New Delhi, June 18 (IANS) The China–Pakistan Economic Corridor (CPEC) is pitched as a transformative initiative to build big infrastructure projects with the aim of driving economic growth in Pakistan, but the ground reality is that it is sinking deeper into Beijing’s debt trap and the targeted economic development is nowhere in sight as the country’s poverty and unemployment levels have been on the rise in recent years, an article said.

“The most fundamental concern surrounding CPEC is not the infrastructure it delivers but the debt obligations it creates. Pakistan’s external debt has grown substantially during the CPEC period, and concerns persist regarding the true cost of capital, hidden clauses in loan agreements, and the adequacy of revenue generation from completed projects to service accumulated debt,” the article in Modern Diplomacy said.

The article highlights that although 9,504 MW of power capacity has been created with Chinese investment in Pakistan, these projects have come up at elevated operational costs and generate electricity at tariffs that are putting strain on Pakistani consumers and government finances. The International Monetary Fund has repeatedly flagged concerns about the financial viability of these energy projects, questioning whether they will generate sufficient returns to justify their capital costs.

Similarly, the Main Line-1 Railway Upgrade project that has been taken up at an estimated cost of $6.7-7 billion does not have a clear revenue-generating potential. Pakistan’s railway network has never been profitable, as train fares are subsidised to make them affordable for the poor masses. Without fundamental restructuring of tariff policies and operational efficiency, the ML-1 upgrade risks becoming a capital-intensive project with insufficient revenue streams to service debt obligations, the article points out.

“A critical geopolitical dimension of CPEC concerns the strategic leverage asymmetry it creates between China and Pakistan. As China’s investments deepen and Pakistan’s dependence on Chinese capital grows, questions emerge regarding the degree to which this economic interdependence constrains Pakistani policy autonomy,” the article observed.

The concentration of large-scale infrastructure projects in Chinese hands creates structural dependency. Chinese firms dominate CPEC project implementation, procurement, and technology provision. They also exercise operational control over critical infrastructure, including ports, energy installations, and transportation networks.

CPEC is increasing Pakistan’s economic dependence on China at a time when it is also trying to balance diplomatic relationships with the US and Russia. This dependence creates potential constraints on Pakistan’s capacity to pursue a genuinely independent foreign policy when Chinese and American interests diverge, the article added.

–IANS

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