A cautionary tale.

Byline: Amna S. Sandhu

A famous quote highlights sustainability by discussing the difference between giving a man a fish and teaching them how to fish. Recently, it has become a common conception that China is using its Belt and Road initiative to hawk all of the world's fish supply at least for the foreseeable future. How true is this?

In case of Pakistan, our Prime Minister Imran Khan's trip to China in his early days has been regarded as a success in terms of Chinese aid to our current deficit. Particularly, the focus has been on the second phase of China-Pakistan Economic Corridor (CPEC) after completion of early harvest projects. A growing concern under these recent developments is whether Pakistan will follow footsteps of Malaysia or pay the cost similar to Sri Lanka. Possibly neither. That is because our options are not limited to either converting Chinese debt into equity like Sri Lanka or cancelling Chinese projects like Malaysia did. As Gwadar port projects cannot be rationally compared to other Chinese investments specifically those in Sri Lanka or Malaysia due to the difference in nature of underlying financial framework and instruments. Let's discuss the two countries in question and their relationship with China and how CPEC is different?

Recently, Sri Lanka was drowning in debt with regards to its Hambantota Port project so large that the country approached Chinese to request a payment reschedule. China played its cards right and swapped debt in the project with equity effectively taking ownership of the port and industrial zone, the surrounding 15,000 acres of land, for the next 99 years.

This debt relief in exchange for control of strategic territory can be attributed to few other factors. This port had little to no commercial potential and was launched at one to two percent interest rate. The debt further escalated when the timeline was accelerated for political reasons. Similarly, Gwadar might take years before it reaches commercial viability. However, that can change if China diverts even a fraction of its sea traffic of its major shipping companies to this new port. Furthermore, many people attribute this transfer to Sri Lanka's corruption and bad management. Unfortunately, Pakistan seems to suffer from these adverse traits too, thus, the policymakers need to actively monitor the progress and accountability of the projects.

On the other end, the Malaysian Prime Minister Mahathir Mohamad decided to suspend two...