On Wednesday, September 28, The Heritage Foundation hosted a panel discussion on “Geopolitics and Economic Development: Assessing the China–Pakistan Economic Corridor.” The discussion focused on the economic viability of the proposed $46 billion China–Pakistan Economic Corridor (CPEC), security concerns impacting CPEC, and the geopolitical and geostrategic implications of the formation of an economic corridor linking China’s Xinjiang province to Pakistan’s Gwadar Port in Baluchistan.
In his opening remarks, moderator Walter Lohman, director of The Heritage Foundation’s Asian Studies Center, noted that CPEC could be a game-changer in terms of the geopolitics of the region. He said its impact will depend largely on how much investment is actually realized, but noted that several projects were already underway.
Andrew Small of the German Marshall Fund, author of The China-Pakistan Axis, pointed out that China has previously promised significant economic investment in Pakistan that has never come to fruition. Between 2001 and 2011, for example, China pledged to invest $66 billion in Pakistan, yet only 6 percent of the promised investments were ever realized, said Small. Nonetheless, he says that CPEC shows “a new political momentum between the Chinese side and Pakistani government which simply was not there before in terms of economic cooperation.”
Small further noted that Pakistan is one of the few countries where China has been able to put together such an enormous investment package and carry out the project on its terms, making Pakistan a showcase country for its larger One Belt, One Road initiative. Small noted that several, mostly energy-related, projects were already nearing completion, and that most of the proposed projects were likely to eventually come through.
Another panelist, chairman of Pathfinder Group Pakistan, Ikram ul-Majeed Sehgal, noted that China’s main motivation behind its enormous investment in CPEC is to gain access to the Indian Ocean. He said that both Pakistan and China will derive economic benefits from CPEC, and that China would also enjoy geostrategic advantages in South Asia from strengthening its partnership with Pakistan.
The biggest obstacle to CPEC remains security concerns. As Lisa Curtis, senior research fellow at The Heritage Foundation, pointed out, “The Chinese are risk-averse when it comes to investment.” Although Pakistan has set up a new special security division with the sole purpose of protecting Chinese workers and CPEC, there are still questions about whether that will be enough to allay Chinese wariness. Recent Indo–Pakistani tensions, including the attack on the Indian military base in Uri on September 18, have highlighted such concerns. Following the Uri attack, Hu Shisheng, director of the China Institute of Contemporary International Relations, which is affiliated with the Chinese Ministry of Public Security, said that China wanted India and Pakistan to jointly fight terrorism, and that CPEC could not happen “in a violent atmosphere.” Without efforts from Pakistan to rein in extremists in their territory, such security issues would become a significant obstacle for CPEC, according to Curtis.
Curtis wondered how China would ultimately square its seemingly contradictory strategic goals. On the one hand, China seeks to promote stability in the region in order to curb the influence of Islamic extremists. On the other hand, Beijing seeks to contain Indian regional power by bolstering Pakistan in military and strategic terms (even as Pakistan supports extremist groups targeting Afghanistan and India). Curtis believes that CPEC would be more successful if it contributes to overall South Asian regional economic integration.
India, for its part, has been persistent in its opposition to CPEC, even though China is trying to convince India that it could also be a beneficiary. Ikram Sehgal emphasized that the last thing Pakistan wants is conflict with India, and that such economic opportunity can become a “fire wall for terrorism.”
Despite the obstacles and questions surrounding CPEC, the bottom line is that several projects are already underway, and the Chinese appear committed to its full implementation. Lohman ended by cautioning that the U.S. should not underestimate China’s ability to implement CPEC. Lohman reiterated that CPEC could mark a geopolitical realignment of the region—one that the U.S. will need to factor into its own goals and interests in the region.