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Paw Tracker newsletter (Week of Apr 11)

Over the past week, the political and economic situations in Pakistan and Sri Lanka have changed dramatically. Both countries have played important roles in shaping China’s narratives about the BRI model and the new uncertainties have proved challenging for China to maintain a coherent BRI storyline. In this week’s newsletter, we zoom in on the Pakistan situation, especially how domestic Chinese conversation has responded to the change of leadership. The Panda Paw Dragon Claw website will soon bring you analyses from Sri Lanka, so please stay tuned for that.

The Paw Tracker newsletter, developed by Panda Paw Dragon Claw, provides up-to-date and granular project-level information on the Belt and Road Initiative. Drawing from Chinese sources of information that are often disjointed and difficult to access, the newsletter also aims to become a convening space for watchers of the BRI to share and cross-check information about projects and their impacts on the ground. 

Talk of the Town

The dramatic political events that unfolded in Pakistan over the past two weeks were a focus of Chinese media’s international coverage last week, with a number of outlets publishing long explainer and analysis pieces. In the official media, the tone was clear (and echoed the message from the Ministry of Foreign Affairs): the change of leadership will have little impact on the “iron brotherhood” of China-Pakistan relations. As Global Times wrote, “the fall of an old friend causes one to sigh; the ascent of another old friend causes one to celebrate.” 

And indeed there are reasons for China to celebrate Shehbaz Sharif as an “old friend”. As the Global Times pointed out, he is the brother of a former PM who maintained strong ties with China. During his brother’s rule he was head of Pubjab province, the country’s economic powerhouse and home to numerous CPEC projects, including highways, the Lahore Orange Line Metro and transmission lines. While in command of the province, Sharif became known for his “Punjab speed” of effective, technocratic governance, and has already claimed that he will bring “Pakistan speed” governance to Islamabad.

Sharif gave prominent mention to China and the CPEC during his first speech to the Pakistani parliament. In language that echoed that of China’s officials he said, “China has always supported Pakistan and regarded us a friend. The Pakistan-China relationship has been tested and proven unswerving. The new government will accelerate the construction of the China-Pakistan Economic Corridor.” The speech also gave overtures to strengthening relations with the US, EU and Russia. In another speech to parliament on Saturday April 16, Sharif blamed Pakistan’s ongoing power shortage crisis on the failure of the Khan government to properly see through CPEC power projects, calling out a 1250MW power plant that was supposed to begin operations in 2019 but has yet to begin construction.

The message that China-Pakistan relations will not be impacted by the changing of the guard in Islamabad was echoed across the major Chinese media outlets. What most failed to mention, however, was just how unstable the situation in Pakistan remains. Khan’s Trumpian moves to contest his overthrow, such as calling protestors onto the streets, went mostly unmentioned in the Chinese press - though his claims of American interference appear to have not been taken seriously, particularly after the Pakistani military dismissed the claims.

A long read piece in Sanlian Lifeweek Magazine was one of the few articles to delve into the full complexity of the situation. Quoted in the article, Lin Yiming of the China Institute of Contemporary International Relations pointed to the deep economic problems the country faces, and that Khan summarily failed to address. According to Lin, the root of Pakistan’s economic woes is deindustrialisation in the country. While in the 2000s the country attracted a lot of investment and saw exports grow steadily, since 2010 exports and FDI have slumped and resulted in a reliance on foreign imports and a rapid increase in foreign debt. By the end of 2021 debts had reached a record USD120 billion. The result has been Pakistan’s reliance on repeated IMF bailouts. Lin critiques the Khan government for “never establishing a permanent economic policy team to implement long term economic policies” which may have been able to turn the situation around.

The challenge of controlling Pakistan’s debt and negotiating an inevitably unpopular loan deal with the IMF awaits Sharif. In addition, he faces popular opposition from Khan’s supporters and rising tensions with Afghanistan’s Taliban government. Sharif has less than four months to make an impression before the next general election. China’s foreign policy community and BRI architects will be watching closely.

This week's highlight project

Pakistan: Power China gets contract to build water supply project supporting Thar coal projects

On Apr 11, a contract signing ceremony was held in Dubai for the Nabisar Vajihar water supply project in Pakistan. The project’s developer, Kuwait’s Enertech Holding Company, granted the EPC contract for the project, located in Pakistan’s Thar desert, to Power China. The Chinese company will build a water storage and supply facility with a capacity of 129,600 tons and pipelines stretching over 60km. According to the press release, the water supply project is “crucial for the long-term stable operation of existing coal-fired power projects” and for the further extraction of Thar coal resources.

Thar’s water crunch: The Thar desert has one of the world’s biggest deposits of lignite coal. Through the China-Pakistan Economic Corridor (CPEC), major coal projects, including mining and power generation, have developed in the region to tap into this massive local reserve. These include the Sindh Engro Coal Mining Company (SECMC)’s mining and power project in Thar Block II, operational since 2019, and the Sino Sindh Resources Ltd (SSRL) open pit mining plus coal-fired power plant in Block I. 

The region suffers from chronic water shortages, however, which has proven to be a choke point for Pakistan’s ambitions for domestic coal production. The region’s residents have held protests and hunger strikes against water grabs by the coal operations. The Nabisar Vajihar project is likely part of the underground pipeline that takes water from the Nabisar storage, which receives water from the Nara canal, to the Vajihar storage. This is already a delayed, second attempt to send water to the Block II project, according to Dawn. The Sindh province government would have to face liquidity damages of USD10 million per month had the project been delayed further, Dawn reported in November last year.

Other project & corporate updates

Maldives: China State Construction builds “small but beautiful” bridges in the Indian Ocean

On 10 April, China’s official Belt and Road Portal featured a description of a new series of bridges built by the China State Construction Engineering Corporation in the Maldives, an archipelago country 750 km southwest of the Indian subcontinent. The bridges connect the two reclaimed islands of Hulhumale, which were dredged up and completed in 2004, replacing wooden paths that would flood in rain.

The bigger picture: The Maldives has been a site of transition for the Belt and Road. In the top level 3rd Symposium on the Belt and Road Initiative last November, Xi Jinping emphasized that "small but beautiful" projects should be the focus of the Belt and Road’s next phase, signaling a shift in focus from large, debt-financed infrastructure initiatives to smaller but still high profile projects. The Hulhumale bridge project comes after the completion of the China-Maldives Friendship Bridge in 2018, which connected the Maldives’ capital of Malé to the islands of Hulhulé and Hulhumalé.

If you have further details of any of the above mentioned projects that you would like to share with the community, please reach out to us through
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