CPEC: The Silver Lining for Pakistan’s regressing Political Economy

Countries cannot survive in isolation; healthy and bilateral exchange with other nations leads to the economic transformation of a state. Pakistan has long been at the forefront of economic warfare induced due to both internal and external factors. It seems as if the headlines of rising Current Account deficit, increasing Balance of Trade deficit, and uncontrollable inflation have been on the news forever, to the extent that people have started to lose hope in their state. In such challenging times, the China-Pakistan Economic Corridor (CPEC) can potentially be a game-changer for Pakistan’s economy. As a key component of China’s Belt and Road Initiative, the project aims to connect Gwadar Port in Pakistan’s Balochistan province to China’s Xinjiang region via a network of roads, railways, and pipelines. This would boost Pakistan’s economic development and provide China with a shorter and more direct route to the Arabian Sea, bypassing the Strait of Malacca.

For Pakistan, the benefits of the project are clear. Gwadar Port, which was developed with Chinese assistance, is now operational and has the potential to become a major hub for trade and commerce in the region. The construction of roads and highways as part of the project will also improve connectivity within Pakistan, making it easier for businesses to transport goods and for people to access education and healthcare.

The project has also brought much-needed investment and jobs to Pakistan. According to the Pakistani government, the project has generated over 70,000 jobs and is expected to create many more. This is especially important given Pakistan’s high unemployment rate and the need for economic growth.

However, the project has not been without controversy. There have been concerns about the lack of transparency surrounding the project and the economic benefits that China has received at the expense of Pakistan. There have also been worries about the project’s environmental impact and local communities’ displacement.

Despite these challenges, it is important to remember the potential benefits of the China-Pakistan Economic Corridor for Pakistan. If managed effectively, the project could bring significant economic growth and development to the country, improving the lives of millions of people. It is, therefore, important for the Pakistani government to address the challenges and ensure that the project is successful in the long term.

CPEC as a means to escape Eurocentrism:

Eurocentrism in Pakistan refers to how European culture, values, and perspectives have dominated and influenced Pakistani society. This has often resulted in marginalizing local cultures and traditions and focusing on Western-style education and development models. Eurocentrism in Pakistan has been perpetuated by several factors, including the country’s colonial history, its reliance on Western aid and investment, and the influence of Western media and popular culture. As a result, many Pakistanis have come to view European culture as superior to their own, leading to a loss of cultural identity and a lack of pride in local traditions and values.

Eurocentric policies have significantly impacted Pakistan’s economy, often leading to a neglect of local industries and a focus on exports to meet the demands of Western markets. This has resulted in a lack of economic diversification and a reliance on a few key industries, such as textiles and apparel.

One of the main effects of Eurocentric policies on Pakistan’s economy has been the neglect of agriculture, a key sector in the country. Even though agriculture accounts for a large portion of Pakistan’s GDP and employs a significant percentage of the population, the sector has received little investment and support from the government. This has led to a lack of productivity and a reliance on imported food, contributing to the country’s chronic food insecurity.

Another effect of Eurocentric policies has been the failure to address the needs of underserved communities. Many rural and marginalized communities in Pakistan lack access to basic infrastructures, such as roads, schools, and healthcare facilities. This has contributed to widespread poverty and inequality, as these communities cannot participate in the country’s economic development.

The China-Pakistan Economic Corridor (CPEC) has the potential to be a significant step toward a more multipolar world where a single center of power does not dominate countries. It represents an opportunity for Pakistan to escape this Eurocentric worldview and forge its path toward development. By partnering with China, Pakistan has access to a major market and a source of investment, rather than relying solely on Western aid and investment (Irshad, Xin, & Arshad, 2015). This gives Pakistan greater autonomy and the ability to shape its future.

In addition to the economic benefits, the China-Pakistan Economic Corridor also represents a way for Pakistan to reduce its dependence on the West and mitigate the influence of Western powers. In recent years, Pakistan has often found itself caught between competing interests of the United States and China, with both countries seeking to exert their influence in the region. By partnering with China on the China-Pakistan Economic Corridor, Pakistan can balance these competing interests and reduce its reliance on any single power.

CPEC and its inevitable challenges:

While the CPEC project has the potential to bring significant economic benefits to both Pakistan and China, it also faces several threats, both internal and external. Internal threats to the CPEC project include political instability in Pakistan, which could disrupt the project’s progress. There are also security concerns as the project passes through Pakistan’s areas prone to terrorism and militancy.

