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The idea of transforming the ancient fishing village of Gwadar into a bustling port city has been around since at least 1954, when Pakistan commissioned the U.S. Geological Survey to examine its coastline. Their conclusion: Gwadar, which sits on the Arabian Sea, would be an ideal location for a deep-water port.
Gwadar's potential went unrealized for decades, but it is now at the heart of a hugely ambitious plan known as the China-Pakistan Economic Corridor, or CPEC. China has pledged to spend $63 billion to bolster Pakistan's power plants, ports, airports, expressways and other infrastructure under the initiative, which Beijing positions as one of the pillars of its $1 trillion global Belt and Road Initiative championed by Chinese President Xi Jinping.
The investment is clearly visible at Gwadar. More than 1,000 people, about half of whom are Chinese, work at a recently completed 660-meter container terminal. Nearby is a hospital built using Chinese funds. Pearl Continental Hotel, a luxury hotel owned by a local company, stands on a hill overlooking the port. The pier is dotted with Pakistani naval and coast guard ships. Armed boats and pickup trucks patrol the area, while wooden fishing boats float in the distance.
The gains for China in all of this development are perhaps less visible, but potentially far more significant. A major goal for China is to link its landlocked western region to the port at Gwadar. This would allow ships carrying oil and other goods from the Persian Gulf to avoid the "choke point" of the Strait of Malacca, shaving thousands of kilometers off existing routes frequently patrolled by foreign navies.
For all this grand ambition, some analysts have doubts. Pakistan's trade deficit with China has been rising, and there are concerns about what happens if it is unable to repay its debt. As with other countries that have benefited recently from Beijing's largesse, some in Pakistan worry that the price of such investment could be a huge debt burden.
The China-Pakistan corridor "will no doubt be a game changer for Pakistan, but we need to be careful," said Ehsan Malik, the CEO of Pakistan Business Council, a business policy advocacy forum. "Ten years' tax concessions, 90-year leases for Chinese companies and cheap imports will impact the competitiveness of existing domestic industries."
Pakistan symbolizes both the promise and the potential peril for countries participating in China's BRI undertaking -- arguably the largest investment drive ever launched by a single country -- and its related projects.
For countries needing infrastructure, the BRI holds the promise of investment in new railways, roads, ports and other projects. But as the Nikkei Asian Review and The Banker magazine discovered in producing this special report, participating countries also have worries, ranging from a lack of participation by local workers and banks to unmanageable debt hangovers.
The Nikkei Asian Review and The Banker examined how BRI projects are unfolding in eight countries: Indonesia, Sri Lanka, Kazakhstan, Bangladesh, India, Poland, Laos and Pakistan. We also collaborated with the Center for Strategic and International Studies' Reconnecting Asia Project to aggregate key BRI infrastructure projects worldwide.
Key findings include:
Project delays After initial fanfare, projects sometimes experience serious delays. In Indonesia, construction on a $6 billion rail line is behind schedule and costs are escalating. Similar problems have plagued projects in Kazakhstan and Bangladesh.
Ballooning deficits Besides Pakistan, concerns about owing unmanageable debts to Beijing have been raised in Sri Lanka, the Maldives and Laos.
Sovereignty concerns In Sri Lanka, China's takeover of a troubled port has raised questions about a loss of sovereignty. And neighboring India openly rejects the BRI, saying China's projects with neighboring Pakistan infringe on its sovereignty.
Mushtaq Khan, an economist and former chief economic adviser at the State Bank of Pakistan, acknowledges that the country's debt to China is rising. But he says Beijing "cannot afford" to bankrupt Pakistan -- in part because of the country's importance as a counterweight to India, a regional rival of China's.
"China's primary interest in Pakistan is geopolitical rather than strictly economic, and therefore, for China, repayment of the debt burden will be secondary to maintaining a good political and economic relationship with Pakistan," he said.
Gwadar, with a population of 110,000, is 90 minutes west by propeller plane from the mercantile city of Karachi in southern Pakistan and just 70km from the border with Iran. China refers to neighboring Pakistan as its "all-weather friend," but the country is not known for having a healthy business climate. Pakistan ranked 147th out of 190 countries and regions in the World Bank's Ease of Doing Business 2018.
The deeper ties with China come amid strains between Pakistan and the U.S. In January, the U.S. State Department announced that it would suspend secu