CPEC – The Axis of Hope & a Pak- China Symbiosis

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By Sahar Pirzada[*]

The overuse of the phrase ‘strategic game changer’ stares you in the face whenever a discussion on CPEC takes form but the truth of the matter remains, it is in fact a turning point in the geopolitics, strategic alliances and economic growth possibilities in the region. If the region in general and Pakistan in particular is spinning euphorically around this axis of possibilities and hope, it has good reason to.

 

The China- Pakistan Economic Corridor is a project of mammoth proportions that aims to link Pakistan’s Gwadar Port in Baluchistan to Xinjiang in China’s autonomous region Uyghur in a move to transport oil & gas through a proposed infrastructure of existing and newly built highways, railways & pipelines. At a price tag of $46 billion, the 2900 km economic corridor will run from Gwadar to Kashgar swathing its way through the landscape, propping up planned and ancillary development along its corridors in conjunction with other infrastructural boosts and the setting up of industrial estates along the way in the next few years. The corridor is an extension of China’s proposed 21st Century Silk Road initiative which includes the land-based “Silk Road Economic Belt” (SREB) and oceangoing “Maritime Silk Road” (MSR). The first phase of the project will receive concessionary and commercial loans for which financial facilitation to the Chinese companies is being arranged by the Silk Road Fund. The role of this fund set up in 2014 is  to invest in businesses rather than lend money for projects. The CPEC strategy underlines China’s push to take a bigger role in global affairs, and its need to export China’s production capacity in areas of overproduction such as steel manufacturing.[i]

On this agenda, the areas of cooperation in CPEC are the amelioration of transport, telecommunication and energy infrastructure in Pakistan. It also includes the military field and intelligence sharing between China and Pakistan and is designed to be a mutually beneficial tool contributing to the economies and geostrategic presence of both countries.

 

The centripetal force of this Pak China axis of hope is Gwadar that holds within it the power to draw the region and even the world into its force field. The CPEC deal also comes with a $622 million package for the development of Gwadar Port. Gwadar opened in 2007 with great fanfare and has lived up to its promise of transforming Pakistan’s importance on the globe. Years ago TIME magazine had published an issue on how different countries around the world interpreted the concept of ‘nirvana’. Celebrated Pakistani writer, Mohsin Hamid had contributed a very interesting essay on the topic and nominated Gwadar as Pakistan’s route to nirvana. All these years later, it appears he was right. China’s primary interest in Pakistan and the driving force behind CPEC is the port of Gwadar where it plans to build an oil refinery and storage facility and from there to transport that oil to China. China is the world’s largest oil importer and 60% of its imported oil comes from the Middle East. 80% of that passes through the vulnerable Strait of Malacca. Gwadar shortens this transport line significantly and erases the vulnerabilities of the existing routes which can fall victim to global hostilities at any point in time. In February 2013 Gwadar Port was transferred to the State-owned China Overseas Port Holding. Built by Chinese workers, it has been handed over to China for the next 40 years. “The first phase involves development at Gwadar Port and the construction of an international airport. It will be completed by 2017, with Chinese companies expected to participate. The Karakoram Highway connecting the two countries will also be widened, while the rail network between Karachi in southern Pakistan and Peshawar in the north will be upgraded. The two countries also plan a fiber-optic communications link between them”. This will link not only the two countries but open up the closed Central Asian region to the world for trade and economic growth. CPEC is poised to trigger a flurry of economic activity and cultural integration with its multi-layered enhanced connectivity structure and is guaranteed to have the entire region along with the Pak- China binary resultantly spin around its axis.

