Spooked by the recent flurry of reports about how Chinese investments have played havoc with the host countries’ economies, Pakistan appears to have developed cold feet on the China-Pakistan Economic Corridor (CPEC), the flagship Chinese project under the Belt and Road Initiative (BRI).

Pakistan has always claimed the CPEC to be a game-changer, which will lift millions out of poverty. But reports now suggest that the newly elected government of Prime Minister Imran Khan is re-evaluating the CPEC projects and how do they fit with the national priorities. It has balked at the cost and financing terms of the CPEC, forcing it to internally adjust some of the non-essential projects. As per some reports, for instance, the government has formally axed 455 projects from the ongoing Public Sector Development Programme including four projects related to the CPEC and Gwadar city. Recently, the Overseas Investors Chamber of Commerce and Industry – an advocacy group of multinational companies working in Pakistan - also advised the government to review the CPEC and the Free Trade Agreement (FTA) with China in order to provide a level playing field for all stakeholders. They have been constantly complaining about the disadvantages of the China-Pakistan FTA.

But even as the Imran Khan government wants to review all the CPEC project contracts, China is apparently willing to review projects that have not yet begun. While it allays domestic concerns, Pakistan and China have been looking at ways to neutralize the negative impression surrounding the CPEC. During his recent visit to Pakistan, Chinese Foreign Minister Wang Yi sought to allay Pakistani government’s concerns on the debt trap and highlight the positive benefits that the projects will accrue to the Pakistani economy. Both countries have now agreed to formally invite “third-country” investors to be part of the CPEC and add social sector and regional development schemes to the existing portfolio of CPEC projects. Wang’s visit was accompanied by the increased propaganda by the Chinese news agencies around the BRI, which sought to highlight the changes brought about by the BRI in and around China’s neighbourhood.

Recently after his tour of Saudi Arabia, Pakistan’s government announced that Saudi Arabia is set to become to become a third strategic partner in the CPEC and has reportedly agreed in principle to invest in Pakistan. Reports suggest that Pakistan has asked Saudi Arabia to establish an ‘oil city’ in its largest and resource-rich province of Baluchistan, preferably in the port city of Gwadar- the pearl in the CPEC necklace as per the Pakistani narrative, but in reality the proverbial albatross around its neck. It is pertinent to note that Baluchistan is situated on Pakistan’s border with Iran and the seaport of Gwadar is geographically only a stone’s throw away from Iran. While Pakistan hopes to benefit from the Saudi investments, the potential of Gwadar emerging as another pawn in the larger Saudi-Iran confrontation can derail Pakistan’s designs. Given the omnipotent and omnipresent Pakistan Army’s closeness to the Kingdom of Saudi Arabia (KSA) rulers and eagerness to lead the military alliance against the Shia Houthi rebels of Yemen and fragile peace at Pakistan-Iran border, the undeclared Saudi-Iran rivalry in the Middle East would have larger ramifications for Pakistan’s strategy so far.

All these moves suggest that Pakistan remains wary of seeking one more bailout from the International Monetary Fund (IMF), which in return for the financial package, will bring in a lot of more scrutiny of the Chinese investments. While China remains wary that such a scrutiny will not only bring in modifications to the investment patterns, but also derail the pace of CPEC-BRI implementation.

Pakistan’s intentions in relooking at the CPEC investments in light of the national priorities of the new government may be noble, but this is not an easy step as today’s Pakistan is different from earlier years. Today’s Pakistan is much more dependent on China economically, than in the past where it could play off US against China and continue to receive international patronage. The current dispensation in the White House under President Donald Trump is in no mood now to give the benefit of doubt to Islamabad and has increasingly sought to call its bluff, evident from its stance towards the potential IMF bailout to Pakistan. To make matters worse, its intransigent attitude towards its neighbours has only added to the complex regional security environment.

Its geopolitical difficulties are worsened by its economy being in doldrums- partly a function of the CPEC’s debt trap and also being grey-listed by the international money transaction watchdog, Financial Action Task Force (FATF). The country currently attracts very low Foreign Direct Investment (FDI), which constitutes less than 1% of its Gross Domestic Product (GDP) against an average of 3% in regional countries. No wonder then, Pakistan is desperately looking for an alternative source of funds to prop up its economy and salvage the game changer that it has touted the CPEC to be up to now.