The China-Pakistan Economic Corridor (CPEC) has long been touted as a transformative initiative for Pakistan’s economy, envisioned to foster strategic and economic benefits. This multibillion-dollar project seeks to link China’s Xinjiang region with Pakistan’s Gwadar Port, promising immense advantages through infrastructure development, trade facilitation, and geopolitical positioning. However, in recent years, the project has stalled, overshadowed by challenges including slow implementation, unpaid loans, corruption, and worsening security conditions.

The West, particularly the United States, has repeatedly voiced concerns over CPEC. The U.S. has described the project as a "debt trap" for Pakistan, warning that loans from China could strain Pakistan’s fiscal position further, possibly relying on IMF funds to service them. These apprehensions have been exacerbated by internal issues, including recurring terrorist attacks on Chinese nationals working on CPEC projects, further straining relations between Pakistan and China.

Despite these concerns, both countries remain committed to the project. However, Pakistan’s mounting financial crises have prompted renewed efforts to secure additional funding, and in June 2024, Prime Minister Shehbaz Sharif visited China to discuss upgrading CPEC and initiating Phase II. However, the visit was less about economic cooperation and more about Pakistan’s desperate plea for a bailout.

In July 2024, Pakistan secured a staff-level agreement with the IMF for a $7 billion loan under the Extended Fund Facility (EFF), contingent upon receiving financial backing from bilateral partners, particularly China. Yet, with unpaid dues to Chinese companies involved in CPEC and ongoing financial instability, the situation remains grim. Pakistan has failed to allocate sufficient funds to meet its obligations under the Energy Framework Agreement, highlighting its fiscal challenges and undermining investor confidence.

China, despite recognizing Pakistan’s geostrategic importance, appears wary of further investments in CPEC due to political risks and Pakistan’s inability to address the underlying issues. In response to Pakistan’s repeated requests for new investments, China has been cautious, agreeing only to proceed with a delayed railway project rather than the additional $17 billion Pakistan had hoped for. This reluctance reflects growing concern in China about Pakistan’s capacity to manage the project effectively.

Pakistan’s government remains optimistic about the future of CPEC, particularly the development of Special Economic Zones (SEZs) and agricultural cooperation under Phase II. However, these expectations seem increasingly unrealistic, given the challenges on the ground. China’s focus appears to be on the agricultural and scientific aspects, leaving Pakistan’s aspirations for energy and technology advancements unmet.

As Pakistan grapples with its debt obligations, particularly to China, its future hinges on securing a debt restructuring deal. Pakistan is seeking to extend the repayment period for its energy debts, which amount to $15 billion, and reduce annual foreign currency outflows. This request for debt reprofiling, however, is still pending, and Pakistan’s prospects for securing the necessary financial support remain uncertain.

In summary, Pakistan’s reliance on CPEC and external support to stabilize its economy faces significant obstacles. China’s diminishing enthusiasm for further investment, coupled with Pakistan’s ongoing financial struggles, casts doubt on whether CPEC can deliver the hoped-for economic revival. The situation is precarious, and while Pakistan’s leaders continue to push for renewed Chinese support, it remains to be seen whether their efforts will bear fruit.