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February 7, 2020

Will coronavirus affect CPEC and Pak economy?

Top Story

February 7, 2020

ISLAMABAD: Can coronavirus outbreak create havoc in Pakistan and hamper the ongoing progress on the China Pakistan Economic Corridor (CPEC) projects? The question has put Pakistani authorities in a catch-22 situation.

Thousands of Chinese nationals working on CPEC projects left for China last month to celebrate the New Year and might not be returning anytime soon without proper screening. Their return can possibly cause the coronavirus outbreak in Pakistan as some of the Chinesemight be potential carrier of latent and/or active coronavirus. If they don’t return soon, the progress on CPEC projects will be halted.

Pakistani officials believe the coronavirus will have no repercussions on the CPEC projects and China will not send any of its national to Pakistan without completing the 14-day quarantine period. However, former chairman Parliamentary Committee on CPEC believes the delay in Chinese workers return will slow down the CPEC projects and subsequently hamper the country’s economy.

At present the number of Chinese nationals working on different CPEC projects in Pakistan is around 10,000 to 15,000. Besides CPEC, thousands of other Chinese are residing in Pakistan for business purposes or working on some other projects. A majority of them had left for China to celebrate the Chinese New Year with their families, official sources confirmed.

Their early return to Pakistan will pose a serious threat as some circles have expressed doubts that there are chances some of the Chinese workers might be carrying latent and/or active coronavirus. The host country (Pakistan) not only lacks the screening kits for such a large number but it has no adequate facilities for the treatment of this pandemic. Hence raising many questions whether China will send back its workers to resume the ongoing projects or will it delay their return until they finish the mandatory 14-day quarantine period in China.

The pre-coronavirus progress on CPEC projects during the present regime is not as ideal as it was during the previous government’s era. The projects were slowed down during the first year of present government due to lack of coordination from Pakistani side. However, proper work on these projects resumed after the November 2019 JCC meeting. The possibility of prolong outbreak of coronavirus will once again hinder the CPEC projects, official documents and background discussions with informed sources reveal.

Till 2018, China has already injected a sum of $27 billion in Pakistan for different CPEC projects. Furthermore, an amount of $19 billion was to be spent in Pakistan till June 2021 which seems impossible now as the present government has delayed the projects, informed a well-placed source associated with CPEC projects.

During the PML-N regime the progress on CPEC projects was not only satisfactory but many projects were completed before time.

Total number of Chinese citizens working on CPEC and other projects

According to Mushahid Hussain Sayed, 2017 was the peak time when maximum projects were being carried out under the CPEC. The total number of Chinese nationals working on CPEC projects in 2017 was 19,583. According to official sources, currently around 10,000 to 15,000 Chinese are working on the CPEC projects. The number of Chinese nationals is reduced because some of the projects have been completed.

Similarly, according to Securities and Exchange Commission of Pakistan (SECP) official data, a total of 2,022 companies with Chinese subscribers or shareholders are registered with the regulatory body as of December 31, 2019. Similarly, 167 Chinese companies are also registered with SECP.

However, the total number of Chinese residing in Pakistan is far more than the official data as many are working on private projects as well as doing business in the country. January 25, 2025 was the Chinese New Year and thousands of Chinese citizens working in Pakistan left for China. This scribe contacted DIG Immigration Nasir Mehmood Satti to know the exact number of Chinese left for China in January 2020. However, he refused to comment on the issue.

Progress on CPEC projects

Official documents and background discussion with the Pakistani officials associated with CPEC proves that the progress on CPEC projects during the previous regime was not only satisfactory but almost every early harvest project was completed in time. However, the progress on the projects started getting late during the PML-N era as some have either been halted or are facing unprecedented delay.

