The four-times-a-week propeller plane from Karachi whips up a cloud of dust as it lands on an arid airstrip. Passengers cross the tarmac in the scorching sun and enter an arrivals terminal not much larger than a tractor-trailer rig. Outside, soldiers carrying AK-47s are waiting.
This is Gwadar, a remote scratch of land on Pakistan’s southwest coast. Its port is the last stop on a planned US$62 billion corridor connecting China’s landlocked westernmost province to the Arabian Sea, the crown jewel of Chinese President Xi Jinping’s (習近平) Belt and Road Initiative.
Plans called for a seaport, roads, railways, pipelines, dozens of factories and the largest airport in Pakistan, but almost seven years after the China-Pakistan Economic Corridor (CPEC) was established, there is little evidence of that vision being realized.
Illustration: Tania Chou
The site of the new airport, which was supposed to have been completed with Chinese funding more than three years ago, is a fenced-off area of scrub and dun-colored sand. Specks of mica in the dirt are the only things that glitter.
The factories have yet to materialize on a stretch of beach along the bay south of the airport and traffic at Gwadar’s tiny, three-berth port is sparse. A Pakistan navy frigate is the only ship docked there during a recent visit, and there is no sign of the sole scheduled weekly cargo run from Karachi.
Less than one-third of announced CPEC projects have been completed, totaling about US$19 billion, government statements showed.
Pakistan bears much of the blame. It has repeatedly missed construction targets, as it ran out of money. Last year, it received a US$6 billion bailout from the IMF, the country’s 13th since the late 1980s. Two successive prime ministers have been jailed on corruption charges.
The Baloch Liberation Army’s desire for a separate homeland in Balochistan Province, where Gwadar is located, has made life there uneasy. In May, militants stormed the city’s only luxury hotel, shooting up the white-marbled lobby and killing five people.
However, setbacks in Gwadar point to larger problems in the Belt and Road Initiative. China is scaling back its ambitions, not just in Pakistan, but around the world. Its economic growth has slowed to the lowest rate in three decades, inflation is rising and the country has been feeling the effects of trade tensions with the US.
The picture is getting even darker as the COVID-19 outbreak threatens to cause more delays and cutbacks.
“The biggest constraint for China now is its own economy,” Washington-based Center for Strategic and International Studies senior fellow Jonathan Hillman said.
In a number of countries, projects have been canceled, downsized or scrutinized. Malaysia renegotiated the terms of a rail link being built by China and scrapped US$3 billion of planned pipelines.
In Kenya, a court halted construction last year on a US$2 billion power plant financed by China. In Sri Lanka, new leaders have said that they want to regain control of a port in Hambantota that was leased to a Chinese company for 99 years when the previous government could not pay back a loan.
That takeover sparked concern in many Belt and Road countries that China’s largesse comes with the risk of ceding critical infrastructure. It has increased wariness about the price of indebtedness to China, which the Washington-based Center for Global Development said has put at least eight nations, including Pakistan, at high risk of debt distress.
All that could result in shaving hundreds of billions of dollars off an estimated US$1 trillion in planned Belt and Road spending, a report released in September last year by law firm Baker McKenzie said.
While the value of signed projects increased last year, data from the Chinese Ministry of Commerce show that actual spending stalled at US$75 billion last year after falling 14 percent the previous year.
Total spending from the beginning of 2014, shortly after Chinese President Xi Jinping (習近平) announced the initiative, through November last year has been US$337 billion, government figures showed, far short of China’s ambitious goals.
Pakistan might be a harbinger of bigger problems, said Hillman, who directs Reconnecting Asia, a project that tracks Belt and Road progress.
“That is generally where the rest of the Belt and Road seems to be going,” he said. “It’s not dead in the water, but I’m skeptical whether China is going to be able to achieve what it set out to do.”
Gwadar is shaped like a barbell dangling from Pakistan’s coastline. A strip of sandbar and rocks less than 1km wide at its narrowest connects to a rocky outcrop where the luxury Zaver Pearl-Continental Hotel sits like fortress.
The city of 140,000 is closer to the Iranian border than to Karachi, a 10-hour drive, in an area so remote that it was part of the Sultanate of Oman until 1958.
Just getting around is a challenge. Foreign visitors must be accompanied by an entourage of 10 Pakistani soldiers in flatbed trucks. At the deep-water port on the eastern side of the barbell, there is little sign of commerce on a hot October day.
The only cargo ship that calls in Gwadar, operated by China’s Cosco Shipping Holdings Co, delivers construction materials and sometimes departs with seafood. Occasionally, it does not arrive at all.
