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Shehbaz Sharif’s China visit: All talk, no cash
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  • Shehbaz Sharif’s China visit: All talk, no cash

Shehbaz Sharif’s China visit: All talk, no cash

Tara Kartha • June 11, 2024, 15:48:37 IST
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Based on public statements, the visit seemingly yielded none of Pakistan’s desired financial commitments

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Shehbaz Sharif’s China visit: All talk, no cash
Chinese President Xi Jinping and Pakistani Prime Minister Shehbaz Sharif shake hands at the Great Hall of the People in Beijing, China, June 7, 2024. Image: REUTERS

It seems the heat has gotten to Shehbaz Sharif, the Prime Minister of Pakistan. His visit to China seemed shaky from the start, with dates remaining unconfirmed by Beijing until just before his departure. Finally, a five-day visit was slated—which might seem like a nice holiday, except that critical policy decisions are looming. As Pakistani experts note, the visit led to postponing a critical budget session, vital for securing a deal with the International Monetary Fund (IMF). Sharif must have needed that visit badly. Just how badly soon became apparent. In a highly unusual development, the Chief of Army Staff, General Asim Munir, was seen front and centre throughout the visit.

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The ‘talky talk’ before the visit

Prior to the visit was the usual flowery rhetoric. In an interview with the Chinese media, Sharif declared, “We are two iron brothers, our friendship is unshakable and our hearts beat together.” The reality, however, is that Pakistan desperately hopes for a rollover of some $15 billion in debt to China for the construction of approximately 20 power plants. Additionally, there is the small matter of $1.5 billion in unpaid bills, and Sharif’s government desperately wants to avoid raising power charges again. The last time such an increase occurred, it sparked severe protests, especially concerning given the current heatwave. Officials acknowledge the visit was unexpected, while others hope the prime minister will return with substantial business deals. In a sign of bravado, Islamabad announced $2 billion for the Karakorum Highway realignment, a project that has yet to undergo feasibility studies and certainly won’t be funded by the already overburdened public exchequer.

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In Beijing, Sharif was received with due ceremony by Chinese Vice Foreign Minister Sun Weidong. His entourage, which included the Ministers for the Board of Investment, Commerce, and Revenue, among others, indicated the visit’s primary focus on economic matters. Around 79 Pakistani companies were present in Shenzhen, the prime minister’s first stop.

At the conference, Pakistani ministers promoted the country as an ideal base for export-oriented companies. The team’s consistent message, echoed even during their visit to the UAE, was that Pakistan no longer seeks loans but rather employment opportunities and training for its youth. This stance implicitly acknowledges the limitations of the current Pakistani labour force. Headlines say that Pakistan’s “best and brightest” are leaving.

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In 2022 alone, a staggering 765,000 individuals left for foreign shores, including 92,000 highly educated professionals such as doctors, engineers, IT experts, and accountants. Furthermore, Pakistan’s finance minister Muhammad Aurangzeb acknowledged “ temporary hiccups” in payments and repatriations for Chinese firms due to severe foreign exchange issues. Other companies, including German giant SAP, face similar challenges, with solutions unlikely to materialise soon.

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Those mysterious agreements

As the visit progressed, the theatrics intensified. On June 6, the Ministry of Commerce hailed a ‘historic moment’ in bilateral ties, reporting the signing of 32 agreements in business-to-business meetings. These agreements covered sectors such as energy, automobiles, information technology, pharmaceuticals, healthcare, and—most notably—agriculture and food processing. This focus on agriculture has always been a priority for China, given its heavy dependence on food imports and low arable land availability.

Interestingly, available reports also included an MoU between the Pakistan Television Corporation and China Media Group, signalling further ingress of Chinese media into the country, adding to the six companies already operating there. Additionally, there is the now-customary mention of “feasibility studies” for various highways, such as the DI Khan-Zhob National Highway (N-50) and the Muzaffarabad-Mirpur-Mangla Expressway. The latter derives its importance from two proposed economic zones (Bhimber and Mirpur), which, notably, are absent from the main CPEC page.

It’s worth noting that Mangla houses Pakistan’s Strike Corps, making that particular road strategically significant. Furthermore, plans persist for constructing a tunnel at Babusar, aimed at enabling all-weather connectivity between “Azad” Kashmir and Gilgit-Baltistan, a project in development since 2016. In short, the agreements offer nothing new.

