China's CPEC carries heavy economic risks for Pakistan

Subject

Economic risks to Pakistan posed by the China-Pakistan Economic Corridor.

Significance

Ahead of the 2018 parliamentary elections and to offset the damage caused by the ongoing Panama probe, Prime Minister Nawaz Sharif’s government is fast-tracking the execution of several projects related to the China-Pakistan Economic Corridor (CPEC). This is drawing increased attention to the cost and ultimate benefit to Pakistan from Chinese investment in CPEC.

Impacts

• Chinese-backed energy projects may deliver surplus but possibly prohibitively costly electricity to Pakistan.
• Public funds for social spending in areas such as health and education are likely to decline as authorities prioritise CPEC-linked payments.
• A change in government in 2018 is unlikely to disrupt CPEC plans as all political parties stand to gain from provincial-level development.
• Local protests (and violence) against Chinese workers will occur sporadically.