CPEC Debts: China Concerned After Change In Government? – Analysis

The best bet for China is to keep the Pakistan army happy.

By Harsha Kakar

The recent visit by the Pakistan army chief, General Bajwa, to Beijing and his comments there indicate a desperate attempt by both countries convincing the other that all is well in the continuation of the CPEC. This comes after multiple statements in the Pakistani media about the present government seeking to revisit the terms and conditions of the CPEC considering the debt burden which Pakistan has begun to face. The Pakistan commerce minister had even suggested suspending all projects for a year, thus enabling the government to regain fiscal control. Simultaneously, Pakistan is seeking options for a bailout but is hesitating to approach China as it is already in deep debt.

General Bajwa’s visit is the first after the new government, supported by the army, assumed office. His visit came concurrent to the visit of Prime Minister Imran Khan to Saudi Arabia and the UAE, where he was seeking a bailout package. Imran did manage something as Saudi Arabia agreed to join the CPEC and invest in Pakistan. How would this play out with the Chinese and on ground is yet to be seen. Another reason for the visit could be to convey to the Chinese that the PM’s first visit abroad to Saudi Arabia and not China is not aimed at stating that China is not Pakistan’s number one ally.

With the US hinting on controlling terms and conditions of any International Monetary Package (IMF) package, Pakistan has limited options. No matter from where they take the loans, the money would have to flow to China. During the recent visit of the Chinese foreign minister to Pakistan, there were some comments on the concentration of CPEC projects in Punjab. China is now planning to extend the project into western Pakistan.

Despite all its statements during the electioneering, there has been no step taken by the Imran Khan’s government to make public the terms and conditions of the CPEC and the debt which Pakistan owes to China. Like all earlier governments, investments remain shrouded in mystery. As earlier, the army has ensured that even if financial wizards know that this investment would take Pakistan downhill in the coming years, it would neither be slowed down or impacted.

Bajwa commented in China that “the Pakistan military and its new government are consistent in their policy towards China.” The words ‘military and new government’ were aimed at conveying that since the military supports the project and the government, it would have no choice but to toe the line. He also added that the Belt Road Initiative (BRI) with the CPEC as its flagship project is destined to succeed despite all odds and the Pakistan army shall ensure security of the CPEC at all costs. This is largely because the Pakistan army is dependent on China to counter the growing Indian conventional superiority since US support has all but ceased to provide aid and military equipment.

Pakistani and Chinese media reported that the Chinese consider the Pakistan army support as the backbone to the success of the CPEC. It is more than true as the Pakistan army has deployed 15,000 troops involving 9,000 of the army and the balance paramilitary to protect 10,000 Chinese workers employed in the project. With India turning down joining the CPEC, it remains an isolated project providing Pakistan with no additional source of revenue.

In every meeting which General Bajwa had in China, including with General Zhang, the vice chairman of China’s Central Military Commission, and President Xi Jinping, the one issue which was continuously mentioned multiple times was the CPEC. Thus, the visit was more about convincing the other on the stability of the CPEC, rather than military cooperation. Xi Jinping even added, “Those who oppose the BRI or CPEC would never succeed as this is an initiative of peace and development.” He went on to state that China shall continue to support Pakistan as a strategic partner. Both sides took elaborate efforts to reiterate on multiple occasions that Chinese investments in the CPEC would be protected.

The best way for China to secure its investments has been to boost the capabilities of the Pakistan military to act as a deterrent to India. This has multiple benefits to China. First, Indian concentration and focus would remain divided between two formidable nuclear-powered adversaries, one on each front. Second, it would give the Pakistan army an upper hand internally, freedom to push forth its agenda of bleeding India with a thousand cuts and force any government at the centre into inactivity. Thus, post comments on the CPEC came other comments which included, “China-Pakistan military ties are an important backbone of relations between the two countries.”

Every single Chinese statement on the CPEC stated that it is aimed at bringing more benefits and prosperity to the people of both countries. Internal reports flowing from Pakistan are in the reverse. The Pakistan business community has stated that cheap Chinese imports are impacting local industry. Added to this are the concessions offered by the government to Chinese companies and high tariffs for power produced by Chinese companies.

Simultaneously, China remains in a bind. This is its flagship project and hence cannot be allowed to fail. It has realised that its investments have been high, yet it can neither stop nor slow down. It has no option but to push ahead, no matter whom it must approach for support. If this project fails, then the balance of the BRI is in grave danger as other countries may follow suit. Further, it would impinge on the power and authority of Xi Jinping, as it has been his personal project.

Hence, the best bet for China is to keep the Pakistan army happy. All China needs to do is keep supplying the Pakistan army with the capability it desires to counter India, thus winning it over, and despite any economic slowdown or internal objections, the CPEC would continue. If the Pakistan army could raise a force of 15,000 to ensure protection to 10,000 Chinese, then it would be willing to do much more.

Clearly in Pakistan, a situation has arisen when the army which controls the country stops thinking about the country, but itself. Simultaneously, political leaders are running from pillar to post desperately seeking funds to prevent the country’s economy from going into a spiral. China on the other hand has gained a nation which would never be able to repay its debt and remain beholden for a long time. Clearly, Bajwa was only there to convince the Chinese that Imran Khan has no choice but to toe their line and the CPEC would remain secure as long as Pakistan continues to get military support.