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    OpinionsCPEC is a classical googly can turn either way-II

    CPEC is a classical googly can turn either way-II


    CPEC is a classical googly can turn either way-II

    By Dr Shabir Choudhry



    One Pakistani sums up the CPEC with the following comment: ‘CPEC appears to be a risky game changer – a classical googly and one need to wait to see which way it turns after bouncing.

    The above comment makes a lot of sense for those who have studied the CPEC and have logically analysed it. My article is also for people with common sense; and not for those who observe things with prism of religion and who are emotionally charged.

    Before you accuse me of opposing CPEC, I want to assert that no sensible citizen of Jammu and Kashmir is against Pakistan's right to development because it is imperative for the progress and comfort of the society. However, we want Pakistan to treat others with compassion and care; and must abandon its policy of exploitation and plunder, especially in Gilgit Baltistan and Pakistan Administered Kashmir.


    Chinese money cannot bring success


    Pakistanis need to do a bit of before they sleep walk on to the CPEC bandwagon. Not all countries have benefitted from the Chinese supported projects; however China has benefited from all the projects. I won't go in to details of what happened to African countries who borrowed heavily from China, I will just give an example from Pakistan's friendly country Sri Lanka.


    Sri Lanka also had a dream to establish a port like Gwadar, Hambantota; and they made similar arrangements with China, just like Pakistan did over the CPEC. Borrowing money and establishing a project is perhaps the easy part; one million dollar question is, has the borrowing government capacity and skills to manage the project and pay off the high interest loan instalments.


    Hambantota was a small port town without much economic activity. When Mahindra Rajapaksa was elected President of Sri Lanka, he envisaged a grand plan to boost his home town Hambantota. His plans included a deep sea port, an airport of standard, a cricket stadium, an LNG plant, tourist resorts and an industrial zone. 7


    It was not possible for the Sri Lankan government to provide funds required for the projects, so China was requested to fund 8 billion soft loans. The projects were successfully completed; and situation after the completion is that the Mattala airport in Hambantota is almost idle – hardly two flights a day, Cricket stadium and conference centres are just as new because they are rarely used.


    The business activity at the port and the industrial state is less than satisfactory because they are hardly used. Although the infrastructure is in place, the users are not there that government can call it a success or earn revenue. Whether users come or not all the infrastructure requires maintenance which adds to the government expenditure.


    Those projects which are designed with political considerations in mind rather than economic viability generally end up with the same fate as in Hambabtota. It was Rajapaksa's home town and he thought with the Chinese money he would be able to boost his political position; but he lost the next elections. Irrespective of what happened to the man who got the loans, the people of Sri Lanka will have to pay back the loan.


    If a member of another nationality is doing something and you caution him of its dangers, he will appreciate that and feel obliged. However, if a Pakistani is doing something, and you caution him of its dangers he will not appreciate that, and instead he will say who the hell are you to poke your nose in my matters; and can even start a fight with you.


    So advising Pakistanis, especially government officials, is a risky business. However, despite that I always point out what wrong they are doing. While building my case on the CPEC, I will mainly rely on comments of Pakistanis, who can tell their fellow citizens what wrong they are doing; but I don't have that liberty because I am not a Pakistani.


    A Pakistani columnist Shahid Mehmood wrote in his article, Lesson from Sri Lanka: ‘Gwadar and the CPEC represent some interesting comparisons. Gwadar is an outpost in the middle of nowhere – a rural setting which lacks modern facilities. It is located in a province which is almost half the size of Pakistan but is sparsely populated. It is from this province that the main arteries of the CPEC will pass and it is in Gilgit-Baltistan where they will ultimately end. But both provinces lack the population density to initiate or sustain a business surge. Simply put, there are not enough customers or producers to make it a business metropolis which can attract business and freight transport from all around the world.


    Another Pakistani critic of the CPEC, Basit Ali wrote:

    ‘A brother China is using the route to export its manufactured products, do you think it would encourage competition to that. Can anyone imagine China concluding a development project in China where all the manpower and supplies came from outside the country? 9


    It must be pointed out that apart from cement; almost everything related to the CPEC is imported from China, which is good for the Chinese economy, especially when there were clear signs of slowing down. And the icing on the cake is that Pakistan will partly pay for the recovery of the Chinese economy, which is competing with America and other countries.

    Those who are emotional with Pakistan – China relationship need to understand that the Chinese are shrewd business people; and they leave emotions at home when they go to business meetings. Their only motive is profit and a lot of it with strategic and defence of the country in mind. If China is a true friend of Pakistan, then they should provide a favourable market access to Pakistani industry rather than just build roads and railway tracks to transport its finished products to other markets of the world.

