Chinese influence in South and Central Asia is set to expand through the much-hyped China-Pakistan Economic Corridor just as the United States draws down its presence in the region. The proposed corridor, which plans to connect Kashgar in Western China to Gwadar Port in Pakistan’s Balochistan province through a network of rail, road and energy infrastructure, has become the subject of intense domestic wrangling in Pakistan. Leaders from Kyber-Pakhtunkhwa (KP) and Balochistan, two under-developed provinces, are accusing the federal government, which draws support primarily from Pakistan’s most populated province, Punjab, of modifying the original route away from the two less developed provinces. The government, which recently approved the route, maintains that it only intends to use existing rail and road networks in Sindh and Punjab until new rail and road infrastructure is built in the less-developed regions. Although it appears that the ongoing dispute is a result of technical considerations raised by China, and for Pakistani authorities these are informed by an underlying need to secure Chinese investment for the planned economic corridor, which would also stabilize Pakistan’s fragile economy. Underdevelopment and ongoing insurgencies in KP and Balochistan increase the cost of constructing new infrastructure, while Chinese and Pakistani governments want to operationalize the corridor as soon as possible. Economic and geopolitical concerns in both countries inform their collective haste. This project will consolidate the growing Chinese power in the region, thereby posing a formidable challenge to Western influence.
New Economic Imperatives for All-Weather Friends
Pakistan’s civil and military elites consider China to be an “all-weather” friend, describing the Pakistan-China friendship as “taller than the Himalayas.” In 2013, the relationship was also referred to as “sweeter than honey” by the Pakistan’s Prime Minister, who has been pushing for greater foreign investment in Pakistan as a panacea for stagnant economic growth. Historically, Pakistan’s relationship with China, not unlike that with the United States, has largely been security-centric. But China has also assisted Pakistan with security oriented economic projects, however, including construction of the Karakoram Highway – along the ancient Silk route – and more recently the Gwadar deep seaport (completed in 2007). Pakistan handed over the thus-far under-utilized Gwadar port to the Chinese shipping corporation in 2013, and it is notable that some experts believe Gwadar could one-day serve as a naval base for the Chinese navy in the region. Pakistan is also building two nuclear reactors costing $9.59 billion, out of which China will provide $6.5 billion. With China’s expanding economy and the need for bigger markets and access there is now a renewed emphasis on the economic cooperation between the two countries. Indeed, dozens of investment memoranda for sectors such as energy and infrastructure have been signed in the recent years.
When Chinese Premier Li Keqiang visited in May 2013, he floated the ideaof an economic and transport corridor connecting Gwadar seaport in Balochistan and Kashgar. The Chinese vision for the economic corridor aims to connect the two underdeveloped regions via highways, rail networks, and new oil and gas pipelines. In the long term, the projects will deliver economic and industrial zones and an oil and gas pipeline from Gwadar to northwestern China.
Both Balochistan and Xinjiang are poor, restive provinces plagued by insurgencies against their respective states. For China, an economic corridor can potentially add a new route to import energy from the Middle East and uplift Xinjiang. An official of the Chinese Foreign ministry termed it as a means of “strengthening the entire communication between South Asia and East Asia, bringing economic development and improving the quality of life in the peripheries [of China and Pakistan].”
Pakistan is suffering huge economic losses due to energy shortages. It eyes the corridor as a much-needed boost to its economy, given the paucity of trade with its immediate neighbors, India, and Iran, but this project is also viewed as a means to integrate Pakistan into the Chinese economy. In economic terms, Pakistani leaders believe that such economic integration could make Pakistan a pivotal state in the region for the movement of goods from Central Asia to the world’s sea-lanes. But geopolitics is even more important. Furthering alignment with Chinese economic and strategic interests is seen as a boost to Pakistan’s security given growing Indian power and New Delhi’s apparently increasing embrace of American strategic interests in the Asia-Pacific region.
In February 2014, Pakistan’s President formalized a bilateral commitment to build the China-Pakistan Economic Corridor along with other agreements whereby China will upgrade existing road and rail networks and construct an airport in the city of Gwadar. In November 2014, during the visit of Prime Minister Sharif, Beijing announced the intention of investing over $45 billionin Pakistan to operationalize the China-Pakistan Economic Corridor by 2020. Of the $45 billion committed, $33 billion was promised to address Pakistan’s energy crisis while $12 billion or so was announced for infrastructure development. Pakistan termed these developments as a “game changer” in the region.
