Impassive towards Pakistan’s cries for help, the reluctant world watches on as the country continues to crumble under the weight of past mistakes. The atypical toughness of the International Monetary Fund (IMF) has left the nation teetering on edge. While others were occupied with guessing the future, the Chinese changed gears and came to the rescue.

The billion-dollar question is: what China asked in return? Most officials approached were either unaware or not ready to share the details of recent interactions with the mighty power of the East. When pressed, they deflected from the issue and started singing praises for the friendly nation that historically stood by Pakistan in thin and thick. They also mentioned the massive Chinese investment — China Pakistan Economic Corridor (CPEC) — under its ‘One belt one road’ initiative to reaffirm its trust in Pakistan as a dependable ally.

Currently, instead of waiting for the revival of the IMF programme (a pre-condition conveyed to Pakistan earlier), it seemed to have decided to bail Pakistan out of the current economic morass. The expected momentum in the rejuvenation of CPEC projects under Prime Minister Shahbaz’s government has not yet been visible, but China rescheduled loan repayment deadlines and dispatched the first tranche of $700 million of the $2.3bn loan. Last Friday, the Industrial and Commercial Bank of China Ltd disbursed another $500m to the State Bank of Pakistan.

Last month China gave a call to support Pakistan in its time of need. Whatever the motivations, the recently Chinese-brokered deal between Saudi Arabia and Iran was also expected to open up new avenues for Pakistan to gainfully build on its ties with energy-rich Iran. The distressed energy minister has already visited Tehran to explore the possibilities.

“Even in better times, Pakistan takes its sweet time before responding to geo-political realignments. The swiftness with which the energy ministry pounced on the opportunity as soon as it emerged made one wonder if Pakistan knew about the deal beforehand. I would not be surprised if the minister simply acted on Chinese advice.

All kinds of speculations are circulating about Chinese demands and Pakistan’s offers in exchange for the recent support provided by the Asian superpower

“Multiple studies (including Pakistan Business Council’s bilateral trade report) confirmed the trade between Pakistan and Iran has been a tiny fraction of the actual potential. Despite the common border, the total volume of trade between the two is low, under $500 against close to $2bn between Iran and India,” commented an expert on China.

Some observers in Balochistan contested the official trade numbers citing the free flow of goods and services across the border. They claimed the trade between Pakistan and Iran to be actually double the officially declared volume. Even so, the scope of increasing mutually beneficial cooperation is huge.

Enlighted Pakistan’s business star from Faisalabad, chairman of the Interloop Group of companies Musadaq Zulqarnain cautioned policymakers to tread with care in its economic diplomacy, citing the West-centric profile of the country’s exports.

“China has an obvious interest in the region, and as such Chinese strategic interest in Pakistan will remain high. At the same time, Pakistan has enjoyed long cooperation with China, which was further strengthened due to CPEC. However, it has made Pakistan somewhat dependent on Chinese commercial loans.

“Nevertheless, Pakistan is not in a position to tilt too much towards China. Pakistan’s major export destinations are in the US and Europe. Multilateral lending institutions are also indirectly controlled by the West. Our defence hardware is largely reliant on the West.

“For economically weak Pakistan, it’s very difficult to balance our relationships, but that’s the only way for us. With the Saudi-Iran patch up, we might be able to establish better trade relations with Iran, but it will also depend on how the USA reacts to recent developments.”

What Pakistan did to energise the Asian superpower is not clear. All kinds of speculations were circulating in the market about Chinese demands and Pakistan’s offers, but the relevant officials were tight lipped.

“It’s an open secret that economic diplomacy is not based on the goodness of heart but on the alignment of interests involving give and take. What has Pakistan offered? Building of Chinese security outpost on its soil like Tajikistan? A share in infrastructure at strategic locations in the country like Sri Lanka? A blanket permission to China to do the needful to secure its project sites and personnel in Pakistan or something else?

“In socialist China, things are done differently, but in Pakistan, lack of transparency generates doubts and feeds conspiracy theories. It’s best if the government keeps the parliament and the public informed,” advised a retired trade expert.

A Chinese-speaking academic and project operation expert Dr Hasan Daud Butt contested the perception of any reluctance on the Chinese part in CPEC projects. He blamed the pandemic that restricted the mobility of investors between the two countries for the slowdown.

“Currently, the work on CPEC projects is progressing at a satisfactory pace. The first industrial zone at Rashakai is an example. Multiple industrial projects, some Chinese-owned and other joint ventures, are at different stages of building,” he said.

Questions on the subject were mailed to the relevant leaders of the ruling coalition, including commerce minister Naveed Qamar and energy minister Khurram Dastgir Khan. Their response did not arrive till filing of this report.

Published in Dawn, The Business and Finance Weekly, March 20th, 2023