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  • Looks like things are hotting up between China & Pakistan

    China and Pakistan fall out over Belt and Road frameworks | Nikkei | Jan 19 2021

    ADNAN AAMIR, Contributing writerJanuary 19, 2021 17:10 JST

    KARACHI -- China and Pakistan are embroiled in their most serious disagreement relating to the Belt and Road Initiative, causing the annual bilateral summit of the China-Pakistan Economic Corridor (CPEC) to be delayed.

    The Joint Cooperation Committee (JCC) is CPEC's principal decision-making body. It is jointly chaired by Pakistan's minister for planning, development and special initiatives and the vice chairman of China's National Development and Reform Commission.

    The first JCC meeting was held in August 2013 and the last in November 2019. The 10th JCC was scheduled for early 2020, but remains postponed.

    Initially, the COVID-19 pandemic was the reason, but later disagreements between the two countries over the Main Line 1 (ML-1) railway project and special economic zones became the main points of disagreement, Nikkei Asia has learned from informed sources.

    Asad Umar, Pakistan's minister for planning, development and special initiatives, told local media in November that the 10th JCC would be held the following month. However, officials in the Planning Commission of Pakistan, who asked not to be named, recently told Nikkei that the meeting will not take place for at least three months -- by far the longest JCC gap to date.

    ML-1 is the largest CPEC project and worth $6.8 billion. China is expected to lend $6 billion of this, which Pakistan wants to borrow at a concessional interest rate of less than 3%.

    China offers a mixture of concessionary and commercial loans for such projects. This could significantly increase the aggregate interest rate Islamabad will face, according to the planning commission officials.

    "China is reluctant to lend money for ML-1 because Pakistan has already sought debt relief to meet G-20 lending conditions and it is not in a position to give sovereign guarantees," Nasir Jamal, a senior journalist in Lahore covering business and the economy, told Nikkei. He said Beijing's appetite for lending money for large infrastructure projects has diminished because these projects are vulnerable to local politics that delay returns on investment for China. That has hindered agreement on the finance framework for ML-1.

    Andrew Small, a senior trans-Atlantic fellow with the Asia program at the German Marshall Fund, a U.S. think tank, said China tends to base its decisions about interest rates for loans to Pakistan on a couple of criteria. Firstly, do low-interest rates encourage projects that do not make sense financially? Secondly, what precedents are set for other countries looking for similar concessions?

    "China is much more comfortable deferring payments or providing new financing than it is offering concessional rates in the first place," Small told Nikkei. He said this approach provides Beijing with greater leverage and control even if they are willing to be very flexible at the back-end.

    With host countries under pressure to repay at higher rates, China trades payment deferments in return for influence, which helps it get more favorable arrangements.

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    The delayed JCC meeting and unsettled ML-1 financial framework is complicating matters for Pakistan. Early this month, Pakistan Railways asked the government for 11 billion rupees ($69 million) to provide ML-1 security. Without the Chinese financing framework being agreed by the JCC, it is hard for Islamabad to come up with such a large amount given the state of the economy and severe budgetary constraints.

    The other major disagreement between Beijing and Islamabad delaying the JCC meeting relates to SEZs. In the second phase of CPEC scheduled for 2020 to 2025, Chinese companies are due to start producing goods in Pakistan and exporting from there.

    Currently, the industrial cooperation framework for the SEZs is limited to a memorandum of understanding without detailed modalities. Matters such as tax exemptions and requirements for employing local labor have not been finalized. These need to be agreed by China for confirmation at the JCC. The Board of Investment of Pakistan submitted the draft agreement for the industrial cooperation framework to the Chinese government last month and is still awaiting a response.

    In December 2020, during a meeting of the Joint Working Group on Industrial Cooperation under CPEC, Asim Ayub, the project director for industrial cooperation at the Board of Investment, pressed for early signing of the industrial cooperation framework agreement.

    The seriousness of the delay is clear from China's unprecedented reluctance to schedule a JCC meeting. In the past, JCCs were always held in time, and China agreed to Islamabad's requests most of the time. Some experts believe the delay is evidence that CPEC is derailing.