 

China’s economy in the recent past has taken a few knocks. According to Shahid Javed Burki, former Vice President at the World Bank there has been a 30% decline in the rate of increase of China’s national product. From the 1500s to early 1800s China’s economy was the world’s largest. By 1820 there was an economic swell and it once again accounted for one third of the world’s GDP but the following bi-century was tumultuous for China and it saw a radically downward trend. However, the economy witnessed a major reversal after change in policies and in 2015 the size of the Chinese economy was 32 times larger than in 1980.[ii] Recently, China experienced a stock market crash after a prior boom in stocks and it is now evident that China needs to lend itself to a more “consumption based growth” for sustainable development and away from development project investment where returns are slow and stretched over time. With the CPEC the economic destinies of the two countries remain entangled and if China finds itself unstable on its feet so does Pakistan. If money for the proposed projects is stalled, or if China can no longer meet its commitments or wavers not just in its willingness, but ability to funnel money for CPEC, Pakistan resultantly will find itself in a vile predicament.  Environed in a politically precarious and financially fragile climate, success of CPEC, for Pakistan is an imperative way forward.

Let us however, not minimize the economic importance of CPEC for China. Though economists suggest that China should move towards a consumption based  growth and away from a long drawn out infrastructural growth investment for speedier returns, one must remember that China is not simply giving away this money. China will be lending money to Chinese companies to invest in CPEC making it a commercial venture stimulating and revitalizing China’s slackening economy. For this reason alone it is a symbiotic relationship for both countries and freely addresses their mutualistic goals and designs of both economy and geostrategy.

This corridor is an alliance with a wider scope than in the obvious areas and possesses more subtle connotations such as China strengthening its presence in the region against India. With growing influence, and economic engagement with Pakistan, direct access to the Indian Ocean through a deep sea port not only shortening China’s energy transportation line, but circumnavigating China clear of the Port of Malacca which lies between Indonesia and Malaysia and can easily be blocked by the US or India, China is succeeding in keeping its potential regional rival at bay and nipping India’s influence in the geopolitical zone while increasing its own. As a corollary Mr Narendra Modi is displeased with this collaboration and the resultant influx of dollars for development into Pakistan. This presents itself as a double dilemma for India, losing regional power to China while simultaneously seeing Pakistan growing from strength to strength in the wake of the Pak-China cooperation. China is the new kid on the block with a heavy purse and a willingness to win financial force allies in the region all the way up to Russia.

Raised eyebrows from Washington too, lend energy to the shifting dynamics of the region. Since Gwadar is a deep sea port, potentially it can serve as docking station for China’s submarines allowing it a naval presence in the Pacific. Additionally, knowing that the battles of the future are financial and not just military, countries set on developing financial muscle present just as threatening a scenario for established powers as a hot war. China, for a while now has been making aggressive attempts in leading an Anti-Dollar Alliance encouraging countries to move away from the dollar as a reserve global currency. The Asian Infrastructure Investment Bank (AIIB) dedicated to lending was founded by China in 2014 and is perched to rival the Bretton Woods Institutions like the World Bank which are linked to the dollar. Initially it was just the anti-US countries that were joining the 56 member $50 billion fund but now others are hopping on given that China is now already considered by many as the largest economy, and the heyday of US financial dominance is coming to a close especially since the US is in a dire debt crisis at an insolvency of approximately $60 trillion. Add to that the fact that the government uses, according to Forbes Magazine[iii] its well trusted banking mechanisms and currency to pressurize other countries into dictates like FATCA (the Foreign Account Compliance Act) which is America’s global tax law introduced in 2010, that affects the whole world including China and Russia. Boosting China’s importance globally as a result, countries are looking for other options to the established mechanisms and dictates of the dollar, and so the added strength of China financially, and now geo-strategically with CPEC makes for nervous tremors in the US and India. The reasons are global financial dominance for the former and regional dominance for the latter especially in trade. Since China’s economy is at least five times the size of India’s, other countries in the SAARC region will now look to China more and more.

Symbiont China’s commitment to Pakistan through CPEC is so generous that it rivals America’s Marshall Plan and its $13 billion given to rebuild European counties after World War II. For Pakistan the jubilation is triggered by multiple considerations. The obvious being that infrastructrure development kick starts its own progression dynamics. Then, an unprecedented financial injection of this scale into Pakistan’s economy, mainly directed towards investment in energy projects will address Pakistan’s crippling power shortages that result in a 2% loss of GDP annually. It is projected that towards the tail end of the 15 year CPEC project in 2030, there will be a 15% increase in GDP. The CPEC can thus be viewed as a two-pronged social and economic intervention.

