Chinese President Xi Jinping, right, and Pakistani Prime Minister Shehbaz Sharif greet each other at the Great Hall of the People in Beijing on June 7. © Reuters
ISLAMABAD — Pakistani leader Shehbaz Sharif went to China hoping to land more big-ticket energy and infrastructure deals as his county reels from an economic crisis.
While Sharif and his entourage of cabinet ministers met with President Xi Jinping and other top officials in Beijing, the group left nearly empty handed after finishing a five-day official visit this past weekend.
That may be the new normal for Pakistan’s leadership as China cools on the South Asian nation and its much-hyped $50 billion China-Pakistan Economic Corridor (CPEC), a cornerstone of Beijing’s globe-spanning Belt and Road Initiative.
“The Chinese have become wary of putting in more money since they know it is a financial black hole due to Pakistan’s long-term poor economic circumstances,” Jeremy Garlick, an associate professor of international relations at Prague University of Economics and Business, told Nikkei Asia. “China needs to maintain the facade that CPEC is working because it is supposed to be a key part of the BRI.”
Last month, Islamabad requested an additional $17 billion of China-funded energy and infrastructure projects following a key meeting of the body that decides on future CPEC investments.
Before his trip, Sharif’s first to China since taking office in March, Pakistani officials had claimed that an upgraded version of the multibillion-dollar agreement would be formally launched in Beijing.
The Chinese response, however, was lukewarm. A 32-point joint statement issued this weekend revealed that Pakistan eked out few concrete gains, with only a vague mention of an upgraded economic cooperation deal.
“Earlier CPEC investments in the power sector were rushed by political needs, and might not have been optimal,” said Stella Hong Zhang, a China public policy postdoctoral fellow at the Harvard Kennedy School’s Ash Center.
That was highlighted by cash-strapped Pakistan’s recent call to restructure more than $15 billion in power-plant debt owed to Chinese energy producers operating power plants in Pakistan. The surprise request came as the Islamabad negotiates a $6 billion to $8 billion bailout with the International Monetary Fund.
Another aggravating factor is security. On the weekend, Pakistan committed to ensuring the safety of Chinese workers in the country and projects after a string of deadly militant attacks alarmed Beijing, casting further doubt on future investment.
Still, Sharif’s entourage managed some modest gains. China agreed to advance the Main Line 1 (ML-1) Railway project in stages. With a price tag of $6.7 billion, the ML-1 will improve Pakistan’s railway infrastructure between the southern port city of Karachi and Peshawar in the north in three phases. China has only agreed to the first phase.
There was also a deal to upgrade a portion of the Karakoram Highway that connects Pakistan with China through mountainous terrain, which is closed during winter due to heavy snowfall.
“We will not see big investments, nor will we see China [completely] withdrawing from cooperation with Pakistan,” Garlick said.
Mohammad Shoaib, an assistant professor at Quaid-i-Azam University Islamabad, said that further progress on Chinese investment in Pakistan will likely come slowly, and remain that way: “CPEC will continue to be a major enterprise in terms of rhetoric only,” Shoaib said.
However, there may be potential for nongovernmental economic cooperation between the two countries, he added. “China will be interested in doing business with a growing number of enthusiastic entrepreneurs in Pakistan,” Shoaib added.
Zhang, from Harvard’s Kennedy School, agrees. The Chinese “government will urge companies to seek opportunities in Pakistan,” she said. “Whether such activities will bear fruit will still depend on how much Pakistan’s business environment improves.”
source : asia.nikkei