Additionally, there have been allegations of corruption concerning the awarding of contracts for the project, which could impact its credibility and success. Public opposition is also a potential threat, as some members of the Pakistani public have raised concerns about the project’s potential environmental and social impacts (Rajput, et al., 2022). Environmental concerns are also a potential threat, as the project involves the construction of infrastructure projects that could have environmental impacts.

More importantly, Pakistan’s economy has faced many challenges recently, including a high budget deficit and a balance of payments crisis, which could impact the country’s ability to fund and benefit from the CPEC project.

The project has the potential to bring economic benefits to both countries, but it has also attracted controversy and criticism in Pakistan. One concern is that the project could lead to an increase in China’s influence in Pakistan and that this could pose a threat to the sovereignty of the Pakistani state (Farooq, Rao, & Shoaib, 2022). There have also been concerns about the terms of the loans and financing agreements for the project and the transparency of the bidding process for contracts related to the project.

In addition, there have been reports that the project has led to an influx of Chinese workers and businesses into Pakistan, which has led to tensions with local workers and businesses (Baig, Qasim, Xuemei, & Mehmood Alam, 2020). There have also been concerns about the project’s environmental impacts, including potential damage to natural habitats and pollution.

One of the main environmental threats posed by the CPEC project is habitat destruction. The construction of infrastructure projects such as roads and power plants could lead to habitat destruction, particularly in areas that are home to rare or endangered species. This could negatively impact biodiversity and the ecosystem’s overall health. Deforestation is another environmental threat posed by the CPEC project. The construction of infrastructure projects may require clearing trees and other vegetation, which can lead to deforestation. This can negatively impact the environment, including the loss of habitat for wildlife and the disruption of natural ecosystem processes.

The operation of infrastructure projects such as power plants can contribute to climate change through the emission of greenhouse gases. This can negatively impact the global environment and the local environment in Pakistan (Kouser, Subhan, & Abedulah, 2019). It is important for the Chinese and Pakistani governments to consider these threats carefully and to implement measures to mitigate their impacts. This could include conducting environmental impact assessments, implementing environmental regulations and standards, and promoting sustainable development practices.

There have been several terrorist attacks on China-Pakistan Economic Corridor (CPEC) workers and infrastructure in Pakistan in recent years. The CPEC project has faced security challenges, including attacks by separatist groups and Islamic militants, who view the project as a threat to their interests.

In August 2016, terrorists targeted a convoy of Chinese workers in the province of Balochistan, killing several people and injuring many more. In October 2016, terrorists targeted a police checkpoint near Gwadar Port, a key component of the CPEC project. In May 2017, terrorists targeted a convoy of buses carrying Chinese workers in Balochistan, killing 14 people. And these inhumane attacks continue to date.

These attacks have caused concern among the Chinese and Pakistani governments and the companies involved in the project about the security of the workers and infrastructure associated with the project. The Pakistani government has improved security, including deploying additional security forces to protect workers and infrastructure (Pak Institute for Peace Studies, 2021). However, the threat of terrorism in Pakistan remains a concern, and it is possible that there could be further attacks on CPEC workers and infrastructure in the future.

On the other hand, external threats to the CPEC project include regional geopolitical tensions as the project passes through the disputed region of Gilgit-Baltistan. There is also the potential for competition from other countries, such as the United States and India, who may view the project as a threat to their own economic and strategic regional interests (Salim, Ambreen, & Shah, 2022). If China’s economy experiences a slowdown or other challenges, it could impact its ability to fund and support the project in Pakistan.

It is also worth noting that some Western powers and international organizations, such as the International Monetary Fund (IMF), have expressed concerns about the sustainability of the project and about the ability of Pakistan to repay the loans associated with it. This threatens the project’s long-term viability and could lead to economic challenges for Pakistan.

Overall, the CPEC project faces many internal and external threats. While it has the potential to bring significant economic benefits to both Pakistan and China, it is important for both countries to carefully address and manage these threats to ensure the success of the project.

Unrivaled potential for Pakistan and China:

The CPEC project offers some significant opportunities for the prosperity of Pak-China trade relations. One of the main opportunities for Pakistan is the potential for economic growth and development. The CPEC project includes many infrastructure projects, such as the construction of roads, railways, and power plants, which have the potential to stimulate economic growth and development in Pakistan (Mirza, Fatima, & Ullah, 2019). These projects could create jobs and improve the country’s infrastructure, making it more attractive to investors.

