Beijing limits investment in Pakistan because of political instability
China has turned down requests for more investments in energy and infrastructure due to rising attacks and insecurity, uncertain about the fate of the current government. Some experts say money flows could resume after next year's parliamentary elections, but Pakistan's economy is still at risk of default and Beijing is reassessing the chances of long-term gains from the China-Pakistan Economic Corridor.
Islamabad (AsiaNews) – China has turned down Pakistan’s requests to invest in new projects in its Belt and Road Initiative (BRI), the mega infrastructure project launched ten years ago by China to expand trade with Africa and Europe. The main cause is the country’s political instability and security problems.
Two officials who attended a conference between diplomats from the two countries reported this information after seeing the minutes from the meeting.
The two told Nikkei Asia that China rejected Pakistan's proposal to connect the port of Gwadar, the hub of Chinese infrastructure investment, to the national electricity grid in Karachi.
Beijing also dismissed Islamabad's objections to the Gwadar coal-fired power plant. Pakistan wanted to move it to another site to use domestic rather than imported coal.
“China's approach to Belt and Road investments is guided by prudence and long-term sustainability,” said Andy Mok, a senior research fellow at the Center for China and Globalization, a Beijing think tank.
“Like any investment process, China is adapting its BRI investment process based on experience and a deeper understanding of how to more effectively align investments with strategic objectives," which “is essential for the initiative's long-term success,” Mok added.
Beijing has invested more than US$ 50 billion in the China-Pakistan Economic Corridor (CPEC), one of the core components of the BRI. The Joint Cooperation Committee, CPEC's highest decision-making body, met for its eleventh meeting in October last year.
In recent years, several attacks have been perpetrated against Chinese workers in Pakistan due to opposition by the Balochistan separatists against Chinese investments at the port of Gwadar.
This year, terrorist attacks are up across Pakistan, this according to the Center for Research and Security Studies (CRSS), an independent think tank based in Islamabad. In the first nine months, at least 700 civilians and members of the security forces lost their lives in attacks, the CRSS’s latest report indicates.
This represents a rise in casualties of about 19 per cent over 2022, with Tehreek-e Taliban Pakistan (TTP), the Pakistani Taliban, and the Islamic State (IS) group as the main culprits. IS is believed to be responsible for two suicide bombings that took place last week.
Pakistan's recent political instability began in April last year, when Parliament backed a vote of no confidence against then Prime Minister Imran Khan, who has generated political turmoil ever since against his successor, Prime Minister Shehbaz Sharif, his administration and Pakistan’s military.
Since August, the country is led by a caretaker government ahead of upcoming parliamentary elections in January 2024. Meanwhile, the Pakistani economy has plummeted and the country has not yet defaulted only thanks to international and bilateral loans.
Foreign exchange reserves are an historic low because the government has failed to generate tax revenues and increase productivity. As a result, due to liquidity shortages, Pakistan has failed to make a US$ 1.2 billion in overdue payments to Chinese power producers.
According to some analysts, Chinese investments could resume without problems after next year's elections, but not all experts agree.
"Although China needs Pakistan as a partner for geopolitical reasons, the Chinese are reluctant to commit more funds than necessary," said Jeremy Garlick, an associate professor of international relations at Prague University of Economics and Business.
In his view, the Chinese government "does not believe anymore that it can get economic returns from CPEC."
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02/03/2018 13:56