A manager who answers Cosco’s telephone in Karachi, where the weekly run originates, said that the line is operational, but that it is up to the captain whether he wants to stop in Gwadar or go directly to Oman.
The captain recently had a cold and did not want to stop, the manager said.
Yet, Gwadar Port Authority Chairman Naseer Khan Kashani maintains that all is well.
Cosco was frustrated by problems with a Web-based customs system, but it has been sorted out, he said, sitting in his office at the port.
He declined to give figures for cargo volume.
“Everything is going to be fine,” Kashani said. “The volume of trade is going to increase tremendously.”
That view is echoed by Zhang Baozhong (張保中), chairman of China Overseas Ports Holding Co, which operates Gwadar’s port and free-trade zone.
He dismissed the apparent inactivity with a wave of his hand, comparing it to four years earlier when he first arrived.
Then, there was only one flight a week to Gwadar, with a handful of people on it, he said.
“My impression was that this place was completely neglected by the whole world,” Zhang said. “I felt this was a mission impossible.”
Now, there is progress — US$250 million in port renovations, including new cranes for unloading cargo, a business center, a desalination plant and sewage disposal — he said.
“This port is now becoming a node in international shipping,” Zhang said. “Of course, the quantity is not big enough, but it takes time. By 2030, we believe Gwadar will be a new economic hub of Pakistan and will be the highest GDP contributor to Pakistan’s economy.”
A free-trade zone was established in Gwadar in 2015, and officials said that nine or 10 companies, including a Chinese steelmaker and a Pakistani producer of edible oils, have signed up.
However, there are no signs of any factories operating.
An additional 30 are targeted for the free zone’s “Phase II,” closer to the site of the new airport, into which US$400 million has been invested so far, officials said.
Twice that number of companies applied, including firms from European countries, Zhang said.
“It’s going to be established in the near future,” Kashani said. “They talk about the CPEC slowing down, but nothing is slowing down.”
The zones still need critical infrastructure, including water and power, the CPEC’s Web site said.
Construction began in November last year on a 300-megawatt, US$542 million plant, which would run on imported coal and is expected to reduce the frequency of power cuts.
An acute scarcity of water, with annual rainfall of less than 10cm, was alleviated by freak rains in 2018 that temporarily filled reservoirs, Gwadar Development Authority director-general Shahzeb Kakar said.
The city would meet needs by building desalination plants, he said.
A plan for a “safe city” project with surveillance cameras might reduce the need for Gwadar to feel like it is under military occupation.
“We have three basic issues — power, water and security,” Kakar said. “All three of these issues have now been taken care of. Now things are moving in the right direction.”
Not everyone is so upbeat.
Life for people in the area has not improved much after five years of planned developments, Gwadar-based Balochistan Review editor Mariyam Suleman said.
“Their neighborhoods are still without good infrastructure,” she said. “There’s a sewage issue. There isn’t electricity for long hours, especially in summer, and the water crisis has always been an issue.”
Even if Gwadar were not under the threat of violence, and had sufficient power and water to operate 40 factories, it does not have enough people to work in them.
The city’s population, mostly fishers and their families, is about one-fifth that of Washington’s.
A proposal for a project called China-Pak Hills envisages a gated community with a “Hong Kong financial district” and luxury housing for 500,000 Chinese professionals who could move to Gwadar and provide a labor force by 2022 — an influx that would not sit well with either Baloch separatists or the Pakistani government, Karachi-based Collective for Social Science Research economist Asad Sayeed said.
It is also hard to imagine how Gwadar would need Pakistan’s largest airport, with capacity for Airbus A300 jets and 27,216 tonnes of cargo annually.
Yet that is the plan for the 1,740 hectare area demarcated by razor-wire fence on the outskirts of town. Announced in 2014, the new airport was supposed to have been built by China Communications Construction Co, the largest builder of projects along the Belt and Road, with a US$230 million loan from China and a grant from Oman.
However, construction has never begun.
The following year, the Chinese government said that it would convert the loan to a grant and Pakistani officials said that the airport would be completed by the end of 2016, then by October 2017 — still nothing.
Last year, Pakistani Prime Minister Imran Khan traveled to Gwadar and broke ground on a new airport site.
A new contractor was announced to take over: A branch of state-owned China Railway Engineering Corp, which would also build schools and a hospital. Completion is scheduled for 2022.
During a visit in October last year, a tractor started up and began driving around the empty, dusty stretch of land without evident purpose.
