Balochistan liberation and debt directly hitting China-Pakistan Economic Corridor

The hijacking of the Jaffar Express train from Quetta to Peshawar by the Balochistan Liberation Army (BLA) on 11 March 2025 was another blow to the Pakistan security establishment. Pakistan Railways temporarily suspended its train operations between the mineral-rich Balochistan and the other provinces of Pakistan. BLA has been spearheading the separatist movement. There was yet another attack 3-4 days later. The Pakistan Army has a Corps Headquarters and Staff College at Quetta, the provincial Capital.

The China-Pakistan Economic Corridor (CPEC) is the flagship infrastructure project of China’s Belt and Road Initiative (BRI). A significant part of the western line passes through Balochistan terminating at the China-developed deep-sea port at Gwadar. CPEC has sparked unrest and dissatisfaction among the Baloch people, who have long faced exploitation by Pakistani security forces and Chinese nationals. The Baloch have accused Pakistani authorities of genocide, enforced disappearances, and extrajudicial killings. While CPEC is meant to build roads, railways, pipelines, and energy projects, it has faced criticism, including allegations that it is a Chinese debt trap. It has also been hindered by internal ethnic divisions in Pakistan.

Balochistan

Oil and mineral rich Balochistan is Pakistan’s largest and least populated (14.8 million) province. It has an area of 347,190 square kilometres, which is 43.6 per cent of the country’s land. Baloch people make up 3.6 per cent of Pakistan’s population, 2 per cent of Iran and 2 per cent of Afghanistan.

CPEC phases

The CPEC is a massive infrastructure development project aimed at connecting China with Pakistan, and further to the Arabian Sea at Gwadar. The CPEC implementation is divided into two phases. The ongoing first phase focuses on infrastructure creation, including energy, transportation, and port development projects. Some of these projects have been completed, but a lot is still work in progress.

The second phase will be the operational phase in industrial cooperation and development of Special Economic Zones (SEZs). This phase is expected to create more jobs and stimulate economic growth in Pakistan.

CPEC and the ‘Malacca Dilemma’

The Straits of Malacca provide China with its shortest maritime route to Europe, Africa, and the Middle East. Approximately 80 percent of its Middle Eastern energy imports also pass through the Strait. As the world’s largest oil importer, energy security is a major concern for China, especially since current sea routes used for importing Middle Eastern oil are to some extent dominated by the not-so friendly United States and India. It could potentially threaten the Chinese economy. Sea routes passing through the disputed and contested South China Sea, could also be threatened.

The CPEC project would allow Chinese energy imports to bypass these contentious areas, offering an alternative route through the west. However, there is evidence suggesting that pipelines from Gwadar to China would be very costly, face significant logistical challenges, including difficult terrain and potential terrorism, and would have minimal impact on China’s overall energy security. With the West pushing Russia into Chinese arms, China has a breather on energy supplies.

Huge Chinese presence

CPEC is mostly funded by Chinese banks. The main construction companies are all Chinese. They bring their own engineers and senior managers, and many cases steel and cement. China has also brought its own security personnel. Only some labour and smaller items are being sourced locally. It has not brought the kind of jobs that Pakistan was expecting.

CPEC and massive debt

CPEC has a total investment of over $62 billion. While CPEC has the potential to transform Pakistan’s economy, it has also raised concerns about Pakistan falling into a debt trap, with many critics labelling it as a form of “neo-colonialism”.

Pakistan’s debt burden has increased significantly since the launch of CPEC in 2013. According to the International Monetary Fund (IMF), Pakistan’s external debt has risen from $44.35 billion in June 2013 to $90.12 billion in April 2021, with China being the largest bilateral creditor. Pakistan owes China approximately 27.4 per cent of its total external debt, which is around $24.7 billion.

Pakistan’s rising debt burden has raised concerns about its debt-sustainability, and ability to repay Chinese loans. The lack of transparency in CPEC projects has raised concerns about corruption and mismanagement. Bureaucratic delays have hindered the progress of most CPEC projects.

