Pakistan’s so-called all-weather friend is likely stepping back. According to reports, China is pulling out of the Main Line-1 (ML-1) railway upgrade, which is part of Pakistan’s most ambitious China-Pakistan Economic Corridor (CPEC) project.
The development signals a major shift in Pakistan-China infrastructure cooperation.
The decision was likely taken after Pakistan Prime Minister Shehbaz Sharif’s recent visit to Beijing. Reports claim that Sharif failed to secure fresh funding or major projects under CPEC Phase-2.
Sharif, however, was able to secure some funding in other sectors agriculture, electric vehicles, solar energy, health, and steel. The two countries signed Memoranda of Understanding (MoUs) valued at $8.5 billion,
BRI, CPEC, and ML-1?
CPEC is a major infrastructure initiative that connects China’s northwestern Xinjiang region to Pakistan’s Gwadar port on the Arabian Sea. It spreads for around 3,000 km. The project includes a network of roads, railways, pipelines, and energy projects and is a key element of China’s Belt and Road Initiative (BRI).
The ML-1 railway upgrade was once considered the centerpiece of CPEC however, China has now withdrawn from it. It aims to modernize the 1,800-kilometre route from Karachi to Peshawar.
Why China Withdrew From ML-1 Project?
During his six-day visit to China, Sharif acknowledged Pakistan’s security environment posed challenges, while pledging stricter protection for Chinese nationals. He also promised to address bureaucratic bottlenecks after investors expressed concerns about delays and red tape.
However, Sharif’s unilateral announcement of the “formal launch” of CPEC 2.0, without Chinese endorsement, showed the lack of alignment between Islamabad and Beijing.
With China’s own economic pressures and rising debt repayment risks in partner countries, it is withdrawing from projects with high exposure. Pakistan’s growing arrears to Chinese power producers and repeated IMF bailouts have made the country a particularly risky investment.
What China’s Withdrawal Means For Pakistan
Reports indicate that China’s exit from the ML-1 project has forced Pakistan to seek alternative financing from the Asian Development Bank (ADB). Islamabad is now pursuing a $2 billion loan to upgrade the Karachi-Rohri section of the line.
China had pledged roughly $60 billion in CPEC investments, with ML-1 slated as the largest and most transformative project. But nearly a decade of negotiations, coupled with Pakistan’s deepening fiscal challenges, has reduced Beijing’s appetite for such a high-risk venture.