China-Pakistan Economic Corridor (CPEC)

• IAS NEXT, Lucknow
• 28, Feb 2022

Reference News:-

Amid growing economic woes and international isolation forcing over-reliance on China, Pakistani officials have said that they are ready to scrap the China-Pakistan Economic Corridor (CPEC) if the US could offer a similar deal.

What’s the issue?

China has been using the financial tool of debt to gain influence across the world and grab considerable power in India’s neighbouring countries, thereby increasing the amount of political and security threats the nation is exposed to. 

How does China’s debt trap diplomacy work?

• In a push to gain rapid political and economic ascendency across the globe, China dispenses billions of dollars in the form of concessional loans to developing countries, mostly for their large-scale infrastructure projects.
• These developing nations, which are primarily low- or middle-income countries, are unable to keep up with the repayments, and Beijing then gets a chance to demand concessions or advantages in exchange for debt relief.

About CPEC:

Launched in 2015, the CPEC is the flagship project of the multi-billion-dollar Belt and Road Initiative (BRI), a pet project of Chinese President Xi Jinping, aimed at enhancing Beijing’s influence around the world through China-funded infrastructure projects.

• The 3,000 km-long China–Pakistan Economic Corridor (CPEC) consists of highways, railways, and pipelines.
• CPEC eventually aims at linking the city of Gwadar in South Western Pakistan to China’s North Western region Xinjiang through a vast network of highways and railways.
• The proposed project will be financed by heavily-subsidised loans, that will be disbursed to the Government of Pakistan by Chinese banks.

Opposition by the locals:

CPEC is getting increasingly unmanageable with local Pakistanis unhappy with the Chinese soldiers and civilians working on the project. Therefore, Pakistan has been forced to deploy more soldiers in the area.

But, why is India concerned?

It passes through PoK.

• CPEC rests on a Chinese plan to secure and shorten its supply lines through Gwadar with an enhanced presence in the Indian Ocean. Hence, it is widely believed that upon CPEC’s fruition, an extensive Chinese presence will undermine India’s influence in the Indian Ocean.
• It is also being contended that if CPEC were to successfully transform the Pakistan economy that could be a “red rag” for India which will remain at the receiving end of a wealthier and stronger Pakistan.
• Besides, India shares a great deal of trust deficit with China and Pakistan and has a history of conflict with both. As a result, even though suggestions to re-approach the project pragmatically have been made, no advocate has overruled the principle strands of contention that continue to mar India’s equations with China and Pakistan.