Is China’s US$62 billion investment plan fuelling resentment in Pakistan?

China’s massive investment in Pakistan could fuel greater conflict in the South Asian nation if it continues on its current path, a non-profit organisation warned, just weeks ahead of what are shaping up to be the most controversial elections in the nation’s democratic history.

The China-Pakistan Economic Corridor (CPEC) – a collection of US$62 billion worth of infrastructure projects under construction across the country – may raise political tensions and animosity if Islamabad and Beijing cannot mitigate existing concerns, according to a report by the Belgium-based International Crisis Group.

“Pakistan’s economy clearly needs reform to better serve its people, and many officials say CPEC will help in this regard,” it said. “But as currently rolled out, the corridor risks aggravating political tension, widening social divides, and generating new sources of conflict in Pakistan.”

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As the linchpin of Beijing’s development drive in the region, under its signature “Belt and Road Initiative”, the corridor has faced a flurry of accusations about a lack of transparency, disproportionate benefits for Chinese firms and wealthier areas of Pakistan, and raised concerns about China’s geopolitical intentions.

Once completed, the network of transport, energy, industrial and agricultural projects will stretch 2,700km (1,680 mile) from the port of Gwadar on the Arabian Sea to Kashgar prefecture in China’s westernmost region, Xinjiang.

“While it is too early to assess if CPEC can deliver the economic gains Islamabad promises, the project risks inflaming long-standing tensions between the centre and smaller federal units, and within provinces over inequitable economic development and resource distribution,” the report said.

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While China and Pakistan have a friendly relationship, dominated by their security ties, the report detailed how deepening economic cooperation through the CPEC has engendered domestic discontent, with the main concern being that the huge energy and transport projects deliver few benefits for locals.

People living near the Gwadar deep-sea port project, for instance, are annoyed at the “overbearing” security presence to protect Chinese investments, while there is the belief that related projects, such as the Mirani dam to the north, benefit the port but not the local community, the report said.

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Of even greater concern is the fact that scores of Pakistani workers have been killed by militants for being involved with the CPEC, including 10 labourers who were building a road in Gwadar, which although not directly financed by the corridor programme is part of the broader China-funded transport connectivity network.

Another major bone of contention and source of anti-Chinese sentiment has been the displacement of communities to make way for infrastructure projects, without clear details or resettlement plans, the report said. Although the CPEC launched in April 2015, details of the long-term plan were not released until December last year, by which time many projects were already under way.

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Beyond the domestic complications, the CPEC has also upset Pakistan’s neighbour, India, which sees China as a strategic competitor and is wary of Beijing’s rising influence in the region.

New Delhi has refused to sign on to the belt and road programme, partly because of the fact the CPEC passes through Kashmir, a disputed territory claimed by both India and Pakistan.

As Pakistan gears up for its parliamentary elections later this month, with the military appearing to play an outsize political role, it is critical that the new government be more transparent about the roll-out of the CPEC, while ensuring local communities are appropriately consulted, compensated and employed in major developments, the report said.

“Unless there is a serious rethink in policy circles, CPEC could … trigger or worsen [the] conflict,” it said.

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Meanwhile, the researchers urged Chinese firms to work closely with Pakistani stakeholders at the local, regional and national level to ensure everyone benefits from the development projects.

“For all the risks and challenges, CPEC offers an opportunity to upgrade Pakistan’s ageing and dysfunctional infrastructure, and revive a flagging economy,” the report said.

“But to deliver on these promises, both Islamabad and Beijing need to implement it with considerably more sensitivity and consultation than they have displayed thus far.”