ChiPak: A Precarious Partnership
Pakistan and China characterise their relations as higher than mountains, deeper than oceans, stronger than steel, dearer than eyesight and sweeter than honey. During President Xi Jinping’s two-day visit to Pakistan in April 2015, Chinese assistance of $45.6 billion was pledged for energy and infrastructure projects, including $622 million for expansion of the Gwadar port, the China-Pakistan Economic Corridor (CPEC) linking Xinjiang with Gwadar being the centrepiece. Recent reports from Pakistan put the planned investment at over $60 billion. The fecundity of the relationship in generating epithets and grandiloquent statements is unmatched, but the reality on the ground is a mixed bag.
Economic and commercial interaction between the two countries is not a patch on the hype surrounding their relationship. Pakistan’s trade with China, its largest trading partner, has ranged between $12-15 billion annually in recent years, largely in China’s favour. Pakistani businessmen describe the China-Pakistan Free Trade Agreement (FTA), operationalised in 2007, as a disaster for their industry. A study conducted by the country’s top business body, the Pakistan Business Council, in 2013 concluded that postFTA, China’s share in total Pak exports remained below 10 per cent, whereas China became the second largest source of imports, accounting for a little over 25 per cent excluding petroleum products. It noted that China made no Pakistan-specific tariff reductions. Consensus has eluded the two sides for Phase II of the FTA that was to commence from January 1, 2014, entailing removal of tariff on 90 per cent lines.
In his book, The China-Pakistan Axis, Andrew Small puts informal estimates by Pakistani experts of the Chinese investment at $5-7 billion in 2013. A very low percentage of pledged Chinese assistance, essentially as loans, has flowed into the country in the past because of the poor absorption capacity of the economy and the appalling security situation.
In a region in dire need of connectivity, CPEC would have been a welcome development but for its passing through the Indian territory under illegal occupation of Pakistan, and the geopolitics of the region. Together with India, Pakistan can become a bridge linking central/west Asia and beyond on one side to Southeast Asia and beyond on the other. But Pakistan’s ardour for CPEC is matched by its apathy towards the east-west route. In a classic case of cutting its nose to spite its face, the country continues to oppose the lucrative east-west transit across its territory as well as intra-regional connectivity within SAARC.
The Karakoram highway built over the 1960s and ’70s contained the seeds of CPEC. Construction of the first phase of the Gwadar port, completed in 2006 with Chinese assistance, was a significant step. However, China chose not to take over its operations, apparently deterred by the fast deteriorating security situation. Instead, a 40-year operations contract was given to the Port of Singapore Authority (PSA). The port failed to take off because of its poor connectivity to the rest of the country, the reluctance of the Pakistan navy to hand over the adjoining land to PSA for expansion and, again, the terrible security situation. In February 2013, Pakistan announced transfer of operations to the China Overseas Port Holding Company Limited. So what made the Chinese change their mind despite the continuing perilous security scenario? The economic rationale for the corridor is clearly overblown. With oil and gas pipelines running to China through Central Asia, a pipeline across the 15,000 feet Khunjerab Pass would make little sense. While CPEC may make some economic sense when the Chinese plans to develop their western region fructify, the considerations underlying it are largely strategic, with the corridor serving as one of the routes for China to bypass the choke-point at the Strait of Malacca. Gwadar could also eventually serve as a naval facility for the Chinese, literally at the mouth of the Persian Gulf and as a naval base for the Pakistanis, farther from the Indian coast than Karachi.
The CPEC passage through Pakistan will not be smooth. Besides the security threats, suspicions persist among smaller provinces that the eastern leg of CPEC via Pakistan’s Punjab is being given greater importance than the western leg passing through Khyber-Pakhtunkhwa and Balochistan. Another worry is the impact of the corridor on the economy in the medium- to long-term. Speaking on CPEC at the Pakistan Business and Economic Summit in Karachi in October 2016, Ehsan Ali Malik, CEO of the Pakistan Business Council, said, “The gift horse we are
Pakistani businessmen describe the China-Pak FTA, operationalised in 2007, as a disaster for their industry
reluctant to look in the mouth should not turn out to be a Trojan horse.” He expressed concern about the impact of the free trading zones to be created along the corridor on the industrial cluster at Karachi and wondered whether sufficient foreign exchange would be generated to service the CPEC debt. Indeed, the chairman of the Senate standing committee on planning and development called for complete clarity to protect the country’s interests. “China is our brother,” he said, “but business is business.”
China has contributed significantly to the building of Pakistan’s military industrial complex and emerged as its largest arms supplier. Pakistan’s missile programme has benefitted from outright supply of the M-11 and M-9 Chinese missiles in the 1990s and assistance in developing other delivery systems. It is well known that Pakistan acquired nuclear capability much before the May 1998 tests because of technological exchanges with China, including the design of a Chinese weapon tested in the 1960s. After the Chashma I and II reactors, covered by the ‘grandfather clause’ at the time of China’s entry into the Nuclear Suppliers Group (NSG) in 2004, China has contracted construction of four more reactors—two each at Chashma and near Karachi.
The China-Pakistan nexus is thus much wider than the two issues that have grabbed our attention of late: China’s opposition to India’s entry into the NSG and the inclusion of Jaish-e-Mohammed chief, Masood Azhar, in the list of sanctioned individuals under UNSC resolution 1267.
The all-weather friendship has, however, failed to address China’s concerns on terrorism and religious extremism flowing from Pakistan to their restive province, Xinjiang. Uighur militants of the East Turkistan Islamic Movement have found sanctuary in Pakistan’s unruly northwest over the years. Attacks have been mounted against Chinese nationals in Pakistan. China has shown no inclination to replace the United States as provider of outright grants and budgetary support to Pakistan. Their investments have been in the form of credits, at best long-term credits on easy terms.
The Chinese are pursuing two contradictory aims in Pakistan: seeking to use it as a strategic partner and transit route, and exploiting its India obsession to contain the latter. However, they should draw a lesson from the experience of Pakistan’s first patron, the United States. A militarily propped up Pakistan does not necessarily follow the agenda of its patron and regards the support as a licence to continue its adventurism against India without observing any red lines that the patron may draw. Pakistan’s policy of confronting India has resulted in its living perennially beyond its means, the primacy of its army, a civil-military imbalance, the destabilising policy of seeking strategic depth in Afghanistan and nurturing of groups such as the Lashkare-Taiba, which spread religious extremism in Pakistan. Consequently, Pakistan’s adversarial posture towards India contains the seeds of its instability. A patron seeking to encourage this posture to contain India will inevitably find itself saddled with an unstable ally that cannot serve either as a reliable strategic partner or a safe transit route.
We can ignore the growing China-Pakistan nexus at our own peril. However, a long-term policy must also not lose sight of the big picture, including the vulnerabilities of this partnership. If the Chinese persist in using Pakistan to contain India, sooner rather than later, they may find it to be more precarious than treading on thin ice.
THE NEW SILK
ROAD Trucks transporting Chinese workers pass through a glossy highway in northern Pakistan’s Gojal Valley