Security concerns

There is a saying that the snake you breed in your backyard may one day bite you. For long, Pakistan has been recognised as the hub of global terrorism. Afghanistan-based and local terror groups are targeting the security forces for various grouses. Despite China bringing close to 10,000 security personnel, and Pakistan Army getting involved directly in CPEC security, for many years there have been incidents of Chinese engineers and personnel being targeted and killed by local militants. The security situation in Balochistan, where Gwadar Port is located, is a major concern.

CPEC which was meant to promote regional connectivity and cooperation by linking China with Central Asia, the Middle East, and Africa, and enhance China’s influence in the region has not shown the kind of results yet.

Question Marks on Usefulness of Pakistan

Pakistan is a country with a failing economy. Terrorism is hitting them from all directions. Secessionist movements are very active. Most influential Pakistanis prefer to invest abroad, and their children study and settle in liberal Western democratic countries.

While Pakistan is skidding from one debt interest payment to another, it often falls back on Saudi Arabia and China. Both are reluctant to put any more money in the “black hole”. Many in China are questioning the economic and geostrategic returns of Pakistan. With the flagship CPEC failing it has sent signals to many other such projects in Asia and Africa. The Chinese debt-trap is causing political concerns all over.

BLA is highly motivated and has adequate external support. Its devastating “Operation Herof” continues, as the Pakistan military is not only unable to suppress the Baloch resistance, but are being repeatedly targeted. 2024 was one of the bad years for the Pakistani establishment with a large number of incidents and killings. Beijing has been watching closely and has repeatedly warned of its concerns. CPEC was supposed to be the magic bullet for Pakistan to solve all their economic, security, and political woes, but has turned out to be a bullet out of the muzzle. Far from stabilising the country’s economy, it has turned to be most destabilising. In fact the entire stretch from Gilgit-Baltistan to Balochistan, is a security nightmare. The entire region is a fertile ground for anti-Pakistan groups. By targeting Chinese workers, the militants are actually sending a signal to Pakistan government.

Chinese investments on CPEC projects have slowed down in recent years. Despite Pakistan government diktat, Gwadar port has still to see trade picking up. Gwadar is the crown jewel that Baloch will not let prosper.

Pakistan has been seeking billions of dollars of fresh investment from China, and seeking to renegotiate terms of old loans. China has refused to sink any more money in this bottomless pit. Chinese investments are now directly contingent to security conditions. Under pressure from China, the Pakistan Army announced a new military Operation Azm-e-Istehkam. But the government was forced to back down due to strong public reaction against it. The Pakistan Army is already fighting many militant groups near the Afghanistan border.

CPEC is hardly a vibrant trade route. Failure of CPEC will be a setback for Xi Jinping. China has shifted away from large-scale infrastructure projects with long-term payoffs. Shifted focus to smaller projects with quick returns, what they now call ‘smart CPEC’. Aim is to build a revenue stream. Meanwhile Pakistani Generals keep talking of laying the American card.  Clearly there is a big investment dilemma for China.

CPEC and Balochistan

Balochistan, makes up 44 per cent of Pakistan’s land mass, and yet as per the UNDP, Balochistan has the second highest headcount for multi-dimensional poverty out of all the provinces at 71.2 per cent. It also has the lowest literacy rate in the country, especially among women. Two energy projects under CPEC are located in Balochistan; both are troubled. The first, a 300 MW imported coal power project in Gwadar has yet to be built and there is speculation the project will be shelved due to financing challenges. Meanwhile, the China Power Hub Generation Company’s 1,320MW coal-fired plant at Hub, has faced frequent liquidity problems, shattering investor confidence.

Of the two road projects in Balochistan, the Khuzdar-Basima road has been built, but the second road from DI Khan to Zhob is not yet complete. The Gwadar port is operational but has, thus far, failed to attract significant economic activity. Gwadar Airport, the biggest in the country, though inaugurated in October 2024, has seen little activity.

Other than the BLA, the Balochistan National Party (Mengal) (BNP-M), the Baloch National Front (BNF), the Baloch Republican Party, the Balochistan Liberation Front, and the Baloch Republican Army have raised objections to CPEC. Most Baloch prefer autonomy and control over their own local resources rather than foreign mega projects. Insurgency in Balochistan is complicated because it’s not just a terrorist threat but has a very significant political element. Pakistan has only been taking a military approach.

