CPEC: A Debt Trap?  


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Sumera B Reshi

Nowadays the China Pakistan Economic Corridor is being flaunted as a project that is going to change the economic landscape of South Asia. Such is the ambit of CPEC that very recently, Chief Minister, Mehbooba Mufti suggested the building of a corridor — similar to the CPEC between South Asia and Central Asia with Kashmir as its nucleus. She pointed out that “taking advantage of its geographical location, Jammu and Kashmir could become a nucleus towards forging a new economic alliance in the region”.

The primary objective of CPEC is to connect the landlocked western Chinese city of Kashgar to the Arabian Sea through Gwadar, providing China an alternative route for shipping gas and oil, one that would bypass the southern tip of India and the Strait of Malacca, a chokepoint that could make China’s maritime trade vulnerable to interdiction by hostile states during a conflict.

CPEC is a trillion dollar network of highways, railway lines, seaports and telecom network encompassing 60 countries in Asia, Europe and Africa in order to generate trade, increase connectivity and cooperation. CPEC is the major part of the One Belt One Road (OBOR) globalization project of the President Xi Jinping. CPEC is certain to benefit China’s troubled state-owned enterprises, allowing them to overcome the challenges of overcapacity and oversupply by going global. And for Pakistan, the project could help it quickly overcome deficits in its electric supply and revive its struggling domestic industries, positioning it for high rates of economic growth.

Moreover, the network of pipelines shall also be constructed which will then be used to transport liquefied natural gas and oil from Iran and the Gulf countries, however, the project is not only about the infrastructure for trains, roads and pipelines, rather it will also connect Europe and the Central Asian countries with the region providing a higher level of development as well as cultural exchange between China and Pakistan.  It is believed that CPEC will also be beneficial for the surrounding countries including India.

Recalling Mufti’s suggestions, if Jammu and Kashmir jump on the CPEC bandwagon, how

beneficial is CPEC then?

As per an article titled “Distant Dream” and published in Kashmir based weekly, Prof G.N Khaki, director Centre for Central Asian Studies, Kashmir University expressed his support for CPEC by saying that Kashmir used to have economic, cultural and trade links with central Asia prior to the partition of the subcontinent. There used to be an exchange of knowledge with China and Central Asia countries and Kashmiris often visited Samarkand and Chinese Turkistan. Trade links and the exchange of knowledge with Central Asia and China helped in the transaction of ideas that deepened and enhanced the knowledge base, culture and traditions of Kashmir.


According to Prof Khaki, CPEC could revive all these old routes and is certain to generate interest in Kashmir. Since the changes in the political landscape of subcontinent, Kashmir has lost connectivity with Central Asia, thus, CPEC will help revive the historical links and identify the routes and would connect Kashmir with China, Central Asia as “Leh-Turtuk, Leh-Chishoor, Uri-Muzaffarabad, Tangdhar, Gurez and Kanzalwan routes”.

CPEC being a strategic vision of China will improve its access to the global market through the Indian Ocean by building a new 3000 km road, railway, pipeline optic fibre and a new deep-sea port network through Pakistan.

As of now, China is connected to Europe, Africa and the US through the Strait of Malacca in the South China Sea.  Therefore, CPEC which passes through Pakistan would provide an alternative route for China to reach to the global markets of Middle East, Africa, Europe and the US. Moreover, the new route is expected to reduce the distance from western China to Eastern Europe by at least 10,000 miles.

While CPEC has been presented as a scrumptious meal and a splendid commodity, however, it also has some shades of grey mixed with streaks of gold. Experts believe that China’s presence in Pakistan, especially in Gilgit-Baltistan, is twofold. One to counter the US influence in the region and second to combat Muslim separatists directly on the ground.

China’s aim isn’t just commerce and trade rather establish some military bases in Gilgit-Baltistan. Historically GB (formerly known as Northern Areas), was an integral part of the former princely state of Jammu & Kashmir ruled by Hindu Dogra dynasty. Since 1949, GB has been under the control of Pakistan. Besides GB being a focal point of CPEC and strategically important for China as well as Pakistan, it is known to China that GB is a disputed territory and Pakistan’s sovereignty does not extend to the region. They are well aware that the constitution of Pakistan doesn’t have jurisdiction in GB.

Although American forces are already in Pakistan, so is China wanting to set up its military base either in Federally Administered Tribal Areas (FATA) or the Northern areas of GB. In exchange, Pakistan wanted China to build a naval base at Gwadar in Baluchistan to counter Indian threat.

