
The BRI in Pakistan: China’s flagship economic corridor
Power generation makes up bulk of projects
The map above displays a much larger part of the project categories included in the MERICS BRI database than our previous mappings, adding fossil fuel, nuclear and renewable energy power plants, as well as transmission lines, fiber optic cables, highways, airports and urban public transport.
Although the idea of a transport corridor has been the focus of international attention, power generation makes up the bulk of already completed CPEC projects. If one includes projects implemented and/or financed by Beijing that have not been branded as part of CPEC, energy makes up an even larger share, with power plants accounting for over 90 percent of the cumulative total cost of projects. This fits the emphasis in “Phase I” of the “Long Term Plan” on addressing chronic electricity shortages – as a precondition for building up Pakistan’s industrial base as well as connectivity with China after 2020.
Three years after the official launch of CPEC in 2015, the MERICS BRI database confirms the frequent description of CPEC as a “flagship project” of the BRI. Pakistan has absorbed the largest share of Chinese financing connected to completed projects. When including projects under construction, more than 15 billion USD of Chinese FDI and loans are tied up in relevant projects.
Three main, and partly contradictory, motivations are behind this Chinese focus on Pakistan: aiding economic development to reduce support for separatist and Islamist militancy, stabilizing China’s military ally as a strategic counterweight to India in South Asia, and using Pakistan’s non-transparent procurement process and lack of alternative investors to maximize benefits for Chinese companies.
Business interests undermine development agenda
Firstly, the Chinese government is concerned about insurgency-fuelled instability in neighboring Pakistan. The goal is to keep militants from China’s Xinjiang Uyghur Autonomous Region from finding support and training in the Pakistani-Afghan border regions, and to secure trade routes towards the Indian Ocean and the Middle East. Beijing’s stance is that its state-driven investment in such regions can improve the security environment through economic development.
Secondly, Pakistan remains useful for China as a check on its main regional geopolitical competitor in South Asia: India. Nuclear-armed, in part thanks to China, Pakistan acts as a buffer and counterweight in Sino-Indian border disputes, weakening China’s competitor by absorbing a lot of its attention. Taking this even further, Pakistan, China’s “all-weather” strategic partner for half a century, might even host the second overseas PLA Navy base besides Djibouti at Chinese-built port facilities in Gwadar.
The third objective risks undermining the first two. The BRI aims to support Chinese companies in gaining greater market share worldwide, and in offsetting slower growth in an increasingly saturated domestic market. Chinese companies already had a strong presence in Pakistan when the BRI was announced, and were then able to expand it without having to go through open tenders. More importantly, Chinese companies have often obtained long-term contractual rights to operate road and energy infrastructure and to collect electricity or toll fees at guaranteed high prices.
These high prices threaten to put Pakistan at a disadvantage compared to regional competitors like Bangladesh. Chinese investment could thus stunt Pakistan’s industrial growth and ultimately undermine the economic development China seeks to support for security and geopolitical reasons.
You can download a high resolution version of the map here.
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