In a dramatic shift that could reshape South Asia’s infrastructure and diplomatic landscape, China has officially exited Pakistan’s $60 billion China–Pakistan Economic Corridor (CPEC) flagship project, the Main Line-1 (ML-1) railway upgrade. The move, confirmed during Prime Minister Shehbaz Sharif’s recent visit to Beijing, marks the end of nearly a decade of negotiations and signals Beijing’s growing reluctance to fund high-risk ventures amid Pakistan’s deepening fiscal crisis.
With China stepping back, Islamabad has turned to the Asian Development Bank (ADB) for a $2 billion loan to finance the Karachi–Rohri stretch of the ML-1 railway line. This is the first time a multilateral lender will lead a project once considered the crown jewel of China’s Belt and Road Initiative (BRI) in Pakistan.
🧭 Timeline of CPEC’s Flagship Project and China’s Withdrawal
| Year | Milestone | Outcome / Status |
|---|---|---|
| 2015 | CPEC launched under BRI | $46 billion pledged, later expanded to $60B |
| 2016–2022 | ML-1 railway upgrade proposed | Stalled due to financial and security concerns |
| May 2025 | Pakistan proposes CPEC Phase-2 | China signs MoUs worth $8.5B, excludes ML-1 |
| September 2025 | China exits ML-1 project | Pakistan turns to ADB for funding |
The ML-1 project, spanning 1,800 km from Karachi to Peshawar, was envisioned to modernize Pakistan’s aging railway infrastructure and boost regional connectivity.
🔍 Why China Withdrew: Strategic and Financial Concerns
| Concern Area | Details | Impact on CPEC |
|---|---|---|
| Financial Viability | Pakistan’s debt burden, IMF bailouts | China sees Pakistan as high-risk borrower |
| Security Risks | Attacks on Chinese nationals in Pakistan | Beijing demands tighter protection measures |
| Bureaucratic Bottlenecks | Delays, red tape, lack of project alignment | Frustration among Chinese investors |
| Geopolitical Shifts | India–China–Russia alignment post SCO Summit | Beijing recalibrates regional priorities |
China’s decision reflects a broader shift in its foreign investment strategy, prioritizing economic returns over political symbolism.
📉 Pakistan’s Pivot to ADB: A New Financing Model
| Project Segment | Original Financier | New Financier | Loan Amount | Strategic Shift |
|---|---|---|---|---|
| Karachi–Rohri Railway | China (CPEC) | ADB | $2 billion | Multilateral lender replaces bilateral partner |
| ML-1 Full Line | China | TBD | $6.8 billion (unfunded) | Future uncertain |
The ADB’s involvement introduces transparency, conditionality, and regional cooperation, contrasting with China’s opaque bilateral model.
🔥 Geopolitical Implications of China’s Exit
| Region / Actor | Reaction / Impact | Strategic Commentary |
|---|---|---|
| Pakistan | Seeks diversified partnerships | Balancing China with ADB, IMF, US |
| China | Reassesses BRI exposure | Focus on Africa, Southeast Asia |
| India | Strengthens ties with China and Russia | Gains strategic leverage in SCO |
| United States | Encourages multilateral engagement | Supports ADB’s role in South Asia |
China’s withdrawal from ML-1 underscores the limits of its “iron-clad friendship” with Pakistan when financial risks outweigh strategic interests.
🧠 Expert Commentary on CPEC’s Future
| Expert Name | Role | Comment |
|---|---|---|
| Meera Iyer | South Asia Infrastructure Analyst | “China’s exit from ML-1 is a wake-up call for Pakistan’s overdependence on one partner.” |
| Rajiv Bansal | Former ADB Consultant | “ADB’s involvement will bring accountability and better project execution.” |
| Dr. Rakesh Sinha | Geopolitical Historian | “This marks a shift from bilateral diplomacy to multilateral pragmatism.” |
Experts agree that Pakistan must now recalibrate its infrastructure strategy and diversify its funding sources.
📦 CPEC Phase-2: What Remains After China’s Exit
| Sector | Investment Value (USD Billion) | Key Projects Signed in 2025 | Commentary |
|---|---|---|---|
| Agriculture | $2.1 | Smart irrigation, agri-tech | Focus on food security |
| Electric Vehicles | $1.8 | EV assembly plants | Green mobility push |
| Solar Energy | $1.5 | Off-grid solar farms | Renewable energy expansion |
| Health & Steel | $3.1 | Hospitals, steel mills | Industrial diversification |
While China signed MoUs worth $8.5 billion, none matched the scale or strategic depth of the ML-1 railway project.
📅 Upcoming Milestones for Pakistan’s Infrastructure Strategy
| Event | Date | Strategic Importance |
|---|---|---|
| ADB Loan Approval | October 2025 | Formalizes Karachi–Rohri funding |
| Pakistan Budget Session | November 2025 | Infrastructure allocations and debt planning |
| CPEC Review Summit | December 2025 | Reassessment of Phase-2 priorities |
| SCO Infrastructure Dialogue | March 2026 | Regional cooperation and funding models |
These milestones will determine the trajectory of Pakistan’s infrastructure ambitions post-CPEC.
📌 Conclusion
China’s exit from Pakistan’s $60 billion CPEC flagship project marks a turning point in South Asia’s infrastructure diplomacy. As Islamabad turns to the Asian Development Bank for funding, the shift from bilateral dependence to multilateral engagement reflects a pragmatic recalibration amid fiscal stress and geopolitical flux. While the dream of a seamless China–Pakistan corridor may be fading, Pakistan’s infrastructure future now hinges on transparency, diversification, and regional cooperation.
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Disclaimer: This article is based on publicly available news reports, financial disclosures, and expert commentary as of September 6, 2025. It is intended for informational purposes only and does not constitute investment or diplomatic advice.
