Imran Khan's Silk Road journey: Why Pakistan's economic dependence on China is set to grow
As economic pressure mounts for Pakistan, it is becoming clear that the new government of Imran Khan will have to borrow $12 billion from the IMF to ease pressure on dwindling foreign reserves and repay overseas loans.
Pakistan is reeling from an economic crisis and the IMF is its saviour of last resort. But there’s a twist in this tale as the US Secretary of State, Mike Pompeo, has announced that Washington would block an IMF bailout package for Pakistan if it is used to repay Chinese loans borrowed under the multi-billion-dollar China Pakistan Economic Corridor. Pompeo underlined that American taxpayer dollars were part of IMF funding and, therefore, the US government would not allow a bailout package for Pakistan that could be used to repay Chinese creditors or the government of China.
Growing reliance
In his victory speech, Imran Khan had declared: “Our neighbour is China, we will further strengthen our relations with it”, arguing that “the CPEC project which China started in Pakistan will give us chance to bring in investment to Pakistan.” Beijing, for its part, had also welcomed the new government, hoping for political stability and economic viability.
Soon after the elections, China had lent $2 billion loan to Pakistan to keep its doddering economy afloat. All this has reinforced the growing reliance of Pakistan on China as a source of financial, diplomatic and military support at a time when Pakistan’s ties with the US have entered into their worst phase ever. Though in an ideal world Pakistan would like to balance the US and China, but its dependence on China is only likely to grow in the future and Imran Khan’s government will have little ability to change that.
There is something not quite right about an inter-state bilateral relationship when words such as “higher than the mountains, deeper than the oceans, stronger than steel, dearer than eyesight and sweeter than honey” are used repeatedly to describe it. No other relationship depends so much on flowery language to underscore its significance as the China-Pakistan does. Imran Khan’s predecessor Nawaz Sharif had also made his maiden trip as Pakistan’s Prime Minister to China where at the Great Hall of the People in Beijing, Sharif had said his welcome “reminds me of the saying, our friendship is higher than the Himalayas and deeper than the deepest sea in the world, and sweeter than honey.”
To show China how seriously it is taken in Islamabad, Sharif had introduced a ‘China cell’ in his office to speed up development projects in the country. This cell was to supervise all development projects to be executed with the cooperation of Chinese companies in Pakistan. This was an attempt to address Chinese concerns about the shoddy state of their investment in Pakistan because of the lackadaisical attitude of the Pakistani government. Meanwhile, Beijing too needs the political and military support of the Pakistani government to counter the cross-border movement of the Taliban forces in the border Xinjiang province.
Pakistan enjoys a multifaceted and deep-rooted relationship with China underpinned by mutual trust and confidence. In fact, Pakistan enabled China to cultivate ties with the West, particularly the US, in the early 1970s, as Pakistan was the conduit for then-US National Security Advisor Henry Kissinger’s landmark secret visit to China in 1971 and was instrumental in bringing China closer to the larger Muslim world.
Over the years China has emerged as Pakistan’s largest defence supplier. The Pakistani nuclear weapons programme is essentially an extension of the Chinese one. This is perhaps the only case where a nuclear weapon state has given weapons-grade fissile material — as well as a bomb design — to a non-nuclear weapon state.
Chinese policy
China was perhaps the only major power that openly voiced support for Pakistan after Osama bin Laden’s assassination in May by publicly affirming that “Pakistan has made huge sacrifices and an important contribution to the international fight against terrorism, that its independence, sovereignty, and territorial integrity must be respected, and that the international community should understand and support Pakistan’s efforts to maintain domestic stability and to realise economic and social development.” It is an openly stated Chinese policy that it would like to be an “all-weather strategic partner” of Pakistan.
At a time when Pakistan is under intense scrutiny for its role in fighting extremism and terrorism, the world has been watching with interest to see how China decides to deal with Pakistan. While pressure has been piling up from the West, Beijing has continued to affirm that “Pakistan has made huge sacrifices and an important contribution to the international fight against terrorism, that its independence, sovereignty, and territorial integrity must be respected, and that the international community should understand and support Pakistan’s efforts to maintain domestic stability and to realise economic and social development.”
Asymmetrical ties
The Sino-Pakistan relationship remains fundamentally asymmetrical: Pakistan wants more out of its ties with China than China is willing to offer. Today, when Pakistan’s domestic problems are gargantuan, China would be cautious in involving itself even more. Moreover, the closer China gets to Pakistan, the faster India would move into the American orbit. Amid worries about the potentially destabilising influence of Pakistani militants on its Muslim minority in Xinjiang, China has taken a harder line against Pakistan. The flow of arms and terrorists from across the border in Pakistan remains a major headache for Chinese authorities and Pakistan’s ability to control the flow of extremists to China at a time of growing domestic turmoil in Pakistan would remain a major variable.
As the Western forces move out of Afghanistan, Beijing is worried about regional stability and is hoping against hope that close ties with Pakistan will make it safer. The two states will continue to view each other as important partners, especially as India’s rise continues to aggravate Islamabad and cause anxiety in Beijing.
(Courtesy of Mail Today)