    According to Small, there were plenty of announcements about CPEC last year, but actually setting deals in motion was another matter. "The optics do matter to China so I still expect them to figure out terms in the end, and certainly to keep some narrative of continued progress alive," Small told Nikkei. "But that doesn't mean they're willing to agree on something that doesn't make sense for other reasons just to speed things up a little."

    Pakistan is currently renegotiating its $6 billion extended fund facility with the International Monetary Fund (IMF), which was suspended in April 2020. The IMF reportedly will only resume the program if Pakistan does not take out any new commercial loans, and that is one of the reasons it is looking for concessions on loans for the ML-1 project.

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    An important long-term implication of this case for other BRI countries could be that China will be more wary of lending to countries that have entered loan agreements with global lenders such as the IMF.

    Hasaan Khawar, an Islamabad-based public policy analyst, views the situation from a different perspective. "The back-and-forth with China by Pakistan on the interest rate and additional guarantees for the ML-1 project is a good sign," he told Nikkei. "The Pakistani side is appraising the terms carefully and trying to negotiate a better deal."

    The Chinese Embassy in Islamabad did not respond to a request for comment.
    Last edited by Double Edge; 18 Feb 21,, 01:41.


    • Can't pay then China wants a parlimentary oversight committee and to be in it (!)

      China moves for more control over Belt and Road in Pakistan | NIkkei | Feb 11 2011

      ADNAN AAMIR, Contributing writerFebruary 11, 2021 17:00 JST

      KARACHI -- China is taking its Belt and Road infrastructure-building initiative into its own hands in Pakistan, proposing a joint parliamentary oversight committee to tighten control over the speed and quality of projects.

      Li Zhanshu, the chairman of the National People's Congress of China, proposed the formation of the joint committee for the China-Pakistan Economic Corridor, or CPEC, in a virtual meeting held with Asad Qaiser, the speaker of Pakistan's National Assembly, toward the end of January. Both heads of parliament directed their secretaries to form the joint parliamentary oversight committee.

      This decision has been made at a time when concerns are rising about the slowdown of work on CPEC, the $50 billion Pakistan component of the Belt and Road Initiative. In the last week of January, Pakistan's Cabinet Committee on CPEC directed ministries to improve the pace of work on CPEC projects.

      The decision to form the joint parliamentary oversight committee was made in haste, and even the representative from Gwadar, the port city that is the center stage of CPEC, was not consulted.

      "I represent Gwadar in Pakistan's National Assembly, and I was not taken into confidence before making the announcement of the formation of Pak-China joint parliamentary committee on CPEC," Aslam Bhootani told Nikkei Asia.

      Experts believe this latest development reflects the frustration of Beijing with the slow pace of CPEC projects. They are of the view that China wants to get more closely involved with individual CPEC projects both due to some recent challenges with respect to the security of some parts of CPEC, such as Gwadar Port, and the economic and social impacts of COVID-19 on Pakistan.

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      Michael Kugleman, the deputy director of the Asia Program at the Wilson Center in Washington, believes Beijing was happy with the former government of Prime Minister Nawaz Sharif and has not attained the same level of comfort with the Imran Khan government vis-a-vis CPEC. "It makes sense that China would want to have more direct involvement in CPEC policy [via a joint parliamentary body] so that it doesn't have to be as dependent on Pakistani officials," he told Nikkei.

      Another perspective about this latest policy decision of Beijing is the financial problems of Pakistan. Experts believe that this move is an attempt by China to gain an upper hand in CPEC, given Islamabad's precarious fiscal situation.

      "Beijing is increasingly unwilling to pour money in what seems like a bottomless pit without exercising greater control," said Mohan Malik, a visiting fellow at the Near East South Asia Center for Strategic Studies in Washington. He added that Beijing's demand for joint parliamentary oversight and day-to-day monitoring of CPEC, therefore, is a logical progression of recent steps taken to strengthen Beijing's hold over the initiative's flagship megaproject in Pakistan.

      Still, experts are skeptical about the success of this joint parliamentary oversight committee.

      Malik Siraj Akbar, a South Asia analyst based in Washington, told Nikkei that this move will increase anxiety among sections of the local population that have been expressing concerns over CPEC projects. "Getting things done quickly will benefit China in the short term but it will alienate the local populations in the long run," he said.

