China-Pak relations not as before The Excelsior 19 Jul 2022

China-Pak relations not as before The Excelsior 19 Jul 2022

China-Pak relations not as before

China-Pak relations not as before The Excelsior 19 Jul 2022

          The ‘higher than the mountains’ and ‘deeper than the ocean’ ties between China and Pakistan are possibly losing momentum. There is no doubt that China continues to support Pak diplomatically, as it did when it blocked Abdul Rehman Makki from being listed as a global terrorist, while simultaneously campaigning for Pak to be removed from the FATF Grey List. It also financially supported Pak by rescheduling its USD 4.2 Billion debt and promising to provide a USD 2.3 Billion deposit in Pak banks to boost its foreign exchange reserves.

          The reality is that China has no option. If it did not support Pak financially, Pakistan could go the Sri Lanka way and default on its payments, most of which are due to China. Compelled by circumstances, China is pushing good money after bad. Pakistan’s failure to invest its share in the CPEC has slowed down most projects.

Diplomatically, ties between the two are sinking. Shehbaz Sharif, as the PM, has yet to be invited to visit Beijing, while his foreign minister, Bilawal Bhutto and army chief visited the country, albeit for different reasons. In addition, Yang Jiechi, a senior Chinese diplomat visited Islamabad to convey a strong message from Beijing. Officially Pak claims delay in Shehbaz’s visit being on account of COVID, but with Xi having visited Hong Kong and Xinjiang, this story has no value.  

          The cause for deterioration in ties are immense. First and foremost are attacks on Chinese citizens in Pakistan. The killing of three Chinese teachers of Karachi University’s Confucius Institute by the Baloch Freedom Fighters in a suicide attack was the latest. An earlier attack on Chinese engineers working in the Dasu hydroelectric power plant resulted in Pak paying USD 11.6 million in compensation. While Pakistan claims to have arrested the mastermind of the Karachi attack, China is still not satisfied. The number of Chinese who left Pakistan after the attack displays insecurity. Pakistan will be compelled to pay compensation for those killed in Karachi once China determines the figures.

          General Bajwa rushed to Beijing to cool tempers, which only worked partially. China demanded that it be permitted to employ its own security agencies to safeguard its nationals in Pakistan. While this would be a win-win for China, as it would set into motion an excuse for subsequent deployment of the PLA, it would be the opposite for Pakistan. Pakistan’s relations with the west are already tenuous, deployment of Chinese troops would only make it worse. It would also project Pakistan’s incapability in securing foreigners in its own country. Till this is resolved, Chinese projects have slowed down.

              Secondly, has been the problem with Chinese power companies, established as part of the CPEC. These companies have been regularly threatening to shut down power plants in Pakistan unless their dues, amounting to Rs 300 billion, are cleared. They have also protested on high cost of import of coal. To offset their problems, Pakistan made partial payments and announced plans to procure coal from Afghanistan at lower rates as also payable in Pak rupees. Exploiting the situation, the Taliban government increased the price of coal from USD 90 per tonne to USD 200 per tonne. They justified this on grounds of increase in global prices. Chinese power firms threatened to stop imports. The issue has yet to be resolved. A Pak official delegation is earmarked to visit Kabul to resolve the issue.

          Thirdly, is the role of the IMF. The IMF, from whom Pak has obtained a loan, has objected to payments to Chinese power companies. On the contrary, it has directed the Pak government to renegotiate terms and conditions with Chinese power companies and bring their financial compensation at par with other power providers. This has angered China. Further, the IMF is concerned that Pakistan would use their loans to repay debts to China. It was only after obtaining guarantees from Pak did the IMF agree to release the next tranche of the loan.

          Fifthly, Indian pressures. In the last BRICS online summit, India blocked the participation of Pakistan in the ‘High level Dialogue on Global Development’ organized on the side lines of the summit. It was attended by two dozen countries including Ethiopia, Iran, Fiji, Algeria, Cambodia etc. India’s reason was that Pakistan does not fit into the group as an emerging market was just an excuse. China, possibly due to dissatisfaction with Pak, supported the Indian stand, hurting Pak sentiments. The only comment which flowed from China was that nations were selected based on ‘consultation amongst BRICS members.’ Pakistan satisfied its population by blaming India. It is aware of reality.  

          Sixthly, poor quality Chinese military products. Reports indicate that the Pak armed forces are unhappy with Chinese equipment supplied to them. Armour, artillery and air defence equipment have been facing servicing problems, while spares remain in short supply. Problems faced by the navy and air force in their latest acquisitions are even greater. With Pak on the Grey List, there have been no weapon nor technology inflows from the west. Therefore it desperately seeks to get off the Grey List and shed its overdependence on China. It is aware that it is compelled to bank on China as other sources have dried up.

          For Pakistan, the only saving grace is that China is slowly being pushed into the corner. It desperately needs allies. Further, with vast Chinese investments in the country and the CPEC being the bulwark of the BRI, China fears its failure. Despite all differences, China can never let Pak collapse and follow the Sri Lankan route. If that happens, Chinese global standing will be impacted. However, it will seek its pound of flesh, which could imply Pak surrendering territory including part of Gilgit Baltistan as payment or permitting Chinese security companies to enter Pak.

Pakistan also has limited options. It has only China for diplomatic support in global forums to counter the western backing for India. The fact that Shehbaz, whose second foreign trip should have been China, as is customary, is still awaiting an invitation, implies that relations between the two-iron brothers appears to be deteriorating.