US flags Chinese 'risks' to Pakistan's economy

ISLAMABAD: The US has warned Pakistan about the risks to its economy while embracing China’s huge infrastructure projects under the $60 billion-plus China Pakistan Economic Corridor (CPEC).


Washington said Islamabad should pursue an American business model instead in trying to address its economic woes.

The CPEC, launched in 2015, is a planned network of roads, railway lines and energy projects linking China’s resource-rich Xinjiang Uighur autonomous region with Pakistan’s strategic deep-sea port at Gwadar on the Arabian Sea, which falls under the restive southwestern Balochistan province. It is part of the wider $1 trillion Chinese project known as the “Belt and Road Initiative (BRI)”.

“It’s clear, or it needs to be clear, that CPEC is not about aid,”

Alice Wells

, principal deputy assistant secretary of state for south and central Asia, said at the Woodrow Wilson International Center for Scholars in Washington on Thursday.

She was speaking on China’s BRI in south and central Asia, with emphasis on the CPEC, the BRI’s Pakistan component.

Wells warned that the initiative was driven by non-concessionary loans, with Chinese companies sending their own labour and material. “The CPEC relies primarily on Chinese workers and supplies, even amid rising unemployment in Pakistan,” she said. “The corridor is going to take a growing toll on the Pakistan economy, especially when the bulk of payments become due in the next four to six years. Even if loan payments are deferred, they are going to continue to hang over Pakistan’s economic development potential, leaving Prime Minister Imran Khan’s reform agenda hamstrung.”

Wells acknowledged that the US could not come to Pakistan with offers from state-run companies, but said private American investment, along with US grants, would help Pakistan’s economic fundamentals. “There is a different model. Worldwide, we see that US companies bring more than just capital; they bring values, processes, and expertise that build the capacities of local economies.”