Conclusion

Xi Jinping’s dream geopolitical project, BRI, was initially lapped up by many Afro-Asian countries. Most seem to have burnt their fingers. Despite a few achievements, the initiative has proved to be a significant burden on developing countries’ finances, some of which have been pushed to the edge of near economic collapse.

The economic impact of the Covid-19 pandemic and global inflation caused by the Russia-Ukraine War also slowed progress on projects, worsening financial difficulties, and made BRI loans even more unsustainable. Pakistan, for example, has struggled to make external payments, as one-fourth of its total debt is owed to China. Similarly, Sri Lanka has struggled to repay its debt to China from a billion-dollar port project and was forced to lease the port and 15,000 acres of land around it to China for 99 years.

In 2023, the then U.S. President, Joe Biden, called the BRI a “debt and noose agreement.” China disagrees and claims to have spent $240 billion to bail out about 22 countries in the period 2008 to 2021, and renegotiated or wrote off approximately $78 billion in debt from 2020 to 2022. This too indicates lack of viability and failure of the projects.

China has often averred that Pakistan’s CPEC projects might “wean the populace from fundamentalism”. That clearly has not happened. A consortium of Pakistani broker houses has predicted that Pakistan would end up paying $90 billion to China over a span of 30 years, with annual average repayments of $3-4 billion per year. That has already begun happening. The report also stated that CPEC-related transportation would earn Pakistan $400–500 million per annum and could increase Pakistani exports by 4.5 percent annually by 2025. That doesn’t seem to be on the horizon.

The Pakistan Army has assumed responsibility for the security of CPEC employees and investors, and strengthening the relationship between China and Pakistan. However, the areas through which the corridor passes are plagued by conflict, with Chinese workers frequently targeted in regions where Islamic jihadists and Baloch separatist forces are active. Chinese Uyghurs were trained in Pakistani Madrassas. Many joined violent Uyghur nationalist groups. The Pakistani Taliban has also threatened to attack China’s Belt and Road route unless a “tax” is paid. The Pakistan Army too seems to be collecting its own taxes.

Pakistan has faced Taliban insurgent violence since 2008 during the rule of General Pervez Musharraf. China fears that militant groups in Xinjiang could collaborate with Tehrik-i-Taliban militants in Pakistan. In 2014, Pakistan launched Operation Zarb-e-Azb to eradicate Tehrik-i-Taliban militants from Pakistani territory, following an attack on Karachi’s airport and the 2014 Peshawar school massacre, in which terrorists from Tehrik-i-Taliban killed 148 school children. The operation did make a small dent in incident numbers.

Nawaz Sharif preferred projects in Punjab. Imran Khan pressured China to focus on developing the Rashakai SEZ in Khyber Pakhtunkhwa Province, a stronghold for the PTI leader. Out of 330 CPEC-related projects in Pakistan, 176 were in Punjab Province, while Balochistan had only 8 projects allocated. Imran Khan criticised alleged corruption in previous government contracts related to CPEC. The rampant corruption prevents efficient use of foreign funds. China has often temporarily halted the release of funds for projects due to corruption. Mindful of political chaos in Pakistan, China sought to enlist Pakistan’s military in a leading role to ensure the successful completion of projects.

Political instability in Pakistan often leads to frequent changes in political leadership, and continued military interference in civilian government. This undermines investment reliability and further compounds risk for foreign investments. Additionally, crime, extortion, kidnapping, armed conflict, terrorist attacks, extremism, civil unrest, nationwide strikes, protests, riots, and mass expropriations pose significant obstacles to the timely and successful completion of projects.

Unable to manage its internal security and political unrest, Pakistan accuses India of supporting the Baloch movement and anti-CPEC agenda. They claim that hostile Indian intelligence agencies are involved in training thousands of militants formerly affiliated with Taliban factions. Nearly 30,000 Chinese workers are employed in about 280 Chinese-funded projects, with nearly 35,000 security personnel deployed. Naming India is a ploy to divert attention.

The worst economic crisis in Pakistan’s history since 2022 raises doubts about whether CPEC can achieve its development goals. Both the increasing debt and uncontrolled militancy will keep the pot boiling and Pakistan in a mess for some time to come.

The writer is former Director General, Centre for Air Power Studies. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.