China Frustrated With Pakistan As Terrorism Threatens To Delay CPEC’s Second Phase

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Terrorism continues to plague Pakistan and its economy.

Written by Paul Antonopoulos, independent geopolitical analyst

Despite only one Pakistani athlete participating in the Beijing Winter Olympics 2022, Prime Minister Imran Khan, with an entourage of six ministers, arrived in the Chinese capital just as a series of terror attacks ripped through Balochistan and Khyber Pakhtunkhwa, key provinces in the $60+ billion China Pakistan Economic Corridor (CPEC). Following Khan’s meeting with Chinese President Xi Jinping, he tweeted that they agreed “to fast track the second phase of CPEC,” which would focus on agriculture and industrialisation. However, endless terrorist attacks are reigniting Beijing’s frustrations with Islamabad and threatens to delay the roll out of CPEC’s second phase.

Construction for CPEC projects began in 2013 with the intended aim of rapidly upgrading Pakistan’s infrastructure and strengthening its economy with a modern transportation network, new energy projects and special economic zones. The economic corridor became partly operational on November 13 2016 when Chinese cargo was transported overland to Gwadar Port in Balochistan for onward maritime shipment to Africa and West Asia, thus skipping China’s need to use its eastern ports.

Since construction for CPEC projects began, endless terrorist attacks have plagued rapid progress. Such attacks since the beginning of 2022 alone have claimed the lives of 50 soldiers and civilians, as well as one Chinese worker. In this context, it is recalled that in July 2021, ten Chinese nationals were killed in a bomb blast in Khyber Pakhtunkhwa province that Pakistani authorities tried to pass off as a vehicle accident.

This was the most serious in a series of attacks that has targeted Chinese workers and caused huge strains in Beijing-Islamabad relations, especially as the latter attempted to deny terrorists were responsible for the deaths. China also became enraged when Pakistan attempted to dodge compensation payments for victims and their families.

Following these endless attacks, security has become Beijing’s top concern regarding its projects in Pakistan. In fact, security issues dominated discussions at the 10th Joint Cooperation Committee meeting for CPEC projects in September 2021.

Chinese workers, who form the bulk of CPEC’s labour force (and not locals), are becoming less willing to work in Pakistan, particularly in areas with Pashtun and Baloch insurgents. These insurgents are in regions that are key to CPEC but whose local population are not receiving any of the benefits of the $62 billion project.

A former President of the Federation of Pakistan Chamber of Commerce and Industry (FPCCI), speaking on condition of anonymity to Dawn newspaper, shared his anxieties over the resurgence of increasingly lethal “nationalist” outfits in Balochistan who see CPEC as exploitative as it brings no benefits to local communities.

Beijing is becoming increasingly frustrated that Pakistan is failing to curb terrorism. It must be noted that although the Baloch’s are struggling for a national independence movement, many of the terrorists responsible for attacks, particularly among the Pashtun, are groups with deep links and ties with Pakistan’s Inter-Services Intelligence (ISI) and have a Salafi ideology.

In effect, many of the attackers are part of the jihadist contingents funded and armed by the ISI to serve Pakistan’s interests against India in Jammu and Kashmir, but can sometimes operate rogue at the local level.

In addition to homegrown and self-funded terrorists, Pakistan also has to contend with the Uighurs Eastern Turkistan Islamic Movement (ETIM) and the Turkistan Islamic Party (TIP), as well as Islamic State and Al-Qaeda groups. Islamabad’s failure, or refusal, to deal with such terrorist groups is making Beijing uneasy as it begins questioning whether it should continue pouring billions of dollars into the country.

Since the 2015 fiscal year, China has been Pakistan’s biggest trading partner. Despite Pakistan’s economy already in terminal decline and for now being saved from complete International Monetary Fund control only because of China, the Dawn found that although government officials and heads of chambers of commerce and industry spoke highly of Chinese investments, sectors of the private economy, many who chose to speak on the condition of anonymity, provided caution and criticism to the Sinification of the Pakistani economy.

A senior corporate lawyer, who had voted for Imran Khan’s party in the last elections, told the Dawn: “We have never been proficient in handling commercial affairs with our partners, but the ruling party has breached all records […] We can deal with American hostility as we know what to expect. China is a different ball game. We only know it as a friend. I sincerely hope that we are not exposed to what it means otherwise.”

More importantly than worrying about the Sinification of the economy, and despite Khan confidently announcing that the second phase roll out of CPEC would be “fast tracked”, China could be having second-thoughts again on making significant investments in Pakistan at a time when no other country is interested.

Husain Haqqani, the South Asia director at the Hudson Institute, told DW that “No investor, including China, wants to deal with constant violence or a long-running insurgency.”

Although the endless terrorist attacks will not expel the Chinese from Pakistan, larger commercial investments in the presence of an endless insurgency will not be possible. In this way, Pakistan’s refusal to end support for the jihadist groups they do help, whilst being unable to deal with the terrorists groups outside of their orbit, can have long-term impacts on the roll out of CPEC.

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