      Kugelman said the impact of this move on CPEC's progress can be better gauged once Pakistan has overcome the pandemic and its economy has stabilized. "A number of new plans [relating to CPEC] have been floated, but until Islamabad has the bandwidth to follow up on them, I doubt it will be able to muster the requisite policy space to do so," he added.

      This new development has once again triggered debate on whether CPEC is on the right track and Pakistan is getting a good deal out of it.

      Malik said Beijing has apparently adopted a deliberate go-slow policy on the financing of several CPEC projects so as to increase its direct control over CPEC. "Caught between a rock and a hard place, Islamabad has no option but to give in to keep the projects going," he added.

      However, there is consensus among experts that irrespective of Islamabad's needs and apprehension in local communities, China wants to make CPEC work at all costs.

      Malik explained that the Chinese have already come so far in CPEC that they will make sure it survives and moves forward even if Pakistan stumbles due to political or economic challenges.

      "Beijing wants CPEC projects completed because for China, CPEC [as the flagship project of Belt and Road] is mostly about its prestige and rise as a global power."
      So, finally we get the answer as to why China is throwing good money at bad.

      Prestige and Rise as a global power


      • Most dangerous country in the world to be if your Chinese...

        Pakistani militants shift focus to cities in targeting of Chinese | Nikkei | Dec 27 2020

        ZIA UR REHMAN, Contributing writerDecember 27, 2020 13:11 JST

        KARACHI -- Recent attacks on Chinese citizens in Karachi show that Pakistani militant groups opposing China's Belt and Road Initiative have changed their strategy -- focusing on the country's urban centers and targeting Chinese nationals and investments.

        On Tuesday, a Chinese citizen and his interpreter survived a gun assault on a car showroom in the outskirts of Karachi, the country's key port city and economic hub. A week before, another Chinese national survived an attempt to blow up his vehicle outside the restaurant he owns in Karachi's upscale Clifton area.

        The Sindhudesh Revolutionary Army insurgent group claimed credit for both attacks. "China and Pakistan have forcibly been occupying the land under the projects of the China-Pakistan Economic Corridor (CPEC) and we will continue our attacks to target them," the SRA said in a statement.

        The CPEC -- which involves $50 billion worth of infrastructure projects in Pakistan -- is part of the BRI that is aimed at developing land and sea trade routes in Asia and beyond.

        Ethnic militant groups in Balochistan and Sindh provinces that have been fighting security forces for years over what they see as unfair exploitation of the regions' vast mineral wealth have also been attacking projects linked to the CPEC.

        Security experts believe that the groups are now choosing major urban centers, mainly Karachi, to target Chinese nationals and investments in addition to Pakistani state institutions and personnel, their traditional focus.

        In June, four militants belonging to the Baloch Liberation Army attacked the Pakistan Stock Exchange building, located in the heart of Karachi's main corporate district, killing two guards and a policeman and wounding seven others before being shot dead.

        The Shanghai Stock Exchange, Shenzhen Stock Exchange and China Financial Futures Exchange are the cornerstone investors in the bourse and secured management control of it after acquiring a 40% stake in 2017.

        "Militant outfits regularly target Chinese interests and Pakistani security personnel in the country's mountainous and rural areas," said Abdul Basit, a research fellow at the S. Rajaratnam School of International Studies, a Singapore-based security think tank. "But carrying out attacks on them in major urban centers, such as Karachi... they want to grab global attention and publicity."

        The Armed Conflict Location & Event Data Project, a U.S. based nonprofit organization conducting real-time data collection, analysis and crisis mapping, has recorded an increase in organized violence by groups opposing the BRI since the beginning of 2020. The ACLED said that the formation of a trans-province alliance between militants has given new life to their insurgency that had weakened steadily after 2015.

        In July, the SRA made an operational alliance with the Baloch Raji Ajoi Sangar, or BRAS, a consortium of four Baloch militant organizations that was formed in late 2018.

        Experts believe that uniformity in their opposition to the BRI has brought the armed groups together and the alliance has helped them to coordinate around identifying strategic targets and expanding operational areas.

