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2016: The year of the CPEC

Updated January 02, 2017

It was conceived back in the 1990s, and the first approach to Pakistan from China about connecting China’s western provinces to the Arabian Sea came in 1999. Gwadar port was built in the mid-2000s, and many of the MoUs were signed after 2010.

The key agreement for the projects to be listed under the China Pakistan Economic Corridor (CPEC) was signed in 2013, and term sheets for them were signed during President Xi Jinping’s visit to Pakistan in 2015. But the outgoing year was when work began in earnest.

In 2016, Pakistan’s first utility-scale solar power generation plant went into commercial operations, digging began in the Thar desert for a coal-fired mine mouth power plant, and the first trade convoy carrying goods from China travelled down the newly constructed roads of the western route and arrived in Gwadar for a large ceremonial send-off.

Examine: Tale of two CPECs

The shape and outlines of the corridor projects first began to appear before us in this year, and decades from now when historians would look back at the origins of Pakistan’s tight embrace of China, they will identify 2016 as the year in which it all started happening.

But the year also brought its share of unanticipated consequences. It was the year when numerous projects were found to have defective feasibility studies, or when they were found to be financially un-viable.

The largest CPEC power project, the coal-fired power plants at Gadani, was ‘shelved’ during the year, and the coal project in Kalar Kahar was cancelled altogether.

The solar tariff upon which the first solar power plant at Quaid-e-Azam park in Bahawalpur was built, was found by Nepra to be unworkable, forcing the regulator to revisit the tariff and prompting a court challenge that will likely roll into the next year.

Until that matter is resolved, further investments in solar will remain blocked. Wind tariffs are similarly in turmoil with a string of review petitions awaiting a hearing.

This is the year when Pakistan began to learn what CPEC really is. The perils and promises alike took shape. If the venture is a ‘game-changer’, as is being claimed by the government, then the myriad hearings, successes, and court cases of the year gone by would suggest that the game is a long one.

If it is not a game changer, as the sceptics claim, then the problems that pinned down the implementation of many of the projects will eventually grow to engulf the corridor has a whole. It will be a few more years before judgement can be passed on this important question, but the answer began cropping up for the first time in 2016.

This was also the year in which the controversy surrounding the route of the proposed road infrastructure subsided. A few stray comments aside, the string of resolutions being passed in provincial assemblies slowed to a trickle and attention turned towards the more substantive issues of financing instead.

It was also the year in which the security question marks began to fade away, as the insurgency in Balochistan subsided (although they did not disappear), with roadside shootings and IED attacks coming down sharply. Security remains a big concern for the future, but it has certainly been reduced.

Alongside the reduction in security threats, the costs of the new security architecture also appeared during the year. The so-called CPEC security force was created in the second half of last year, but its deployment and future size took concrete shape in 2016.

A maritime security force to protect CPEC-related shipping was also launched during the year.

The year also saw the financial impact of the force, as the government began asking the provinces to share the burden of the costs (estimated at almost 3pc of the federal divisible pool), and the provinces gearing up to resist. All this happened in the closing months of the year, and from here on, the issues around burden-sharing are likely to grow to eventually overshadow the controversies surrounding the route plan.

The year has been a pivotal one for CPEC. Many of the questions regarding the project were answered, and new ones raised. What the project means for Pakistan and what it will look like upon completion also came into sharper relief.

The depth of the controversies surrounding the project was also revealed. The reality of the project was revealed, as well as the rhetoric. However, the battle between reality and rhetoric is likely to intensify as the implementation stage moves forward.

Today CPEC stands as the only answer Pakistan can give to any of its challenges. It is expected to bridge the power crisis for us, revive exports, create jobs, serve as the motor force for the growth rate of the economy, create demand and infrastructure, and address urban congestion through mass transit schemes.

It is also being tapped as the solution to a persistent slump in agriculture as well as creating the grounds for greater cultural exchanges between both countries. How much of this is reality and how much rhetoric? The year 2016 is when this question was launched, and how it plays it out in years to come will be central in deciding how much of a ‘game-changer’ the project turns out to be.

For China, the year 2016 was when the country began to discover the complexities of doing business in Pakistan. The raft of Chinese investments that are already in Pakistan – from telecom's to oil and gas – have not encountered anything closely similar to the political controversies that the CPEC projects have been subjected to.

The new round of negotiations on the renewal of a Free Trade Agreement with China, originally signed in 2006, began this year with the government taking a slightly more strident stand in the name of domestic industry than before.

Both China and Pakistan began to discover the reality of embracing each other more tightly in 2016. In the years to come, will reality triumph over rhetoric to yield a truly strong and enduring partnership? Or will the embrace turn into a something a little more sinister? The question arose in 2016, and the answer lies in the years ahead.