This is a review of CPEC and CPEC-related news and analysis for the week of April 22-29, 2018.
Note: On Friday, Finance Minister Miftah Ismail presented a PKR 5.9 trillion (USD 51 billion/RMB 320 billion) federal budget before the National Assembly for the 2018-19 fiscal year. The Public Sector Development Program (PSDP) — the main instrument of channeling federal government resources toward development programs — has been cut by 20 percent in budgeted terms, from PKR 1.001 trillion (USD 8.67 billion/RMB 54.91 billion) in FY 2017-18 to PKR 800 billion (USD 3.93 billion/RMB 43.89 billion) in FY 2018-19, though it is an increase of PKR 50 billion according to the previous year’s revised figures.
The government of Pakistan forecasts real GDP growth to rise from 5.8 percent in the present fiscal year to 6.2 percent in FY 2018-19. In contrast, the major development banks forecast growth in Pakistan to slow next year. Here are their respective FY 2018-19 GDP growth estimates for Pakistan: ADB (5.1 percent), IMF (4.7 percent), and World Bank (5.0 percent).
CPEC and the Budget:
- Total CPEC spending in the proposed FY 2018-19 budget is PKR 198 billion (USD 1.71 billion/RMB 10.85 billion), according to Pakistan’s The News. Total Chinese project financing, according to Pakistan’s Express Tribune, is expected to decline (in dollar terms) to around $906 million, representing over a 50 percent drop from FY 2017-18. Reasons for this include: several first-stage CPEC projects have been completed or are near-completion, while several major projects remain stuck in the feasibility stage or have yet to attain financial closure. For example, only $35 million in funding has been proposed for the upgradation of Pakistan’s main railway line (ML-1), a project that could cost as much as $8.2 billion. China and Pakistan are currently at odds over the project’s cost.
- A total of 31 development projects for Gwadar are part of the proposed PSDP, with an estimated cost of PKR 137 billion (USD 1.19 billion/RMB 7.52 billion). These include allocations for the Eastbay Expressway, a “smart” landfill and sanitiation system, and a water treatment plant.
Matiari-Lahore: CPEC’s transmission line project faces three-year delay
Shahbaz Rana, The Express Tribune
- Gwadar Holds First Science Festival: The event was inaugurated by senior povincial officials and was attended by 3,500 students from over 28 government and private schools.
Regional and Strategic
- Xi-Modi Summit: Ahead of the Shanghai Cooperation Organization meeting this June, Chinese President Xi Jinping and Indian Prime Minister Narendra Modi held an “informal summit” in Wuhan, China last week to attempt a “reset” in relations. The two countries agreed to pursue joint development projects in Afghanistan.
Former Afghan President Hamid Karzai hailed the announcement:
I welcome the China-India joint venture for economic projects in Afghanistan. Such regional cooperation would surely help overcome the existing challenges in Afghanistan and the region. Regional and major powers collaboration for peace in Afghanistan and the region is the best…
— Hamid Karzai (@KarzaiH) April 29, 2018
- Beijing Counters Claims About CPEC: China’s ambassador to Pakistan, Yao Jing, said in an interview with Voice of America that neither CPEC nor BRI involve a military or strategic design; each is “purely a commmercial development project.”
- China Steps Up Security Role in Afghanistan and Central Asia: Beijing will hold a series of joint military exercises with Afghanistan, Pakistan, and Tajikistan later this year. This month, Afghanistan’s National Security Adviser Haneef Atmar visited Beijing and asked it for help in establishing a mountain brigade. The two sides also discussed two stalled Chinese investments in Afghanistan: the Amu Darya basin oil extraction project and the Mes Aynak Copper mine.
Rahul asks Modi to raise Doklam, CPEC with China
Indo-Asian News Service
The Belt and Road and the Rest
- Financial Times Editorial: Beijing must better manage BRI debt and act as a “responsible creditor,” argue the FT editors.
- INSTC Testing: This month,Azerbaijan, India, Iran, and Russia will begin testing the International North-South Transport Corridor, a Belt and Road competitor, this month ahead of a 30-day sports car rally that will be held on the route.
Updates on the China-Pakistan Economic Corridor and Belt and Road Initiative.