China recognises that the future of China-Pakistan Economic Corridor (CPEC) depends much on the political stability that Islamabad can ensure and the country's financial climate in the time to come.
Pakistan's political stability has been a matter of international spotlight for years and critics of CPEC have repeatedly pointed towards it as one of the biggest risks in CPEC. It is a risk that experts in China too are well aware of, apart from the obvious shortcomings of the economy. "In the past few years, investors from both China and Pakistan got too excited about the CPEC, and they overlooked the problems with the Pakistan economy," Mei Xinyu, a research fellow at the Chinese Academy of International Trade and Cooperation, told the state-run Global Times. "Now, they need to carefully assess potential risks in some projects, and Pakistan's ability to repay its debts."
Earlier this week, Pakistan-based Dawn reported that the country had asked China for fresh loans worth up to $2 billion. In April, Chinese banks had already lent $1 billion to Pakistan. With the International Monetary Fund already expressing concern over the country's macroeconomic future, the concerns may well be rubbing off on the Chinese as well.
The added possibility of political instability does not do much to help either.
Shahid Khaqan Abbasi, widely seen as only a caretaker Prime Minister, is expected to face a stiff challenge when Pakistan holds elections in July. The suspected role of the military behind the wings may further dent the process of democracy here. Add rampant corruption and it makes for a cocktail possibly too deadly for the Chinese to gulp. "Political instability and widespread corruption are still serious issues in Pakistan, and it is crucial to strike a balance between political strategy and business profitability," Global Times quoted Wang Yiwei, director of the Institute of International Affairs at Renmin University of China, as saying.
Nontheless, China has attempted to highlight that there are more advantages than disadvantages associated with CPEC and are firm that it would help in regional stability. Profitability, however, may well be a differnt ball game - one much riskier.