ZURICH: If the name ‘China’ were deleted from ‘China-Pakistan Economic Corridor’ (CPEC), nobody except terrorism-watchers would pay attention to the country that remains. CPEC is projected by Islamabad as a ‘game-changer’ but it might only be a Pakistani reputation-laundering exercise that although strategically important is economically less than crucial to Beijing. The corridor provides a platform for Chinese ‘soft’ and ‘hard’ power projection but its commercial attractiveness stems in large measure from sweetheart deals that disproportionately favour Chinese entrepreneurs over Pakistani ones. The main ‘native’ beneficiaries of CPEC are the Pakistani military and its business empire. The losers are Pakistan’s people.
To understand CPEC, three landmark studies published in the late 15 years are helpful. The first is Ayesha Siddiqa’s Military Inc.: Inside Pakistan’s Military Economy. Written during the Musharraf regime, this book describes how the Pakistan army over several decades acquired business interests and used its political dominance to undermine free market competition.
The second study is Minxin Pei’s 2016 book China’s Crony Capitalism: The Dynamics of Regime Decay. Pei demonstrated that by nominally retaining state ownership over property and granting usage rights on a discretionary basis to private businessmen, the Chinese Communist Party (CCP) allowed regional satraps to engage in massive and systemic corruption. Government offices were purchased by kleptocrats within and outside the party, who misused access to the corridors of power to corner business opportunities for themselves.
The upshot of these two books is: Pakistan has built a predatory economy around its praetorian army and China has constructed a similar economy around the CCP.
The third major study was published in 2019 and is entitled The China-Pakistan Economic Corridor of the Belt and Road Initiative: Concept, Context and Assessment. Written by Siegfried O. Wolf, a German scholar with on-ground knowledge of Pakistan, it approaches CPEC with no hint of a predetermined agenda. The author even-handedly weighs up competing hypotheses, leaving the reader to reach their own conclusion based on an abundance of evidence, the vast majority of it derived from Pakistani sources.
Wolf’s work is a study of CPEC but still shares a common analytical thread with research by Pei and Siddiqa in examining crony capitalism centred around non-democratic elites. CPEC appears to be a Trojan Horse through which China can export not only authoritarian surveillance tactics to other countries but also superimpose its own judicial system in matters relating to business dispute resolution. Beijing’s main instrument for blunting criticism that its activities undermine other countries’ sovereignty is to reiterate a mantra of offering ‘win-win’ solutions. This, even as China transfers wealth from nominally sovereign states to itself.
Reading Wolf’s book in continuation with the two mentioned above, one is struck by how compatible Pakistani and Chinese corruption dynamics are. In both cases, local community interests are subordinated to the private gains of distant politico-business elites. Civil administrators stay silent about abuses of power to avoid jeopardising their own careers. When combined, the result of Chinese and Pakistani corruption is an experiment that is respectively, colonizing and collaborationist. The one-sidedness of CPEC is both amusing and worrying.
Chinese nationals get visa-free entry to Pakistan, with no reciprocity on the Chinese side. Chinese companies operating in Pakistan receive generous tax benefits on imports, while Pakistani exports to China face continuing administrative hurdles. Revenue earned from port operations at Gwadar will overwhelmingly accrue to China, with Islamabad getting a mere 9 per cent. For Gwadar and Balochistan itself, nothing will remain except the incalculable honour of enabling Han and Punjabi enrichment. Gwadar could also become host to a ‘Chinese only’ gated community. The cost of protecting these Chinese expatriates will be borne by Pakistan.
The only way such conditions—a sampling of those described in Wolf’s meticulous study—can be termed ‘win-win’ is if ‘winners’ are asymmetrically defined as Chinese firms plus their country of origin, and select Pakistani firms minus their country of origin.
From an Indian perspective, what is worrying about CPEC (besides the fact that it cuts through illegally occupied territory in Gilgit-Baltistan) is why Islamabad would agree to such a lopsided set of deals in the first place. Some observers have pointed out that the so-called ‘Long Term Plan’ for the corridor, revealed in 2017, is only aspirational and there remains much opacity regarding how CPEC will be operationalized. On the one hand, this suggests that the Pakistani state retains some negotiating power vis-à-vis China in pushing for more equitable terms. On the other, common sense leads one to question if the Chinese would have so strongly committed to CPEC without first knowing of Pakistan’s desperation for it.