Another opportunity for Pakistan is the potential for increased trade and connectivity. The CPEC project is expected to improve connectivity between Pakistan and China, which could lead to increased trade between the two countries. This could be particularly beneficial for Pakistan, as it could help to diversify its export market and reduce its reliance on other countries. The CPEC project also offers opportunities for states that share friendly relations with Pakistan. For example, countries that have strong economic and strategic ties with Pakistan, such as the United Arab Emirates and Saudi Arabia, could potentially benefit from increased trade and investment opportunities that result from the project (Anwar, et al., 2022). Additionally, countries with a strategic interest in the region, such as the United States, could benefit from increased stability and economic development in Pakistan.

The CPEC project offers several significant opportunities for Pakistan and its allies. It is important for these countries to carefully consider how they can leverage these opportunities to achieve economic and strategic benefits.

SWOT Analysis:

 Strengths:

• Geo-Strategic Positioning

Pakistan is known for its access to warm waters and the world’s largest deep-sea port (Gwadar). It is also the neighbor of Afghanistan, which is a landlocked region. CPEC and BRI provide Pakistan with the perfect opportunity to become the corridor for most countries that seek to use Gwadar. The BRI will provide a path that can be utilized effectively for several economic activities; moreover, since most of the oil trade passes through this route, it will also serve as an essential stayover point for several middle eastern countries.

• Warm waters 

The warm waters provide the perfect environment for year-round trade, which benefits all landlocked countries, the Middle East, and African states that use this route for trade.

• A comprehensive idea

CPEC is established under a wide range of phases which shows that it is well thought out and made in a manner that covers different sectors and works on the synergy between interlinked industries. This makes it a truly remarkable and strong initiative.

• Shorter Route

Pakistan and CPEC provide China with the shortest route for conducting its trade activities, meaning a major of its flow will occur through Pakistan, uplifting the status of many dry ports and local regions of Pakistan.

Weakness:

• Politics

The political situation has been very volatile, due to which the entire project has been going through delays. The regime change and personal agendas of the politicians have slowed down the process of CPEC’s completion.

• Poor Governance

Many governance weaknesses exist in the systems of Pakistan. These are red-tapism, corruption, etc. There needs to be more transparency regarding where the resources are being allocated. Speculations of corruption have occurred in CPEC projects over the years of its development.

• Lack of Transparency

There have been complaints that the processes taking place in CPEC are not transparent. The accountability needs to be handled in a proper manner.

• Language and cultural Barrier

Despite the Pak- China, there is no denying a language and cultural barrier between the two countries. This can be a weakness in understanding the tech used in developing several techs.

Opportunity:

• Employment

The development of CPEC opened several avenues in terms of employment opportunities for many people. As it progresses toward completion, the Special economic zones made under CPEC will serve as hubs for those seeking employment.

• Ending Energy Crisis

CPEC can and will effectively solve the energy crisis Pakistan is actively facing. There are a total of 22 energy-focused projects under CPEC that aim to bridge the energy deficit that exists in Pakistan.

• Regional Connectivity

CPEC serves as the perfect opportunity for regional connectivity. This will promote road travel in landlocked countries such as Afghanistan. This will create another path to promote trade between the local merchants and those going to Gwadar to use the seaport.

• Revival of Agrarian Economy

Pakistan originally was an agrarian economy with fertile and prosperous land. CPEC aims to focus on this crucial feature of Pakistan, which will help strengthen the economy and also help regenerate all the export crops again.

• Foreign Investments

The economic corridor will attract foreign investments once it reaches its final stages. Large MNCs and investors will want to fund projects or establish their own in the vicinity of this very crucial economic corridor.

Threats:

• Strict policies by western institutions have been serving as a hindrance to the growth of CPEC. Pakistan is currently forming policies to adhere to the loaning bodies to pay off their debt. The shift in focus is a threat to the timely completion of CPEC.
• Chabahar Port

Attempts are being made to make the Chabahar port functional and working to counter Gwadar. Although Gwadar has a definite advantage, the delays and timing play a crucial part in this.

• Insurgent Activities

Recent attacks on Chinese citizens and increased terrorist activities serve as a deterrent to all the advancements China wants to make in Pakistan under CPEC. However, these activities may not heavily discourage the Chinese but are still an active threat.

PESTEL Analysis:

Political 

– Continuous political instability has led to the delay in CPEC on several occasions

• Constant shuffle in the policies has either slowed the processes down or stopped em
• Balochistan is unstable
• Corruption poses a massive hurdle in the provision of funds for the projects being run under CPEC.

Economic:

• Currently, Pakistani is facing an economic crisis due to inflation at an all-time high leading to less focus on CPEC.
• Due to strict IMF economic policies, Pakistan cannot focus on CPEC.
• CPEC’s introduction and creation of Special Economic Zones will only help increase the employment rate.

Social:

• Many people see CPEC as a Chinese attempt to take over.
• A cultural barrier exists, but it has promoted learning the Chinese language so that people can effectively communicate with the Chinese engineers who will be running things.

