The world is seeing a rise in a great power conflict, notably in South Asia, where it appears that India and the US have created an alliance to counter China.
On the other side, over the past 20 years, there has been a lot of strain on American relations with Pakistan.
These circumstances have pushed China and Pakistan to forge amicable relations. Both countries show not only a mutuality of interests but also a sincere desire to expand their partnership.
Pakistan regards its relationship with China as the cornerstone of its foreign policy, whereas China regards it as its top priority.
Their mutual trust is evident in their support for one another on critical issues of national interest. Pakistan has expressed its support for China on the issues of Xinjiang, Taiwan, Hong Kong, Tibet, and the South China Sea, as well as at the Human Rights Council.
In fact, Pakistan has been identified as the country most significantly influenced by China, according to a report by China Index in the World (CITW) network, a project of the Doublethink Lab.
As per the report, China’s influence in Pakistan was most active in foreign policy and technology domains.
The CPEC, a component of China’s Belt and Road Initiative, was founded during Chinese Premier Li Keqiang’s trip to Islamabad in May 2013.
Pakistan was suffering at the time from frequent bombings, ongoing power outages, and subpar economic expansion.
Li urged both nations to “concentrate on carrying out priority projects in connectivity, energy development, and power generation and fostering the establishment of a China-Pakistan economic corridor” as China pledged to play a significant role in Pakistan’s economy.
Also read: CPEC, manifestation of ironclad Pakistan-China friendship: National Assembly Speaker
To alleviate the power shortages that had caused his nation’s economy to stagnate, Nawaz Sharif, who was Pakistan’s Prime Minister-elect at the time, leaned on CPEC. Pakistan’s foreign policy has relied greatly on China since then.
Principal Bilateral Creditor of Pakistan
China has largely shaped Pakistan’s foreign policy in terms of economy in recent years, mostly due to Beijing now being Islamabad’s biggest creditor.
Only 9.3 percent of Pakistan’s entire public and publicly guaranteed external debt was owed to China in June 2013, according to documents made public by the finance ministry of Pakistan.
The International Monetary Fund estimates that by April 2021, this external debt had grown to $90.12 billion, with $24.7 billion ($27.4 percent) of Pakistan’s total external debt owed to China.
Economic Dimension of China’s Foreign Policy towards Pakistan
China and Pakistan have a long-standing strategic alliance. Therefore, it was only logical that Pakistan would go to China at a time when it required an immediate boost.
Pakistan had hoped that China’s financing would satisfy necessary investments in hard infrastructure, particularly power plants, and highways.
In response to this demand, the early harvest projects of CPEC significantly increased Pakistan’s power generation capacity. Plus, it ended the supply-side constraints that had made rolling blackouts a common occurrence throughout the nation.
China also contributed financial support and technical assistance to Pakistan’s road infrastructure development. This has enhanced north-south connections to boost the effectiveness of shipping products from Karachi to Gilgit-Baltistan.
These investments played a crucial role in better connecting the nation’s ports with the cities in Punjab and Khyber-Pakhtunkhwa. Chinese investments have not only been restricted to investments in bilateral governments.
A Chinese consortium purchased 40% of the shares of the Pakistan Stock Exchange in 2016. Again in 2018, Ant Financial, a subsidiary of the Chinese Alibaba Group, invested $184.5 million to acquire a 45% stake in the Pakistani Telenor Microfinance Bank.
In November, two Chinese businesses agreed to establish a cellphone manufacturing facility in Faisalabad, signaling a recent uptick in pace.
In order to sell sportswear to Western markets, Challenge, a Chinese textile producer, is investing $150 million to develop a production facility in Lahore.
The establishment of Hui Coastal Brewery and Distillery Limited, which will make beer in Baluchistan, is another example of how Chinese investors are transforming traditional Pakistan. All of this has increased economic opportunity and employment in Pakistan.
China’s role in Pakistan’s policy on the international platform
China has become Pakistan’s top defense supplier over time. The Chinese nuclear weapons program has effectively been expanded upon by Pakistan.
This may be the first instance where a nuclear weapon state has transferred fissile material to a non-nuclear weapon state.
After Bin Laden’s killing in May, China was probably the only significant force to publicly express support for Pakistan. They declared in the open that “Pakistan has made enormous sacrifices and an important contribution to the international fight against terrorism.”
In fact, China urged the international community to support Pakistan’s efforts to maintain internal stability and realize economic development.
The world is waiting with curiosity to see how China will handle Pakistan. This is because Pakistan is facing tremendous criticism for its role in combating extremism and terrorism.
Despite growing pressure from the West, Beijing maintains that Pakistan is making considerable sacrifices in the fight against terrorism. The world should preserve its independence, sovereignty, and territorial integrity.
However, the flip side of the coin has a slightly different perspective. According to reports, Pakistan’s dependence on China is driving away other international partners. America and the European Union are the two most important ones.
Pakistan’s strengthening connections with China are also putting pressure on its already deteriorating relations with India. Also, the diplomatic relationship between New Delhi and Beijing is not very amicable.
Hence, there are no realistic prospects for improving Pakistan-India ties due to China’s expanding influence in Pakistan.
Implications for Pakistan
Geopolitical implications
States are vying for positions in the constantly reshaping international system as competition between the US and China for great power status heats up.
Pakistan is in a similar situation, and its relations with China and the US continue to dominate its foreign policy.
Although there hasn’t been any indication that Pakistan will have to exclusively support either power just yet.
It is uncertain how long Pakistan will be able to hold onto this precarious position. To strengthen its geopolitical strategy, it should direct its foreign policy in a certain direction.
Economic implications
Secondly, despite predictions that the CPEC will create jobs, it seems that the corridor won’t help Pakistan’s working classes grow. There is, for instance, no progress on CPEC agriculture-related initiatives.
Instead, the project is likely to have negative impacts on regional micro-economies. It will increase Pakistan’s unemployment rate and expand the divide between wealthy and impoverished regions.
It is encouraging more people to participate in illegal marketplaces and stage political protests. Another concern is that Pakistan owes about 30% of its foreign debt to China.
Way forward
There are several mitigation strategies Islamabad might use to minimize its growing reliance on China. It entails changing the way CPEC projects operate on a domestic level. To proactively seek out chances for American and other foreign investors to supplement Chinese funding.
Additionally, Pakistan can operate as “a neutral player” to assist ease tensions between the two superpowers. It should act as “a melting pot” for interests shared by both China and the US to advance regional prosperity.
Pakistan would stand to gain both security and economic benefits as a result. This will help the country to not rely too heavily on either one.
Next, it is crucial for Islamabad to understand that carrying out significant reforms that enhance Pakistan’s economic outlook is necessary. It will help the country to succeed in its geo-economic pivot.
Only through making difficult decisions will Pakistan be able to draw in the additional capital flows. These are necessary for Pakistan’s economy to modernize and experience faster rates of growth.
Without reform, the nation will soon discover that even China is reluctant to continue saving a critical partner.
*The writer is a Fellow at The Diplomatic Insight, published by the Institute of Peace and Diplomatic Studies
**The Diplomatic Insight does not take any position on issues and the views, opinions & findings represented herein are those of the author(s) and do not necessarily reflect the views of The Diplomatic Insight and its staff
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