The China-Pakistan Economic Corridor (CPEC), a multi-billion-dollar project has faced a major setback. Beijing has decided not to extend its cooperation further, revealing the challenges in strengthening economic relations between China and Pakistan. This development underscores the complexities that come with deepening economic ties between these two countries. The CPEC, initially seen as a symbol of collaboration and investment, now faces obstacles that need to be addressed for its continued progress.
Reliable sources have confirmed that China has declined to extend cooperation with Pakistan in various critical areas encompassing energy, water management, and climate change within the framework of CPEC. This stance underscores the evolving dynamics and potential challenges in sustaining and broadening economic collaboration.
Conversely, Pakistan has taken steps to ease its objections to a coal-fired power plant located in Gwadar, among other issues related to the Chinese. These matters were addressed during the 11th Joint Cooperation Committee (JCC) meeting for CPEC.
It's noteworthy that despite the JCC meeting taking place in October 2022, achieving consensus over the meeting's minutes required at least a year's time. Finally, the minutes were officially signed on July 31, 2023, signifying the deliberative nature of the decision-making process within the CPEC framework.
“The delay was because China did not agree to a host of measures that Pakistan had proposed in the areas of energy, water management, climate change, and tourism in Gilgit-Baltistan (GB), Khyber Pakhtunkhwa (KP), Pakistan occupied Kashmir (PoK) and the coastal areas,” stated economist Shahbaz Rana.
“The JCC is a strategic decision-making body of CPEC and its 11th meeting was held virtually on October 27, 2022, on the insistence of the PML-N led government that wanted to showcase some progress."
Although China's refusal and Pakistan's concessions on several concerns are perceived as significant setbacks, the Islamabad government asserts that engaging in discussions and addressing disparities in understanding is a routine and expected part of the process.
“It was a global practice for the minutes of meetings between two countries to be signed by both sides only after due consultation and evolving consensus. This is to ensure that the minutes accurately reflect the agreements and understandings reached by both the parties,” an official from the Ministry of Planning said.
“The 11th JCC meeting minutes were signed in July 2023 after a thorough consultation process. Both the sides reviewed and discussed the minutes in detail to ensure that they comprehend all these outstanding issues and future goals,” the official added.
China made a notable decision by alleviating the financial difficulties encountered by power companies, resulting in the exclusion of significant projects from the finalized minutes. These removed projects include the 701-megawatt Azad Pattan Hydropower project, the 1,124-megawatt Kohala power plant, and the 1,320-megawatt Thar Block 1 Shanghai Electric Co power plant. This shift marks a pivotal development in the negotiations and collaboration between China and Pakistan.
Furthermore, it has come to light that Pakistan has granted substantial concessions to China, particularly concerning the establishment of the 300-megawatt Gwadar Power Plant. These concessions signify Pakistan's commitment to advancing projects within the China-Pakistan Economic Corridor (CPEC) and the multifaceted economic ties between the two nations. These intricate negotiations play a key role in shaping the trajectory of the CPEC and its various initiatives.
“Pakistan wanted to either shelve the 300MW project or change its locations to Thar to use local coal. China did not agree to Pakistan’s text about the Gwadar plant, which did not mention that both sides recognized that there was a need to examine the requirement, size, location, and fuel type for the 300MW Gwadar Power Plant in view of escalating international coal prices, which were resulting in exceptionally high prices of electricity, liquidity and foreign exchange issues for Pakistan and environmental concerns,” said Shahbaz Rana.
China has opted not to proceed with the inclusion of the 100MW KIU and 80MW Pander hydropower projects in the CPEC expansion plans. These projects were originally intended for implementation through Chinese investors, but China has expressed its disagreement with this proposal.
The diverse range of disagreements from China regarding the expansion of the CPEC has cast a shadow over numerous initiatives in Pakistan. Islamabad had anticipated that these projects would materialize through Chinese investments, but the differing viewpoints have created challenges and uncertainties surrounding these ventures.
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