Will Pakistan’s ‘all-weather’ friend China offer yet more cash for development amid political turbulence?
- Pakistan’s PM Shehbaz Sharif is beginning two-day trip to Beijing, keen for more money to help nation deal with flood-ravaged economy
- But experts say while China has helped Pakistan to develop, there are concerns over who’s in charge in Islamabad, and terrorism attacks
Pakistan’s Prime Minister Shehbaz Sharif is hoping during his two-day visit to Beijing that long-standing “all-weather friend” China will agree to plough billions more dollars into his country’s flood-ravaged economy, after Islamabad’s Western lenders refused its entreaties.
But Sharif’s hosts will have one eye on a protest march to Islamabad led by his deposed predecessor Imran Khan, which many fear could descend into destabilising violence if Pakistan’s government and powerful military-led establishment do not agree to call a snap general election.
“The Chinese government likes Shehbaz Sharif personally and a number of the other figures in this government, and will generally want to do them some favours, but they are not certain in the medium term who will be running things,” said Andrew Small from the Asia programme of the German Marshall Fund, a Washington-based think tank.
Political turbulence in Pakistan since 2017 has made China “less certain” about whether some of its long-term economic bets will “pay off if there aren’t governments that can sustain their commitments or a really solid political consensus behind these investments,” he added.
Since taking office in April, Sharif has prioritised the revival of the estimated US$62 billion China-Pakistan Economic Corridor (CPEC), a Belt and Initiative programme connecting Xinjiang province to Pakistan’s Arabian Sea port of Gwadar.
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Sharif hopes his coalition government’s efforts to fast-track the completion of lagging CPEC projects and target militant separatists who have carried out lethal attacks against Chinese nationals have been enough to persuade Beijing to pay huge amounts for mass transit and power generation schemes.
“But strategically the alignment is very robust. Particularly in the wake of the accelerated big power [between nations] competition, we see there are more and more convergences and shared interests with Beijing,” he said.
The US national security strategy unveiled on October 12 prioritised the building of strategic relations with India, with which China and Pakistan have both fought wars over territorial claims.
China knows a “stable and strong” Pakistan is in “the national interest of the People’s Republic,” Sayed said.
Small said Pakistan’s security situation will be at the top of Beijing’s agenda in talks, because of the killing of 13 Chinese nationals in terrorist attacks by Taliban insurgents and ethnic Baloch separatists since July 2021.
During a recent meeting with Sharif during the Shanghai Cooperation Organisation summit in Uzbekistan, President Xi Jinping hoped Pakistan would protect “the security of Chinese citizens and institutions in Pakistan as well as the lawful rights and interests of Chinese businesses”.
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The killing by suicide bomb of nine Chinese men working on the Dasu hydropower project was “a particular shock to the Chinese government, even more so than some of the soft target attacks in Karachi”, said Small.
Beijing’s overall view is that between the Tehreek-e-Taliban (TTP – the Pakistani Taliban) and the Baloch insurgency, there has been a serious deterioration in the security environment and not enough is being done to protect Chinese workers, Small said, delaying projects’ progress and increasing the risk that China will pull personnel out.
It also means Beijing may use more of its own security staff.
Pakistan has recently arrested the leaders of Baloch insurgent cells responsible for attacks on Chinese nationals in the province of Balochistan and the port city of Karachi, said Abdul Basit, a research fellow at Singapore’s S. Rajaratnam School of International Studies.
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China is also maintaining pressure on the Taliban in Afghanistan to rein in the approximately 5,000 Pakistani Taliban insurgents it hosts, he said.
Despite a Taliban-brokered ceasefire agreed in June, the TTP has launched daily lethal attacks against the security forces and police in the northwest of the country since negotiations broke down in late July.
A major military operation in Pakistan’s tribal districts bordering Afghanistan “is in the offing”, Basit said.
“Beijing is concerned, but it has full trust in the Pakistan Army’s counterterrorism capabilities,” he added.
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At a Friday press conference after a CPEC joint cooperation committee meeting, planning minister Ahsan Iqbal said a memorandum of understanding for an estimated US$9.85 billion project to rebuild Pakistan’s decrepit national railway network would be signed during Sharif’s China visit.
Iqbal said the so-called ML-1 project was crucial because Pakistan’s main north-south railway line would become inoperable in “six to 12 months” due to a lack of investment since being agreed in 2018, and damage caused by August’s massive floods.
Other expected memorandums of understanding include a Chinese loan of US$1.1 billion to build a metro in Karachi, based on a Chinese-built project in Lahore.
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Further expected agreements include Chinese funding for two hydropower projects, while Sharif’s government has also sought up to US$2 billion from Beijing for a project to build 10,000MW of new solar power capacity.
However, this all depends on Beijing agreeing to reschedule payments on US$3.3 billion of Chinese commercial bank loans and extend a US$3 billion central bank deposit which will mature by June 2023, the end of Pakistan’s current financial year.
Responding to Pakistan’s appeals for Western lenders to reschedule debt repayments and boost financial assistance, US Secretary of State Antony Blinken told Islamabad in September to first seek debt relief and restructuring from China.
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Small, from the German Marshall Fund, said the International Monetary Fund (IMF) has “long been sceptical” about Pakistan’s ability to repay China for the almost US$10 billion railway project it is pursuing.
The IMF has enforced very tough conditions on Pakistan in return for the resumption in August of financial assistance under a US$7 billion bailout programme first agreed in 2019, needed to avert a looming default on its international payments.
So, while Small expects China to provide “some help” for Pakistan’s immediate economic needs, it will “move slowly and carefully on them in practice” on new projects agreed during Sharif’s Beijing trip.
