Why The China-Pakistan Economic Corridor Will Worsen Tensions in Southern Asia


Editor’s Note: This is the ninth installment of “Southern (Dis)Comfort,” a new series from War on the Rocks and the Stimson Center. The series seeks to unpack the dynamics of intensifying competition — military, economic, diplomatic — in Southern Asia, principally between China, India, Pakistan, and the United States. Catch up on the rest of the series

Last May, Chinese President Xi Jinping described the Belt and Road Initiative as the “project of the century.” Premier Li Keqiang has identified the China-Pakistan Economic Corridor (CPEC) as the initiative’s “flagship project.” Marked by the fanfare of high-flying rhetoric and backed by billions of dollars in new investments, China has undeniably taken on a new and more active role in Southern Asia.

In the years since CPEC was announced, analysis of the geopolitical implications of these developments has also gotten more sophisticated. For the most part, this has led to gloomier prognostications about the geopolitical implications of China’s involvement in the region. This installment of the Southern (Dis)Comfort series aims to take yet another step into the gloom by showing how China’s grand schemes, Pakistan’s agenda, and India’s threat perceptions are, in combination, more likely to feed a spiral of suspicion and hostility than to encourage increased regional cooperation.

China’s Vague Grand Ambitions

In the initial phase of work on the CPEC and the Belt and Road Initiative, the primary questions for observers and commentators were “What is China actually doing?” and “What is Beijing ultimately trying to accomplish?” Answers were mixed. At one end of the spectrum were the rosy-eyed optimists and more than a few propagandists who presented China’s actions as driven purely by the desire for economic integration that would present “win-win” opportunities for China as well as the other regional players. The corridor, by this logic, was primarily a massive development scheme by which China could simultaneously serve its own economic agenda as well as that of Pakistan, all without undermining the interests of other states in the region.

At the other end of the spectrum were those inclined to see every Chinese initiative as a carefully crafted strategic move to advance its own power projection capabilities, build regional geopolitical influence, and, ultimately, further its aim of challenging the United States in Asia and on the world stage. By this logic, China’s main aim in Pakistan was undoubtedly Gwadar port, from which the Chinese navy would gain a valuable foothold in the Arabian Sea. Connecting roads, railways, and even pipelines would enable China to escape its “Malacca Dilemma” by providing a new overland route from the energy-rich Persian Gulf directly to China’s western provinces.

But neither of these extreme explanations quite held up to scrutiny. Yes, some projects could well make money, and others will at least provide work for Chinese firms that are having trouble competing at home, where infrastructure supply now too often outstrips demand. Yet the economics-only interpretation could not explain China’s apparent willingness to dump considerable sums of money into projects with questionable prospects for repayment. And the security-only interpretation was flawed in two ways: First, because the Pakistanis seemed a great deal more eager to get the Chinese into Gwadar than the Chinese were to deploy naval assets to the region, and second, because the forbidding geography between Pakistan and western China is hardly conducive to massive commercial flows.

As a consequence, the debate has effectively matured to recognize that China’s motivations in supporting the corridor are mixed. Potential economic gains are real but insufficient; China’s economic investments are too often only justifiable by strategic rationales or, it seems, by the fact that CPEC enjoys the personal and political backing of Xi himself. Individually, China’s strategic moves in Southern Asia are opportunistic works-in-progress, but collectively they reflect deeper and longer-term aspirations for regional hegemony and global preeminence. China, at least for the moment, has bold but still somewhat vague ambitions for Southern Asia and will likely cross this river by “feeling the stones,” as Deng Xiaoping famously said in the context of his own reform efforts. Still at issue is whether the complexities of the region, and especially the longstanding tensions between India and Pakistan, will lead Beijing to slip and fall.

Pakistan Plays CPEC

Understanding how China’s actions will play into existing regional realities begins with Pakistan, the locus for most of Beijing’s new initiatives. A second major debate has centered on the question, “What is Pakistan attempting to achieve through CPEC?” Once again, the poles of the debate can be identified as, on the one hand, an optimistic economic agenda of promoting growth and opportunity sparked by Chinese capital, and, on the other, a strategically-oriented agenda, seeking to use China as an external balancer in Pakistan’s core strategic aim of resisting Indian domination. A corollary to this strategic argument is the observation that Pakistan faces a particular need for additional external assistance because its ties with the once-generous United States are fraying.

Here, too, there is ample evidence to suggest that neither of these poles captures the whole story. If Pakistan had primarily been interested in using investment from China to spur additional investment from domestic and other international sources, Islamabad would have embarked on a broader scheme of economic reform, opening its economy and revising its regulatory procedures in ways that would have provided a level playing field to all investors, with the Chinese leading the way. Instead, Islamabad has conducted its negotiations with Beijing almost entirely behind closed doors, suggesting other motives beyond simple economic development, both political and strategic. And framing the corridor as merely an anti-Indian balancing strategy cannot explain at least the initial allocation of Chinese investment, since the lion’s share of funds are directed to Pakistan’s civilian energy sector.

A more sophisticated read of Pakistan’s intentions would see both logics at work, with Islamabad seizing a last, best opportunity to advance its economic and security agendas with Chinese assistance, but without submitting to the politically wrenching path of sweeping economic reforms or acquiescing to the even more painful reality of India’s regional supremacy. In other words, whatever China’s broader intentions might be, its involvement in Pakistan is reinforcing some of the least healthy aspects of Pakistan’s political culture at home and its relationship with neighboring India.

