Shailesh Kumar, National Defence
New Delhi, 06 June 2018
CPEC threatens India and shall trigger Pakistan’s collapse. Yet Pakistan is walking into the grave willingly.
China’s investment of $62 billion in China- Pakistan Economic corridor (CPEC) as part of One Belt One Road initiative, projected as change of face of Pakistan’s economy, will be ‘Dragon’s Net of Debt Trap for Pakistan’.
CPEC project lacks transparency and financial accountability. The agreement in shrouded with lack of information and severely impedes proper cost benefit analysis. The Chinese approach is not of partnering local companies and communication and will not create job opportunities for Pakistan nationals, as envisaged earlier. Today all companies are Chinese and Chinese laborers are all over Pakistan. Pakistanis are helping Chinese by way of establishing Dhabas along the roads, repairing Chinese vehicles along the highways and Pakis are mostly vulcanizing.
CPEC has the potential of making Pakistan a colony of China, once operationalised in line with East India Company conquering India by stealth. India has not participated in the project due to obvious security concerns and alignment of the corridor which passes through POK. Financial estimates that CPEC related imports could reach 11 percent of total projected imports by 2020, equal to just over $5.7 million, while inflows of the corridor will touch 2.2 percent of projected GDP in that year. Gross external financial needs of the country will jump 60 percent by then to $17.5 billion in 2020 and thus Pakistan shall become a willing victim to fall into the Dragon’s debt trap.
IMF has already warned that Pakistan needs to manage increasing CPEC related outflow. Pakistan’s debit service outflows will be about $1billion and return on equity will be $646 million if it is kept at 17 percent which shall be additional to the 1.9 percent as repayment of principal. That means an outflow of $3.546 billion per year once CPEC corridor becomes fully operational. Economists have serious reservations on Pakistan’s ability to service the debt. CPEC loans will add $14 billion to Pakistan’s public debt, raising it to $90 billion in 2019.
China has not given guarantee to Pakistan and debt trap will cause instability in the region.
It is in India’s interest that CPEC must not cause regional instability in the region and Chinese influence should not increase towards West.
Writing on the wall is clear and is alarming.
Shailesh Kumar is an independent journalist with over 15 years of experience in crime, political and defence reporting for leading media brands including Star News, India TV and NewsX. He is the founder editor of defence and security news portal and web channel, National Defence.