China’s FDI into Pakistan slows down as differences over CPEC surface

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Inflow of foreign direct investments (FDI) into Pakistan has shown signs of picking up in the last couple of months. But there is a caveat. Inflow from China, Pakistan’s all weather friend, has slowed down. Also, the cumulative FDI inflows in the first three months (July-Sept) of the current fiscal year 2021-22 were recorded at $439.1 million, which was 4 per cent or $18.5 million, lower compared to $457.6 million in the same period of last year, <a href="https://tribune.com.pk/story/2325451/fdi-soars-to-11-month-high-in-sept">the Express Tribune said.</a></p>
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According to reports, in September FDI inflow into Pakistan jumped 16 per cent to touch $236 million against $202.8 million in the corresponding month previous year. The chunk of the FDI inflow has come from the US despite fraying relations between Washington and Islamabad.</p>
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In the July to September period this year, FDI from the US stood at $100.9 million while it was only $76.9 million from China.</p>
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The <a href="https://www.dawn.com/news/1652889">Pakistani daily Dawn</a> in a report said that the five-time higher FDI inflows from the US in 1QFY22 are encouraging for the country while at the same time a significant decline of FDI from China is worrisome.</p>
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Analysts India Narrative spoke to, said that investments towards the much talked about China Pakistan Economic Corridor (CPEC), the fulcrum of the Belt and Road Initiative are thinning down. Not only has the multi-billion project been hit by corruption and delays, the recent spate of attacks in Pakistan that were essentially targeted at the Chinese nationals have also had an impact, they opined.</p>
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“Pakistan will be worried as it has typically been relying on China for assistance and going by data, Chinese investments are slowing down. This shows that investments into the much talked about CPEC (China Pakistan Economic Corridor) is now thinning and there is a possibility that China which is also battling several economic challenges will be choosy in investing money,” an analyst with an industry chamber told India Narrative.</p>
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The road ahead for Islamabad may not be easy as the Paris based anti money laundering watchdog  Financial Action Task Force (FATF) retained Pakistan on its grey list. FATF in a recent report also warned that terror outfits “continue to pose a serious threat to international stability, security and peace”.  Earlier, an independent think tank Tabadlab estimated an economic loss of a whopping $38 billion for Pakistan on account of the FATF grey list. The country has been placed thrice on its grey list since 2008. More recently, from June 2018, it has continuously been on the FATF grey list.  </p>