The recently concluded 2nd Round of China-Pakistan Foreign Ministers’ Strategic Dialogue has drawn considerable media attention. The Joint Press Statement issued has come a long way from the statement issued in November 2018, when Prime Minister Imran Khan made his first official visit to China. Pakistan has received stronger support on the J&K issue from her ‘iron brother’. This will no doubt help Foreign Minister Qureshi who is facing attack from his Cabinet colleague Shireen Mazari for "letting down the Kashmiris and [Prime Minister] Imran Khan".¹The charge was made for failure of the Foreign Office to attract sufficient international support for its stand on the J&K issue. However, the significance of the visit need not be over-stated. It comes at a time when both countries are facing international pressure.

The Sino-Pak Joint Statement at the end of Prime Minister Imran Khan’s first official visit to China in November 2018 included a non-committal formulation of J&K. It mentioned that China ‘supports Pakistan’s efforts for improvement of Pakistan-India relations and for settlement of outstanding disputes between the two countries.’² This did not have any reference to either Jammu & Kashmir or UN resolutions on the subject. In contrast, the Joint Press Release issued at the end of Foreign Minister Qureshi’s visit stressed that ‘it is an objective fact’ that ‘the Kashmir issue is a dispute left over from history between India and Pakistan’.³ It added that ‘the dispute should be resolved peacefully and properly through the UN Charter, relevant Security Council resolutions, and bilateral agreements.’⁴ It added for good measures that ‘China opposes any unilateral actions that complicate the situation.’⁵ This was an obvious reference to India’s action in scrapping article 370 last year.

The Joint Press release also included a reiteration by Pakistan of ‘its firm support to China on affairs concerning China’s core interests and issues of major concern, such as those related to Taiwan, Xinjiang, Tibet, and Hong Kong.’⁶ There was no such reference in the statement issued after Prime Minister Imran Khan’s visit in November 2018. It shows not only the progress in bilateral relations but difficulties China is facing in its relations with the rest of the world. An affirmation of Pakistan’s support on Taiwan, Tibet, and Hong Kong may not matter much, apart from showing that Pakistan is turning its back on its western friends. But China obviously wanted Pakistan to affirm positive support on Xinjiang, where it is facing trouble with the restive Uighur minority.

The Joint Press release also had a paragraph on Afghanistan. The November 2018 Joint Statement issued at the end of Prime Minister Imran Khan’s visit to China included the mantra that China supports the ‘Afghan-owned and Afghan-led’ peace and reconciliation process. Since then the Afghan situation has evolved considerably, and therefore the Press Release issued at the end of Qureshi’s visit makes is more detailed. While retaining reference to ‘Afghan-owned and Afghan-led peace process’, it also ‘emphasized the importance of an inclusive, broad-based, and comprehensive negotiated agreement for a future political settlement in Afghanistan.’⁷ China has been staking its position as a peace-maker in Afghanistan. It remains to be seen if it narrows space for Pakistan or circumscribes it. China could not be too comfortable with the prospects of a Taliban regime in the neighborhood at a time when it is facing problems vis-à-vis the Uighur Muslim minority.

Prime Minister Imran Khan’s first official visit to China took place against the background of his publically expressed reservations on CPEC. Hence, there was a measure of Chinese reticence in supporting him until they had secured his full compliance. Pakistan’s establishment ensured that Imran Khan quickly fell in line. Its economic difficulties now accentuated by COVID, and strained ties with Saudi Arabia have made Chinese support even more critical. The Joint press release mentions that the ‘China-Pakistan Economic Corridor (CPEC) has entered the new phase of high-quality development.’ It mentions that the ‘two sides will continue to firmly advance the construction of CPEC.’

While there may be political convergence on CPEC, Pakistan’s challenge is to find resources to pay for its share of the project costs under CPEC, even assuming that the bulk of the finance and machinery comes from China. Defense (Rs. 1,289 billion) and servicing of domestic debt (Rs. 2,631billion; US$ 1= Pak Rs.168.58) together account for Rs. 3,920 billion and exceed the Federal Government’s share of revenue receipt (3,699 billion).⁸ This does not take into account the external debt repayment on which there is a moratorium following the G-20 decision. Excluding these two items, fresh borrowing will be needed even for meeting current expenditure. This is compounded by a 26.7 % reduction in external receipts as compared to the budget estimate of 2019-20. The total external receipts expected are Rs. 2,222.9 billion.⁹

According to the Budget document, ‘Public Sector Development Programme (PSDP) is the main instrument for improving the socio-economic conditions in the country and achieving the macroeconomic and development objectives and targets.’ The overall PSDP budget has been reduced by 17.9 % from the 2019-20 budget. The Federal PSDP has received a lighter reduction of 7.2 % as compared to the 2019-20 budget. Nevertheless, this points to a severe resource crunch for development projects.

The Joint Press release promises to ‘unleash the great potential of CPEC to make it a hub of regional connectivity.’ The regional connectivity refers to the Gwadar port. In May of this year, 16,000 metric tonnes of urea and fertilizer for Afghanistan transited through the Gwadar port.¹⁰ The bagging of fertilizer brought in bulk was done at Gwadar. But its use for connectivity with Central Asia demands settled conditions in Afghanistan. This will depend upon how the political transition in Kabul takes place. If it leads to a broad-based government, and peace returns, Gwadar may have a role. But Iran has a safer hinterland and offers better prospects for regional connectivity through Chabahar and Bandar Abbas ports.

Going beyond the text of the Joint Press Release issued at the end of Qureshi’s visit, the prospects of Sino-Pak collusion are real. Pakistan’s dependence on China will increase in the future. China will have to bear a greater financial burden; it can also extract a higher price from Pakistan. China-Pak situation was always driven by the senior partner. This imbalance will increase in the future. It remains to be seen how China exploits it.

Endnotes

1. Business Recorder, Editorial, Discordant Voices, 21.8.2020
2. XINHUANET http://www.xinhuanet.com/english/2018-11/04/c_137581441.htm
3. Joint Press Release of the 2nd Round of China-Pakistan Foreign Ministers' Strategic Dialogue, 22.8.2020, http://www.chinamission.be/eng/mhs/t1808344.htm
4. Ibid
5. Ibid
6. Ibid
7. Ibid
8. Pakistan’s Budget 2020-21
9. Pakistan’s Budget 2020-21
10. The Daily Times, Pakistan operationalized Gwadar Port for Afghan transit trade, May 29, 2020

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