How to Overcome Hurdles to CPEC?
First, Pakistan is hobbled by a high fiscal and current account deficit, a large foreign debt and a resulting heavy debt repayment burden. Its ability to provide support funds for CPEC has lost to a great extent, and there is large financial pressure to expand infrastructure construction. IMF loans come with conditions and Pakistan will not be able to provide a large budget for the CPEC project while meeting these conditions.
Second, after Prime Minister Imran Khan came to power, his government further adjusted the original blueprint of the CPEC, focusing more on economic and social development, industrial parks and agricultural cooperation.
Finally, the impact of international factors plays a vital role. Due to economic and financial pressure, Pakistan needs to seek IMF loans. At the same time, it hopes that the construction of CPEC will be truly multilateral, with Saudi Arabia, the United Arab Emirates and other countries participating. The Pakistani government and think tanks are concerned about the current regional geopolitical situation, especially the geopolitical competition between China and the United States. The Indo-Pacific Strategy adopted by the US, coordinated by Japan, India and Australia, is containing and hedging the BRI. CPEC is hence affected.
In the last few years, obstacles in the construction of CPEC can be seen in three aspects.
To begin with, the largest difficulty has to do with Pakistan’s domestic politics. Owing to China’s non-interference, the problem can only be solved by Pakistanis themselves.
Moreover, some Pakistanis believe that as long as their country provides land and China invests funds, all development problems can be solved. It is normal to hope to share the development dividend of cooperation, but it will take time for the economic benefits to accrue. Chinese investment also needs Pakistan’s supporting facilities, including industrial park planning, water, electricity, gas, road, investment policies, tax policies, land policies and reforms of other laws and regulations. The promotion of CPEC needs the cooperation of officials and the public from both sides.
Last but not least, the power of geopolitical and security factors should not be underestimated. A peaceful and stable surrounding environment is needed to develop the economy. With the change in geopolitical situation as the CPEC progresses, external forces have become a challenge. The Afghan peace process also has a significant impact on the progress of CPEC constructions. In essence, CPEC is in need of a synergy between Chinese and Pakistani development strategies.
In the context of the complex and delicate situation in South Asia, the geopolitical influence is likely to be magnified. However, both sides should have a clear understanding of this and should not overstate the geostrategic value of the CPEC. Both China and Pakistan need to strengthen the exchange of ideas on development and governance. Central and local governments, and the military from both sides should improve exchanges. Think tanks should play an important role in this regard. Personnel communication and training are also important.