-Azb’ that the country’s armed forces carried out in 2014.


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