Prime Minister Shehbaz Sharif was in China last week for a five-day visit to push for an upgrade of the China-Pakistan Economic Corridor (CPEC) initiative and exhort Chinese companies to invest in Pakistan.

In a meeting with President Xi Jinping, the two leaders discussed various dimensions of the multi-faceted Pakistan-China relationship and reaffirmed their longstanding friendship, all-weather strategic cooperation, economic and trade ties, and CPEC.

“[We] mutually decided to enhance economic cooperation through timely completion of ongoing CPEC initiatives as it enters into the next phase with five new corridors: [growth corridor, economic development projects corridor, innovation corridor, green corridor, and regional connectivity corridor].

“I underscored that Pakistan would continue to work with China to promote regional connectivity and economic development and to make Gwadar a connectivity hub for the socio-economic development of Pakistan,” Mr Sharif said on X after the meeting.

The countries realign corridor goals and discuss investment opportunities blocked by bureaucratic redtape and worker insecurity

President Xi also promised to extend financial support through investment in different sectors. “President Xi reassured [us] that China would continue supporting Pakistan’s sovereignty, territorial integrity, and development and supporting us in harnessing our geo-economic potential as a hub of regional trade and economics.”

The trip has produced 23 memorandums of understanding (MoUs) and agreements aiming at “deepening cooperation in technology, transport, industry, infrastructure, energy, agriculture, media, health, water, and socio-economic development.” It is still unclear what these MoUs will materialise into or if these will propel the corridor project into its second phase for its monetisation to help Islamabad pay back its debt.

As Islamabad negotiates a tough bailout with the International Monetary Fund to steer its economy out of the doldrums, the cash-strapped Shehbaz Sharif government is looking desperately towards Beijing and the Gulf countries for investments in Pakistan to shore up its gloomy economy.

The revival of official and private Chinese investments under the multi-billion-dollar corridor initiative, which has suffered a slump in recent years because of Pakistan’s political, economic, and security problems, is also expected to uplift economic growth.

Every speech Prime Minister Shehbaz Sharif has made during his trip to China centred around commitments of fool-proof security

Under the CPEC initiative, launched in 2015 and dubbed a ‘game-changer’ for Pakistan’s economy, China has invested $25.4 billion in various transport, energy and infrastructure projects. Several other projects worth billions of dollars are in different stages of planning or execution. The CPEC initiative is also considered a flagship project of China’s ambitious Belt and Road Initiative, a massive network of roads, bridges, and ports spread across nearly 100 countries that Beijing hopes will recreate the ancient Silk Road trade routes linking Europe and Asia.

The project has certainly helped Pakistan improve its power and transport infrastructure. Based on the achievements of the CPEC in its first phase, the second phase — mostly based on business-to-business cooperation — is expected to yield further economic dividends for Pakistan, besides translating those benefits into higher productivity, growth, and exports through Chinese investments in manufacturing, agriculture and technology.

In spite of the Chinese government’s expressed desire to further boost trade and investment cooperation with Pakistan, many analysts believe that Chinese investors remain wary of venturing into Pakistan for a variety of issues, such as poor governance or bureaucratic red tape.

The Chinese have long been complaining about being hampered by the bureaucracy, and many are frustrated by the difficulties of getting things done here. The delays in arrears payments of $1.8bn the government owes Chinese power producers are also deterring other firms from investing in Pakistan.

Moreover, the security of Chinese workers in Pakistan remains the most pressing concern for Beijing amid increasing attacks on Chinese nationals and interests. The last two attacks came in quick succession of a week between March 20 and 26 this year.

The first attack was carried out by an armed group at the new port in Gwadar. Then, the Tehreek-e-Taliban Pakistan (TTP) fighters targeted Chinese engineers working on a Chinese-funded hydropower project near Besham and killed five Chinese workers and their Pakistani driver. There have been reports suggesting Beijing has demanded a massive counterterrorism operation to eliminate threats to its interests.

The Besham attack had triggered a stern response from Beijing. “China asks Pakistan to thoroughly investigate the incident as soon as possible, hunt down the perpetrators, and bring them to justice. Meanwhile, we ask Pakistan to take effective measures to protect the safety and security of Chinese nationals, institutions, and projects in Pakistan,” its Ministry of Foreign Affairs said on March 27, adding, “no attempt to sabotage China-Pakistan cooperation will ever succeed.”

Chinese media quoted experts as saying that counter-terrorism and safeguarding the security of the CPEC were the main focus of Mr Sharif’s visit. No wonder, every speech Prime Minister Shehbaz Sharif has made during his trip to China centred around commitments of fool-proof security.

While Mr Sharif’s visit will enhance mutual trust between the two countries to tackle the challenges facing bilateral ties, expand cooperation models under the new security concept, and provide strong support for the CPEC, many argue that Pakistan needs to tamp down its exaggerated expectations from its all-weather friend.

Published in Dawn, The Business and Finance Weekly, June 10th, 2024