This will be the 11th meeting of the Joint Cooperation Committee, the key forum for making decisions on the China-Pakistan Economic Corridor (CPEC), a US$50 billion Pakistan component of the Belt and Road. Zhao Shiren, the Chinese consul general in Lahore, told local media earlier this month that work on the CPEC is expected to speed up after the JCC meeting.
The centre of attention now is Main Line 1, or ML-1, a project that will upgrade 1,733km of railway track between Karachi and Peshawar. This is the largest CPEC project in terms of cost, and it has been awaiting a final decision for the past five years.
“Pakistan has agreed to increase the cost of ML-1 from US$6.8 billion to US$9.85 billion, on the demand of Chinese negotiators, who termed the former cost figure as unrealistic,” an official privy to CPEC planning told Nikkei Asia on condition of anonymity since he was not authorized to talk to the media. The official further added that the ML-1 project will likely be approved by the JCC, which would be a major boost for the CPEC.
In multiple background interviews, sources said other projects expected to get the nod include the Karachi Circular Railway at a cost of US$1.33 billion and the Karakoram Highway realignment, valued at US$1.8 billion.
Apart from these plans, another major issue up for discussion will be power projects. Beijing has built 12 power plants under the CPEC and Pakistan owes more than 250 billion rupees (US$1.14 billion) in unpaid bills to the facilities. The JCC huddle is expected to deliberate on forming a revolving account for Chinese power producers so that they can get paid without getting entangled in Pakistan’s web of debt.
Moreover, the JCC meeting might decide the fate of a 300-megawatt power plant in Gwadar – a port intended to be a key Belt and Road hub. The Pakistani government would prefer to scrap the project as it scrambles to save money, whereas China seeks approval to start building it.
Aslam Bhootani, a member of the national assembly representing Gwadar, is not happy about the outlook. “No investment will come in Gwadar” unless the area’s power problems are resolved, he said. “Scrapping the 300 MW power plant will not help in this situation.”
Experts are on the fence about the prospects for rejuvenating the CPEC.
Michael Kugelman, director of the South Asia Institute at the Wilson Center, said the CPEC is in a holding pattern, with no new projects and existing projects moving very slowly out of caution over Pakistan’s economic crisis, with its foreign reserves falling dangerously low.
“Given Pakistan’s severe economic stress, as well as China’s own recent slowdown,” he said, “there will be little space for any type of new economic activity.”
But the Pakistani government does have the incentive to stay in China’s good books. Next week, soon after the JCC, Prime Minister Shehbaz Sharif is scheduled to visit China. This will be his first visit to Beijing as the leader.
According to media reports, Sharif will likely seek US$10 billion in financial assistance from China, through the balance of payment support and rolling over Chinese loans, which make up 30% of Pakistan’s total external debt. Experts believe the Sharif government wants the JCC to be successful so that it can secure the required financial support from China during the prime minister’s visit.
Despite his scepticism and the CPEC’s sputtering progress, Kugelman also suggested Sharif might be the man to restore some momentum. “It was Prime Minister Sharif’s brother who launched the CPEC, and there’s reason to believe Beijing is more comfortable working with the ruling PML-N party than with Imran Khan’s PTI, which asked questions about the transparency of CPEC projects that China didn’t like,” Kugelman told Nikkei.
While Sharif is planning to revive the CPEC, his political nemesis Khan is in full-throttle mode to topple his government. Even after suffering a setback last week with his disqualification from office over alleged mishandling of foreign gifts, Khan has announced a long march from Lahore to Islamabad starting Friday, demanding Sharif’s resignation and fresh elections. Initially, it appeared Khan might be barred from politics for years but for now he has only been stripped of his seat in parliament.
Government officials fear that political uncertainty could jeopardise any gains made at the JCC meeting.
The instability is a problem, said James M. Dorsey, a senior fellow at the S. Rajaratnam School of International Studies in Singapore. But he said Beijing has already factored it in when making decisions about CPEC projects.
“Beijing knows that the ML-1 project is also in the interest of Pakistan and even if Khan again formed the government, he cannot reverse it,” Dorsey said.
He added that the Belt and Road, in general, has been slowing down and that efforts made to revive the CPEC are partly Beijing’s attempt to fire up its broader global infrastructure drive.