Reviving CPEC

Published October 29, 2022

PRIME Minister Shehbaz Sharif’s first official trip to China, that begins early next week, will focus on the immediate ‘restart’ of the multibillion-dollar CPEC initiative and a swift completion of the pending large infrastructure projects. On the table are a $10bn railway project, the Karachi Circular Railway, and energy generation schemes worth $18.5bn that had been delayed due to frosty ties between the PTI government and Beijing, deferrals in payments to Chinese power producers and the liquidity troubles Pakistan has been facing for the last five years. According to the government, the Joint Cooperation Committee meeting held after a long time has cleared the projects and a formal announcement will be made during Mr Sharif’s visit. The JCC, where both sides discussed ‘missed opportunities’ and ‘prolonged delays’ in the execution of schemes like SEZs agreed upon eight years ago, also decided to include water resources management, business-to-business investments in the energy and industrial sectors and climate change concerns in the new phase of cooperation. Islamabad has also sought Chinese investment for its 10,000 MW solar power generation plan, facilitation of export of some agricultural products to China and exclusion of the 300 MW coal power plant in Gwadar.

With Pakistan in dire need of foreign loans and investments to shore up its dwindling foreign exchange reserves to stabilise its currency and external sector, the resumption of CPEC will provide relief to its teetering economy. Begun in 2015, so far 28 projects worth $18.8bn have been completed. Other schemes worth $34bn are under different phases of execution or at various stages of planning. It was unfortunate that the initiative lost its momentum under the Imran Khan administration due to lack of foresight; by the time the government realised its potential for Pakistan’s economy and people it was already too late.

Ever since its formation, the new coalition government has repeatedly emphasised the importance of the initiative and expressed high-level political commitment to the revival of Chinese investments on multiple occasions. Mr Sharif has himself been taking an interest in resolving the payment and approval issues facing Chinese companies. That his efforts now seem to be bearing fruit is a positive sign for Pakistan as the CPEC schemes can help us bridge our infrastructure gaps and revive Pakistan’s moribund economy. Nonetheless, it is advisable that the country’s political leadership avoid past mistakes that had allowed this enormous investment initiative to become a source of a major public controversy due to lack of transparency in the deals done with Chinese companies. It is therefore vital that the prime minister convinces Beijing to share complete information on the deals made and the costs involved with the people and bilateral lenders. Unnecessary controversies around the CPEC initiative can be detrimental to the schemes under it as well as relations between China and Pakistan.

Published in Dawn, October 29th, 2022

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