The 10th meeting of the Joint Cooperation Committee (JCC) of the China-Pakistan Economic Corridor has been delayed for an undefined amount of time, suggesting an indefinite halt on the advancement of a railway project worth $6.8 billion, which aims to connect Karachi and Peshawar, as well as bilateral industrial cooperation.
JCC has the authority to include new projects as well as track the progress of existing projects under the scope of CPEC. This delay could mean that Pakistan would not be able to suggest new projects into the corridor’s framework.
Some of the reasons attributed to the delay include the ongoing Covid-19 pandemic. It is also being reported that Pakistan and China are not on the same page regarding several corridor projects, including the conditions for Chinese financing for the Main Line-1 project and industrial cooperation.
The meeting is “unlikely to take place in the next 2-3 months as a lot of work still needs to be completed and disagreements between the two sides hammered out,” officials opine.
Moreover, analysts seem to attribute the delay to the PTI government’s “lack of interest.” While others like a Board of Investment official hold China responsible for not approving the industrial cooperation’s framework soon enough.
Pakistan and China claim to have entered the second phase of CPEC which is expected to be “broader and deeper” compared to the first phase, because of the enhanced industrial cooperation related projects as well improved agricultural cooperation.
There are currently nine special economic zones (SEZs) on the cards for Pakistan. However, it has only made progress on three industrial zones yet which include Dhabeji in Sindh, Rashkai in Khyber Pakhtunkhwa, and Allama Iqbal Industrial City in Punjab.
A special economic zone is developing in Faisalabad namely the Faisalabad Industrial Estate Development and Management Company (FIEDMC). Its chairman Mian Kashif Ashfaque has informed that more than 30 Chinese firms have already invested in different industries including chemicals and ceramic but, “these companies have not ‘relocated’ under the CPEC framework; they have invested directly (to take advantage of the Pakistani market and growing local demand for their products). We have now set aside almost 1000 acres of land exclusively for the Chinese companies which will relocate here as part of the industrial cooperation plan under the corridor initiative.”
Keeping in view Pakistan’s current financial situation, China requires more guarantees before providing a loan for the ML-1 project worth $6 billion, according to a report. It is further reported that China is demanding these guarantees Pakistan had decided to request debt relief from G-20 countries because according to a term by the G-20 countries, developing countries are not allowed to seek large amounts of commercial loans, excluding the ones granted by the IMF.
Approximately $25.5-29 billion worth of CPEC initiative related investments has been made by China. It is being reported that now, China will turn its focus from loans for infrastructure to different zones.
The focus on cooperation in science and technology, agriculture, information, and industrial development must be enhanced, reiterated the Chinese Ambassador to Pakistan.
According to an official of a planning ministry, “The window of new Chinese investments and loans for infrastructure schemes has closed now with the execution of the early harvest energy and transport projects; the second phase of CPEC is all about cooperation between the private sectors of the two countries.”