    As things are, CPEC will increase Pakistan's dependence on China; and in future Pakistan's ability to negotiate deals will be substantially reduced. True friendship requires China to give loans at the same interest as Japan has given to 0.25%; and not 7% which is exploitation of a vulnerable friend. Another Pakistani critic of the CPEC wrote:


    ‘Chinese friendship, sweeter than honey. Chinese interest on loan, higher than Himalayas. Pakistan economy, deeper than the deepest ocean in the world'. 10

    Pakistanis must understand that CPEC is essentially a trade route with other projects which are necessary for the successful operation of the CPEC; and moreover, they are designed to consume Chinese products for the revival of the Chinese economy. Trade routes on their own do not empower the nations; if that was the case then Egypt would have been the richest and most powerful as it is controlling very vital trade route of Suez Canal with billions of dollars in revenue every year. Same could also be said about Panama Canal. Abdul Jabbar, a Pakistani critic of the CPEC says:

    The world is run by those who use that route – not by those who collect the toll tax.

    Another critic says: ‘Unfortunately, the Chinese are conducting daylight robbery of Pakistan. On paper, China is giving Pakistan billions but most of that money is going back to China in the form of payments to Chinese companies, Chinese exporters & Chinese labourers. China did the same thing in Sri Lanka where they built infrastructure, ports & airports which are barely used. The Sri Lankans have realized their mistake but now they owe billions to China. The CPEC is a trade route & if trade routes could make a country prosperous, Egypt would be an economic giant…I really don't understand how in the world will Pakistan pay off billions Chinese debt along with interest, a high ROE, dollar appreciation etc. by collecting tolls'.

    Everyone in Pakistan is fed with false hope that the CPEC is a game changer and that it will bring prosperity to Pakistan and strengthen Pakistan's economy. I wish if that was true. Prosperity doesn't come by borrowing money with very high interest rate and by collecting toll money on a trade route which will be primarily used by China. Pakistani policy makers can only see dollars and they cannot see dangers and dark shadows moving towards their country and economy.

    What little money they will make from the CPEC will be eaten away by security related facilities; and the Chinese goods will flood the Pakistani markets. So who will suffer? Those Pakistanis who complain that P in CPEC represents and not Pakistan have reasons for saying that because Punjab gets lion's share in everything. Just look at the data below which gives details of the loans from Zarai Taraqiati Bank Limited.

    In simple English name of the loan provider is Agricultural  Development Bank Limited; and it has provided the following loans:

    • Loans for Punjabi farmers 81%;
    • For Sindhi farmers 13.4%;
    • For KPK farmers 4.2%;
    • For Baloch farmers 0.3%;
    • For farmers of Azad Jammu Kashmir 0.3%, and
    • For farmers of Gilgit-Baltistan 0.4%. 12

    If one complains or points out a wrong doing then that person is promoting regionalism and is anti Pakistan; and in some cases agent of India.


    Good thing about the Chinese loans is that they don't interfere in politics of the country, unless it becomes absolutely necessary and lives of their nationals are under threat, as was the case during Red Masjid crises in Islamabad. Loans from the US or European companies come attached with conditions to protect human or labour rights.

    What this means is that with the Chinese loans Pakistan can continue to do what they are doing in Balochistan, FATA, Gilgit Baltistan, Azad Kashmir and some other places of Pakistan; and China will not even raise an eye brow. In some cases, China will encourage Pakistan to be harsher with people in Gilgit Baltistan and Balochistan that they don't create any problems for the CPEC.

    Chinese investment always has two objectives: short term and long term. The short term is trade and immediate profits, whether the project is economically viable or not, it is not their headache. The loan taking country has to repay the loans; and if they struggle to pay as is the case with the Sri Lanka, then the long term objective kicks in. The country concerned will gradually lose its sovereignty to China, as is the case with Sri Lanka which has lost sovereignty to massive tracts of land south of the port area. It is believed this area is under control of Chinese security and is a no go area even for Sri Lankan security forces. Sri Lanka cannot object how that territory is used because a new agreement was signed after Sri Lanka failed to repay the loans.

    This is also the case in parts of Gilgit Baltistan which is illegally occupied by Pakistan, but Pakistan is generously giving it way to China. Pakistan gifted around 2000 sq miles of Shaksam Valley area to China. Apart from that there are large tracts of land in various parts of Gilgit Baltistan which are leased by the Chinese for exploration and they are under control of China for the duration of the lease; and are no go areas for Pakistanis and the local people who have lived there for centuries.

    CPEC will link China with Europe through Central Asia and ensure a safe passage of China's shipping through the Indian Ocean and the South China Sea. CPEC is presented as an economic project, but it has great political strategic and military aspects as well; and that is a great cause of concern to those countries which have interests in Arabian Sea and the Indian Ocean.

    China has already started buying important assets of Pakistan, for example, they have just purchased 40% of the Pakistan Stock Exchange. Also they have expressed interest in buying a stake in a Pakistani cement company. Thinking people wonder what China will demand when Pakistan will be unable to pay off the high interest loan of billions?

    Writer is a political analyst, TV anchor and author of many books and booklets. Also he is Chairman South Asia Watch and Director Institute of Kashmir Affairs.

    The Northlines is an independent source on the Web for news, facts and figures relating to Jammu, Kashmir and Ladakh and its neighbourhood.

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