The China Pakistan Economic Corridor, a multibillion dollar projects, which is a part of the the Chinese Government’s “belt and road initiatives” is going to majorly benefit China more than it can to Pakistan. This is mainly because of the lack of any inputs in the project, by Pakistan.
This lack of growth and development to the project by Pakistan is only going to drive China to economic growth, as Pakistan, sooner or later, would end up paying loans to the Government of China for the project. The benefits to China might not be distributed widely, initially, but it would lead to a 6% economic growth eventually.
The Chinese Banks are going to wait to get this share, by holding over $20 billion currently for financing the project. Potentially. Most of the project has been funded by China already as a structured settlement cash advance, while the Pakistan lenders are not involved a lot.
Currently, US$ 6 billion- 7 Billion have been invested, out of which 10% is financed locally. thus, the main share of the CPEC project has been incoming from China itself.
The Coal mines of That that are worth $3.5 billion might generated 1.3 gigawatts worth of electricity, which is one of the most expensive energy project yet. In fact, China is also going to spend $5.5 billion on the upgradation of the Pakistani Railway system.
The Local lenders are trying to deploy all the funds from the securities of the Government. The amount of funds that are parked, currently, in the local securities is about 9.26 trillion Pakistani Rupee. The Pakistani banks are going to have few opportunities to finance the project directly as the private sector is not exactly involved in the same.
According to reports, the China Development Bank is funding the project by providing $7.9 billion, and the Bank of China has also lent more than $80 billion till now.
The project is demanding more and more finances in the current year and most funding has come from the Chinese banks. The funding of Pakistan, on the other hand, is not that advanced and is not capable to fund such a mature project.
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