More interestingly, given that China is investing so heavily in Pakistan, it will be increasingly inclined to protecting Pakistan’s security interests. This gives Pakistan an even stronger defense against the provocations of a hawkish India since it has the sturdy Great Wall of China to lean on so to speak. An increased GDP also holds the promise of reducing the economic gap between India and Pakistan.

Another positive correlation that can be drawn to this project is Pakistan’s restrained state posture towards India. In the recent past India has continually maintained an aggressive stance towards Pakistan and indulges in unprovoked skirmishes, armed assaults and sporadic gunfire over the LoC and Working Boundry between Pakistan and India. Bilateral talks have been cancelled and cross- border provocations abound. In ordinary circumstances Pakistan could consider responding with military action but since countless growth opportunities present themselves with the newly hatched CPEC, Pakistan is likely avoiding an outright, full-blown war with India. The general public sentiment on the issue is to answer fire with fire especially given that currently the Army Chief is the hero of the hour, but in the long term interests of the country the State posture has donned a more tolerant avatar. Since both countries are nuclear- capable, this can only prove to be good news, not just for the inimical two, but for the entire region.

The United States has over the years been a strong ally to Pakistan both financially and militarily but this relationship has always see-sawed and though long-standing, has been unreliable. China’s friendship with Pakistan has endured over the years and support from China has been time-tested and unwavering. Now with long-term mutual investment goals the friendship will be cemented further which is being echoed already in the diplomatic rhetoric between the two countries who claim ‘ brotherhood and ties higher than mountains’. The Pak- China camaraderie is  based on secret deals between the two armies and a shared hostility towards India according to Andrew Small, an Asia expert on the German Marshall Fund of the United States.

 

Any indigenous skepticism that may arise from the handing over of Gwadar to the Chinese for 40 years can easily be erased with the knowledge that to develop the port and an airport in the area, China will invest heavily its capital, expertise and trained labour force. A less publicized benefit to Pakistan will be the addition to its naval fleet of six diesel powered attack submarines purchased from China as part of the agreement which will stave off any attempts of blockade from India at Gwadar or Karachi and will scuttle India’s dominance in the waters of the region. China remains Pakistan’s largest arms market with 60% of its arms sales to Pakistan and now with an amplified mutual security interest the military trade alliance will grow stronger.

 

Law and order, security of Chinese workers on the various projects is of paramount concern to both governments. Since history has stood witness to unfavourable incidents in the past therefore,  special steps are being taken to protect this joint national interest. It is reported that Pakistan plans to train 12000 security personnel to protect Chinese citizens on the corridor. At the moment 8000 Pakistani security officials are deployed for the protection of over 8100 Chinese workers in Pakistan. This concern for the well being of the Chinese also contributes to trust building between the two countries regarding the Muslim separatist Uighur fighters which China has implied Pakistan does not take a hard enough stance against, and provides shelter to across the border. Through the CPEC arrangements for the security of Chinese personnel, the government can see that regional stability and well being of the Chinese is of great concern to us and that Pakistan does not harbor or support China’s militant Uighur of the East Turkistan Islamic Movement. As pointed out by Riaz Khokar, former Foreign Secretary of Pakistan, despite its concerns related to security and capacity China has its stake in Pakistan, “The question is how we utilize this opportunity.” So far we seem to be on the right track.

 

Though this is an uncontested axis of hope for all involved, no initiative of this scale can come to fruition without the splash and stain of controversy. The indigenous troubles threatening the CPEC spring from the regional insecurities of  Khyber Pakhtunkhwa and Baluchistan regarding the planned route of the corridor. Despite vociferous denials from the authorities, these provinces feel that the sitting government is feckless and wants to deprive them of their rightful share of development by altering the geographical path of the corridor. Secondly, the people of Baluchistan fear migration trends of trained workers into the province making them a minority in their own region and denying them control of their own resources. These concerns, at least the ones pertaining to the route of the corridor are being placated by both governments and it has been announced that despite China’s concerns for safety on this route, work on the project will commence from the western end passing though KP and Baluchistan. It is a good time to reflect on the words of George Bernard Shaw that “Progress is impossible without change and those who cannot change their minds, cannot change anything”. It would be pertinent to add here, including their destiny.

