What do Pakistan, Montenegro and Kenya have in common? The debt-to-GDP ratio of all three countries exceeds 70%; and in each case a significant proportion of that debt is owed to Chinese financiers who have lent money to fund infrastructure projects. In recent months, however, there has been growing concern that some countries have borrowed too much from the Chinese; and that their participation in the Belt and Road Initiative (BRI) has only resulted in the build-up of unsustainable amounts of debt.

In our previous blog piece, we outlined the potential ramifications on costly BRI infrastructure projects if such concerns are left unchecked and newly-elected governments come into power. In the case of Malaysia, this fallout means that Chinese BRI projects worth around $20 billion risk getting scrapped.

Pakistan will have fresh elections next week on July 25. The question that needs to be asked is; might Pakistan be the next in line to reassess its approach towards costly BRI infrastructure projects? Pakistan is supposed to be a poster child of the Belt and Road Initiative; and with Chinese investments of over $62 billion in energy, infrastructure, special economic zones and telecommunications, the China Pakistan Economic Corridor (CPEC) is the flagship BRI project in South Asia.

In contrast to some other BRI projects, CPEC comprises more than just infrastructure. Documents laying out the long term plan for CPEC reveal that China envisages a strategic and complex role in Pakistan, penetrating not only most of its economy, but also its society. This ranges from Chinese involvement in agriculture through provision of seed and irrigation technology, to the set-up of surveillance systems in cities, to media cooperation and joint development of the internet industry. Chinese enterprises have established a solid market presence in sectors such as household appliances (Haier), telecommunication (Huawei, China Mobile) and mining (China Metallurgical Group Corporation).