CPEC’s Strategic Importance for Pakistan

Arzam Bajwa

24 June 2024

Published in: Pakistan Observer

“We are the indispensable nation. We stand tall. We see further into the future than other countries. And we see the danger that others cannot see.” This quote by Madeline Albright shows the US euphoria when the USSR disintegrated, ushering the world into a unipolar moment. But the economic rise of China has instilled fears of a new cold war, more intense than the last century. China is the second-largest economy in the world. Both the US and China are entangled in an intricate web of economic interdependence. With China’s increased global influence, aspirations for regional leadership, ambitious military modernization, enhanced military presence in the South and East China Seas, and rapid economic growth, the relative comprehensive national power gap between the US and China has decreased. As one 2019 study by James Dobbins, Howard J. Shatz and Ali Wyne put it, “China is a peer competitor that wants to shape an international order that it can aspire to dominate.” In light of these developments, the US adopted a containment policy toward China.

The main battlegrounds for US-China contestation are the South and East China Seas and the Belt and Road Initiative (BRI). BRI was announced by President Xi in 2013. Initially, it was aimed at connecting the Chinese hinterland to Europe. Subsequently, it incorporated the regions of Africa, Oceania and Latin America. It seeks to bolster regional connectivity and increase economic dividends. The China-Pakistan Economic Corridor (CPEC) is a flagship project of BRI. It promises economic prosperity, infrastructure development, Special Economic Zones (SEZs) and the state-of-the-art Gwadar port. However, the economic state of Pakistan is on tenterhooks. It requires economic assistance from the World Bank (WB) and the International Monetary Fund (IMF) which is difficult to avail if Pakistan aligns itself more with China.

The Pivot to Asia policy was announced by Secretary of State Hillary Clinton in 2011. Its primary objective was to counterbalance the rising influence of China. Subsequently, President Xi articulated his economic vision in the form of BRI in 2013. The USA cannot match Chinese financing in Asia. But it also cannot leave China’s prowess unchecked. An increasingly assertive China in Asia will decrease US influence. Hence, the United States responded with a trade war with China under the Trump Administration. It involved increased tariffs on Chinese products. President Biden continued this trade war under his Administration. Washington also built close relations with New Delhi in the form of the Quadrilateral Security Dialogue (QUAD).

The US and multilateral institutions like the World Bank and the Asian Development Bank have recognized the significance of revitalizing the ‘old silk route’. These acknowledgements provide the rationale for Pakistan to become a party to it. As of December 2023, the number of countries that signed the memorandum of understanding (MOU) with China stands at 153. CPEC is pivotal to BRI, owing to its proximity to the Middle East, Africa and Europe. The US views BRI from a geostrategic lens, arguing that BRI is part of China’s grand strategy to dominate Asia. Pakistan’s weak economy cannot resist the economic dividends of BRI. Moreover, Washington cannot commit to such economic plans in Asia. Here, the burden of responsibility lies on Pakistan to convince the US that CPEC is devoid of any strategic aims on the part of China. The theory of dual or naval use of Gwadar is simply not true. The mass media needs to present it as an economic project rather than a strategic or military game changer.

CPEC is vital to realizing the dream of BRI. But rising Chinese influence in Asia invites US opposition. Consequently, the US adopts an antagonistic approach to CPEC. The United States expresses its displeasure by stating that China is encroaching on states’ sovereignty via a debt trap. This confrontational approach has deep implications for Pakistan. Pakistan cannot withstand alienating either. Therefore, it needs to carefully navigate regional sensitivities.

Despite CPEC and outstanding relations with China, Pakistan cannot afford to distance itself from the US either. The United States is the biggest market for Pakistani exports. The US needs to go beyond the traditional carrot-and-stick approach and increase bilateral trade with Pakistan via the Generalized System of Preferences (GSP) program. It could bring ease for specific in-demand commodities like mangoes, etc. Pakistan can also play the role of a ‘Bridge State’ or a ‘melting pot’ as it did during the Sino-US Rapprochement.

Islamabad could invest in efforts to bridge the chasm between Washington and Beijing. However, the prospects of broadening will be dependent upon US and China’s commitment to avoid a security competition. Islamabad needs to devise a mechanism to conduct the scrutiny of Chinese projects and loans to rebuff the claims of a debt trap and encroachment of strategic assets. The US needs to comprehend that a security competition with China can disrupt the strategic balance in Asia.