China Exits $60B CPEC Project, Pakistan Seeks ADB Funding

 

China has walked away from the most ambitious China-Pakistan Economic Corridor (CPEC) project, the Main Line-1 (ML-1) railway upgrade in one of the most significant geopolitical realignments. The move comes after the recent visit of the Pakistan Prime Minister Shehbaz Sharif to Beijing where he was unable to get fresh funding or significant projects under CPEC Phase-2.

Rather, he brought home Memoranda of Understanding (MoUs) valued at $8.5 billion, comprising predominantly of agriculture, electric vehicles, solar energy, health and steel investments, but no big-ticket investments.

Key Highlights

• China Withdraws from CPEC ML-1 Project, Strains Geopolitical Ties with Pakistan
• Pakistan PM Sharif Returns from Beijing with $8.5B, No Major CPEC Deals
• CPEC Phase-2 Struggles: Sharif’s Bold CPEC 2.0 Declaration Sparks Tensions

Meanwhile, warming ties between Islamabad and Washington and India’s increasingly close ties with China and Russia since the Shanghai Cooperation Organisation (SCO) summit in Tianjin have provided a complicated geopolitical context to the detachment of Beijing.

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The ChinaPakistan Economic Corridor (CPEC) is a large-scale infrastructure initiative that seeks to link China, which is located in the northwest of the country, to the Arabian Sea port of Gwadar, Pakistan, via a road and rail network, oil pipelines, and energy projects. CPEC is about 3,000 km long and constitutes a key element of the Belt and Road Initiative (BRI).

It is believed that the corridor will promote connectivity in the region, connecting South Asia, Central Asia, Middle East, and Africa. It is aiming at increasing trade between China and Pakistan, ease imports of Chinese energy, and promote economic development with investment of over 60 billion.

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In his six-day visit, Sharif was quoted by CNN-News-18 as telling Chinese investors that they should have no fears of their security in Pakistan, but he would provide extra protection to Chinese.

He even vowed to eliminate bureaucratic bottlenecks following complaints by investors that it was taking too long to open a business. But when he alone declared the formal launching of CPEC 2.0 without Chinese approval, it only served to emphasize the mismatch.