This article looks at the latest hurdle in the China Pakistan Economic Corridor (CPEC). The contemporary, main obstacle in CPEC is a Chinese organization SINOSURE. It is the Chinese Export & Credit Insurance Corporation which is holding back the $13 billion insurance for energy and infrastructure projects of CPEC (Kiani 2021). SINOSURE is a state governed and policy-oriented corporation of China. Its function is to promote China’s exports of high value-added goods, high tech technology and services by credit insurance when there is a risk of non-payment (SINOSURE 2021).
CPEC is considered a game-changer for Pakistan. The GDP of Pakistan was 2-2.5 per cent before the inauguration of CPEC, mainly because of load shedding. CPEC, under the flagship of the Belt and Road initiative (BRI), helped Pakistan rebuild its energy sector. After CPEC Phase-I, Pakistan was on its way to industrialization: however, due to growing circular debt and economic slowdown, CPEC phase-II nearly halted. Pakistan is an Agrarian economy, and it is almost impossible for an agrarian economy to fulfil the needs of more than 220 million people. Thus! Pakistan is in dire need of industrial growth to have a sustainable economy. As Khalid Mansoor, Special Assistant to Prime Minister(SAPM) on CPEC affairs, labelled “CPEC as Pakistan’s last chance for industrialization” (Ghazi 2021). In these circumstances, SINOSURE is not approving investment for seven projects, mainly coal and hydel power projects and one infrastructure project. Consequently, an amount of Rs250 billion is struck for CPEC power projects (Business Recorder 2021).
To cope with this situation, Khalid Mansoor has asked the Vice Chairman of National Development and Reforms Commission (NDRC) of China Ning Jizhe in two separate letters to use his influence on SINOSURE so that it passes US $12 billion payment for seven CPEC projects. As mentioned earlier, out of those seven projects, six are energy projects, and one was infrastructure. The six energy projects cost is $5 billion, and one infrastructure project, which is the Pakistan Railways project known as Mainline-I (ML-I) or ML-I scheme, costs $6.8 billion (Rana 2021).
It was not the first time when Mansoor tried to convince the Chinese state to intervene. He has also sent a letter to Chinese Ambassador Nong Rong, concerned Ministers/ Ministries of China and CEO of four Chinese companies in October 2021 to decrease hurdles in CPEC. Due to this delay, the 1320 Thar Coal Block-1 power plant, 1124MW Kohala Hydropower Project, 300MW Gwadar Coal power plant, and 700MW Azad Pattan HPP are suffering the most (Ghumman 2021). SINOSURE is creating hurdles for these projects mainly because of public criticism. In July, a suicidal terror attack at the Dasu hydropower project killed 12 people, out of which nine were Chinese (Malik 2021). In response to it, China demanded $38 million in compensation (Ghumman 2021). However, the work on the Dasu hydropower project is resumed, but events like these are creating mutual distrust between the State of Pakistan and Chinese lenders and people.
According to Mansoor in current dynamics, Pakistan is trying to request China that both states should work on agreed projects and take them to the developmental stage (Rana 2021). On the other hand, Chinese lenders such as SINOSURE are not confident that Chinese people and investments are secure in Pakistan. This lack of trust is not easy to digest as the two countries have the reputation of Iron brothers. In past, both of them constructed a highway on the most dangerous terrains in the world. That highway is known as the Karakoram highway and is presented as a symbol of friendship between Pakistan and China. In the construction of the Karakorum highway, 810 workers of Pakistani and 82 Chinese workers lost life. Similarly, in CPEC, workers of both states are giving their blood. However, the main difference is that in the construction of the Karakoram Highway people died because of natural calamities, but in CPEC workers are dying because of terrorism. This terrorism is not only soring Pak-China relations but also Pakistan is in the shackles of FATF. In the past few years, Pakistan arm forces have fought against terrorism and saved Pakistan’s soil from this menace. Still, some terrorist organizations are functioning in Pakistan which is damaging the economic sector of Pakistan. In press briefings, Advisor Khalid Mansoor has ensured the Pakistan nation that Pakistan arm forces will also provide security to CPEC projects. Moreover, he also stated that Pakistan is reassuring China that their investment will not become the victim of circular depth again. Pakistan government will pay Kibor plus 2% cost to Chinese investors. On Pakistan’s side, Pakistan is doing its diplomatic efforts to reassure China. On the other hand, China is not demanding guarantees (Rana 2021). It indicates that both States wants to work, and their friendship will survive the test of time. So snags like SINOSURE will be resolved.
Business Recorder. 2021. CPEC: Our last chance for industrialization. November 12. Accessed November 21, 2021. https://www.brecorder.com/news/40132905.
Ghazi. 2021. CPEC: Our last chance for industrialization. November 14. Accessed November 21, 2021. https://defence.pk/pdf/threads/cpec-our-last-chance-for-industrialization.728261/.
Ghumman, Mushtaq. 2021. Ongoing power projects: China has adopted ‘go slow’ policy after ‘unjustified’ criticism? October 23. Accessed November 21, 2021. https://www.brecorder.com/news/40128486.
Kiani, Khaleeq. 2021. Beijing’s help sought for insurance cover of six CPEC projects: Dawn. November 10. Accessed November 20, 2021. https://www.dawn.com/news/1657063.
Malik, Arshad Aziz. 2021. Chinese company decides to resume work on Dasu hydropower project. October 24. Accessed November 21, 2021. https://www.geo.tv/latest/377790-chinese-company-decides-to-resume-work-on-dasu-hydropower-project.
Rana, Shahbaz. 2021. China asked to remove CPEC snags. November 10. Accessed November 21, 2021. https://tribune.com.pk/story/2328665/china-asked-to-remove-cpec-snags.
SINOSURE. 2021. Corporate Profile: . November 20. Accessed November 21, 2021. https://www.sinosure.com.cn/en/Sinosure/Profile/index.shtml.