Economic corridor: unfinished agenda

Although much steam out of CPEC (China Pakistan Economic Corridor) has been let out, the unquestionable positivity demonstrated on it by Pakistan and China, from time to time, makes this mega infrastructure project stand firmly on the ground as an unfinished agenda item.

On the occasion of the celebrations of the completion of a decade of CPEC, in August 2023, the Chinese Vice Premier paid a three-day visit to Pakistan and conveyed President Xi Jinping’s message through which the latter congratulated Pakistan on the achievement of this milestone, and encouraged to enhance cooperation with China across multiple fronts. The Chinese President proposed five new corridors which are reported to be: growth, livelihood, innovation, green energy and regional connectivity for CPEC.

One year later, the Minister for Planning, Development and Special Initiatives Professor Ahsan Iqbal, this Tuesday directed all Working Groups (WGs) to prepare concept papers on five new corridors proposed by Chinese President Xi in August last year, including growth, livelihood, innovation, green energy and regional connectivity for CPEC Phase-II. The minister elaborated that many joint working groups’ meetings would be held in the next month and instructed the relevant ministries to prepare concept papers for next five years under the China Pakistan Economic Corridor (CPEC) projects Phase-2.

He said that Pakistan and China have agreed to start work on five economic corridors as soon as possible under CPEC Phase - 2.

But, the very fact that after one year from the announcement of CPEC Phase-2 in August 2023, this phase has just made the beginning of preparing concept papers. This approach makes it clear that Phase-2 is not materialising anytime soon. It lacks enthusiasm and urgency.

The CPEC, a decade ago, started with great enthusiasm under a hope of something real big happening. On 21st April, 2015, at the inaugural ceremony of the China Pakistan Economic Corridor (CPEC), President Xi addressed the parliament of Pakistan. During his address, he signified the nature of the relationship between China and Pakistan with a Chinese saying “Strong wind reveals the strength of grass, and genuine gold stands the test of fire.”

In the first decade of the life-cycle of CPEC, termed as Phase-1, China has made an investment of around 25 billion dollars, notably in the energy and infrastructure sector. In the energy sector with 14 projects completed and 2 under construction a total of 7280MW of electricity has been added to the national grid, while the arrival of an additional 4428MW of electricity is in process. In the infrastructure sector, a total of 6 projects with 1656 km of road network have been completed across provinces, while 18 more projects of 4244.6km road network are reported to be under way.

The jewel of CPEC is Gwadar, where 4 major projects out of a total of 14 projects to develop the Gwadar Port have been completed, including Gwadar Port and free-zone, Gwadar Smart-port city master plan, Pak-China Technical and Vocational Institute at Gwadar, Pak-China Friendship Hospital and Gwadar Eastbay Expressway. Gwadar Airport is also underway to be fully operational anytime soon.

China’s priority under its ‘Belt and Road Initiative’ is the Gwadar port and its connectivity with China. This ambition has been accomplished by China and it appears satisfied on this account. As a give and take, China offered Pakistan, under the umbrella of CPEC, to develop its needs in the energy sector, infrastructure, industry, technology and businesses. This part did not go well for Pakistan.

CPEC for a long time was dreamed as a game changer for the economy of Pakistan and this could have held true if Pakistan’s leadership would have acted responsibly and made the right choices in the best national interests. This did not happen and the CPEC dream turned sour.

The then leadership went for expensive and superfluous unsustainable mega projects in infrastructure and energy sectors and that too recklessly without considering the demand side and gaps in the system and the fragile state of country’s economy.

At the end of the day the installed capacity of electricity was made to increase to 42,000 MW while the demand at its peak turned out to be half of it. And same held true for the evacuation capacity of the electricity transmission network. The revenue generated out of the investment was too meager to pay back the Chinese loan, whilst, the accumulation of debt burdened the fiscal sustainability of the state.

In fact what is now CPEC Phase-2 should have been CPEC Phase-1 to start with. This would have prepared the nation with rapid industrial growth, innovation and employment, engaging the regional powers to share CPEC connectivity - all of it resulting in enhanced revenue generation, enabling the nation to benefit and absorb the output and investment in mega projects. The Special Economic Zones (EPZ) foreseen under CPEC, though earmarked, remain largely unpopulated. Today, the nation stands with sluggish industrial growth, heavy debt on investments made in the energy and infrastructure sectors under CPEC- lying mostly unutilized.

To put CPEC back on track is a great challenge. Security dilemma, which upsets the Chinese the most, is the foremost challenge followed by the settlement of the dues of the Chinese contractors engaged in projects in Pakistan.

CPEC is undoubtedly in the best interest of both China and Pakistan. In addition to bilateral benefits it promises to the two countries, it holds great benefits for other regional countries in the orbit as well. It provides connectivity between China, Russia, Iran, Pakistan, Turkey and Central Asian countries. CPEC can prove to be a useful linchpin for Pakistan. The unfinished agenda of CPEC needs focus.

Copyright Business Recorder, 2024