China under President Xi Jinping has embarked on a journey of economic growth, infrastructural expansion, regional connectivity and market outreach. In this respect, the Belt & Road Initiative (BRI) ─ grounded in six different but significant geographical regions of the world in terms of economic corridors ─ outlines China’s trade, fiscal and energy goals for the decades ahead. With respect to China-Pakistan relations, which took a military-strategic turn in the mid-1960s, China-Pakistan Economic Corridor, commonly known as CPEC, has added an economic dimension to bilateral relations.
As a showcase of the BRI, CPEC, initially worth 46 billion US dollars, was launched in 2015 during the Chinese President Xi’s visit to Pakistan. In its early phase, the Corridor prioritised infrastructure development, energy generation and digital communication. Chinese and Pakistani stakeholders, from both public and private sector, played a lead role in terms of economic cooperation and project operationalisation at different locations in Pakistan. To further expand and consolidate CPEC, Chinese and Pakistani governments concluded at the sixth Joint Cooperation Council (JCC) held in 2016, that they will establish Special Economic Zones (SEZs) in the second phase of CPEC, which was supposed to kick-start in the following year.
Numerically, nine SEZs are to be established in the Centre, provinces and regions such as Gilgit-Baltistan. Along with SEZs development, agricultural and industrial cooperation was also a key component of the cumulative objectives under the second phase. Prime Minister Imran Khan, during his previous visits to China, emphasised bilateral cooperation under CPEC. For example, along with reiterating the economic and market significance of CPEC for Pakistani and Chinese investors, he urged regional stakeholders such as Middle Eastern companies, i.e., Saudi, Emirati etc., to invest in CPEC for mutual gains.
Importantly, during his past and the present visit, which contextually aligned with Beijing Olympics, PM Khan stressed on the need to promote bilateral cooperation not just in CPEC but beyond. For example, along with underscoring the second phase of CPEC, which comparatively is moving at a slow pace, the Khan government also communicated key foreign policy objectives to its Chinese counterpart. The political recognition of the Taliban in neighbouring Afghanistan was discussed along with highlighting the Kashmir issue.
Moreover, Pakistani delegation, while attending the inaugural session of China’s Winter Olympics ─ which has been politicised by the US-led Western governments ─ supported this Chinese mega-sports event which diplomatically has been boycotted by the US and its key allies. Ironically, however, the sports delegations and some former politicians such as George W Bush from the ‘boycotting’ countries participated in the Olympics. Overall, more than eighty heads of states/government attended the glamorous gala of sportive dynamism which could not escape the divergent set of strategic, if not commercial, choices that the US and China are seemingly enacting in the current context.
Currently, it seems the US is being influenced by neorealist scholarship which allows for economic cooperation in terms of bilateral trade, yet it believes in enhancing state capabilities in other domains such as military and technology. In the latter realm, the US is still a key stakeholder, with comparative edge in military technologies and prowess. It is still the “base nation” maintaining around 800 military bases around the world, the majority located in the Indo-Pacific ─ previously known as Asia-Pacific. The latter has attracted American attention and interest once more. To further expand its commercial and strategic outreach in the Indo-Pacific in the 21st century, and perhaps beyond, the US is building security and economic partnerships and alliances with its traditional European and Pacific allies such as the UK and Japan, respectively, in order to, on the one hand, capture regional markets and (sea) lines of communication and, on the other, contain China’s rise as a global hegemon.
China presently is the second largest economy of the world and, as per certain calculations, may become the first leading economy of the world in the next two to three decades. However, China is still a long way to match the American military might in terms of technology, weapons systems, security alliances such as NATO and military bases.
China, on its part, is engaging the world commercially under its Belt and Road Initiative (BRI) which was launched in 2013. The BRI has gained considerable (non-)governmental legitimacy in the past eight years. For example, more than 150 countries and hundreds of non-state actors such as MNCs have joined the BRI one way or the other. Under CPEC, Pakistan is also playing an active part in the (extra) regional projection of the initiative. However, owing to its lingering economic crisis, Khan government tried to approach major players in global finance such as the IMF for economic assistance. A few days ago, Pakistan negotiated another loan arrangement with the IMF under which further fiscal fine-tuning will be done, carrying more burden for the masses ─ which may impact the PTI electorally in the next election. Hence, to control inflation and related negative economic indicators, the government is looking for more foreign funds such as loans and/or aid. Whether the current visit of the prime minister accrued Chinese economic assistance is still to be ascertained. Nonetheless, principally the Chinese government has reiterated its interests in, for example, the agriculture sector in Pakistan under the CPEC.
Moreover, China has urged Pakistan to expedite work on SEZs. Whether or not these ventures pick up speed in coming months is yet to be seen. There are structural issues involved in, for example, purchasing land from private persons for SEZs. Importantly, the Khan government is facing political challenges from the opposition which is gearing up to stage protests by the end of this month. If this happens, the government would waste its time and energy in managing the opposition and will not be able to prioritise SEZs. Considering that the general elections are scheduled next year, foreign investors usually are hesitant to invest in a country that faces political and electoral uncertainty.
Moreover, Pakistan has recently witnessed an increase in incidents of terrorism especially in Balochistan ─ where key CPEC projects such as Gwadar port are hosted. Though Pakistani security forces have thwarted such attacks, the likelihood of further terror attack cannot be ruled out. If the menace of terrorism continues, it will carry negative implications for CPEC. For example, trans-regional foreign investment from the Gulf countries may get deferred.
Similarly, the situation in Afghanistan is still unstable where the humanitarian crisis is affecting innocent lives on a daily basis. The US has reportedly decided to allocate half of the 7 billion frozen Afghanistan’s financial assets to the victims of 9/11 and the remaining half to be put in the fund for Afghanistan, and not to the Taliban.
China and Pakistan need to engage the US and its allies such as from Scandinavia in a meaningful manner to help Afghanistan have its funds back – along with the much-needed global economic assistance to feed the poor and hapless Afghans. In addition, Pakistan and China need to talk about trade in sports goods too. Pakistan has exported high-quality sports products to, for example, the European Union in the past and it can do the same with China whose interest in hosting mega sports events such as the Beijing Olympics has doubled in recent years.
Lastly, it certainly would have been prudent for the US and its allies to manifest sports spirit by encouraging sportive interaction among various stakeholders globally. If politics is really to be played out, there are other areas and reasons to do it. It is hoped in the future the US and China, among others, engage each other meaningfully for a candid conduct of large-scale sporting events which are liked by the public all over the world regardless of colour, creed, race and politics.