Shifting Geopolitical Realities
The Sino-Pak axis is also affected by Beijing’s expressed interest in working to help stabilize Afghanistan. In December, representatives of the United States, China, and Afghanistan parlayed in London and China is now willing to play the role of a mediator of sorts between Afghan Taliban and the Kabul administration to protect its interests in the region. For instance, the Chinese government hosted a delegation of Afghan Taliban for talks on ending the conflict in Afghanistan in December 2014. Beijing has committed $327 million in economic aid to Kabul and has offered to boost Afghanistan’s security infrastructure. The underlying motives are to counter Islamic extremism in the AfPak region that directly affects the restive Uyghur Muslim population in Xinjiang, and to establish better relations with all regional players, including Russia and Iran. China hosted a Foreign Ministers conference of 14 Asian states for discussing future regional security and stability in Afghanistan, as part of its efforts to forge better understanding of regional security imperatives. China’s security and economic imperatives are best served by a stable Afghanistan that can also play a conduit, along with Pakistan, for energy trade in the future.
A Chinese analyst recently wrote that Sino-Pakistan cooperation was “not only conducive to improving the trade and investment environment in Pakistan,” but it could also help “improve the security environment in South Asia and Central Asia.” For China this is a moment to expand its power and enhance strategic engagement in the region.
The recent visit of President Obama to India marked a new beginning in U.S.-India relations. In the words of a veteran commentator, India took the decision to “join hands with the United States against China.” The “U.S.-India Joint Strategic Vision for the Asia-Pacific and Indian Ocean Region” statement issued on January 25 alluded to a maritime dispute involving China.
With growing cooperation between India and the United States, notwithstanding the various warts in the relationship, China continues to engage with New Delhi. High profile visits by the Chinese Premier and President have focused on economic cooperation aiming to boost Sino-Indian trade to a future $100 billion mark in a few years (currently between $60-70 billion per annum). China is keen to assert its power and is closely observing the shifting power alignments in the region. At the same time, however, China continues to see Pakistan as a necessary counter-weight to India in the region. In view of growing U.S.-India partnership, the economic corridor and allied security arrangements will provide China with greater leverage in the region. Pakistan is quick to capitalize on that as the military, which remains at the helm, views India as its perennial “enemy.” The corridor, therefore, encompasses much more than economic gains. It is symbolic of and a building block for China’s more assertive and growing role in the region. This comes at a time when the United States is drawing down in Afghanistan, an event that is likely to bring with it a diminishment of the transactional U.S.-Pakistan relationship over the medium term.
Balancing Internal Politics and Geopolitics
There are three potential routes for development of economic and transport corridor within Pakistan. The first, known as the “eastern route,” connects Gwadar mainly via Sindh and Punjab, traversing only a few areas of the insecure Balochistan province. The “western route” entails traveling through much of Balochistan and the northwestern KP province, the poorest regions. The third possible route also envisions going through Balochistan and KP (with a greater coverage of the latter), once again covering economically backward but insurgency-hit parts of the country.
The Pakistan government announced in November, 2014, that it was going ahead with the eastern route, which is considered the safest of the three options. Leaders from Pakistan’s conflict-ridden provinces, Balochistan and KP, demand that the third option be chosen as it covers the two provinces extensively and could usher in greater economic activity in these subregions. The government claimed that the eastern route was chosen in consultation with the Chinese. The Minister for Planning and Development has also justified the eastern route on the basis of its commercial viability in terms of putting Build-Operate-Transfer (BOT) arrangements in place and the fact that it would accelerate the implementation of the corridor project. Earlier, Pakistani Parliament was told that the longer route -covering many underdeveloped regions – may not be preferred by the state-owned Chinese corporations and banks.
The smaller provinces are concerned about the apparent bypassing of less-developed regions inhabited by Baloch and Pashtun people at the behest of Chinese government. They accuse the government of acquiescence to Chinese demands in contravention of Pakistan’s national interests. Parliamentarians even threatened demonstrating in front of the Chinese embassy in Islamabad. Recently, many senators walked out of a session to mark their protest. Even the allies of PM Sharif joined these protests. The government has been trying to allay the fears of these parliamentarians and has stated that the route will not marginalize the underdeveloped provinces. But the incumbent government, with its popular base in the Punjab and non-Pakthun areas of KP, may be better disposed to the eastern route for political reasons as it is likely to benefit its political constituencies.
There is also a technical argument: in lieu of building new infrastructure, road, and rail networks for the western route, the government can leverage the existing networks in Punjab and Sindh. But this debate is rooted in domestic politics, as Balochistan has traditionally complained of neglect by the federal government and the change in route is seen as another betrayal. The separatists of the province have already rejected the corridor. It would be a major challenge for the authorities to secure Gwadar and handle the political backlash of the project. The Pakistani cabinet has approved the corridor route and now the government has to deal with the dissenting voices. At the end of day it is Chinese diktat that prevails.
The envisioned corridor also marks the projection of Chinese power in the region. It will impact the earlier U.S.-backed, and now stalled efforts that envision connecting South and Central Asia through a network of infrastructure building and energy pipelines. China since past few years is emerging as an alternate source for financing economic development and ushering regional connectivity. As a future stakeholder in regional security, China is likely to appropriate the role of Western nations. Will it succeed where others faltered, remains to be seen.