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Monday, February 6, 2023

China ‘Belting’ Pakistan On The Road To A Debt Trap

China’s strategic shift from Gwadar to Karachi has prompted Pakistan’s ousted Prime Minister Imran Khan to dub the “jackpot” project “a revolution” in his Tweet to develop Karachi’s coast. Chinese policy puts strategy over investment and ignores profits. The Chinese Communist Party’s (CCP) leadership has shifted from high-risk lending to hedging its bets. The ancient silk-road was envisioned as a megaproject – Belt and Road Initiative (BRI) by China’s powerful President Xi Jinping.

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By: Saleem Samad

The political debacle of the ambitious Gwadar International Port built by the Chinese is yet to be fully operational. It was discovered that the challenges were unbearable and the threat perception has increased manifold in the restive Balochistan province in Pakistan.

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The security threat challenged by Baloch separatists and armed nationalists demanding an independent Balochistan has caused a ripple of fear for the future of the Gwadar Port and China’s ambitious connectivity with Central Asia into the Arabian Sea.

The ‘all-weather friends’ China and Pakistan signed a precursor deal to develop the Karachi coastline at the cost of $3.5 billion – another would be a debt trap.

China’s strategic shift from Gwadar to Karachi has prompted Pakistan’s ousted Prime Minister Imran Khan to dub the “jackpot” project “a revolution” in his Tweet to develop Karachi’s coast.

Chinese policy puts strategy over investment and ignores profits. The Chinese Communist Party’s (CCP) leadership has shifted from high-risk lending to hedging its bets.

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The ancient silk-road was envisioned as a megaproject – Belt and Road Initiative (BRI) by China’s powerful President Xi Jinping.

However, the project seems to have hit a speed bump after reaching Gwadar and is losing its steam.

Meanwhile, China is extremely concerned about the safety and security of its personnel engaged in the construction of China-Pakistan Economic Corridor (CPEC) projects, including the Karakoram Highway linking with Gwadar.

China defending its lending practices, said they were “sincere and unselfish”, and insisted it only lent to countries that could repay.

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Patterns of Chinese investments in South Asia – Bangladesh, Nepal, Pakistan, and Sri Lanka – all of which are part of BRI, depict Chinese propensity to control the domestic markets and the natural resources of the South Asian nations.

Many countries where China has offered ambitious BRI proposals could not contemplate where and when they were going to fall into a debt trap.

Some countries admitted that they have fallen into a debt trap and the mega infrastructure is being colonized, like the $306.7m Hambantota International Port in Sri Lanka built by China in 2010.

In 2016, a 70 per cent stake of the port was leased to China Merchants Port Holdings Company Limited (CM Port) for 99 years for $1.12bn. The lease was questioned during the street revolution which toppled the Rajapaksa brothers. The cash-starved Sri Lanka now wants the port back.

Pakistan is one of them. They know where the trap is. The Sunni Muslim majority nation knows they are sliding into China’s debt trap. Despite the debt trap, a strong pro-Chinese lobby with Pakistan elites and military in Rawalpindi promotes Chinese megaprojects, while the politicians have to swallow the Chinese red pills.

Pakistan is China’s gateway to Central Asia and the Middle East. CPEC’s transportation corridor will create a low-cost network of roads, railways and other infrastructure and substantially increase trade capacity between southwest China with Europe, the Middle East and North African countries.

The $62bn Gwadar project links with the persecuted Uyghur Muslims in East Turkistan (now Xinjiang Province) of China and is being built through disputed territory in Gilgit-Baltistan, Pakistan-administered Kashmir, and militant-infested Balochistan.

Well, the BRI flagship project in Pakistan fails to address the participation of the fiercely independent Baloch people, which has scaled up armed insurrections in Balochistan.

Historically, Balochistan was a princely state and once an independent nation under British Raj. Before the British colonialists quit India, signed its independence months before Pakistan’s independence in August 1947. Muslim League overzealous leaders invaded Balochistan in March 1948 with full knowledge of Mohammad Ali Jinnah, founder of Pakistan.

Gwadar has been leased to China for 43 years and the prospect of the Chinese navy converting the port into a strategic naval base will invite greater security issues.

China which they do not hide its grand plan to expand its maritime presence in the Arabian Sea and the Gulf of Oman – a major strategic global oil trade route.

The United States and its allies in the Gulf reckon China’s hegemony in the Gulf has been deemed a security issue of the oil route.

America thinks the presence of the Chinese navy will provide military backup to Iran’s naval patrol in the Persian Gulf, from yet another Chinese-built Chabahar port in Iran, not far from Gwadar.

Earlier, Communist China for decades propagated on its state radio that the United States, Japan, Britain, and European countries are economic imperialists, warmongers and backed autocratic regimes in third-world countries.

Several think tanks argue that China has become an economic giant and a new superpower – the neo-economic imperialist or another “East India Company”.

A British popular tabloid newspaper The Sun claims that China is “colonizing” smaller countries by lending them massive amounts of money, which they can never repay.

Developing countries from Pakistan to Djibouti, Maldives to Fiji, all owe huge amounts to China. Countries around the world owe huge sums to China and have fallen into a debt trap.

Some political scientists are calling it “debt-trap diplomacy” or “debt colonialism” offering enticing loans to countries unable to repay, and then demanding concessions when they default.

Alarm bells are ringing for Pakistan’s public debt is piling up, while a new narrative taking shape in the West that the BRI is creating a debt trap for developing economies, many are quick to link Pakistan’s ballooning debt to loans incurred under the CPEC.

Pakistan will have to pay back $100 billion to China by 2024 of the total investment of $18.5 billion, which China has invested on account of bank loans in 19 early harvest projects, under CPEC.

Nevertheless, Pakistan elites and media hype boast CPEC has the potential for a dramatic impact on Pakistan’s economy, but this transformation would come at a heavy price of making Pakistan a colony of China. Piling up loans from China is a big gamble for Pakistan’s economy, writes Abdul Khaliq, a debt analyst.

As China makes inroads into Pakistan, the government has given sweeping tax exemptions to Chinese companies, a situation which is creating a damaging and discriminatory playing field against Pakistani business entrepreneurs virtually abolishing the remaining locally owned manufacturing sector in the country.

In fact, Pakistan heavily relies on CPEC and has put all its eggs in one basket. Piling up loans from China and building too many hopes in the CPEC may be a big gamble for Pakistan’s economy. (The author is a South Asia Special Correspondent for the New York Editorial. He is an independent journalist based in Bangladesh. He could be reached at saleemsamad@hotmail.com; Twitter: @saleemsamad)

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The Hills Timeshttps://www.thehillstimes.in/
The Hills Times, a largely circulated English daily published from Diphu and printed in Guwahati, having vast readership in hills districts of Assam, and neighbouring Nagaland, Meghalaya, Arunachal Pradesh and Manipur.
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