During the 7th Joint Cooperation Committee on CPEC held on Nov 21, 2017, it was decided that Joint Working Group (JWG) on energy will carry out joint studies on the current power status, future load forecast as well as the potential power market in Pakistan. However, according to official sources, no significant progress has been made on this count. Although the study was being carried out during the previous regime but this recommendation of the last JCC of PML-N government hasn’t been implemented in letter and spirit yet.

Similarly, Pakistani side in 2017 agreed to facilitate the early resolution of EPC provincial sales tax issues so that the power generation projects are not adversely affected. However, the tax related issues still exist.

Fate of ML-1

It was decided in 5th Joint Working Group meeting on transport infrastructure convened on Sept 23, 2017 in Karachi that the work on phase-1 of ML-1 would be started early 2018 and all requisite arrangements including preliminary design review signing commercial contract etc would be completed through proactive approach. But the ML-1 project is yet to be started even after passage of two years.

Pakistan had proposed extension of ML-1 to Torkham. Both sides had agreed to discuss the extension at technical level on completion of the feasibility study being carried out. The study was completed during the PML-N tenure but the actual issue was the modus operandi which is still unresolved, informed the source.

Progress on CPEC projects in Gwadar

There were several projects related to Gwadar — the heart of CPEC but unfortunately the speed of the work on these projects is very slow. According to Gwadar Development Authority officials, the work on East Bay Expressway (19 kilometer) was started in October 2017 and the due date of this project was October 2020. However, it is still under construction. The project director of East Bay Expressway Imam Bux Bizenjo says almost 70 percent work on this project has been completed. The project was delayed due to technical issues as three bridges have been added. It will now be completed in April 2021, he said.

Similarly, the other projects including 5 MGD Desalination plant, 300MW Coal Fired Power Plant, Gwadar Free Zone, 30MW captive power plant were approved by the last JCC of PML-N government held in November 2017. Interestingly, no significant progress has been made on these projects. The proposal of 5 MGD desalination plant was submitted to Balochistan chief secretary on Nov 20, 2017 who was supposed to reply on Nov 27, 2017. However, no significant progress has been made. According to Gwadar Development Authority (GDA) officials the projects were delayed due to technical issues.

There is no update on Gwadar Port Breakwater as well as Gwadar Port Dredging. The sources inform that both the projects are with the Chinese authorities. There should be significant progress on these projects, said the official sources.

Four Road Infrastructure projects proposed by Pakistan in 2017

The Pakistani side had proposed four road infrastructure projects including Mirpur-Muzzafarabad Mansehra 200km project of road infrastructure, Gilgit-Shandoor-Chitral 359km, Nokundi-Mashakhel-Panjgur Road 290km, Keti Bandar Sea Port Development Project. The 7th JCC had given go ahead for conducting the technical feasibility study of these projects.

The officials associated with CPEC informed that the none-seriousness of the present government can only be imagined with this one example that during the first JCC meeting of PTI government even the minister had no preparation or proper background of CPEC projects.

How Mushahid sees progress on CPEC projects

The present government squandered its first year and did not take the CPEC projects seriously. However, the two visits of Imran Khan during 2019 helped him understand the importance of these projects.

When asked how many projects have been completed under CPEC and if there is any megaproject in the pipeline, Mushahid said early harvest projects ranging from three to five years have more or less been completed. These projects were related to energy and road infrastructure. The upcoming mega projects which will be started very soon include ML-1. This project is basically dualization and upgradation of 1872 kilometers railway track from Peshawar to Karachi.

The project was supposed to be inaugurated during the previous regime however due to some technical hitches it was delayed. The Asian Development Bank (ADB) had offered the financing of Pakistan Railways upgradation. The previous government had proposed that both the ADB and Chinese government should finance the railway upgradation. However, Chinese didn’t like this idea.

Upcoming CPEC projects

“Though Minister for Railways Sheikh Rashid Ahmed claims that both the sides have reached an agreement vis-à-vis ML-1 projects but according to my information the financing issues are still unresolved. It isn’t decided yet whether the financing of Pakistan Railways upgradation should be done in dollar or RMB,” commented Senator Mushahid Hussain.

