When a suicide bomber killed three Chinese nationals and their Pakistani driver several weeks ago in Karachi, China–Pakistan relations were already being tested by Pakistan’s economic troubles and political instability, as well as the broader U.S.–China rivalry.

The attack — claimed by the Balochistan Liberation Army, a secular, ethnic Baloch separatist organization seeking to secede from Pakistan and eliminate China’s economic and diplomatic footprint in the region — may be an inflection point in the two strategic partners’ relationship.

Pakistan’s new Prime Minister Shahbaz Sharif reacted swiftly, visiting the Chinese embassy in Islamabad hours later to express solidarity. But Beijing was incensed. An editorial published in the state-run Global Times “strongly demand[ed]” better protection for Chinese citizens and entities in Pakistan and warned that those targeting Chinese nationals will be hit hard.

Beijing’s anger is not entirely unprecedented. It reacted similarly last year when terrorists struck a convoy carrying Chinese engineers to a dam construction site in Dasu. Islamabad had to pay US$11.6 million in compensation to the families of Chinese engineers killed or wounded. Previous incidents also include a complex attack on the Chinese consulate in Karachi and a suicide bombing targeting Chinese engineers en route to the Saindak mine in Balochistan.

Attacks on Chinese nationals and facilities by ethnic separatist and jihadist terrorist groups have increased since the launch of the Belt and Road-linked China–Pakistan Economic Corridor (CPEC) in 2015. With the Baloch separatists’ primary adversary the Pakistani state, their closest partner is an effective pressure point to target. Underpinning these attacks is the belief that Chinese investment in extractive and port projects in Balochistan is not only exploitative but could also bolster the Pakistani state’s control over the province.

The persistence of these attacks may suggest to some that Beijing’s economic and strategic expansion overseas can be deterred by violence. And Beijing’s perceived inability to secure its nationals abroad is likely an affront to domestic nationalist constituencies. As a result, China appears to be pressing Pakistan to take greater kinetic action against the perpetrators of the Karachi attack and intensify the already-considerable security net for Chinese nationals.

Islamabad has directed tremendous resources and manpower to protect Chinese nationals in the country, even raising a military force of 15,000 personnel to secure CPEC projects. But terrorist groups have exploited gaps in security arrangements for Chinese nationals in Pakistan, targeting those who enjoy less restrictive security outside the CPEC framework. Islamabad’s heavy-handed response to the Balochistan insurgency over the past two decades has only served to broaden its reach into the educated Baloch middle class. What Balochistan ultimately needs is a political solution.

But Chinese pressure could compound the bad instincts of the Pakistani security services to push for an exclusively military response. And deployment of additional security ultimately raises the effective cost of development projects in the country, borne by the Pakistani taxpayer.

Security threats are not the only challenge to China–Pakistan relations. The new coalition government in Islamabad must also contend with Beijing’s growing aversion to lend to high-risk countries like Pakistan. And though Beijing has signaled a willingness to roll over short-term loans to support the rupee, Chinese policy banks are unwilling to sink deeper into the Pakistani morass.

Public attempts by the Pakistani army chief, General Qamar Javed Bajwa, to balance between China and the United States may also add to Beijing’s reluctance to fund large infrastructure projects in Pakistan. In March, Bajwa said that Pakistan turned to Beijing as an arms supplier only because it has been rebuffed by the West, insinuating that it was a partner of last resort. This could have been seen as a slight to China, especially given that growing bilateral military cooperation has proven to be vital to Pakistan’s national security.

Puzzlingly, the Sharif government is behaving as if these new constraints on Chinese financing do not exist, with senior Pakistani government officials declaring their intent to get big-ticket projects — like the US$9.2 billion project to revamp Pakistan’s main railway line — back on track.

Though Sharif is considered an ‘old friend’ of China and his development-centric pragmatism makes him favorable with Beijing, China is unlikely to turn the taps on full blast — given Pakistan’s mounting debt, the army leadership’s attempts at geopolitical rebalancing and overall political uncertainty.

A more prudent approach for Islamabad would be to focus on lower-cost projects that can yield a more immediate impact where it matters most for Pakistan, including improving agricultural productivity and boosting exports, which are vital to Pakistan getting on the path of sustainable, rapid economic growth. Under Khan’s government, exports grew to a record high and with the second phase of the bilateral free trade agreement coming to effect in 2021, exports to China have also grown considerably.

Rather than taking on billions in additional debt, the Sharif government should hone its near-term efforts on leveraging the bilateral FTA and producing export-quality goods catering to the massive Chinese consumer market. It may have no other choice — should insecurity persist, the coming years could be marked by a lighter Chinese footprint in Pakistan.

This article was originally published on the East Asia Forum. It is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported Licence.

Posted by Arif Rafiq

Arif Rafiq is the editor of CPEC Wire. He is president of Vizier Consulting, LLC, a political risk advisory company, and a non-resident fellow at the Middle East Institute. Rafiq authored the first comprehensive public study on CPEC, "The China-Pakistan Economic Corridor: Barriers and Impact," published by the U.S. Institute of Peace. He can be reached via email at contactarifrafiq@gmail.com.

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