BRI: The road to progress (Part - II)

While the BRI has all the potential to become a huge success story, there are some factors that may hamper its progress. The geopolitical interpretations of the BRI fail to take into consideration the interests of the many actors involved, as evidenced by the creation and implementation of CPEC.

Within China, there is evidence that provincial authorities were crucial in laying the groundwork for what would later become the BRI’s central economic corridors. They also maintain an aggressive stance by promoting their provinces to the status of major actors in the competition for federal cash and influence.

To achieve the long-term aims of integrating border spaces and promoting sustainable development in the interior, federal officials have worked to combine the existing provincial initiatives into a national policy. As the example of Pakistan demonstrates, participating countries have used a great deal of discretion in choosing projects, frequently to advance their political agendas.

The idea of a trade corridor connecting the two countries dates back well before China’s BRI. In the summer of 2013, when then prime minister Nawaz Sharif met with former Chinese prime minister Li Keqiang in Beijing, the project was originally revealed. Plans for implementing the projects had a five-year time frame, and the amounts involved (between $10 and $20 billion) were modest in light of China’s current aspirations in Pakistan.

These initiatives were recast as part of CPEC, which did not formally begin until April 2015, when Chinese President Xi Jinping was in Pakistan. The country moved its focus to power generation, with estimates rising to about $46 billion. The two administrations then drafted a ‘long-term plan’, which would begin in 2017 but would not be fully implemented until 2030. The original estimate of $48 billion increased to $62 billion, and now Pakistani officials are talking about much greater figures.

The majority of BRI-related activity in Pakistan are CPEC projects, and its stated goals are in line with those in China’s primary BRI policy documents. However, not all Sino-Pakistani infrastructure projects that can be considered as contributing to BRI objectives are included in CPEC.

However, China’s direct participation in CPEC projects is not a given. Following the logic of the MERICS Belt and Road Tracker, it makes sense to include non-CPEC projects that still contribute to the overarching BRI objectives when appropriate.

Stability-minded development of China’s western heartland is aided by the creation of commercial routes and demand in Pakistan. Chinese businesses are pushed forward by domestic overcapacity. They are also enticed by Pakistan’s simple access to financing and controlled bidding process. Pakistan has responded to energy problems by increasing its coal production, but Chinese manufacturers are seeing declining demand for similar products at home.

But, there are occasions when CPEC’s commercial logic seems at conflict with its ultimate purpose of providing prosperity to Pakistan. Many Chinese firms have secured long-term contracts that allow them to operate roads and energy grids in exchange for fixed-priced tolls and electricity.

These price increases may cause Pakistan to fall behind regional rivals like Bangladesh.

Despite widespread interest in the concept of a transportation corridor, the majority of completed CPEC projects have included the generation of electricity. Seventy-five percent of the $25.5 billion spent on finished projects are related to energy. This includes renewable sources like solar, hydro, and wind, but without counting nuclear, around 60 per cent of the additional MW comes from fossil-fuel fuelled capacity.

Like other projects along the BRI, Beijing’s efforts are hampered by local politics and red tape. It took the provincial administration of Balochistan nearly three years to give the go-ahead to build the Gwadar power plant even though the city was experiencing power outages. In 2018, Pakistan was hit by a second consecutive balance-of-payments crisis. Imran Khan, who was prime minister at the time, sought a $6 billion rescue from the IMF the next year.

CPEC is an ambitious venture, but the country’s economic woes predate and go deeper than CPEC. Khan later asked China to modify the terms of its power deals, citing the burdensome nature of capacity payments in the face of an impending economic downturn.

While the potential rewards of investing in CPEC are high, the clock is ticking and the project has only ten years to turn Pakistan into a rich regional trading centre. With an eye towards expansion and increased profits, CPEC has been approved for a number of credit lines. With a coronavirus-induced recession on the horizon, it takes more hope than ever to envision CPEC’s aspirations for turning insurgency-plagued Balochistan into a hub for seaside tourism.

Concluded

The writer is a freelance contributor and can be reached at: Waseem.sialcsu@gmail.com