Pakistan, striving to maintain the growth momentum, suffered a setback last week when China stepped away from the virtual 10th Joint Cooperation Committee (JCC) meeting at the eleventh hour. The JCC meeting was projected to accelerate the China-Pakistan Economic Corridor (CPEC) and boost industrialisation.

Reacting sharply to the terrorist attack targeting Chinese nationals engaged at the 4,320-megawatt Dasu hydropower project in Khyber-Pakhtunkhwa, China pulled out of the JCC meeting. Pakistan and China were expected to sign a framework agreement for industrial cooperation, cementing the earlier signed memorandum of understanding (MOU). Besides exchanging notes on the issues of mutual interest, they intended to decide on a host of pending matters related to project implementation under CPEC. The high-powered meeting was to be jointly headed by Asad Umar, minister for planning and development, and He Lifeng, chairman of the National Development and Reform Commission of China.

The situation is becoming dicey, with foreign policy dilemmas assuming threatening proportions amid the postponement of the 10th JCC meeting

The postponement announcement was made here by CPEC Authority Chairman Lt Gen Asim Saleem Bajwa in a tweet without giving any reason. There were some unconfirmed reports on the divergence of positions taken by the two sides on certain subjects, including the costing of some mega projects like the ML-1 railway project.

When contacted, senior officials in the CPEC Authority and the Ministry of Planning and Development declined to comment on the JCC meeting or reasons that compelled its postponement. They termed the issue ‘too sensitive’.

Commenting on what businesses read into the evolving situation, Pakistan Business Council CEO Ehsan Malik emailed a politically apt statement. “Incidents such as the attack on the bus in Kohistan, the bomb blast at Serena Quetta, the attack on the Chinese Consulate in Karachi and on the Pakistan Stock Exchange underline the need for Pakistan to significantly step up its security intelligence and control measures.

“CPEC is the most important part of China’s One Belt One Road initiative and China’s long-term commitment and friendship with Pakistan have withstood challenges like these before. The important thing for both countries is to collaborate and overcome the evil intentions of those who resent peace and progress of Pakistan,” he wrote.

The articulate thought leader of the business community and former governor of the State Bank of Pakistan, Salim Raza, hammered the need for a fool-proof security cover for the country’s economic partners. He did not, however, expect a strong reaction from the Pakistani business class over the terrorist incident or the postponement of the CPEC meeting. He advised not to drag US-China relations into a situation that is already complex.

“The Chinese have to be reassured if an explosive can be put into a bus they are using. We must investigate and respond befittingly. This is between us (Pakistan) and them (China), not relevant to the US-China contest.

“Our big private businesses apparently are not really interested in large-scale joint ventures with the Chinese. I don’t think they will lose much sleep,” he commented.

A source familiar with China affairs privately told Dawn that the situation is becoming dicey by the day with foreign policy dilemmas assuming threatening proportions. “We have landed again between the devil and the deep blue sea,” he said, hinting at the terrorist attacks such as the recent one. “Our diplomatic skills are put to test amidst growing security threats with the exit of US troops from Afghanistan. It is difficult to pacify China with mixed signals,” he said, referring to Prime Minister Imran Khan’s unclear stance on the perceivably Taliban-inspired attacks in Pakistan.

The ministerial level forum of the JCC was constituted for long-term planning of CPEC and its steady implementation. Nine joint working groups (JWGs) were set up for planning, energy, logistic infrastructure, Gwadar Port, science and technology, agriculture and industrial cooperation. The JCC is tasked to chart out the road map and direction for CPEC while JWGs are responsible for detailed planning and implementation of the projects.

According to details shared by relevant circles in Islamabad last week, there are areas in the proposed agenda that lack consensus. They mentioned a gap of $2 billion in the estimated cost of ML-1 between the two partner nations. Pakistan has granted the approval for the eight-year mega rail project at a projected cost of $7.2bn. Chinese, however, estimated the cost in the vicinity of $9.5bn.

The JWG on agriculture identified 18 projects worth $500 million to strengthen and modernise the sector under the CPEC umbrella. The establishment of Special Economic Zones and making them operational quickly was at the top of the agenda to set the stage for joint ventures.

The JCC was scheduled after a hiatus of 19 months. The ninth JCC was held in November 2019. “There was hope that the 10th JCC would revitalise CPEC. Pakistan’s decision to join the International Monetary Fund programme in July 2019 might be a factor, but doubts expressed on the transparency and viability of CPEC projects seemed to have demotivated China somewhat.

“China is deeply committed, but will it be willing to deliver in Pakistan at any cost? We need to set things right not just for the CPEC partner, but for the people who have patiently been waiting for the future to arrive.”

Published in Dawn, The Business and Finance Weekly, July 19th, 2021