FILE - Pakistani Prime Minister Imran Khan speaks at the opening ceremony for the first China International Import Expo (CIIE) in Shanghai, China, Nov. 5, 2018.
FILE - Pakistani Prime Minister Imran Khan speaks at the opening ceremony for the first China International Import Expo (CIIE) in Shanghai, China, Nov. 5, 2018.

ISLAMABAD - China and Pakistan say their ongoing multibillion-dollar infrastructure development cooperation program under Beijing’s global Belt and Road Initiative (BRI) has entered the next stage after achieving initial targets, dismissing reports the project increased Islamabad’s debt burden rather than boosting economic growth. 

Officials in the neighboring countries, traditionally strong allies, say 22 "early harvest" projects, launched five years ago under what is known as the China-Pakistan Economic Corridor (CPEC), have been completed with an unprecedented Chinese investment of $19 billion. 

It has built new roads, power plants and operationaliZed the deep-water strategic Arabian Sea commercial port of Gwadar, which overlooks some of the world’s busiest oil and gas shipping lanes and is celebrated as the gateway to CPEC.

Responding to skeptics

The United States contends China's BRI projects are less of an economic benefit for host countries, have dubious economic value, and contain national security elements for Beijing. Last week, Secretary of State Mike Pompeo said Washington is trying to warn countries about the risks. 

“When you’re showing up with a non-economic offer, whether that’s through state-facilitated, below-market pricing or handing someone something knowing that you can foreclose on their nation shortly, so predatory lending practices, that’s not straight and we are working diligently to make sure everyone in the world understands that threat,” he said. 

This week, Chinese Foreign Ministry spokesman Lu Kang defended the corridor as "an important pilot program" under BRI, saying it has created tens of thousands of local jobs in addition to meeting the power demand of nearly nine million households in Pakistan.

"Of all current CPEC projects, only less than 20 percent are financed with Chinese loans, while the rest are all funded by direct investments or grants from China. Far from adding to Pakistan's burden, the CPEC actually strengthened the local economic structure," Lu explained at his regular news conference in Beijing. 

"Leveraging international financing to carry out major projects, as a common practice across the world, is an effective tool for developing countries in particular to overcome the funding bottleneck and boost growth," the Chinese spokesman stressed.

CPEC will ultimately give landlocked western Chinese regions the shortest and a more secure route to international markets through Gwadar port. 

Islamabad acknowledges the corridor investment has improved transportation networks and effectively resolved years of crippling power crisis facing the country. Pakistani officials reject as misplaced concerns the current foreign debt crisis stems from the project. 

"CPEC is great opportunity for Pakistan. CPEC connects us to China which is one of the biggest markets … and CPEC route will connect China and Pakistan located at strategic position of world," Pakistan Prime Minister Imran Khan told a recent international conference.

A Pakistani motorcyclist drives on a newly built P
FILE - A Pakistani motorcyclist drives on a newly built Pakistan China Silk Road in Haripur, Pakistan, Dec. 22, 2017.

?Groundbreaking

Khan traveled to Gwadar a week ago, where he performed groundbreaking for several new infrastructure development projects, including an international airport in the coastal city, marking the start of the new phase of CPEC. 

The airport, which will have a 12,000-meter runway, will be completed in three years with a Chinese financial grant of $250 million. It will be capable of handling aircraft such as an Airbus A-380, linking the once sleepy town of Gwadar to some of the world’s major destinations. 

Saudi Arabia also announced in February plans to build a $10 billion refinery and petrochemical complex in the city.

Pakistani and Chinese officials admit CPEC is behind schedule. They cited problems such as legal and administrative procedural delays in their respective countries and the recent political transition in Pakistan that brought Khan’s party to power last August. But those issues have been settled now, they say.

The "Chinese say they can easily and quickly deliver loans, but financial grants require to go through a time-consuming legal process, that’s why the work on Gwadar airport could not be started in time," a Pakistani official told VOA. 

The newly launched phase of "broadening and expanding” CPEC projects, officials say, will see the construction of nine industrial zones across Pakistan with the help of Chinese financial and technical assistance that will boost bilateral industrial cooperation between the two countries. 

Some industries to relocate

China plans to relocate some of its industries by transferring technology to the new industrial zones to help Islamabad increase its exports to overcome its massive trade deficit and shore up cash reserves.

"CPEC has gained momentum and efforts would be made to continue the same pace in the future," said Makhdum Khusro Bakhtyar, the Pakistani minister for Planning, Development and Reform who is overseeing the project.

Officials said the groundbreaking of construction of the first industrial zone at Rashakai, in northwestern Khyber Pakhtunkhwa province, is expected before Prime Minister Khan travels to China later this month for bilateral meetings and to attend the second BRI summit along with 40 foreign leaders in Beijing. The launching of Rashakai will mark the "implementation stage of the Pakistan-China Industrial Cooperation,” said Minister Bakhtyar.

The United States contends China’s BRI projects are lees of an economic benefit for host countries, have dubious economic value, and contain national security elements for Beijing. 

Washington has also decided against sending high-level officials to attend the BRI summit, citing concerns about financing practices for the project. Last week, Secretary of State Mike Pompeo said Washington is trying to warn countries about the risks.

“When you’re showing up with a non-economic offer, whether that’s through state-facilitated, below-market pricing or handing someone something knowing that you can foreclose on their nation shortly, so predatory lending practices, that’s not straight and we are working diligently to make sure everyone in the world understands that threat,” he said.

Beijing has extended a loan of more than $4 billion during the current financial year at an interest rate of 2 percent to help Islamabad boost its depleting foreign cash reserves.

The Chinese government has recently pledged an additional grant of $1 billion for education, health, vocational training, drinking water and poverty alleviation projects in Pakistan.

While Beijing and Islamabad have traditionally maintained close defense ties, both the counties say their deepening economic cooperation in recent years has cemented the overall relationship. 

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