China appears to withdraw from its initial financial pledges to Pakistan as part of the Beijing-funded China-Pakistan Economic Corridor (CPEC), a $ 60 billion infrastructure construction plan amid growing corruption and terrorist attacks on Chinese engineers .
According to Asia Times, the Pakistani military is expected to take near-total control of the CPEC in an attempt to reassure Beijing that their investments will be safer amid terrorist attacks on Chinese engineers and others facilitating infrastructure projects.
The new bill comes at a time when reports suggest China is slowly withdrawing from its promises.
Overall loans from the state-backed China Development Bank and Export-Import Bank of China fell from a peak of $ 75 billion in 2016 to just $ 4 billion last year. Provisional data from 2020 shows that the amount shrank to about $ 3 billion in 2020, according to data from researchers at Boston University in the United States.
The belt tightening is believed to be in line with Beijing’s so-called “rethinking strategy” for its $ 1 trillion BRI, which is the subject of widespread fire for “structural weaknesses” including opacity, corruption, excessive lending to poor countries resulting in “debt traps” and negative social and environmental impacts, researchers from Boston University said.
Pakistani Prime Minister Imran Khan, whose government is criticized for being under military control, is also addressing the problem in his country for failing to prioritize and accelerate large-scale Chinese infrastructure investments, according to Asia Times.
In 2018, Imran Khan had suspended several CPEC projects on suspicion of corruption by the previous government. However, two years later, many of its government members were cited in major corruption scandals involving the country’s energy sector. About one third of Pakistani power companies are involved in Chinese projects under the CPEC.
The 278-page investigation report, compiled by the Securities and Exchange Commission of Pakistan (SECP) and submitted to Imran Khan in April, uncovered alleged irregularities worth more than $ 1.8 billion in subsidies to 16 producers independent energy companies (IPPs), including those belonging to Imran Khan advisors Razak Dawood and Nadeem Baber, Asia Times told
The SCEP also investigated the profits earned by Chinese power companies. The report revealed that Huang Shandong Ruyi Pakistan Ltd (HSR) and Port Qasim Electric Power Co Ltd (PQEPCL) were paid together in excess of 483.6 billion rupees (US $ 3 billion).
Terrorists in Balochistan province, meanwhile, have intensified their attacks on CPEC projects and the Chinese citizens who work there, increasing the security costs and political risks of the projects. Islamabad’s move to give the military more control over the scheme is a clear attempt to mitigate China’s growing security concerns.
A high-level source from the Pakistani Ministry of Planning told Asia Times, on condition of remaining anonymous, that Beijing mainly agreed to allow Pakistan to form a new joint venture mechanism with companies other than Chinese state-owned or private enterprises to stimulate the progress of the CPEC project, including a multi-billion dollar railway upgrade.
“Certainly we need foreign investors to blow funds for CPEC mega projects including $ 6.2 billion rehabilitation and upgrading of the Karachi-Lahore Peshawar Railway (ML-1) and half a dozen special economic zones in width and width. of the country, “the source said.
The much-publicized 1,872-kilometer ML-1 project is moving at a snail’s pace due to China’s reluctance to fund the project with a paltry 1% return on investment. China is also reportedly dissatisfied with the government’s decision to cut the cost of the project from $ 8.2 billion to $ 6.2 billion due to the growing debt load.
The slow execution of high-level CPEC projects, caused in large part by a lack of funding from China, played a major role in a meeting held last month between newly appointed Chinese ambassador Nong Rong and the foreign minister. Pakistani Shah Mehmood Qureshi in Islamabad, sources say.
If China fulfills the original CPEC commitments, it will build and finance at least eight SEZs in all four Pakistani provinces, as well as in the federal territory of Islamabad, the federal area of Port Qasam and in Pakistan-administered Kashmir and Gilgit-Baltistan, that Pakistan recently declared a province. Another SEZ will be built in Gwadar.
The Institute of Policy Reforms (IPR), a Lahore-based expert group run by Pakistan’s senior leader Tehreek-e-Insaf (PTI) Hamayun Akhtar Khan, said in a recent report: “Pakistan has slipped into a debt trap due to the government’s failure to carry out reforms and weak fiscal management. “
In the research report titled “Pakistan’s Debt and Debt Service Are Concern,” the IPR summarized that “We are in a debt trap that is entirely ours. It is a risk to our national security. The government. he was borrowing to pay off the maturing debt, which now seems to worry all political parties, entrepreneurs and experts. “
If Pakistan’s move to give the military near-total control over the CPEC will reassure China that its investments are safer, what is clear is that Beijing is moving away from Pakistan’s $ 60 billion table in the BRI. , for reasons that until now are not quite. clear, Asia Times reported.