Beijing’s Benevolence v. Betrayal: The Real Intentions Behind the China-Pakistan Economic Corridor

On his first-ever state visit to Pakistan, Chinese President Xi Jinping announced plans to fund the construction of an “economic corridor” between the two countries. Road, rail, and pipeline links will extend 3,000 km from the Pakistani port of Gwadar in the country’s southern province of Balochistan to China’s western autonomous region of Xinjiang. The China-Pakistan Economic Corridor (CPEC) is intended to foster development in Pakistan, while also providing Beijing with direct access to the Indian Ocean, thereby opening inland trade routes through the western regions of China. Although officials in Beijing and Islamabad claim that the CPEC will create benefits for both countries, overarching energy goals may render this agreement irrelevant should other, more attractive options for the acquisition of oil and gas resources become available to China. The urgent need for diversification to meet a growing domestic energy demand may require Beijing to abandon plans such as this one in favour of more viable alternatives. Thus, Pakistan should be wary of its dependence on Chinese aid for economic development, even in the form of an apparently mutually-beneficial agreement.

Image courtesy of Mark Hodson, © 2006 some rights reserved.

Image courtesy of Mark Hodson, © 2006 some rights reserved.

With an expanding population, China has faced a drastic rise in energy demand over the past few decades. Beijing has identified a need to reach new markets to confront the problem of growing domestic demand, and to create a more “sustainable energy security path.” As such, China has implemented a “Go West” strategy, looking to import oil and gas resources from countries in the Middle East, Africa, and Central Asia. Recent investments in the Indian Ocean and the South China Sea demonstrate how Beijing seeks to achieve energy security through the diversification of its supply sources and routes. The incorporation of Pakistan into the “New Silk Road”—infrastructure developments intended to strengthen trade, investment, and energy links across neighbouring countries—may serve to alleviate existing tensions in other regions. For example, Beijing has asserted controversial claims that have overlapped with those of other stakeholders in the South China Sea (including Japan, Taiwan, and many of the ASEAN states), and has staunchly resisted negotiation and compromise. Additionally, an increasing naval presence in the Indian Ocean Region (IOR) has helped China to ensure the protection of precious cargo—particularly energy resources—as they cross the Straights of Malacca. The new China-Pakistan Economic Corridor may serve as a viable alternative to the oil and gas promised in the South China Sea (SCS), and also allow Beijing to bypass vulnerable sea lanes of communication.

Access to the port at Gwadar will allow Beijing to acquire energy resources more directly from markets in the Middle East. The port is located along the coast of the Arabian Sea, ideally situated to serve China’s geopolitical interests—at least for the time being. However, the growing demands of an ever-increasing population may not find satisfaction in the deal with Pakistan alone. China is likely to continue pursuing its claims over territory in the SCS, and seeking to ensure protection of vital sea lanes in the IOR through an increase of military force deployed in the region. If any of these do deliver, and China finds a guarantee for oil and gas resources in the SCS or IOR through negotiation or even victory in armed conflict, Beijing may instead turn towards these alternatives to ensure energy security. An overwhelming dependence on imports for energy security may therefore lead Beijing to abandon investment in Pakistan, and to instead divert its attention to different sources of oil and gas.

Despite apparent intentions of benevolence towards a traditionally amicable neighbour, Beijing may choose to neglect its proclaimed “all-weather friendship” with Pakistan in favour of a more self-interested approach towards energy security. Facing a changing international environment in which energy security is absolutely critical, the Communist Party of China (CCP) will be more preoccupied with domestic stability than with the well-being of its neighbours, no matter how durable and long-standing some of these relationships may have been in the past. Although Xi Jinping hailed the CPEC as a “historic development opportunity” offered to an “Iron Brother,” Beijing’s self-interested goals are not focused towards Pakistan’s economic growth. Rather, concerns over the potential consequences of an inability to meet domestic energy demands are likely to be more prevalent in Beijing’s future decision-making. Energy insecurity, in tandem with slowing economic growth, presents a considerable challenge to the CCP.

It is true that the CCP recognizes how economic growth in Pakistan may actually serve to alleviate other issues that it perceives to be paramount to national security. For example, a stronger Pakistan may help to dissuade the threat of insurgency from Chinese Muslim separatists residing in the bordering region of Xinjiang by eliminating Pakistani militants as a potential source of influence. Ultimately, however, energy concerns present a greater challenge to the current regime. A restless population of over 1.35 billion people will create more of a challenge to the CCP than a few rogue militants in China’s outlying regions.

Since the 1950s, Islamabad has enjoyed positive relations with Beijing. However, if China’s energy needs could be fulfilled elsewhere, the CCP may no longer view its relationship with Pakistan as a priority. At the end of the day, Beijing may choose to ignore Pakistan’s reliance on the economic corridor for development and growth. Instead, China may turn its back on its friend in favour of more attractive sources of energy, such as those in the SCS or IOR, should they become available in the future. Until then, Beijing may continue to invest in Pakistan, though its quest for diversification is not likely to cease. The China-Pakistan Economic Corridor is thus more evident of China’s efforts towards its own economic and security ends, rather than benevolent intentions to promote growth in a relatively deprived neighbour.