International insecurities are voiced through the person of Mr Modi who feels that the corridor’s passage through Kashmir is “unacceptable” even though China has assured them that this is merely a commercial project. India also appears uneasy regarding China’s direct access to the sea. In any event, it has invested heavily in the Iranian port of Chabahar which is just 170km west of Gwadar in an effort to somehow counter the implications of its need of Pakistan, and of bypassing it to access  landlocked Afghanistan and Central Asia.  It has been reported by a high ranking official that the US too, ever-watchful of the growing Chinese presence in the area has on several occasions tried to pressurize the government of Pakistan into not handing the port over to China. Also, “the United States had played an instrumental role in promoting the Port Authority of Singapore for control of the Port (Gwadar) previously.”[iv] If the impressive precedent already been set by China in terms of its international footprint is anything to go by, a project of this scale justifiably warrants global nervousness for its bursting potential in redefining consumer markets and geostrategic presets.

 

This magnificent fraternity of nations has resulted in a sisterhood of cities between the two countries and a general force of mirrored cultural dictates within Pakistan. Simply, some cities have been made sister cities such as Chengdu in Sichan province and Lahore, and Zhuai in Guangdong province and Gwadar. In their fervid desire to imitate the customs and social posture of the Chinese and  in their zealousness to follow suit the projection of nationalism displayed by the Chinese, the provincial and national governments of Pakistan have made a couple of rash decisions one of which was recalled. First, the Baluchistan government announced that Chinese language would be made compulsory in all schools in Baluchistan. The logistics and implications of this were never taken into consideration such as the fact that there would not be enough Chinese and Baluchi speaking teachers to impart such teaching, not to mention how the policy would tax the student in learning a script of over 3000 characters along with the existing curriculum requirement of Urdu, English & a regional language etc. The decision was eventually taken back. Second, the fact that when the President of China visited Pakistan he delivered his speech in Chinese. This set the ball rolling in Pakistan on a debate about Pakistan doing the same in future as it somehow endorsed Pakistani patriotism. At present there is a strong public push that Nawaz Sharif should deliver his speech at the 70th UNGA session in Urdu. Also, the language for all official communication and government forms has been changed to Urdu. The effectiveness of these mechanisms is not up for scrutiny, the reason these developments are finding space in this discussion is that it reflects an eagerness of the Pakistani people to embrace the ways and manners of the Chinese. This is resultant of the euphoria associated with the project possibilities of the CPEC for Pakistan and its people. At its worst, this enthusiasm still remains an endearing phenomenon set into orbit by this extraordinary axis of hope. If one does not take this excitement into account, if it doesn’t figure into our calculus of this visionary partnership, I believe we are missing 50% of the Pak-China CPEC story. It is designed not only to bring about a flush of development but knit together a fragmented region if we allow it to.

Will the CPEC deliver its promise? Will it actually reshape the strengths of the region? Will it impact our destiny?

Let’s just say we are excited, we are hopeful, we are holding our breath and the air is ‘electrified’ with expectation. It is hoped with all puns intended. In an environment where there is little to celebrate finally there is hope and a way forward. Let us then get sucked into this axis of possibilities and surrender ourselves to its positive force-field. Let’s allow this symbiosis to generate its transformative magic and infect us all.

Senator Elizabeth Warren once said, “It’s a simple idea: We all do better when we work together and invest in our future.” The investment has arrived, if we can manage to work together, perhaps we are sorted for the future.

[*] The author is an educationist and an editor of this journal.

[i] Wikipedia https://en.wikipedia.org/wiki/One_Belt,_One_Road

[ii] The Herald Tribune.  14th Sept 2014. China’s Economic Future

[iii] http://www.forbes.com/sites/robertwood/2014/08/19/ten-facts-about-fatca-americas-manifest-destiny-law-changing-banking-worldwide/

[iv] http://thediplomat.com/2014/12/can-chinas-dream-of-a-pakistan-port-survive-local-ire/

Can China’s Gwadar Port Dream Survive Local Ire? By Kiyya Baloch December 17, 2014