Exclusive: China’s Belt and Road Encounters Setbacks in Pakistan

Laborers walk through the Gwadar Port in Pakistan, a multi-billion dollar infrastructure project that China has invested in as part of its Belt and Road Initiative. Amelie Herenstein/AFP/Getty Images

Government documents from Jilin Province of China obtained by The Epoch Times have revealed that the Chinese regime’s Belt and Road Initiative (BRI) projects in Pakistan have encountered setbacks since 2015.

China’s Belt and Road Initiative (BRI), formerly known as the “One Belt, One Road,” is Chinese leader Xi Jinping’s signature grand foreign policy project. It aims to recreate ancient China’s silk road for trading with countries in Asia, Europe, and Africa in the 21st century. The initiative invests Chinese capital in the construction of various high-cost projects in more than 60 participating countries.

One of the documents obtained by The Epoch Times was a May 5, 2016 letter drafted by Jilin authorities and addressed to the Chinese consulate in Lahore, Pakistan, in which they informed the consulate that a Chinese amusement park project in the South Asian country had suffered setbacks.

Copy of letter sent from Jilin Province government to the Chinese embassy in Pakistan. Provided to The Epoch Times

The letter is a response to an April 2016 request from the Consulate-General in Lahore seeking information about the progress of the Lahore amusement park project. The Foreign Affairs Office in the Jilin government thus detailed the project’s status, and attached a progress report provided by the project developer—which is Jindou Investment Holdings, based in Jilin.

The Jilin government and Jindou Investment Holdings stated that on Nov. 6, 2015, the company signed a framework agreement with the Punjab provincial government of Pakistan to invest 2 billion yuan (about $300 million) to build an amusement park in Lahore. In February 2016, the group signed a supplemental agreement of the project with Pakistan.

The terms of the agreements show that the amusement park includes theme parks, five-star hotels, shopping centers, aquariums, and water amusement parks.

The report revealed that Jindou had its branch company registered in Lahore, the capital city of Punjab state. Jindou also stated that after signing the agreements, the company had already carried out planning, design, and preliminary procurement. It had also obtained foreign investment subsidies and secured preferential policies for this project from the Jilin government.

However, due to Pakistan’s slow progress of acquiring the land and refusing to give a tax reduction or exemption to Jindou, the project failed to move forward.

According to Jindou’s official website, the company’s “outward development strategy” includes seizing and making good use of the country’s BRI, “strengthening connections and cooperation with Pakistan and other countries and regions,” and “promoting the Lahore Jindou Amusement Park project and settling in as soon as possible.”

Jindou has close business ties with the Chinese regime. The firm undertakes many of Jilin’s infrastructure projects such as roads and bridges, and shantytown reconstruction.

The Dilemma of China-Pakistan Economic Corridor Project—Jilin’s Portion

Although Jilin Province has undertaken five projects of the “China-Pakistan Economic Corridor” (CPEC), which is China’s multi-billion dollar BRI flagship program in Pakistan, these projects don’t look very promising, the leaked documents reveal.

For example, Jilin’s internal document, titled “Jilin Province Equipment Manufacturing and International Capacity Cooperation Project Library” disclosed that the joint venture between Jilin’s First Automobile Works (FAW) and Pakistan for producing mini vehicles, trucks, and passenger vehicles has not made any profit due to poor sales in Pakistan.

Jilin authorities had to ask the CCP’s central government for assistance, requesting the BRI project “to be included in the list of China-Pakistan capacity cooperation.” At the same time, Jilin hoped that the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) would ask Pakistan “to purchase FAW truck products as the priority for Pakistan’s major engineering projects.”

The awkward situation of Jindou and FAW in Pakistan disclosed in the documents of the Jilin Foreign Affairs Office reveals that the reality of the BRI is unlike the rosy version portrayed in the Chinese Communist Party (CCP)’s propaganda.

The CCP’s geopolitical ambitions via the BRI have been highlighted by researchers, as participating countries’ economic and political situations have been deeply affected by the initiative, while some countries have lost control of their strategically important ports to China due to their inability to pay back the Chinese loans and the construction cost, such as the Hambantota Port in Sri Lanka.

The BRI has been criticized by international communities of “becoming a colonialist power”and a “debt trap diplomacy” of the CCP, and have encountered pushback. The new Malaysian government revoked its BRI agreement with China, while Bangladesh, Burma (Myanmar), and Sierra Leone have also backed out from their commitments to such deals.

BRI Aggravates Pakistan’s Debt Crisis

According to a report published by Wall Street Journal in July 2018, the BRI suffered setbacks in Pakistan. Beijing invested $2 billion to build Pakistan’s first subway line, which not only pushed the country into a debt crisis, but also caused increasing resentment among the country’s political and business circles.

WSJ reported that most of the infrastructure projects promoted by the CCP around the world grant loans through opaque transactions, and usually use Chinese contractors; and Pakistan, like other countries, is caught in financial and political crisis due to huge Chinese debts.

The new Pakistani government, which came to power in 2018, began to change its position on the “China-Pakistan Economic Corridor,” according to a report by the Financial Times. The government said it was unfair for Chinese-funded enterprises to receive tax breaks and other benefits.

The Pakistani government has sought help from Beijing before seeking assistance from the International Monetary Fund (IMF). The CPEC is deeply mired in debt. Only less than half of the infrastructure projects totaling $62 billion have been carried out. For these projects alone, Pakistan will have to repay $40 billion to China in the next 20 years.

In May 2019, Pakistan received a total of $6 billion in bailout funds from the IMF.

Current affairs commentator Li Linyi said that these official documents reveal that Chinese companies cannot make money in Pakistan but only can get a share of the BRI investment. In the end, the CCP steals the money of Chinese taxpayers to pay for its huge foreign investment, while the participating countries of the BRI have fallen into a debt trap.

He Jian contributed to this report.