        "The operational alliance between militant groups is likely to deprive counterterrorism forces of a major advantage they had over the militants, i.e., tackling a fragmented insurgency," said Tariq Pervez, former head of the National Counter Terrorism Authority, a governmental counterterrorism body.

        Karachi was for years rife with political, sectarian and ethnic militancy. A crackdown by security forces started in 2013 has brought a lull in violence in recent years, but scattered attacks still occur.

        In the third quarter of 2020, the SRA and BLA have remained active in Karachi and involved in terror acts, including on paramilitary Rangers, said a report by the Center for Research and Security Studies, an Islamabad-based security think tank.

        Security agencies have also intensified their crackdown on the groups. Karachi police on Wednesday claimed to have arrested two SRA militants in the city for alleged involvement in terror activities.

        Although Chinese authorities did not issue any reaction to the recent attacks on their nationals in Karachi, China's diplomatic mission in Islamabad regularly advises its citizens in Pakistan to be on alert after receiving intelligence reports about possible attacks targeting Chinese.

        In July, senior Karachi police officials met a delegation from the Chinese Consulate and companies to discuss steps to ensure better security for Chinese people in the metropolis. That same month, a similar gathering was held in Lahore, another large city, where officials from both countries agreed that the consulate there would "ensure that their nationals extend cooperation to law enforcement agencies in security measures."

        However, law enforcement personnel complain that Chinese nationals do not follow security protocols. "They [Chinese] roam freely and do not adopt security measures in the city's sensitive areas, and because of their carelessness they become targets of attacks of the militant groups." said a Karachi security official.

        "We also fear that militant groups may target Japanese, Korean, Singaporean, Chinese American, etc., unknowingly, because it is hard for Pakistanis to differentiate among the Asian communities," the official, who requested anonymity to speak freely, told Nikkei Asia.


        • The only group that imposes penalties on China for its treatment of Uighurs ? the TTP

          Reunified Pakistani Taliban threatens China's Belt and Road | Nikkei | Sept 28 2020

          ZIA UR REHMAN,
          Contributing writer
          September 8, 2020 15:04 JST

          PESHAWAR, Pakistan -- As peace negotiations between the Afghan Taliban and the government in Kabul continue, Pakistan's leading Taliban group, which operates from Afghanistan, has announced the reunification of various breakaway factions.

          Analysts believe this will cause internal security problems for Pakistan and also raise threats to projects linked to China's Belt and Road Initiative (BRI) in the country's northwest.

          "In Khyber Pakhtunkhwa province's various remote areas, several Chinese development projects, mainly in the field of hydro-electricity generation and infrastructure, are going on," an Islamabad-based security official told the Nikkei Asian Review on condition of anonymity. "The Pakistan Taliban's recent reunification has increased concerns about the safety of Chinese nationals and projects."

          The Jamaat-ul-Ahrar, the Hizb ul-Ahrar, and Hakeemullah Mehsud group were the three major factions in the Tehreek-e-Taliban Pakistan (TTP) until they splintered in 2014 over leadership issues. Last month, it was announced they were all getting back together, and also being joined by a faction of Lashkar-e-Jhangvi, a banned sectarian group that operates in the western province of Balochistan.

          As a strong ally of al-Qaeda, the TTP became an umbrella organization for militant groups after its formation in December 2007 and has been involved in numerous terror attacks.

          The TTP started out in Pakistan's northwestern Khyber Pakhtunkhwa province and in semi-autonomous tribal areas bordering Afghanistan. The terror group later expanded into other parts of the country, but was countered by a massive military operation launched in June 2014. The offensive shattered the TTP's command and control structure in tribal areas and forced the group to take sanctuary over the border in Afghanistan.

          The rapidity of the TTP's reunification has surprised many. Analysts believe the various TTP splinters recognized that they would no longer be viable alone in a changing Afghanistan. In order to meet its peace talk commitment to stop harboring foreign militants, the Afghan Taliban would no longer be able to shelter the TTP.

          "The self-realization of the threats for its survival in the changing political landscape of Afghanistan, and then possible pressures from the Afghan Taliban, could have played a more significant role behind this process of reunification," said Abdul Sayed, a Sweden-based researcher on Jihadi groups in Pakistan and Afghanistan, told Nikkei.

