The China-Pakistan Economic Corridor and Imbalanced State Relations

Announced in 2013, China’s Belt and Road Initiative (BRI) has gained the world’s attention and garnered the tentative participation of around 150 countries. Inspired in part by history, the “Belt” component retraces the route of the Silk Road from the western province of Xinjiang to Central Asia, the Middle East, and beyond; passing through the South China Sea and Indian Ocean, the maritime “Road” provides China with direct access to Southeast Asian and African markets. Both the Belt and the Road seek to deepen China’s connectivity with its neighbors and trade partners, while simultaneously supporting surrounding regions’ infrastructure development and economic growth. 

The China-Pakistan Economic Corridor (CPEC), is the only of six total economic corridors in the BRI that has seen significant on-the-ground project activity. A network of oil and gas pipelines, highways, and railways, it spans 3,218 kilometers, starting in Kashgar of China’s Xinjiang province and ending at Pakistan’s Gwadar Port. CPEC possesses critical geopolitical importance for China: when fully completed, the corridor will connect the BRI’s land and sea routes. CPEC can provide an alternative and secure pathway for China to import oil and gas to fulfill its growing energy needs, conveniently bypassing the conflict-prone waters of the South China Sea. Easing the reliance on a single trade route would yield countless economic benefits for China, particularly in the case where a country were to apply a maritime blockade. 

For Pakistan, it will be a source of much-needed infrastructure and can solve the country’s energy crisis. Through this project, China offers the financially unstable Pakistan a line of credit—arguably more attractive to the Pakistan government than a bailout from the IMF, which would be granted only after agreement to certain conditions. While CPEC in theory appears mutually beneficial for China and Pakistan, the project is not without varying degrees of regional opposition.

China and Pakistan: “All-Weather Friends”

In 2015, Chinese Foreign Minister Wang Yi summarized the China-Pakistan relationship—calling Pakistan an irreplaceable, all-weather friend. The two countries have kept friendly relations since the 1950s, assisted by their mutual incentive to counter India. In 1949, India’s currency devaluation negatively affected Pakistan’s economy and impelled Pakistan to begin trading with China in the early 1950s. Pakistan received considerable military, economic, and technical aid from the PRC; in return, it offered diplomatic and geopolitical benefits. Other milestones in the Pak-China relationship include the 2003 signing of a bilateral trade declaration by leaders Hu Jintao and Pervez Musharraf; and the 2006 signing of the Free Trade Agreement between the two countries. As a result, Pak-China trade has grown from $1 billion in 1998 to over $15 billion as of 2015.

Chairman Xi’s launching of the CPEC project in 2013 ushered in a new era for the two countries’ relations. The continued support of CPEC through a peaceful transition of power between Pakistan’s political parties in the 2013 elections provided a positive indication that the Pak-China partnership could last between administrations. Pakistani regional parties overall view the initiative as a “game changer” that could propel the country to the status of a regional economic hub. As China invests over $50 billion in the areas of infrastructure and energy, the domestic feedback was largely favorable at the onset, though some have voiced concerns about China contriving the partnership as a debt trap for Pakistan. These perceptions are validated by the project loans that likely will require repayment in the future. Regarding these concerns, Pakistan’s party lines did not define the differing opinions on CPEC as much as its provincial lines.


The greatest opposition to the project originates in the province that houses the most critical component of the CPEC route: Gwadar Port. Balochistan is the largest of Pakistan’s four provinces, in terms of land area, but also the least populated. The province is inhabited primarily by Balochs, who make up 52% of the ethnic demographic. Years of economic marginalization instigated by unfair government policies, paired with Balochs’ underrepresentation in politics, have caused autonomy or independence to become the goal for many Balochs.

Skepticism towards CPEC falls into two main categories: (1) the fear of overwhelming numbers of Chinese migrants and workers taking over Balochistan, and (2) the Pakistani’s sudden decision to change the course of CPEC from the Western Alignment to the Eastern Alignment.

Threat to the Baloch Ethnic Establishment

The Balochs’ concern stems from the Chinese-dominated nature of the project construction and management. At the onset, Balochs were informed that CPEC would create many new jobs, simultaneously lowering the rampant problem of unemployed youth and revitalizing the region’s economy. In theory, the numbers added up: the expansion and redevelopment of Gwadar Port, infrastructure projects, and pipeline construction create greater need for labor-intensive industries. 

