What is the CPEC?
The CPEC — one of the One Belt, One Road’s (OBOR) largest investments — was formally launched in 2015.
Signing over 50 projects worth $45 billion, China set up the ‘Silk Road Fund’ to invest in CPEC projects planned till 2030.
The main project was to establish a corridor connecting Pakistan’s Gwadar port in Balochistan to China’s Kashgar in the south-western Xinjiang region.
The Silk Road Fund, which manages the investment, is being financed by a consortium of Chinese banks.
The projects themselves are undertaken by various Chinese firms in collaboration with Pakistani companies.
Apart from this corridor, a number of power projects and several special economic zones are to be developed under the CPEC.
Current Status
The CPEC had teething troubles in 2016 as several projects ground to a halt over confusion on funding, contractor selection, delay in bidding process etc.
For example, the Gwadar port faced multiple issues, starting with water supply.
The 11.2 billion rupees project to supply, treat and distribute water to the port by connecting the Swad and Shadikaur dams was delayed.
Other projects like the 600 MW Gwadar coal-fired power plant and the Gwadar Smart Port City Master Plan too ran into issues over uncertainty about funding.
These projects are financed by commercial Chinese loans and are insured by the China Export and Credit Insurance Corporation (Sinosure) against non-payment, guaranteed by the Pakistan government.
The biggest thorn in CPEC’s side is the intense protest by locals in Balochistan against the Gwadar port city project.
Fearing loss of local livelihoods such as fishing, and resisting the use of unskilled Chinese labour instead of Pakistani locals.
Baloch residents have refused to sell land to the Chinese for building the port.
The Gwadar port has been leased to the China Overseas Ports Holding Company which means that Beijing reaps 91% of the profits while Islamabad gains only 9%.
This has led to a rise in anti-China sentiments among Baloch locals.
China stopped funding three road projects —
210-km Dera Ismail Khan-Zhob Road worth 81 billion rupees,
110-km Khuzdar-Basima Road worth 19.7 billion rupees,
136-km Karakoram Highway worth 8.5 billion rupees
Over suspicions of corruption, China also complicated the Gwadar port issue by insisting on Yuan as a legal tender in the region.
The port construction, already slow due to local resistance, virtually stalled.
In 2022, China refused to further expand cooperation with Pakistan in the areas of energy, water management, and climate change under CPEC.
With the recent visit to Beijing, Islamabad is attempting to restart funding for its key projects.
While Mr. Kakar and Chinese President Xi Jinping reviewed the progress of other projects, the development of the Gwadar port itself remains unresolved.
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