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China has failed to make Pakistan a global trade hub and instead made it fall into a
debt trap. Pakistan spends half of its revenue to pay back its external loans, most of
which are owed to China, this results in an endless cycle in which Pakistan takes
loans from China to pay back its debt to China. This debt trap puts Chinese state
and commercial banks at risk, those which have loaned money to Pakistan. China
had started an initiative in which Chinese currency would be pumped into the
Pakistani economy but the initiative was to no avail.
In the current time frame it seems that China is aware of its mistakes, as recently
President Xi Jinping stressed that the country would be focusing more on smaller
and beautiful projects rather than large scale ones. China has become stricter with
Pakistan, several policies have been adopted which indicate so. However, it’s true
that China can not pull out of the project, CPEC is of great strategic importance to
China, and a strong alliance with Pakistan helps act as a counterpoint against
China’s regional rival India.
China is following a policy of throwing more money into the project rather than
looking for a proper response and solution. Chinese creditors have made no efforts
to set up factories in Pakistan which would greatly help Pakistan with the foreign
currency it needs to untangle itself from its debt trap. China's projects in the region
do seem to be quite ambitious, however currently they seem to be weary, urgent
action should be taken to address the situation otherwise, as Bilal Gilani a Pakistani
researcher states “China would create a graveyard of economic zone”.