After a lull of more than a year, the second phase of the US$62 billion China-Pakistan Economic Corridor (CPEC) was initiated at the turn of 2019.

The first phase was largely dedicated to setting up infrastructure and power projects in 2014-2018. The next will focus on industries, agriculture and trade.

In this regard, the second phase will include nine Special Economic Zones (SEZs) across Pakistan, with the National Vocational and Technical Training Commission (NAVTTC) identifying and mapping different industries in each SEZ.

Prime Minister Imran Khan will inaugurate the Allama Iqbal Industrial City in Punjab’s SEZ on January 3.

The escalation of activity on CPEC projects comes after the incumbent Pakistan Tehrik-e-Insaf (PTI) government had started its tenure in August 2018 with skepticism about Islamabad’s agreements with
Beijing.

Asia Times reported at the time that the government was looking for a rejig of the CPEC agreements, which had been shared with China, during Foreign Minister Wang Yi’s visit to Islamabad and Imran
Khan’s visit to Beijing in 2018.

In a Financial Times interview with the Prime Minister’s Advisor on Commerce, Industry and Investment, Abdul Razak Dawood, he expressed the government’s desire to put CPEC “on hold” while the terms were renegotiated.

It caused major embarrassment to Khan and his team during his November 2018 visit to Beijing, government officials revealed. A year later, in October 2019, Khan arrived in Beijing seeking China’s support on Kashmir and the looming blacklisting at the hands of counter-terror watchdog Financial Action Task Force (FATF), the government formally agreed to the terms laid out by China for the second phase of the CPEC.

“Instead of reviewing the terms of the first phase of the CPEC, Beijing has actually enforced its will on the second phase as well. There have been no changes in the execution of the projects and the road map for the corridor. In fact, China has explicitly expressed displeasure of the lack of activity over the past year and a half,” revealed a senior diplomat.

Immediately after Khan’s visit to Beijing, Wang Zhiqing, China’s Chief Planner of the Ministry of Transport, arrived in Islamabad to sign a Memorandum of Understanding (MoU) with the Pakistani Minister for Communications Murad Saeed, regarding the transport infrastructure of the second phase of the economic corridor.

The China-Pakistan Economic Corridor Authority (CPECA) was formally unveiled in October 2019. Officials further reveal that Pakistan’s dillydallying over the second phase of the CPEC was also due to the $6 billion bailout that Islamabad agreed with the International Monetary Fund (IMF) in July 2019.

The terms require Islamabad to return $21.8 billion in commercial loans and $7.75 billion in bilateral debt to Beijing over the next three years.

After it became clear that Islamabad will continue to pursue the CPEC, with its existing terms, a war of words ensued between United States Assistant Secretary Alice Wells and the Chinese Foreign Ministry’s spokesperson Geng Shuang in November. Washington dubbed the China-Pakistan Economic Corridor a “debt trap.”

Analysts maintain that Pakistan Foreign Minister Shah Mehmood Qureshi’s public rebuke to Wells’ statement underlines that the PTI government knows it cannot afford to offend Beijing again.

“The US and China are engaged in their own strategic battles and trade wars. Washington is objecting to CPEC purely based on its regional interests. Islamabad should worry about its own interests and check if CPEC projects in Pakistan are based on competitive global prices,” said the PTI government’s former spokesperson on economy and energy, Farrukh Saleem.

“As things stand, around 75% of CPEC projects are power plants. We must compare the power plants with the cost of similar projects in Bangladesh and India. In the two biggest plants, the one in Sahiwal and the other in Port Qasim (Karachi), it costs $1.4-1.5 million per megawatt. The Jamshoro Coal Power Project supported by the Asian Development Bank (ADB) is costing $0.8 million per megawatt,” he
added.

Officials revealed that in addition to the CPEC power projects being economically more expensive for Pakistan, Beijing has the entirety of a similarly skewed plan laid out. This is further reflected in Islamabad following through with the original documents underlining the long-term CPEC plan.

This implies that Beijing continues to have a stranglehold over the projects and the SEZs, with enhanced nationwide surveillance also highlighted in the roadmap.

Meanwhile, many critics argue that the worst aspect of the terms is how little it might benefit the locals – especially those in the marginalized and volatile province of Balochistan.

“The Belt and Road Initiative, with CPEC as its flagship, is based on infrastructure and energy projects, aimed at enhancing trade through this particular route. It isn’t a humanitarian intervention designed to benefit the masses. All those who perceive it that way should correct themselves,” says Senator Anwar-ul-Haq Kakar, the former spokesperson of the Balochistan government.