Shortly after office hours commenced for the day, three gunmen attacked the Chinese consulate in Karachi, Pakistan, on November 23. What ensued was an hour-long gun battle and loud blasts of explosives before the attackers were killed by the Sindh Police and the 21 Chinese nationals working there were safely evacuated from the consulate.
Pakistan security personnel outside the Chinese consulate in Karachi Photo: AFP
The consulate attackers were not from an Islamist terror group, but separatist rebels from the Baloch Liberation Army, wielding violence in an attempt to end China’s presence in their province and stop the construction of the China-Pakistan Economic Corridor (CPEC) that runs through the heart of Balochistan, Pakistan’s poorest province. This tragic incident that left four dead – two hero policemen and two civilians— has drawn the world’s attention to China’s “debt-trap diplomacy” as a means to tighten its grip around debt-ridden countries of Asia and Africa.
The CPEC, in which China has invested more than US$62 billion (£49 billion), includes a string of infrastructure projects including road, rail and oil pipeline links to improve connectivity between China and West Asia. The people of Balochistan perceive that this project will give them nothing, while exploiting Balochistan’s abundant natural resources and effectively lead to state-sponsored subjugation of their people.
This attack was the most extreme in the mounting backlash against China for its predatory lending policies, particularly under its Belt and Road Initiative (BRI), of which CPEC is part. The BRI aims to revive the ancient “Silk Route” by connecting China to other world economies physically via road and rail, as well as financially, and involves massive Chinese-funded construction projects. Several nations that had agreed to BRI-based borrowing are now looking to cancel or scale back Chinese projects that will leave them indebted and vulnerable to the military superpower.
The backlash started with Malaysian prime minister Mahathir Mohammed strongly calling China out for “Neo-colonisation” and cancelling 23 billion-dollar infrastructure projects signed up for by the previous Malaysian government— a deal now regarded as mired in controversy and corruption. “We do not want a situation where there is a new version of colonialism happening because poor countries are unable to compete with rich countries,” Mahathir had said to the press during a trip to China earlier this year. “They know that when they lend big sums of money to a poor country, in the end they may have to take the project for themselves,” he said, citing the example of debt-crippled Sri Lanka that has had to sign over its Chinese-built Hambantota port along with 15,000 acres of surrounding land to China on a 99-year lease, giving China a military and commercial stronghold in the Indian Ocean.
In the meantime, Pakistan is also rethinking the huge loans it has taken from China, amidst criticism from within the country as well. Pakistani economists point out that the deals with China may have looked good on paper but in reality involve inflated budgets, closed tenders that are given only to Chinese companies, and virtually no employment for Pakistanis as Chinese projects are carried out by Chinese contractors who import manpower from China, ensuring most of the borrowed money flows back to Beijing. Razaq Dawood, adviser to the Pakistan Prime Minister on industries and production, was recently quoted complaining that all machinery – and even ladders and furniture – is brought in from China, leaving virtually no business for local industry. “Projects like the CPEC should benefit both nations, not just one,” he pointed out. Apart from Pakistan, six other countries are questioning the feasibility of the BRI with regards to their mounting debt— Indonesia, Kazhakistan, Poland, Sri Lanka, Bangladesh and Laos have realised that they have been “painted into a corner”.
Countries around the world owe huge sums to China
“The China-Pakistan corridor will no doubt be a game changer for Pakistan, but we need to be careful. Ten years’ tax concessions, 90-year leases for Chinese companies and cheap imports will impact the competitiveness of existing domestic industries,” the Japanese Nikkei Asian Review, the world’s largest financial newspaper, quoted Ehsan Malik, the Chief Executive Officer of Pakistan Business Council, a business policy advocacy forum, as saying.
The Centre for Global Development, a non-profit research organisation, has analysed debt to China that will be incurred by nations participating in the current Belt and Road investment plan. Eight nations will find themselves vulnerable to above-average debt: Djibouti, Kyrgyzstan, Laos, the Maldives, Mongolia, Montenegro, Pakistan, and Tajikistan.
Yet, China is looking beyond Asia, having taken its BRI projects to 70 countries overall, ranging from poor African nations to the Pacific islands, as well as India, Russia and New Zealand among the growing economies.
Only time will tell if China’s 900 billion dollar ambition will pay off, or if the other world economies will decide to pull out in order to retain their autonomy.
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