Disapproval of the project increased when Balochistan saw inflows of Chinese migrant workers and barely tangible job creation for locals. The Karachi Chamber of Commerce and Industry’s statistics from 2015 and 2016 validate Balochs’ concerns: More than 71,000 Chinese nationals travelled to Pakistan in 2016, a 41 per cent increase from the previous year. This was followed by a contested projection from the Federation of Pakistan Chambers of Commerce and Industry, stating that the Chinese population in Balochistan will exceed that of the Balochs by 2048. While a clear date of CPEC’s completion has not yet been published, the same federation estimated that upon completion, at least 600,000 Chinese will enter Pakistan each year.

The Chinese Diplomatic Mission in Pakistan as well as the Pakistan government attempted to dispel these projections as inflated rumors, though the sheer possibility for a significant demographic change in Balochistan aroused concerns. The danger of a Chinese influx relates to the province’s thinly spread population, where foreigners can potentially transform the region’s cultural, religious, and linguistic identity, aside from simply absorbing all new job openings. 

Amid fears of becoming further disadvantaged as a provincial minority, Baloch dissent and extremist behavior–targeting project workers, gas pipelines, and railway tracks–have threatened the security of CPEC megaprojects. This raises the question of whether the China-Pakistan Economic Corridor will successfully improve stability and greater regional integration: if opposition to a still-nascent project has taken forms of terrorism and threats of kidnapping, this most likely will only increase in the future when Pakistan begins to reap the benefits from Gwadar Port and gas and oil pipelines, because economic growth clearly does not occur evenly. CPEC may be the culprit in exacerbating the already deplorable levels of provincial inequality.

Eastern and Western Alignment: Why the controversy?

The original blueprint of the CPEC project planned for the corridor to run through districts in smaller provinces, including Zhob, Pishin, and Quetta of Balochistan. The All Parties Conference approved of this route, named the Western Alignment, in 2015; however, its construction has since been deferred in favor of the Eastern Alignment. The Pakistani government’s sudden decision to proceed with the latter plan triggered a strong emotional response from smaller provinces, because the new route no longer passed through their regions. From the minority leaders’ perspective, politics influenced the government’s actions, and the greater scheme involved transforming the China-Pakistan Economic Corridor into a China-Punjab one, excluding the provinces that already experience marginalization. Contrasting with Balochistan, Punjab has the highest level of industrialization, the strongest economy, and the best Human Development Index ranking in Pakistan. 

The Pakistan government denied regional favoritism and raised two threads of logic in defense of the Eastern Alignment: first, the eastern route passes through areas less prone to terrorist attacks and violence. China echoed this reasoning, pointing to the higher economic risks of constructing projects along the Western Alignment. High-stakes investment from Chinese companies forced the Pakistani government to reconsider, as its dependence on Chinese monetary sponsorship outweighed the possibility of agitating minority groups.

Related to this first point on security, the need for Chinese assistance indicates that China was largely the driver of this change in policy. The details in the construction contracts are important: Chinese companies already pledged to undertake Eastern Alignment construction, but under the condition of “build-operate-transfer” (BOT). BOT is a method for financing large-scale infrastructure projects where a government grants a private company control over project building and operation for a certain duration, before reclaiming the project for public ownership. For instance, most recently, the Pakistani prime minister has rolled out tax-exemptions to promote the financing and operation of Gwadar Port, controlled by the state-owned Chinese Overseas Ports Holding Company.

The Pakistani government must simultaneously assuage the provincial tensions surrounding CPEC’s rerouting and navigate the changing demographics caused by an influx of Chinese workers. These obstacles–combined with Pakistan’s inability to repay Chinese loans–call into question the validity of both governments’ great enthusiasm towards CPEC. Whether or not the project’s future can be safeguarded depends highly on domestic politics and finances. In this new era of the Belt and Road Initiative, the China-Pak relationship grows increasingly imbalanced and heads towards that of creditor and debtor. 

(Image: Prime Minister Imran Khan Held A Meeting With President Xi Jinping in Beijing, 2018; Source: China Pakistan Economic Corridor Photo Gallery)

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Rachel Lietzow

Rachel is a Master of Chinese Economic and Political Affairs student at UCSD School of Global Policy and Strategy. Her research interests include Hong Kong-China relations, the intersection of cultural and political identity, and challenges of Chinese sustainable growth.

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