China’s Shift From CPEC: Is CPEC a Failure?

The China-Pakistan Economic Corridor (CPEC) was promised as a “game changer” upon its initial arrival in 2015. Modern infrastructure, billions of dollars in investments, and a vital trade route connecting Western China with the Arabian Sea via Pakistan were all anticipated benefits.

Illustration by The Geostrata

It was portrayed as the centrepiece of China’s Belt and Road Initiative (BRI). However, ten years later, the uproar has subsided. Once regarded as a flagship project, it is currently beset by political unrest, growing debt, and delays. 

The most telling example is the Main Line-1 (ML-1) railway project, the ambitious plan to modernise Pakistan’s deteriorating rail network. With an estimated cost of more than $60 billion for energy and infrastructure, one of the projects, the ML-1, was hailed as the most significant infrastructure project under the Chinese BRI in Pakistan.

Beijing’s hesitation grew by Pakistan’s mounting debt load, repayment risks, and political unpredictability of the State, highlighting a harsh reality: the project’s economic viability no longer justified its initial quake. In addition to exposing the limitations of massive infrastructure projects, CPEC also highlights the intricate realities of South Asian geopolitics and economics.

CPEC- THE EARLY PROMISE

CPEC promised more than $60 billion of investments in the beginning. Highways, railroads, power plants, and the development of Gwadar Port into a trade hub. For Pakistan, the CPEC reflected a chance to solve the long-standing energy crisis, improving connectivity and industrialisation.

China, too, saw an opportunity for minimising its dependency on the Southeast Asian chokepoints such as the Malacca Strait, increasing its presence in the Indian Ocean Region, all the while making its energy imports from the Middle East more secure.

Some other major projects under the CPEC, including the Gwadar port, or the 2 billion dollar Karakoram Highway upgrade, building overland connectivity from Shinkiari to Thakot, giving China an inland trade corridor, all the way from Gwadar to Xinjiang, and the ML-1 railway project, designed to modernise Pakistan’s old rail network.

Additionally, energy projects like Port Qasim Power Plant and other key hydropower projects, such as Kohala and Azad Pattan hydropower plant, have helped link Pakistan’s infrastructure to China’s strategic and economic goals while reducing some of Pakistan’s energy problems. CPEC, with these projects, was made ambitious by using catchphrases like “all-weather friendship” and “shared prosperity”; both governments marketed it as a mutually beneficial alliance.

THE HARSH REALITY- WHY CPEC STRUGGLED?

The high goals set, however, rapidly ran into the harsh realities on the ground, facing bureaucratic obstacles, security risks in Balochistan, and inadequate financial management, which caused delays in projects. The construction of power plants contributed to Pakistan’s circular debt crisis as the nation found it difficult to settle financial obligations with the Chinese investors.

Once called out to be the “next Dubai”, Gwadar Port is still underdeveloped and underutilised. Local communities felt outcast, arguing that CPEC projects bring minimal benefits to Pakistani citizens in terms of employment or facilities. In Gwadar, residents complain of having severely restricted access to most of the basic amenities like water and electricity despite massive investments in port developments.

This neglect has ignited resentment, with protests and movements like the Gwadar Haq Do Tehreek demanding greater inclusion and fair resource distribution. Many residents now view CPEC as a symbol of exploitation rather than empowerment, which creates a trust deficit between the state, communities, and the foreign investors. For China, the return on investment began to look uncertain. Instead of encouraging trade, the corridor became a symbol of mistrust, financial reliance, and broken promises.

MINDSET SHIFT OF CHINA AND PAKISTAN

Initially, Pakistan’s leaders marketed CPEC as a symbol of progress and sovereignty. However, public opinion changed as debts kept piling up and IMF  bailouts did little to help save the economy. CPEC became a debt trap rather than a path to progress. At the same time, China adjusted its approach.

Once ready to pour billions of dollars into infrastructure, Beijing became more cautious after facing resistance and setbacks across multiple BRI-partner countries. Pakistan's hopes of becoming a regional trading hub were dashed by perpetual political instability and deep economic woes.

Meanwhile, growing external debt, repeated IMF bailouts, and chronic trade deficits eroded economic resilience. Security concerns in Balochistan, where the key CPEC projects are located, further pushed long-term investment away. Collectively, these factors made ambitious projects in CPEC an investor’s nightmare.

ECONOMIC CONSEQUENCES OF THE CPEC SLOWDOWN

At best, the economic outcomes of CPEC have been uneven. Even though some energy shortages were resolved, new financial strains were brought on by the high cost of Chinese loans and power tariffs. China is largely responsible for Pakistan’s debt crisis.

After investing billions into its development, Gwadar still contributes little to national income due to poor infrastructure, inadequate water and power supply, limited port activity, and weak connectivity with the countryside. Local resentment, recurring protests, and security challenges in Balochistan further exacerbate the problem, leaving the port far from its promised potential.

China views CPEC’s poor performance as a challenge to the Belt and Road Initiative, raising concerns about the ability of such massive undertakings to actually produce long-term, sustainable global growth. Instead of bringing prosperity, CPEC has shown the structural flaws in Pakistan’s economy and the limitations of China’s global expansion.

CPEC AND THE NEW WORK CULTURE OF CAUTION

With its quick construction and employment promises, CPEC was initially viewed as an unstoppable force. The ambience is different today. Many projects are still unfinished, and Pakistan's workforce is given fewer opportunities than promised, while Pakistan is now a risk management lesson for Chinese businesses. The modernisation places more emphasis on caution, security, and repayment guarantees than it did on speed and scale. Now, the “game changer” has become a  “case study” for China on geopolitical mismanagement.

Some examples of unfinished projects are the Hub and Sahiwal Coal Power Plant, where both coal-fired power plants were built with Chinese loans and guaranteed returns. Although these projects helped ease Pakistan’s energy shortages, the debt repayments placed a greater financial strain on the country’s economy, further worsening Pakistan’s debt crisis, leaving it struggling to repay Chinese companies.

The second one, the Karachi Circular Railway (KCR) Revival, once a flagship CPEC urban transport project, faced delays due to financial disputes, land clearance issues, and disagreements over repayment terms. China grew hesitant as costs escalated and Pakistan’s repayment capacity looked suspicious. The project now stands as another symbol of the failure of the CPEC.

CONCLUSION

The goal of CPEC was to increase China’s regional clout and reshape Pakistan’s economic future. Rather, it is now a tale of broken promises, economic disaster, and changing priorities. Scepticism has replaced the vision of Gwadar as a world port, of smooth highways, and of the industrial revolution.

It emphasises the risks of Pakistan’s excessive reliance on foreign funding in the absence of domestic reforms. It underscores the risks China faces when committing heavily to politically and economically unstable regions. Although some infrastructure does exist, CPEC has failed as a transformation symbol. China’s slow withdrawal from CPEC represents more than just the demise of a single corridor; rather, it represents a more comprehensive reevaluation of Beijing’s megaproject strategy. When social discontent, political volatility, and economic fragility converge, even the most ambitious initiatives can falter.

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BY RISHI PANDEY

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