          The TTP reunification has alarmed China, which was already pressing Pakistan to crack down on ethnic separatist groups in Balochistan and Sindh provinces because of projects linked to the China-Pakistan Economic Corridor (CPEC), a prominent BRI component.

          In Khyber Pakhtunkhwa, Chinese companies are working on several energy and infrastructure projects, including the Karakoram Highway Phase II. The Suki Kinari Hydropower Station and the Havelian Dry Port lie along the highway, which ends at the Khunjerab Pass in Gilgit-Baltistan. Over the border, it becomes China National Highway 314 leading to Urumqi, capital of the Xinjiang Uighur Autonomous Region.

          Increased militancy along the highway could jeopardize a key BRI link. Anti-China rhetoric has already increased immensely in TTP and al-Qaeda media. Among Baloch and Sindhi separatist groups, CPEC projects are already propaganda targets -- foreign intrusions that remind some analysts of the British East India Company's efforts in the 1850s.

          "The TTP often issues detailed statements against the China state, condemning the situation faced by Chinese Muslims in their own country," said Sayed. "More importantly, targeting CPEC projects can create severe economic problems for the Pakistani state -- destabilizing it is the ultimate goal of TTP and its allied anti-state Jihadists."

          In 2013 at China's request, Pakistani authorities outlawed three transitional militant groups linked to al-Qaeda -- the East Turkestan Islamic Movement, the Islamic Movement of Uzbekistan, and the Islamic Jihad Union. The Chinese believed they had established sanctuaries in Pakistan's tribal areas with the help of the TTP.

          Although China was initially less of a concern for the TTP than U.S. and Pakistani security forces, analysts believe that some transnational actors operating in Pakistan's tribal areas have encouraged the Pakistani Taliban to target Chinese projects as retaliation for the mistreatment of Muslims in Xinjiang province by Chinese security personnel.

          In a 2014 video message titled "Let's disturb China," Mufti Abu Zar al-Burmi, an influential al-Qaeda ideologue who is a Pakistani national of Rohingya descent, described the pullout of U.S. forces from Afghanistan as "a victory for the Taliban movement in the region." He said China would be the next target, and directed all Jihadi groups, including TTP, to carry out attacks on Chinese embassies and companies, and to kidnap or kill Chinese nationals.

          The TTP has already killed and kidnapped a number of Chinese, mainly in Khyber Pakhtunkhwa and Balochistan provinces. With the TTP reunification, Pakistan security personnel have been beefing up numbers and intelligence to protect Chinese present in the region, according to security officials.

          "The TTP's reunification can pose a threat in some districts of Punjab, Balochistan, and Khyber Pakhtunkhwa as the terror group has networks in these areas," Muhamamd Amir Rana, director of the Pak Institute for Peace Studies (PIPS), an Islamabad-based think tank, told Nikkei.

          In 2019, the TTP and its splinter groups were the main causes of instability, carrying out 97 terrorist attacks, mainly in Khyber Pakhtunkhwa, Punjab and Balochistan that killed 209 people, according to a PIPS report.


          • Though it says Australia, its just the state of Victoria that is affected by this decision.

            Guess which other port got leased out to China for 99 years.

            Yes, there are others besides Hambantota.

            Darwin in the Northern Territory.

            Govt. committee says the federal govt should take it over and pay off China.

            The sum is half a billion and there does not seem to be much movement to that effect from what i can glean from the Aussie press.
            Last edited by Double Edge; 04 May 21,, 20:23.


            • If another country is trying to weaken our sovereignty by signing an agreement with the Australian local govt, the federal govt must protect ourselves -- Scott Morrison
              Funny. There are no territorial issues between Australia & China yet BRI is being perceived as impinging on Aussie sovereignty

              India's fundamental objection to BRI was exactly that in the sense China was building projects in PO J&K or disputed territory

              We're both on the same page as far as BRI is concerned.

              China has loaned out $1.8 tr for BRi and will not be able to recover it due to the economic losses suffered by beneficiary countries from C19.

              This is going to have a knock on effect in China in the short term.

              Clearest take i've heard on the development so far
              Last edited by Double Edge; 04 May 21,, 20:24.