In certain circles within Pakistan, the CPEC (China Pakistan Economic Corridor) is thought to be another East India Company (EIC) and an attempt by China to colonize Pakistan citing threats of a debt trap, surveillance, and Chinese domination of the local market. This insecurity is rooted in the country’s colonial past and history of subjugation by foreign powers.

The China Pakistan Economic Corridor is the flagship project of the Belt and Road Initiative launched in May 2013. The total investments of CPEC are worth $62 billion. Gwadar Sea Port is considered the crown jewel of CPEC and the main focus of this initiative. Projects funded under CPEC are various but the main ones are energy production, mass transit, and the Gwadar Sea Port.

Critics of CPEC fail to realize the difference between the political structure of pre-colonial India and modern-day Pakistan and between the economic policies of imperial Britain and modern China along with other historical differences. In the Mughal era, India was one of the leading economies in the world. The combined share of India in the world economy was 27%. The Mughal dynasty wasn’t looking for foreign investment to help rebuild the economy. Rather, it was the other way around. Europeans saw India as a “golden sparrow.” Pre-colonial India lacked independent institutions and a political structure, therefore, necessary checks and balances were not available, as they are in Pakistan. For example, the Pakistani supreme court forbade a Chinese firm from taking part in the bidding process of the Dasu Dam project. The East India Company did not have to be concerned about such checks and balances.

There is a lot of negativity in Pakistan associated with the loans provided under the CPEC. But in reality, the loans provided under these arrangements are a game-changer and a relief for the developing economy. China lends money to Pakistan at one of the lowest interest rates in the world and due to these low-interest loans, Pakistan’s GDP saw an increase of 2.1% in the fiscal year 2017-2018. Around 75,000 people have been employed in CPEC projects and up to 1.2 million can be employed through these loans for projects by 2030. Loans are below the 2% interest mark and some loans are interest-free such as $143 million in interest-free loans for the Gwadar East Bay Expressway project and free assistance for some livelihood projects in Pakistan. Several early and late harvest projects are to be constructed via these loans. Furthermore, many projects are being constructed through foreign direct investment (FDI).

Pakistan had been dealing with a huge energy crisis. To a large extent, CPEC has helped the country deal with its energy shortfalls. Energy production is one of the four major areas of CPEC. In the early harvest programs projects totaling 10,400 megawatts have been completed, greatly reducing energy shortages in Pakistan. In total, Chinese firms would bring up to $37 billion in foreign direct investment for independent power production (IPP). This will include solar, wind, hydro, and coal power projects. Certain concerns were raised regarding the overpriced power purchase from rental power projects for a fixed time. But, renegotiations are already underway.

Roads, ports, and highways are another important element of CPEC. Karakoram highway had been identified for the first phase and the Khunjerab-Havelian Islamabad section of the road is an early harvest project completed in March 2020. Moreover, economic and industrial free zones would be constructed alongside the routes, for which a fresh economic zone working group would be created soon after the upcoming visit to link all the four provinces, AJK, the former FATA (now merged with KPK), and Gilgit-Baltistan to expand benefits of the initiative across the country.

CPEC will be instrumental in creating a robust and stable economy in Pakistan. It will also help tackle the psychological barriers in way of the flow of FDI from other sources. It will transform Pakistan into a regional economic hub and further strengthen its relations with China. Pakistan’s macroeconomic conditions have been improving and its economy has maintained a momentum of rapid growth due to the much-needed loans provided under CPEC. Its effect on the country’s economy is a fresh relief. Pakistan’s annual foreign direct investment grew from $650 million to $2.2 billion and per capita annual income rose from $1,334 to $1,641 in 2019.

Apart from economic benefits, CPEC presents significant geo-strategic opportunities to Pakistan. It brings an opportunity for Pakistan to normalize its ties with Afghanistan and Iran and strengthen prospects of peace in the region. It will make China a real stakeholder in Pakistan’s future. Chinese patronage will help Pakistan get rid of the labels like epicentre of terrorism, most dangerous country, and a failing state. China’s economic and military assistance will help Pakistan in narrowing its widening gap in economic-military-nuclear fields with India and in bettering its defense potential.

CPEC is much more of an opportunity and a game-changer rather than a threat to Pakistan. The existence of another EIC in this day and age is a farfetched idea. But this does not mean that transparency, accountability, and effectiveness of the project should not be questioned, and all details should be made available.

Mohammad Ali Zafar is a columnist based in Islamabad, Pakistan. He is a student of International Relations at National Defence University. He consistently writes news articles. His work primarily focuses on matters pertaining to the Middle East, Pakistan, and CPEC. In addition, the author has a keen eye for Arctic affairs.