Amid Imran's 'Free Pak' Call, Can Sharif's CPEC Goals Bolster Ties With China?

India opposes CPEC Extension for the main entry point by road at least is through disputed Pakistan-Occupied Kashmir

Imran Khan and Shehbaz Sharif. 

(Photo: Chetan Bhakuni/The Quint)

Shehbaz Sharif, Prime Minister of Pakistan,could hardly be a happy man. He had to meet the leader of one of the most powerful countries in the world on a very weak wicket. After all, unknown assailants apparently took a potshot at his nemesis—Imran Khan who is drawing massive crowds in his protests.

Pakistanis are rather accustomed to such excitements but it certainly makes for a bad impression when one is visting the country’s main benefactor or— creditor.

As if that was not bad enough, about a third of his country is literally reeling from the after-effects of the worst floods in decades, and his economy is literally hanging by a thread. And he’s meeting a triumphant President Xi, fresh from a total victory at the recent party Congress, except that it's not that simple. Xi has his own troubles and they could be crowding fast. That should concern Islamabad.

Pak’s International Loans Increases

As Shehbaz took off for Beijing, massive crowds converged for Day six of Imran Khan’s ‘Haqiqi Azadi March’ which he terms as Pakistan’s second independent movement from ‘foreign‘ (read US) interference.

Alongside, Pakistan’s financial managers heave a sigh of relief that the country is off the ‘gray list’ of the Financial Action Task Force ( FATF). That’s courtesy of the USA, and which will mean more badly-needed loans from international institutions.

All China did was to stand against the designation of terrorists in Pakistan at the United Nations(UN) four times this year. That may not seem much. But it got Pakistan off the hook even easier on FATF, since a country sheltering UN-mandated terrorists could hardly have escaped the tag of a terrorist funder.

Now, the International Monetary Fund(IMF) will disburse USD 1.9 bn in loans which will be yet another in 23 such disbursements as Pakistan lurches from crisis to crisis. That’s a lot. But here’s a bit of data. China’s State-owned banks have lent USD 21.9 bn in short-term loans to Pakistan’s central bank since July 2018. That’s not as much as the IMF, but it's still a figure to ponder on.

No Rollover of Debts for Pak

With China hit hard by the economic fallout of the pandemic (and its own massive strictures) and the war in Ukraine, not to mention drought, and record unemployment, such largesse may now be limited in Pakistan’s time of crisis.

The Chinese side reiterated the usual comments on ‘iron’ friendship (given that Islamabad is its only real ‘friend’). Certainly, this is the first official visit since Xi’s rise to power in party congress and the elevation of Wang Yi to the Political Bureau of the CPC Central Committee and He Lifeng, another crony of Xi who worked with him in Fujian in the 1980s.

Both were present in the meetings while the Pakistani side had apart from Foreign Minister Bilawal Bhutto, Finance Minister Ishaq Dar, Planning Minister Ahsan Iqbal, Information Minister Marriyum Aurangzeb, Railways Minister Saad Rafique and Sindh Chief Minister Murad Ali Shah.

The Joint Statement has no financial commitment to roll over USD 6.3 billion debt or a fresh loan to repay maturing bilateral debt in the next fiscal year.

Are Pak-China Joint Projects on Track?

What it does have is a promise to complete the long-delayed M-1 and Karachi circular railway, both of which were among issues raised at the meeting of the 11th Joint Cooperation Committee (JCC), where Pakistan urged China to put USD 18.5 billion worth of five projects on fast track.

The five urgent fast-tracking projects include the USD 10 billion Mainline-I railway project, USD 1.2 billion Karachi Circular Railway project, USD 1.6 billion Azad Pattan hydropower project, USD 2.5 billion Kohala power project, and USD 3 billion Thar Block-I coal project.

The officials warned of a collapse of the railways and of power generation. So incensed were the Pakistanis, that they refused to sign the Joint Statement of the JCC meeting.

While the Joint Statement does refer to ‘creating conditions’ for their early implementation, which is not encouraging, Pakistan is ‘welcome’ to export agri-products, vital for China particularly after a severe drought.

Green Signal for CPEC and Other Joint Corridors

The ‘green’ aspect has always been at the heart of the China Pakistan Economic Corridor (CPEC), and is, in fact, far more massive than any of the industrial corridors that was put on hold till infrastructure projects could be booted up.

But now, it seems that the green corridor is on its way that will entirely change Pakistan’s agriculture and pastoral practises, with the recently announced China-Pakistan Green Corridor (CPGC). China’s total arable land is shrinking steadily, despite strict measures. So, it needs all the land it can get.

Also announced was a ‘Health Corridor’ as well as a China-Pakistan Digital Corridor (CPDC) to boost Pakistan's IT industry which in recent years, has grown at about 18.5 per cent due to incentives. That is quite a boost for Pak ambitions though it is unclear at what level this industry will work.

CPEC's Kabul Extension Amid India's Opposition

Pakistanis back home can take heart in the announcement that the CPEC is now to be extended to Afghanistan which means that long-delayed roads and connectivity should increase. Notably, Kabul now has a trade surplus with Pakistan which remains its largest trading partner. That includes exporting about 10,000 tons of coal a day to Pakistan, allowing it to shrug off to an extent, the bane of high oil prices.

China is more interested in stability in Afghanistan, given its overwhelming fear of a fire of insurgency in neighbouring Xinjiang. Meanwhile, the two are inviting a ‘third country’ to countries to participate in CPEC for ‘Mutual benefit’.

That seems a hint to India, which however, continues to oppose it on the grounds that the main entry point of CPEC – by road at least is through the disputed Pakistan-Occupied Kashmir(PoK). Meanwhile, the joint statement had China repeating its standard formulation on Kashmir as a ‘leftover from history’ to be “peacefully resolved based on the UN Charter, relevant UN Security Council resolutions and bilateral agreements."

The sum and substance of the visit seems to be a curious disinterest in Beijing. None of Pakistan’s core problems have been addressed, barring a measly RMD 500 million for flood relief.

Perhaps, it could be due to the clear instability of the Shahbaz government, or its outreach to the US as evident in frequent statements from the Pakistan army in its favour. Besides, there’s a new army chief coming, and it makes more sense to do business with him directly.

But the truth is that Pakistan is there for China to take as it likes, any time it wishes for its own advantage. If China slides further into the red, that could be dangerous for Islamabad. After all, there’s no knowing what Beijing will want next or, for that matter what Pakistan will do next, or where the next shot will be fired.

(Dr Tara Kartha is a Distinguished Fellow at the Institute of Peace and Conflict Studies (IPCS). She tweets @kartha_tara. This is an opinion article and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for them.)