“They are doing as much as they can at the moment to show it is still happening,” said Andrew Small, author of the 2015 book The China-Pakistan Axis and a senior fellow at the Washington-based German Marshall Fund.
Khan’s government is simply trying to complete about US$20 billion worth of CPEC projects in the works, mostly power plants, under pressure from China, Small said.
“The full-scale version is not really in the cards,” he said. “It’s going to land in a far more modest place than envisaged. It’s not going to be a game changer.”
The CPEC project was intended to reduce oil and gas routes from the Middle East by thousands of kilometers, a way to cut overland into western China instead of going thousands of kilometers around South Asia and Southeast Asia by ship.
Pakistan was supposed to get 2.3 million jobs and a 2.5 percentage-point boost to its GDP.
The deal, negotiated by former Pakistan prime minister Nawaz Sharif and touted in a 2017 communique by his successor, Shahid Khaqan Abbasi, after Sharif was jailed on corruption charges, called for the corridor to start taking shape by this year. It was described as a pilot project, a model for Belt and Road countries around the world.
Pakistan, long allied with China to counter the regional weight of India, wanted help developing its mineral-rich, but poorest and most restive province. It also wanted to quell separatists in the Baloch Liberation Army who not only attacked the Pearl-Continental Hotel last year, but also killed four people at the Chinese consulate in Karachi in 2018.
The militant group was seeking to halt plans that they believed would enable Pakistan’s government to take more resources from the area, rather than aid residents. More attacks in recent months have killed more than a dozen Pakistani soldiers and security personnel.
China might have objectives besides better oil and gas routes. Western governments have long been concerned that Belt and Road spending is helping China develop what is known as a “string of pearls” — ports that can be used by its navy, from the South China Sea across the Arabian Sea and on to Africa.
Although China and Pakistan both deny any military intentions, Gwadar could be a stopping point on the way from Sri Lanka through the Maldives to Djibouti, where China has built its first military base on the Horn of Africa.
Beijing’s plans for the Pakistan corridor also include development in China’s Xinjiang region, where it has attempted to curb unrest.
If China’s interests were purely economic, it could have helped expand the port of Karachi, already connected to the highway from China, instead of seeking to build new roads through desolate, dusty and dangerous Balochistan, Sayeed said.
Whatever their ambitions, China and Pakistan have had to scale them back. Khan inherited an economic disaster.
To address its account deficit, Khan’s administration has cut imports, depreciated the rupee, slashed spending and raised taxes. GDP growth fell to an estimated 2.4 percent last year, from 5.8 percent in 2018, as manufacturing experienced double-digit percentage declines and exports remained flat.
As for China, which has become the world’s largest creditor, it is refocusing on smaller projects crafted for the needs of recipient countries. Winning hearts and minds has become more important than announcements of gargantuan airports.
Instead, according to guidelines issued by Xi in late 2018, people-to-people exchanges in education, science and technology, culture, and tourism would help make Belt and Road projects “deeply rooted in the hearts of the people.”
All this seeks to downplay the more strategic aspects of what China has sought to achieve, Washington-based National Bureau of Asian Research senior fellow Nadege Rolland said.
“My hunch is there won’t be big splashes of money anymore,” she said. “The investments were only an incentive.”
China’s ultimate objective “is not to build connectivity, but to increase Beijing’s political and strategic influence,” she said.
This means that even if Belt and Road spending ends up being one-third of what was originally forecast, China might still have gotten its money’s worth.
It would have broadened its influence in countries that are potential providers of natural resources, as well as future markets, and gained allies in international arenas such as the UN at a time when the US is pulling back.
On a visit to Beijing in October last year, Khan assured Chinese officials that CPEC plans are proceeding, but with Pakistan’s budget maxed out and austerity imposed by the IMF, it is clear that there is not to be any big, new projects and unclear how many of the current ones can be finished, Hillman said.
Still, both Pakistan and China pledged during Khan’s visit “to speedily execute the CPEC so that its growth potential can be fully realized,” an official communique said.
Even if the corridor to Gwadar could be developed and security issues resolved, there is only the Karakoram Highway, an inhospitable, two-lane route through the treacherous mountains separating China and Pakistan.
It is prone to landslides and threatened by attacks, and has yet to be connected to roads leading to Gwadar, said Alyssa Ayres, Washington-based senior fellow for India, Pakistan and South Asia at the Council on Foreign Relations.
“It’s hard to imagine this as a viable freight corridor,” she said.
Hillman has come to a similar conclusion, though one with wider implications.
“The Chinese are having some regret about making Pakistan the flagship,” he said. “There’s a lot more caution on all sides.”
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