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Wednesday, July 17, 2024

Understanding the political relevance of CPEC

Chinese investment in different fields of Pakistan provided a much-needed economic lifeline to a government that was struggling to attract any kind of foreign investment due to internal security issues. The ruling party hailed the start of CPEC as a sign of its political prowess at the time and has since projected itself as the brains behind the multibillion-dollar project.

Back in 2015, the announcement of CPEC created a huge buzz in the economic and political domains of the country. For a country that was struggling to attract any sort of foreign investment due to its struggles with internal security challenges, the Chinese investment in various domains served as a much-needed economic lifeline. The ruling party at that time celebrated the initiation of CPEC as a mark of its political prowess and has since been projecting itself as the mastermind of this multi-billion dollar project.

The main components of the CPEC in its initial stage were energy and infrastructure. Due to lack of investment and growing population, Pakistan’s energy needs had substantially crossed the available supply. The development of roads and power plants came at a much-needed time for the people of Pakistan while the high visibility of these projects also ushered in political gains for the PML-N government.

Read more: Win-Win solution with China on CPEC: SAPM Khalid Mansoor

Analyzing the relevance of CPEC

While the government was scoring political points as the early harvest projects came into fruition, the criticism surrounding the feasibility and legitimacy of this mega project was coming into question and was being raised in both local and international media. India protested against the transport component as it argued that the planned route was passing through disputed territory while the US raised suspicion about the debt burden imposed by Chinese investments. Domestically, the opposition parties challenged the environmental sustainability of CPEC related projects and lack of transparency.

When the government changed hands in 2018, there were rumors that the CPEC project would scale down as Imran Khan’s election manifesto targeted sustainable growth and improving Pakistan’s debt crisis. The macroeconomic situation of the country was far from stable when the present government took charge and there were early indications that the government would have to make some difficult decisions to improve the economic outlook.

At present, the energy costs are skyrocketing in the country as the country’s energy mix is dominated by power plants dependent on imported fossil fuels. The rapid devaluation of the Pakistani rupee in recent years has increased import costs and raised energy prices.

The onset of COVID-19 early in the second year of the PTI government’s tenure exasperated the economic challenges. Most significantly, the country on which Pakistan was banking the most for its economic survival found itself in lockdown much earlier than most of the other countries in the world. The economic slowdown not only led to job losses and a decrease in output but also brought CPEC projects to a standstill as the Chinese workforce faced travel restrictions.

Read more: Emerging challenges and opportunities for Gwadar and CPEC

China-PTI cooperation

Despite the challenges, the Chinese did not want the momentum to slow down and have worked closely with the PTI government to explore new avenues for cooperation. China’s willingness to invest in human capital and green energy projects was a welcome relief for Imran Khan.

Moreover, knowledge transfer from China is a very critical component of CPEC as the county lacks the technical capabilities to undertake large-scale projects. During an interview with Global Village Space, Lt. Gen. Muzammil Hussain, Chairman WAPDA, lamented the fact that Pakistan has been unable to build dams for the last four decades due to lack of capacity and political will. He pointed out that in the same period; India and China have built thousands of dams. As compared to Pakistan, both these find themselves in a much stronger position in terms of water and energy security.

Under CPEC, a number of hydropower projects have been initiated which will enhance the county’s storage capacity and bring down energy costs. Similarly, Pakistan hopes to attract Chinese investment and expertise to transform its agricultural sector and revive many of its industries to bolster job creation. The significance of CPEC cannot be downplayed as this project has given Pakistan a lifeline to revive its economic capabilities and pursue sustainable growth.

In his recent visit to China, Imran Khan pushed for enhanced cooperation and acceleration of CPEC’s second phase. For the Pakistani Prime Minister, timely completion of these projects would be critical to overcome his critics. The economic hardships faced by the people due to his adjustment policies have dampened his popularity while the country is also set to face further IMF mandated fiscal tightening after the lending institution agreed to release another $1 billion to support Pakistan’s economic reforms.

Read more: Germany, Saudi & UAE to join CPEC

The new conditions imposed by IMF will slow down the economy so the government would be hoping that CPEC related activities can absorb the pressure and provide relief to the general public and business community. With just a year and a half remaining in his term, gaining back his lost popularity amidst IMF conditions is a daunting challenge. Recently, the Prime Minister has urged the private sector to increase the salaries of employees so that they can bear the rising costs. This is indeed a sign of desperate times ahead and with time ticking, the PTI government must be looking at CPEC as a political lifeline.


Ali Haider Saleem has worked with the Institute of Strategic Studies Islamabad (ISSI) and National Defense University (NDU). His research interests lie in sustainable development, regional integration, and security cooperation. He has studied public policy at Queen Mary University of London and economics at NUST, Islamabad.

The views expressed in the article are the author’s own and do not necessarily reflect the editorial policy of Global Village Space.