CPEC Turns From ‘Game-Changer’ to Liability
Once hailed as a transformative project for Pakistan’s economy, the China-Pakistan Economic Corridor (CPEC) has instead become a financial burden, pushing Islamabad into a $9.5 billion debt trap, according to a report in The Diplomat.
Launched in 2015 as part of Beijing’s Belt and Road Initiative (BRI), CPEC was envisioned to provide energy security, modern infrastructure, and an industrial base for Pakistan. However, delays, cost overruns, and political disputes have severely undermined its promise.
Mounting Debts and Energy Woes
Economist Ali Hasanain, Associate Professor at Lahore University of Management Sciences, said the fundamental flaw was that most CPEC projects relied heavily on foreign currency financing, clashing with Pakistan’s domestic exchange rate and industrial policies.
Currently, Pakistan owes:
- $7.5 billion for setting up power plants
- Nearly $2 billion in circular debt (unpaid bills to Chinese energy producers)
The delay in CPEC 2.0 has prevented Pakistan from building an industrial base necessary for an export-driven economy, forcing Islamabad to take new loans to service old ones.
Political Infighting Stalls Progress
CPEC has been marred by internal political wrangling:
- Under PML-N (2015), the government projected itself as the architect of CPEC. The opposition PTI accused it of corruption and inflating costs.
- When PTI came to power in 2018, it sought to renegotiate “unfair contracts” with China, but Beijing only agreed to review projects not yet initiated.
- In 2019, Pakistan turned to the IMF for a bailout, which required sharing CPEC details and slowing down spending — angering Beijing.
Ethnic and Security Challenges
CPEC also faced resistance from local communities and armed groups:
- The Balochistan Liberation Army (BLA) has carried out repeated attacks against Chinese personnel and infrastructure.
- The Tehreek-e-Taliban Pakistan (TTP) has increasingly targeted Chinese interests, especially after the U.S. withdrawal from Afghanistan.
Between 2021 and late 2024, there were 14 major attacks on CPEC projects, killing 20 Chinese citizens and injuring 34, most claimed by the BLA.
A Debt-Driven Future
With overdue projects, stalled industrial development, and persistent security threats, Pakistan remains trapped in a cycle of borrowing to repay past loans. Analysts warn that without structural reforms and renegotiation of terms with China, CPEC risks becoming less a “corridor of prosperity” and more a corridor of debt.
