The China-Pakistan Economic Corridor (CPEC) is among the more advanced Belt and Road Initiative (BRI) projects, with $19 billion in projects initiated or completed as of December 2018. Given the close strategic ties between Beijing and Islamabad, and the popularity of China among Pakistanis, CPEC serves as a valuable BRI case study, providing insights into how the program has operated in a country with limited initial political barriers to Chinese aid and investment.
Entering its fifth year, CPEC demonstrates the lure of easy financing from Beijing for developing economies and the perils of poor planning by recipient countries. In the short-term, CPEC has exacerbated Pakistan’s macroeconomic imbalances, contributing to a surge in the current account deficit and helping create another boom-bust cycle. Objections over a lack of equitable geographical distribution of CPEC’s projects in its early stage resulted in additions from smaller provinces, bloating the portfolio and weakening its coherence and economic viability. As it stands, CPEC is a series of energy and infrastructure projects without an anchoring, structured economic plan. To continue successfully, it will have to be retrofitted with one—a difficult task in a phase of austerity and reform.
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