Pakistan's Perspective of CPEC
Since the announcement of the $46 billion China-Pakistan Economic Corridor (CPEC) in 2014, the project has become the center point of relations between the two countries. CPEC massive infrastructure development project that will include highways, railways, and oil and gas pipelines - mostly constructed by Chinese companies. Pakistan sees the CPEC as a way of stabilizing the troubled province of Baluchistan and boosting its economy, perhaps even easing tensions by providing employment for locals.
Pakistan is eager for CPEC-related projects to succeed, especially considering that it loses 4-6% of its GDP annually because of inadequate infrastructure. Pakistan has failed to meet energy demands since 2004, while power companies are heavily relying on government subsidies to cover production costs, thus hiking up energy process that results in slow business growth and an increase in poverty. Businesses have suffered from power shortages that pushing smaller firms out of the market, and few government-owned companies are privatized so as to cope with Pakistan's risky financial system.
Investors from China have promised Pakistan to fill the gap in energy production by focusing on coal, but Pakistan, take this as short term solution as Coal is one of the biggest air polluters. Coal doesn't offer Pakistan the sustainability it needs, in fact, even China is moving away from the fossil fuel as recently promised to the world. But, at least, these plans offer Pakistan a chance at normalizing its economy and may add 2% of GDP growth.
For Pakistan, the benefits of CPEC have already started showing both nationally and internationally. Instant benefits for Pakistan is that the CPEC's partial achievement has injected optimism in a country starved for infrastructure and energy investment. The deal has also greatly helped the government to improve the image of the country and attract more foreign investment.
Pakistan's relationship with the United States is deteriorating on the investment front, and the country needs to prosper economically, making it less reliant on the IMF and the United States. The economic corridor will provide Pakistan with the perfect opportunity to stabilize itself economically while cultivating ties with its neighbors. It also helps to realize the US regarding imbalance policies in the region and may rethink their mix of engagement.
Similar to USA approach towards India, China is interested in leveraging Pakistan as a "launching pad" for greater connectivity with energy producers in the Gulf and the Middle East, as well as markets in the West. Although Pakistani businesses still prefer the attraction of technology transfer and innovation offered by U.S. companies, for Pakistanis, Chinese investment is better than no investment. Pakistan also assumes that the Chinese investment may provide another reason that the United States should reassess its relation with Pakistan.
Pakistan has invited Iran into trilateral China-Pakistan-Iran relationship with the hope to improve inter-regional trade and waiting for Iran decision. Iran's decision to join CPEC would help to improve everyday living across the Sistan-Balochistan region and could also be facilitating trade between Islamabad, Beijing, and Tehran. It also provides an economical gateway to the Gulf region for other regional countries like Russia and even India.
On diplomatic front, Pakistan has already started seen the positive effects, for example; Pakistan and Saudi Arabia have historically been close allies, but following China's financial pledge, the country chose to remain neutral regarding Saudi Arabia's involvement in the Yemen conflict. Add the fact that Pakistan is coming out of diplomatic isolation as China's money is turnout be a game changer.
The journey will exemplify China's efforts to rebuild the old Silk Route that for eras linked Asia to the Middle East, and brought wealth to Pakistan. And along the way, China will try to use its "Belt and Road" economic development strategy to lift Pakistan toward prosperity.