Furthermore, people are divided over the possible implications of CPEC on Kashmir. According to an article published in Kashmir ink on 13 Feb, 2018, former vice-chancellor, IUST, Awantipora, Siddiq Wahid expressed his view on the benefits of the CPEC as “The impact on the dispute over J&K state of CPEC, in the context of the Belt and Road Initiative (BRI), depends on whether its primary intent is economic/cultural or security/strategic in orientation. The jury is still out on that question. So, we will have to wait and see whether it will ‘create opportunities for Kashmir’.”

Siddiq Wahid has a genuine point. Senge H. Sering, a scholar from GB based in Washington DC has somewhat similar views. According to Sering, China has a huge presence in GB and the intentions aren’t just economic but there is also a military component to this much talked economic project. Various human rights organizations have termed China’s presence in GB as a silent invasion of China.

Siegfried O. Wolf, a German political scientist and a researcher with the South Asia Institute in his paper titled “China –Pakistan Economic Corridor and its impact on Gilgit-Baltistan” has written that CPEC will lead to a securitization and militarization of GB. The equation will lead to military build-up by both China and Pakistan. With the result, locals will experience an increased presence of security forces in the public sphere.

Moreover, Wolf fears that GB will experience a fundamental demographic reformation to an extent that the locals will turn into a minority in their own region. People from other parts of Pakistan especially Punjab will be moved to GB to take over businesses and administrative jobs and that is why some people term it China – Punjab Economic Corridor. Also, an external migration of Chinese workforce and enforced displacement of locals will deteriorate the situations.

Political pundits consider CPEC an essential part of China’s One Belt One Road initiative to expand its influence in the world in which Pakistan is just the geographical space cashed by China to reach the warm waters of the Persian Gulf. Further, if somehow, there is a blockade in the South China Sea and Strait of Malacca, then CPEC is an alternate route for China to explore vast resources of the Middle East and Africa.  China invested $46bn in Chinese grants and soft loans for infrastructure projects and the investment has grown to $62bn since then. However, some sections believe that for China, the aim is to gain access to the Indian Ocean in order to encircle India. Andrew Small, the author of The China-Pakistan Axis and a fellow at German Marshall Fund, argues that certainly Gwadar, as a port on the Indian Ocean, interests the Chinese navy.

Besides the economic aspects, environmentalists believe that CPEC has detrimental effects on the Gilgit-Baltistan’s environment. According to Hidatullah Baqri, author of an academic paper on “the Economic and Environmental impact of CPEC”, Gilgit- Baltistan will face a serious environmental problems such as climate change, air and water pollution, waste disposal, natural resources depletion, deforestation, loss of biodiversity, melting of glaciers, floods and acidification in near future. He further adds that water pollution, desertification, soil erosion, water logging and salinity are some of the major environmental issues which GB shall have to face because of CPEC.

Additionally, with the construction of China-Pakistan Economic Corridor (CPEC) project, approximately 7000 trucks per day will pass through this area, leading to the emission of up to 36.5 million tons of CO2. Such emission will severely reduce the mass of the glaciers and will likely result in extreme flooding.

Even though CPEC is not just a tool for China to influence the world politics but then it does have flaws. Since China has offered loans to Pakistan, the International Monetary Fund (IMF) has warned that Pakistan might not be able to repay the loan and has expressed its concern over the fiscal impact of CPEC. This, according to IMF could prompt a balance of payments crisis.

In a lecture delivered by Dr S. Akbar Zaidi, a renowned economist from Pakistan, raised his doubts about the practicability of the economic corridor and its effects on Pakistan’s sovereignty.

According to Zaidi, CPEC has the potential to transmute the Pakistani economy; however, his concern is that this transformation might come at a very high price. He believes once CPEC is operationalized, it would make Pakistan a colony of China. For Zaidi, CPEC is what East India Company was for the subcontinent.

In his lecture, Zaidi hinted Pakistan should consider the examples in Sri Lanka, Tajikistan and other African countries where China invested and provided huge loans but now these countries are in the massive debt trap. CPEC is a long-term gaining the opportunity for both China and Pakistan, but will it prove a real game changer for Kashmir as well economically, strategically, security wise and environmentally is a question shrouded in mystery.  It is unwise to jump on the CPEC bandwagon blindly without exploring other fallouts and serious repercussions.


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