The dream of Xi Jinping to expand the cultural and military might of China is now starting to break. With increased financial wealth, China considered reviving its ancient silk road under the ambitious Belt and Road Initiative (BRI). The plan was to build a network of global infrastructure in and around150 countries that would connect China. However, the Covid pandemic completely shattered the dream. Lockdown induced economic breakdown, Ukraine war and anti-China sentiment across the globe have stymied practically every project. China Pakistan Economic Corridor (CPEC), one of the key parts of BRI, seems to be the latest one to end.
China Abandoned Key Power Project in Pakistan
According to the latest report in The Economic Times, the Chinese engineers and personnel have abandoned the repair of 969-megawatt Neelum-Jhelum Hydropower Plan project in the region of Pakistan Occupied Kashmir. It was stated that since July 2022, Pakistan has shut down the operation due to the shortage of fuel and electricity.
In its withdrawal statement, China stated that in light of local protests over the plant, Pakistan was unable to offer sufficient security cover to the Chinese engineers involved in the project.
The Chinese consortium, Gezhoiuba Group, began building on the project in 2008. The first generator was commissioned in April 2018, after years of delay, and the full project was finished in August 2018.
However, three years its inception, the Neelum-Jhelum Hydro-project Plan was shut down in July 2022 due to major cracks in the tailrace tunnel. In the reasoning of failure, the Pakistani officials had complained of substandard construction quality, poor supervision and management by the Chinese.
This withdrawal of the Chinese engineers from the project resulted in a ferocious blame game between China and Pakistan. On one hand, Pakistan complained of China’s substandard construction quality and non-adherence to security protocols. On the other hand, China lamented over the security concerns.
Moreover, the locals are protesting against the project due to inequitable power shares, royalty, employment and environmental concerns.
China’s Crumbling Economy
There are multi-fold reasons to this recent dog-fight between China and Pakistan. As the financial, economic, geopolitical and security situations are changing in both the countries, the black clouds on the CPEC projects started looming. There have been multiple projects in the past, where Chinese authorities or firms have refused to work in-tandem with Pakistan.
Earlier in May 2022, over 25 representatives from Chinese Independent Power Producers (IPPs) had threatened to completely shut down the power in the CPEC projects. The IPPs had said, “The authorities were pressuring them to maximize generation to meet peak summer needs, but this is impossible for us given serious liquidity issues”.
Whereas Pakistan is already on the verge of bankruptcy, China is also crumbling with economic slowdown owing to constant covid outbreak. According to reports, the Chinese economy has been strangled by the never-ending Covid spread and shutdown. It (report), states that 54.4% of the national GDP and half of the population were negatively impacted by the harsh lockdown and the latest outbreak of the Chinese Virus. The country has seen a GDP expansion of mere 0.4% in the first quarter of 2022.
In the real estate sector, the default of EMI payments and lower property buyout has created a huge liquidity crisis. The mortgage has become difficult for the developers, as the home buyers have refused to pay and are organizing a social boycott of EMI payments. The looming real estate sector, which accounts for 29% of China’s GDP, has brought the country on the verge of bankruptcy. Not only the production capacity of the economy has stopped and the source of income has been trimmed but also the exports, which account for 18% of China’s GDP, are sliding.
In this situation, China has begun to experience economic repercussions. Stagnant GDP growth and global anti-China sentiment have completely withheld its economic recovery. Almost every multinational company has already relocated its major manufacturing base from China to other countries, mainly India. The key economic base of manufacturing and export sector on which China has mostly relied on seems to have dismantled. Now, they lack funds to sustain their dream of BRI or CPEC project.
CPEC: Chinese Dream in Breaking
Furthermore, the Balochistan Liberation Army, an organization of freedom groups that seek to liberate the Balochistan province of Pakistan from the federation, is constantly targeting the Pakistani army as well as Chinese workers involved in the CPEC project. The BLA claim that they are being forced out of their ancestral land due to this project and without proper rehabilitation. Many Chinese engineers and workers have refused to work on CPEC projects in this scenario. In addition, several key infrastructure projects built under CPEC have been washed away in the recent flood.
CPEC is also suspending in air as American in recent times has once again started to indulge in Pakistan. Recently, the US announced USD 30 million aid to Pakistan. Earlier this week, the Biden Administration also announced a USD 450 million F-16 fleet sustainment programme to Pakistan. The growing old America-Pakistan bonhomie has irked China. As China and the US are currently engaged in one the most ferocious cold war in the Indo-Pacific, Pakistan going close to America will certainly hurt China. In this situation, China will certainly twist Pakistan’s arm in CPEC.
The growing financial, geopolitical and security concerns surrounding China and Pakistan has raised many questions. Will the $60 billion infrastructure network linking the CPEC project be a broken dream of Chinese President Xi Jinping? Will China’s ambition of reviving the old Silk Route remain a dream? Well, the formal announcement of the failed project will take time, but the facts and circumstances surrounding it suggest that before the CPEC linking project reaches the Gwadar port in the Arabian Sea, Xi Jinping’s dream has already reached the deep trenches of the sea.
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