Pakistan’s priorities have changed during the PTI-led government. The Chinese government will now spend $1 billion under the socio-economic programme in Pakistan in coming years. The Chinese will now carry out different programmes in least developed areas of Balochistan and Khyber Pakhtunkhwa under the socio-economic programme in six fields including education, health, water, irrigation, technical and vocational education and poverty alleviation.

Another upcoming mega project is the $250 grant for Gwadar Airport whereas the third mega project in the pipeline is the establishment of special economic zones.

However, the problem is these special economic zones will come under the umbrella of Board of Investment. The government’s seriousness towards the special economic zones can be gauged by only this factor that it has changed three chairmen so far. The government appointed Naeem Zamindar then Haroon Sharif and now Zubair Gilani who happens to be Imran Khan’s friend. “I personally doubt the capabilities of this government and BOI. To attract maximum investments by Chinese in the industrial sector Pakistan needs better marketing skills,” he said.

About the total number of Chinese nationals working on different CPEC projects, Mushahid said in 2017 when the CPEC projects were on peak there were 19,583 Chinese workers in Pakistan. Since Sahiwal Coal-Fired Power Plants, Port Qasim and road infrastructure projects have been completed so it is true the total number of Chinese workers at present will be around 12,000 to 15,000.

Mushahid’s views on impact of coronavirus on CPEC and Pakistan’s economy

Mushahid agrees that Chinese economy will be slowed down during the first two quarters of 2020 because of the coronavirus outbreak. He believes the timeline of new projects under CPEC will be affected because of the coronavirus as many workers had left for China to celebrate the New Year. The delay in CPEC’s new projects and ongoing one will slightly affect Pakistan’s economy.

Chinese are very strict as far as the coronavirus is concerned. They will not allow any Chinese national to travel to Pakistan or any other country without completing the mandatory 14-day quarantine. This is a fact that Pakistan lacks proper facilities for the treatment of coronavirus therefore China will make sure that all its workers should undergo proper screening before leaving for Pakistan.

Dr Ishrat’s views on Coronavirus and CPEC

Adviser to Prime Minister on Institutional Reforms and Austerity Dr Ishrat Hussain however doesn’t agree that the coronavirus will have any impact on the CPEC projects or disturb Pakistan’s economy. According to him it is too early to predict that the coronavirus will halt the ongoing projects under CPEC.

“Most of the projects under CPEC are energy related which have already been completed. Whereas the road infrastructure projects have also been finalised. We have surplus energy therefore I don’t think that any delay in the CPEC projects due to coronavirus will hamper the country’s economy unless the coronavirus outbreak stays long in China. If the pandemic is not controlled timely then there might be some impact on the CPEC projects as well as Pakistan’s economy,” commented Dr Ishrat.

Pakistani skilled labour is well trained now and handling many projects under the CPEC. Therefore, a short absence of the Chinese workers will not halt the projects. It is yet not confirmed how many Chinese citizens working on CPEC projects left Pakistan to celebrate the New Year. Hence it will be premature to comment on this issue, said Dr Ishrat Hussain.

FO spokesperson’s point of view on the Coronavirus outbreak in China

Foreign Office Spokesperson Aisha Farooqui when contacted Monday said Chinese government has already extended the New Year holidays till the mid of February due to coronavirus. The official correspondence with the Chinese government as of Monday was not resumed due to holidays.

About the return of thousands of Chinese workers who left Pakistan last month to celebrate New Year with their families, the spokesperson said that Chinese as well as Pakistani government is taking measures. “We have this realisation that the Chinese workers who went to China for holidays will have to return Pakistan. However, no Chinese citizen can leave China without a health certificate and proper screening,” commented the FO spokesperson.

She said Pakistan is with its time tested friend China at this critical moment. “This is an international crisis and everyone should support China to combat this outbreak,” said Aisha Farooqui.