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The joint statement

The final joint statement is interesting in multiple ways. First, it’s 18 pages long and dithers on about the ‘iron-clad’ relationship, ironically congratulating Pakistan on its (s)elections—from a Chinese leader who has selected himself for life. Then there’s the now-standard support for “safeguarding its sovereignty, national independence, and territorial integrity,” which falls short of an actual mutual defence treaty. It also reiterates a theme prevalent throughout the visit—the importance of combating terrorism, stressed by none other than President Xi himself—but links it to attempts to “undermine” their friendship.

Someone should inform the Chinese that strong suspicions linger that the recent attack on the Dasu hydropower station—which, rather unusually, the Tehrik-e-Taliban denied—may have been orchestrated by Pakistanis themselves to garner Beijing’s support against Kabul. In fact, that’s what the Taliban are openly claiming.

There’s little in terms of specifics in the economic cooperation sphere. The final statement mentions only 23 agreements and is vague on most matters, except for projects related to Chinese core interests. Gwadar is mentioned in terms of the need to build ‘auxiliary infrastructure,’ which includes roads and railways that Pakistan has failed to build, and the Karakorum Highway realignment project, which has faced serious setbacks. Incidentally, the Gwadar international airport is undergoing flight checks and safety audits, marking the final leg of its coming online. That’s a mystery in itself—a huge airport in the middle of nowhere with no particular incoming traffic to support it.

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Meanwhile, many of Pakistan’s prized projects see little mention. The ML-1, the most expensive project of all, is mentioned only in passing, with China merely committing to its businesses investing in Pakistan “in accordance with market and commercial principles.” In other words, caution is in the air. The statement is predictably enthusiastic about end-to-end agricultural cooperation, which likely means that local farmers might find themselves at a disadvantage. Chinese farms in Africa are well-known for mass mechanisation rather than generating employment.

And as of the time of writing, no spectacular bailout of Pakistan has materialised, either in terms of substantial business deals or debt rollovers. However, there is a commitment to the ‘industrialisation’ of Pakistan. That’s a tall order when at present, it has none of the basics. The IT industry has seen a significant rise in recent years, and China may be expected to dip its fingers into that pie.

The all-platinum lining

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Despite business and Chinese banks hanging back in providing economic succor, Beijing apparently has no qualms about payback in the defence sphere, given the generous provision of the new J-10 combat aircraft with an entire suite missile, the direct import of the new VT tank, licensed production of the Type 90-2M tank, frigates and the new Hangor class submarines. And the reason for that is made more than obvious. The statement underscored that “stronger strategic defence and security cooperation between China and Pakistan plays an irreplaceable and critical role in… ensuring strategic balance of the region”. That’s plain speaking of no mean order.

On the Kashmir question, the Chinese position is a little mixed. While retaining its traditional line of Kashmir being a “leftover of history” to be dealt with under the UN resolutions and bilateral treaties, it opposes any “unilateral action”. Clearly, the Article 370 move still rankles considering that China occupies a large slice of the princely state of Kashmir. And finally, there is what the statement doesn’t say. While it espouses a high-toned position on Gaza and the need for a two-state solution, it is entirely silent on the burgeoning Ukraine situation, where World War III is expected as tensions rise. Apparently, it’s not Beijing which is being cautious. Pakistan likes its bread buttered on both sides, and it likes to keep its US options open.

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Based on public statements, the visit seemingly yielded none of Pakistan’s desired financial commitments. However, it’s worth noting that actual loans to the Pakistani military, for instance, are shrouded in opacity, receiving no mention in State Bank of Pakistan reports beyond a rare (and perhaps accidental) footnote. Yet, Sharif made that hurried trip for a reason, and he brought the Army Chief along for a reason as well.

It appears something was anticipated, potentially involving a payout from the Pakistani Army and a reciprocal quid pro quo for the civilian establishment. If there has been a bargain, it has yet to surface. A debt rollover is possible, but the true quid pro quo might only become apparent through an increased Chinese presence within Pakistan and along its borders with India. Wait for it.

The writer is a Distinguished Fellow at the Institute of Peace and Conflict Studies, New Delhi. She tweets @kartha_tara. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.

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China Pakistan Pakistan economic crisis Shehbaz Sharif Xi Jinping
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