Technological:

• With the help of CPEC, many avenues have opened in terms of R&D.
• As the project progresses, Chinese tech will be introduced to enhance the functioning of CPEC, which will also help elevate the technological standing.

Environmental:

• Due to climate change, Pakistan experienced floods and severe repercussions, which can threaten the BRI in the future.
• Establishing a port at Gwadar will disturb the marine ecosystem, but if managed efficiently, significant shifts in the ecosystem can be avoided.

Legal:

Most of the projects under CPEC have been approved by the government and work in alignment with the constitution and the law of the land.

Conclusion:

CPEC is a developmental project between Pakistan and China, which has several benefits for both parties. Pakistan is expected to become an economic hub after CPEC is completed, while China will get access to Africa and the Middle East. CPEC will play an essential part in the upheaval of its economic standing in the modern world. CPEC will open gateways for foreign investment and for Pakistan to return to its agrarian base economy. Moreover, inter-regional connectivity will provide cross-cultural exchange contributing massively to advancing technology and general practices. This will help establish Pakistan as a strong competitor in different economic sectors.

References:

Anwar, S. U., Wuyi, Z., Ali Shah, S. Z., Ullah, Q., Amir, S. M., & Syed, A. (2022, August 04). The resilient economic impact of CPEC and future of MNCs: Evidence from Pakistan. Frontiers. Retrieved January 5, 2023, from https://www.frontiersin.org/articles/10.3389/fenvs.2022.912975/full

Baig, S., Qasim, M., Xuemei, L., & Mehmood Alam, K. (2020, February 25). Is the China-Pakistan Economic Corridor an Opportunity or a Threat for Small and Micro-Entrepreneurs? Empirical Evidence from Northern Pakistan. MDPI, 1-19. Retrieved January 5, 2023, from https://www.mdpi.com/2071-1050/12/5/1727

Farooq, M., Rao, Z.-u.-R., & Shoaib, M. (2022, August 27). Analyzing the determinants of sustainability of China Pakistan Economic Corridor (CPEC) projects: an interpretive structural modelling (ISM) approach. Environmental Science and Pollution Research, 1-17. Retrieved January 5, 2023, from https://link.springer.com/content/pdf/10.1007/s11356-022-22813-3.pdf?pdf=button

Irshad, M. S., Xin, Q., & Arshad, H. (2015). One Belt and One Road: Dose China-Pakistan Economic Corridor benefit for Pakistan’s Economy? Journal of Economics and Sustainable Development, 1-8. Retrieved January 5, 2023, from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2710352

Kouser, S., Subhan, A., & Abedulah. (2019, December 26). Uncovering Pakistan’s Environmental Risks and Remedies under the China-Pakistan Economic Corridor. Environmental Science and Pollution Research, 1-3. Retrieved January 5, 2023, from https://link.springer.com/content/pdf/10.1007/s11356-019-07428-5.pdf?pdf=button

Mirza, F. M., Fatima, N., & Ullah, K. (2019, April 22). Impact of China-Pakistan economic corridor on Pakistan’s future energy consumption and energy saving potential: Evidence from sectoral time series analysis. Elsevier, 1-13. Retrieved January 5, 2023, from https://reader.elsevier.com/reader/sd/pii/S2211467X19300422?token=F74986E9730906C3633B0FC6F4F03EABFBBFB477BAE710CE44880868EC5D7497351242C0AD3CB333FB39955159B3AD6F&originRegion=eu-west-1&originCreation=20230104223857

Pak Institute for Peace Studies. (2021). Pakistan Security Report 2021. Islamabad: Pak Institute for Peace Studies. Retrieved January 5, 2023, from https://www.pakpips.com/web/wp-content/uploads/2022/01/Overview_PIPS-SR_2021.pdf

Rajput, A., Maqsoom, A., Ali Shah, S. W., Ullah, F., Munawar, H. S., Sami Ur Rehamn, M., & Albattah, M. (2022, June 3). Impact of Political, Social Safety, and Legal Risks and Host Country Attitude towards Foreigners on Project Performance of China Pakistan Economic Corridor (CPEC). MDPI, 1-18. Retrieved January 5, 2023, from https://www.mdpi.com/2075-5309/12/6/760

Salim, A., Ambreen, S., & Shah, A. u. (2022, June 10). National and transnational non-state actors: Strategic dimensions and regional security threats to CPEC. Journal of Public Value and Administrative Insight, 1-9. Retrieved January 5, 2023, from https://readersinsight.net/JPVAI/article/view/2520/1743