The Chinese ‘Debt Trap’ Is a Myth

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Not having choices is, again, an issue created by the Pakistani government. As an example, if you have bad credit because of poor choices you made, you put yourself at the mercy of lenders with high interest rates and unfavorable conditions. The lenders themselves would argue that your poor credit history and circumstances make you a risky investment, which justifies the more stringent lending conditions.

With respect to criticism of CPEC projects, it falls into two categories:

1. Perceived unnecessary projects
2. Lack of transparency on lending & operating conditions

In the first category, anyone familiar with the Sharif brothers knows that they have always been suckers for mega infrastructure projects that they can 'show off' to the voters for the elections. I used to argue this back in the early days of CPEC as well, that merely constructing highways, power plants and other infrastructure would not guarantee a significant economic boom in Pakistan, outside of the associated construction activity impact and some limited impact to existing industries on the logistics side. This is a typical Nawaz Sharif failure in terms of vision and long term thinking - when the first Motorway between Islamabad and Lahore was constructed in the late 90's, Sharif made a similar hullaballoo about a mere highway 'ushering in a massive economic boom in Pakistan and turning it into an Asian Tiger'. No associated reforms in education, R&D, ease of business, incubators etc. were made. I hadn't even graduated from high-school and I remember wondering how he expected a road (even if a very nice and scenic one) to generate an economic boom on its own,

So, with respect to your question on the low growth rate in Pakistan despite CPEC projects, one major factor is the aforementioned lack of investment in broadening the industrial base long term. A highway and a powerplant are of limited use if you don't have the industries to transport goods on those highways and consume the electricity produced. And then there is the current account deficit that Sharif left the country in that had to be controlled, which meant policies that resulted in an economic slowdown.

Powerplants bring up another disastrous failure of the PMLN government - the conditions it agreed to with the IPP's (both outside of CPEC and part of CPEC) that have lead to trillions of rupees of circular debt due to capacity charges. The PTI government recently inked agreements with the non-CPEC IPP's to rationalize those capacity charges and I believe is now negotiating with the Chinese to address similar issues on their end.

In my view the Chinese did nothing different from what any other international lender would have done. The PTI government started reassessing all under construction and proposed CPEC projects when it came into power (something it was criticized for, with some going so far as to call it a 'betrayal of the Pakistan-China relationship) yet it has persisted with that policy despite having just as few options as the PMLN government before it.

To summarize, my issue is primarily with successive Pakistani governments that entered into agreements that were not favorable to Pakistan in the long term. There is no one else to blame for those decisions except the Pakistani leadership. It is for that reason that I also do not support criticism of the IMF or World Bank's lending requirements. States land themselves in situations where they need to go to the IMF and WB, and for the most part everyone knows the kinds of stringent conditions they're going to impose, so arguing some sort of First World Capitalist Imperial Conspiracy to undermine developing world economies is just a blame game to deflect attention away from domestic policy failures. CPEC on its own, even with zero percent interest rates and a 100 year repayment plan, is not going to bring about an economic boom without the Pakistani government reforming how business is done and enacting long term polices in various sectors to help broaden the industrial and technological base. Pakistan already has a vibrant and growing middle class with relatively high consumption, but it is catered to largely by imports. There is a huge opportunity for import substitution, but it requires polices on the part of the government to incentivize investment by both existing Pakistani businesses/startups and foreign companies.

Nawaz Sharif was your Prime Minister, I assume these projects, terms were approved by your representatives in the senate. So how did it all do so wrong? Likely, the good people of Pakistan were distracted by fringe issues, religion, India ... Feb 27 ...
Personally, I have resolved to take on a more active role in the future of my nation after the recent disturbing events. No, I am not running for President but I do want to work toward a better nation.