Hong Kong: The four-times-a-week propeller plane from Karachi whips up a cloud of dust as it lands on an arid airstrip. Passengers cross the tarmac in the scorching sun and enter an arrivals terminal not much larger than a tractor-trailer. Outside, soldiers carrying AK-47s are waiting. This is Gwadar, a remote scratch of land on Pakistan’s southwest coast. Its port is the last stop on a planned $62 billion corridor connecting China’s landlocked westernmost province to the Arabian Sea, the crown jewel of President Xi Jinping’s Belt and Road Initiative, designed to build infrastructure and influence around the world.
Plans originally called for a seaport, roads, railways, pipelines, dozens of factories and the largest airport in Pakistan. But, almost seven years after the China-Pakistan Economic Corridor was established, there’s little evidence of that vision being realized. The site of the new airport, which was supposed to have been completed with Chinese funding more than three years ago, is a fenced-off area of scrub and dun-colored sand. Specks of mica in the dirt are the only things that glitter. The factories have yet to materialize on a stretch of beach along the bay south of the airport. And traffic at Gwadar’s tiny, three-berth port is sparse. A Pakistan Navy frigate is the only ship docked there during a recent visit, and there’s no sign of the sole scheduled weekly cargo run from Karachi.
Less than one-third of announced CPEC projects have been completed, totaling about $19 billion, according to government statements. Pakistan bears much of the blame. It has repeatedly missed construction targets as it ran out of money; it got a $6 billion bailout from the International Monetary Fund last year, the country’s 13th since the late 1980s. Two successive prime ministers have been jailed on corruption charges. And the Baloch Liberation Army’s desire for a separate homeland in Balochistan province, where Gwadar is located, has made life there uneasy. In May, militants stormed the city’s only luxury hotel, shooting up the white-marbled lobby and killing five people.
But setbacks in Gwadar point to larger problems along the Belt and Road. China is scaling back its ambitions, not just in Pakistan but around the world. Its economic growth has slowed to the lowest rate in three decades, inflation is rising and the country has been feeling the effects of a trade war with the U.S. The picture is getting even darker as a coronavirus epidemic that originated in central China threatens to cause further delays and cutbacks. “The biggest constraint for China now is its own economy,” says Jonathan Hillman, a senior fellow at the Center for Strategic and International Studies in Washington.
In a number of countries, projects have been canceled, downsized or scrutinized. Malaysia renegotiated the terms of a rail link being built by China and scrapped $3 billion of planned pipelines. In Kenya, a court halted construction last year on a $2 billion power plant financed by China. And in Sri Lanka, new leaders said they want to regain control of a port in Hambantota that was leased to a Chinese company for 99 years when the previous government couldn’t pay back a loan. That takeover sparked concern in many Belt and Road countries that China’s largesse comes with the risk of ceding critical infrastructure. And it has increased wariness about the price of indebtedness to China, which the Washington-based Center for Global Development says puts at least eight nations, including Pakistan, at high risk of debt distress.
All that could result in shaving hundreds of billions of dollars off an estimated $1 trillion of planned Belt and Road spending, according to a September report by law firm Baker McKenzie. While the value of signed projects increased last year, data from China’s Ministry of Commerce show actual spending stalled at $75 billion in 2019 after falling 14% the previous year. Total spending from the beginning of 2014, shortly after President Xi announced the initiative, through November 2019 is $337 billion, government figures show, far short of China’s ambitious goals.
Pakistan may be a harbinger of bigger problems, according to Hillman, who directs Reconnecting Asia, a project that tracks Belt and Road progress. “That is generally where the rest of the Belt and Road seems to be going,” he says. “It’s not dead in the water, but I’m skeptical whether China is going to be able to achieve what it set out to do.”
Gwadar is shaped like a barbell dangling from Pakistan’s coastline. A strip of sandbar and rocks less than 1 kilometer wide at its narrowest connects to a rocky outcrop where the luxury Zaver Pearl-Continental hotel sits like fortress. The city of 140,000 is closer to the Iranian border than to Karachi, a 10-hour drive, in an area so remote it was part of the Sultanate of Oman until 1958.
Just getting around is a challenge. Foreign visitors must be accompanied by an entourage of 10 Pakistani soldiers in flatbed trucks. At the deep-water port on the eastern side of the barbell, there’s little sign of commerce on a hot October day. The only cargo ship that calls in Gwadar, operated by China’s Cosco Shipping Holdings Co., delivers construction materials and sometimes departs with seafood. Occasionally, it doesn’t arrive at all. A manager who answers Cosco’s phone in Karachi, where the weekly run originates, says the line is operational, but it’s up to the captain whether he wants to stop in Gwadar or go directly to Oman. The captain recently had a cold and didn’t want to stop, the manager says.
Yet Naseer Khan Kashani, chairman of the Gwadar Port Authority, maintains that all is well. Cosco was frustrated by problems with a web-based customs system, but it has been sorted out, he says, sitting in his office at the port. He declines to give figures for cargo volume. “Everything is going to be fine,” Kashani says. “The volume of trade is going to increase tremendously.”
That view is echoed by Zhang Baozhong, chairman of China Overseas Ports Holding Co., which operates Gwadar’s port and free-trade zone. He dismisses the apparent inactivity with a wave of his hand, comparing it to four years earlier when he first arrived. Then, there was only one flight a week to Gwadar, with a handful of people on it. “My impression was that this place was completely neglected by the whole world,” Zhang says. “I felt this was a mission impossible.”
Now, he says, there’s progress—$250 million in port renovations, including new cranes for unloading cargo, a business center, a desalination plant and sewage disposal. “This port is now becoming a node in international shipping,” he says. “Of course, the quantity is not big enough, but it takes time. By 2030, we believe Gwadar will be a new economic hub of Pakistan and will be the highest GDP contributor to Pakistan’s economy.”