India Responds

This takes us to the third debate, centered on the question of how India will respond to CPEC. Thus far, India’s official reaction to the corridor has been negative in a narrowly diplomatic sense, with New Delhi’s criticism focused on Beijing’s direct involvement in the disputed territories of Gilgit-Baltistan. More broadly, however, India sees the tightening China-Pakistan axis as a twofold problem: First, the threat of Chinese encroachment in what New Delhi considers its traditional sphere of influence, and second, the threat that a China-backed Pakistan could be emboldened to pursue even more aggressive anti-Indian tactics, both by cross-border attacks by militant proxies and by ratcheting up tensions in the heat of a crisis. Combine these threat perceptions with the Indian government’s increasingly muscular approach to international politics under Prime Minister Narendra Modi, and you have a recipe for heightened regional competition and a greater chance of violent conflict.

The Sino-Indian competition, including its maritime dimension and recent territorial spats, has been well-covered by other essays in this series. Whatever worries India has about China’s new naval base in Djibouti are likely to be mirrored in its concerns over Gwadar, assuming the port will welcome Chinese warships even if it doesn’t become a full-fledged Chinese base. Overall, India is showing every sign that it will aim to balance against these moves, by improving its own military capabilities, cultivating powerful new friends (like the United States and Japan) and pursuing tactics to deny Chinese territorial gains in ways that aim to throw China off its standard game plan for coercing less powerful states in Asia.

As for the second threat — that of an emboldened Pakistan — it is at least conceivable that China’s tighter embrace of Pakistan would help to resolve Islamabad’s fundamental insecurity from facing a larger Indian neighbor. With that insecurity addressed, Pakistan would no longer feel the need to deploy risky asymmetric tools for balancing, namely a large and growing nuclear arsenal (informed by an inherently risky first-use doctrine) and militant proxy forces like Lashkar-e-Taiba and Jaish-e-Muhammad, which routinely launch terrorist strikes inside India that threaten to set off another war. Instead, this thinking suggests, Pakistan could sit back and get its own house in order, confident that China would have its back in the event of Indian hostility or bullying. Moreover, to the extent that China’s CPEC investments in Pakistan are aimed at promoting economic stability, they would pose no serious threat to India. To the contrary, most Indian policymakers would likely cheer an economic stabilization package for Pakistan if it promised a more prosperous, peaceful, and secure neighbor.

By most Indian estimates, however, China’s backing is more likely to embolden Pakistan than to restrain it. This conclusion is based on the widely held Indian assumption that Pakistan is a revisionist state, not a pure security seeker. Because Pakistan aims to alter the status quo, both in a territorial sense (e.g. Kashmir) and in terms of an overall power balance that increasingly favors India, it will attempt to deploy Chinese power to that end. Put crudely, Pakistan could continue to jab India with proxy forces while collecting potent Chinese military technologies and sheltering behind Chinese defensive security guarantees. Chinese-assisted enhancements to Pakistan’s economic or security condition at home would, from this perspective, only free up resources for a more vigorous competition with India.

CPEC or no, India is already in the process of attempting to establish a more effective deterrent against Pakistani adventurism and Chinese coercion. Accordingly, we see the standoff at Doklam and the “surgical strikes” at Uri. In both instances, Modi’s government managed a feat that eluded its recent predecessors: quick escalations that demonstrate commitment and place adversaries in an uncomfortable tactical position. On the diplomatic stage, we have seen some evidence that India is willing to take a similarly provocative stance, for instance by skipping China’s Belt and Road Forum last May and releasing its own set of guidelines for international investment. Similarly, in early September, Indian diplomats made clever use of the BRICS summit to take a swipe at Pakistan-based terrorist groups.

India’s new and apparently effective tactics may add up to a broader strategy for countering the China-Pakistan Economic Corridor and Sino-Pakistani cooperation writ large. At the very least, India has shown that it will up the ante with both Pakistan and China. Precisely how far New Delhi is prepared to go in response to the emergent China-Pakistan axis is not clear. Pakistanis already claim — on rather flimsy evidence — that India is engaged in covert operations to undermine CPEC. These claims are easily brushed aside, but it would hardly be surprising if New Delhi were to explore all options, from covert tactics to conventional military and diplomatic initiatives, in response to what it interprets as a defining — and expanding — strategic threat. In short, as in the case of Pakistan, we reach the gloomy prognosis that China’s deeper involvement in Southern Asia is stirring competitive Indian tendencies rather than cooperative ones.

The Next Debate

Armed with this (perhaps tentative) resolution to the third debate, we should now open the door to a fourth: How are Beijing and Islamabad likely to respond to a more pugnacious India? The answer will depend in part on how Beijing and Islamabad interpret India’s actions, and their interpretations may differ. At issue is whether India’s tactics of escalation are interpreted mainly as efforts to deter and de-escalate, or if they are instead perceived as signs of fundamental Indian hostility and increasing regional, if not global, ambition.

The first interpretation could lead China and Pakistan to adopt a more restrained approach, both in terms of how they manage a potential crisis with India and in the way they frame their emerging cooperative ties. This impulse toward restraint seemed at the core of a May 2017 statement in which China’s ambassador to India downplayed the exclusive character of CPEC and promoted India’s cooperation. Of course, that statement was subsequently retracted, almost certainly due to Pakistani protests, but also because of China’s own frustration with India’s refusal to attend the Belt and Road summit meeting. This suggests that the second interpretation of Indian actions will dominate in Islamabad and perhaps in Beijing as well.

If China and Pakistan both perceive the need to check Indian tactics by escalating their own competitive initiatives, the scene is undoubtedly set for an increasingly dangerous spiral of moves and counter-moves. In short, the further we press our analysis, the gloomier the conclusions we reach.


Daniel Markey is a senior research professor in international relations and the academic director of the Global Policy Program at the Johns Hopkins School of Advanced International Studies. He is currently writing a book about the geopolitics of increasing Chinese influence in western Asia.

Image: Paranda via Wikimedia Commons