What has happened?
- China and Pakistan have extended invite to “any third country” willing to be part of the multi-billion-dollar China-Pakistan Economic Corridor (CPEC) by making investment.
- CPEC, a flagship project of China’s Belt and Road Initiative, is a combination of transport and energy projects that are under construction throughout Pakistan beginning in 2013.
- Originally valued at $47 billion, the value of CPEC projects is worth $62 billion as of 2020, according to BBC.
- The plan will largely centre on an economic corridor from Gwadar in Pakistan to Kashgar in the Chinese region of Xinjiang.
- India has repeatedly registered its protests over the project, saying that it is in violation of its sovereignty as it passes through Pakistan-occupied-Kashmir.
But why 3rd country?
- As the China Pakistan Economic Corridor (CPEC) runs into roadblocks over fund crunch and delays, the two countries have now invited any third nation to join the multi-billion dollar infrastructure project for what they say would be “mutual beneficial cooperation”.
- The $65 billion mega project has entered its second phase at a time when Pakistan is battered by a financial crisis at home.
- And even China is struggling with a real estate crisis and growing depositors protests.
- During the third meeting of the CPEC Joint Working Group (JWG) on International Cooperation and Coordination (JWG-ICC) held in virtual mode,
- Both sides expressed interest in inviting other countries to make investments in the project, according to a statement by the Foreign Office.
- The meeting highlighted that CPEC had broken new ground in strengthening international and regional connectivity, especially in the context of its extension to Afghanistan.
- China and Pakistan have been mulling extending the CPEC to Afghanistan to promote economic development and stability in the Taliban-ruled nation,
- In return for guarantees on security and human rights, particularly the education of girls, reports say.
Which could be the 3rd country?
- Though it has not been revealed who might be investing in the project, a Global Times report on January 16 suggested that, Saudi Arabia, United Arab Emirates (UAE) and Germany might come on board.
Importance of CPEC for China
- China has given a massive thrust to the BRI which forms a core of its foreign policy.
- As part of the connectivity project, it has invested heavily in building power plants, ports, railways, 5G networks, and laying fiber-optic cables along the route.
- CPEC is one of China’s most substantial undertakings in any single country.
- It was meant to showcase the success of BRI and allowed China to leverage ties with its all-weather ally to secure permissions and security commitments for its projects.
- But China’s failure to present CPEC as a success story and model has dealt a blow for other BRI projects which too are struggling under debt.
Pakistan’s growing problem with CPEC
- Chinese President Xi Jinping and the then Pakistan Prime Minister Nawaz Sharif had launched the CPEC in 2015.
- Pakistan’s economic woes had begun much before that and the project was envisioned to pull the country out of its dire economic situation, setting it on the path of growth.
- Seven years later, Pakistan has slipped into a financial crisis partly caused by what was meant to be a solution to the chronic ailment.
- CPEC contributed to a rise in Pakistan’s debts.
- Islamabad had to import billions of dollars of materials for the project that widened its current account deficit.
- As the economic situation spiralled out of control after the pandemic broke, Pakistan sought an International Monetary Fund (IMF) bailout.
- Meanwhile, the projects that were coming up under CPEC were not only stalled due to a lack of funds were also saddled by corruption and security threats.
- There has been a strong Baloch resistance to Islamabad’s grip over their region which has also manifested in a pushback against the CPEC projects.
- A crucial link of CPEC runs through the resource-rich Balochistan province, for long a hot-bed for insurgency.
- China is known to be particularly keen in exploiting the region known for its gold, gas and coal deposits and wants to develop the derelict Gwadar port to gain access to the Indian Ocean.
- Analysts also say that establishing a modern port in Gwadar will pave the way for a Chinese military base in the region in the future.
- However, CPEC infrastructure has always been targeted by terror attacks.
- Even Chinese soft power is brutally challenged.
- Earlier this year, a Baloch suicide bomber killed four people including three Chinese teachers at the Karachi University.
- As Pakistan finds it harder to protect the infrastructure and payback loans, it is looking for ways to delay the repayment deadlines and cut rates of interests from Chinese banks.
- The Pakistan currency was at 226.81 rupees to the dollar last week, its new historic low.
- Its foreign reserves are down 60%.
Q) Which of the following include the Narrow Money?
- Currency held by the public
- Demand Deposits
- Time Deposits
- 1 only
- 1 & 2 only
- 2 & 3 only
- All of the above