A good probability exists that Pakistan accepted the status of a Chinese commercial satellite because its wishes to free itself of dependence on Western aid, which comes with counterterrorism obligations. As Steve Coll noted in his book Directorate S, after the killing of Osama bin Laden Islamabad understood that American tolerance for double-games on terrorism would diminish. Seeing China as a possible alternative patron, Pakistan switched to making itself relevant to Beijing’s efforts to develop Xinjiang as well as reduce Chinese exposure to a naval blockade of energy supplies via the Malacca Straits.
The idea of providing China access to the Arabian Sea through Gwadar had already gained momentum under Musharraf, as had Chinese commercial presence in Pakistan, much to the consternation of local businesses. Possibly, announcing CPEC was a two-fold effort to:
- Retrospectively bring these disparate projects into a common narrative framework and interlink it with hype about ‘rising China’ and its Belt and Road Initiative (BRI),
- Boost bilateral economic cooperation on the implicit understanding that Islamabad would concede favourable terms as a ‘fee’ for freeriding off China’s brand-name.
The corridor might thus be a marketing exercise for Pakistan to seek economic and reputational rehabilitation post Abbottabad by hyphenating itself with China. CPEC’s commercial viability remains conditional on the provision of a safe environment for foreign investors, regardless of whether these are Chinese or otherwise. Had such an environment existed in the first place, Islamabad would not have been so easily manoeuvred into welcoming Chinese dominance. As far as Beijing is concerned, having an unusually submissive partner in Islamabad means that part of the BRI could be showcased as a model of success, on Beijing’s terms. This would blunt criticism that China has embarked on a ‘win-lose’ neo-colonial endeavour.
Wolf’s analysis makes clear that there is considerable community-level opposition to CPEC. This opposition is blocked from publicity due to a censorship regime in Pakistan that equates public criticism of CPEC with high treason. Inter-provincial disparity, wherein business groups from Punjab and urban Sindh lobby for foreign investment to be concentrated in their home areas, limit the trickle-down effect theoretically meant to reach poorer regions such as Balochistan and Khyber-Pakhtunkhwa. Civilian entrepreneurs are being crowded out by military-owned public sector companies, which use economies of scale and better access to political resources to scoop up lucrative contracts. Importantly, Wolf makes the point that the indebtedness of the Pakistani government to Beijing for loans provided to realize CPEC, are disguised as corporate loans extended between individual companies. This is akin to subterfuge which Pei has documented in China, where property ownership and liability in shady business deals remain masked behind a web of intermediaries.
In Military Inc., Ayesha Siddiqa noted that an anti-poor and anti-peasant bias exists among the Pakistani military’s officer corps, even as they help themselves to urban and rural lands in the name of welfare programmes for the simple jawan. These lands invariably end up appropriated by the officers themselves, who strive to acquire the primitive trappings of feudal authority and status. A similar process seems to be unfolding with CPEC, as rural communities are dispossessed of lands which are then ‘developed’ by extraneous actors from China or Punjab. The promised employment dividend of the corridor might well prove elusive since Chinese firms are under no obligation to hire local staff.
A final thought: is Pakistan acquiescing in Chinese neo-colonialism due to deficiencies in its own founding narrative of statehood? The story of India’s independence struggle describes colonialism primarily as a drain of economic wealth. With Pakistan, the discourse is radically different. The country is built on an exclusivist myth that emphasizes cultural and religious differences between long-term inhabitants of South Asia, not shared economic interests vis-à-vis a foreign predator. Thus, while India would recoil at the prospect of becoming any country’s vassal even if this served a strategic purpose, Pakistani calculations might be fundamentally different. Determined to maintain the fiction of the ‘Two-Nation Theory’, Pakistani elites do not mind selling their country down the Indus as long as they can continue to oppose India. In the long run, their gain shall be similar to that of Mir Jafar after Plassey: sensible from a short-term and self-interested perspective, disastrous in terms of its impact on future generations.
(The author is lead analyst for geoeconomics at the Indo-Swiss Future Leaders Forum. Views expressed in this article are personal.)
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