Once seen as saviour, China is costing Pak millions of dollars. Here's how

China has reportedly demanded that Pakistan sign an agreement on anti-terrorism cooperation to address Beijing's security concerns

Pakistan on Thursday approved an additional budget of 45 billion Pakistani Rupees (PKR), or about $162 million, for the cash-strapped country's armed forces, mainly to strengthen their capacity to protect Chinese commercial interests in Pakistan and manage the fencing along international borders, Pakistani publication The Express Tribune has reported.

Out of the PKR 45 billion, an amount of PKR 35.4 billion will be allocated to the Pakistan Army and PKR 9.5 billion to the Pakistan Navy for various purposes, according to a decision taken by the Economic Coordination Committee (ECC) of the Cabinet, chaired by Pakistani Finance Minister Muhammad Aurangzeb.

Citing a statement issued by the Ministry of Finance, the report said that the ECC also approved a proposal submitted by the Defence Division for a technical supplementary grant of PKR 45 billion for already approved projects of defence services during the current financial year.

This reportedly marks the second major supplementary grant approved for the Pakistani armed forces after the federal Budget was passed in June. Previously, the ECC had granted PKR 60 billion for Operation Azm-e-Istehkam, a counter-terrorism operation launched by Pakistan in 2024, aimed at eliminating terrorist remnants and dismantling extremist networks. These supplementary grants are in addition to the PKR 2.127 trillion defence budget.

The ECC also approved PKR 16 billion for the Special Security Division South, responsible for safeguarding the China-Pakistan Economic Corridor (CPEC) in the southern regions. Another PKR 8 billion was allocated to the Special Security Division North, tasked with protecting CPEC in northern areas.

Due to the increasing number of terrorist attacks, China has demanded the signing of an agreement on anti-terrorism cooperation to address its security concerns.

Beijing has also proposed the establishment of a joint company to ensure the security of Chinese citizens already working in Pakistan or those who will be engaged in the future during CPEC phase-II.

Under CPEC phase-I, China and Pakistan have completed 38 projects worth $25.2 billion. Out of these, 17 projects, valued at $18 billion, belong to the energy sector.

Meanwhile, about 26 projects worth $26.8 billion are in the pipeline, many of which have been included in CPEC phase-II. However, The Express Tribune reports that security concerns have slowed down progress on these projects.

The ECC also approved PKR 9.9 billion for the military in lieu of its internal security duty allowance. Meanwhile, an amount of PKR 1.5 billion was approved for managing fencing at international borders.

The ECC also sanctioned PKR 9.5 billion for the Pakistan Navy's Jinnah Naval Base Ormara and PKR 1.2 billion for the Naval Air Station in Turbat. The Pakistan Air Force will receive PKR 150 million for internal security duty allowances.

The China-Pakistan Economic Corridor (CPEC), launched in 2015 as part of China's Belt and Road Initiative, is a key infrastructure project aimed at enhancing economic connectivity between China and Pakistan through roads, railways, pipelines, and energy projects.