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As the annual UN climate conference (COP29) takes place in Baku, RFE/RL presents exclusive coverage of environmental issues that are often underreported from regions that are often overlooked.

YAR HUSSAIN, Pakistan -- As world leaders gather in Azerbaijan's capital for the annual United Nations climate conference to plan transitioning away from fossil fuel, policymakers will also address the unforeseen obstacles the green transition might bring.

One such scenario is playing out in Pakistan, where soaring electricity prices have made Pakistan's state-owned power supply among the most expensive in South Asia and pushed cash-strapped households and businesses to find relief from rising costs and rolling blackouts by using low-cost Chinese solar panels.

But the flood of ultracheap solar power -- which has seen Pakistan acquire $1.4 billion worth of Chinese-made solar panels and become the world's third-largest buyer in the first half of 2024 -- also risks exacerbating Pakistan's battered power sector, with a debt exceeding $9 billion and falling grid consumption that could move it toward a new fiscal crisis.

For Nasar Khan, a small business owner from the northern town of Yar Hussain, the switch to solar has eased the sky-high electricity costs that have strained his finances in recent years. The green energy source has lowered his monthly bill by nearly a third, close to what he paid five years ago before a spike in prices triggered by soaring global commodity prices. Those savings, he says, have caught the eye of his neighbors and even his cousin, on whose house he is helping to install Chinese-made solar panels.

"The state power rates have become unaffordable for consumers," Khan told RFE/RL. "Everyone who can [afford to] is now trying to switch to solar."

Pakistanis' Passion For Chinese Solar Panels Worries State Power Supplier (Video)
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Khan and his neighbors in Yar Hussian are hardly the only ones. Across the country of 240 million people, shimmering blue panels dot the rooftops of cities and cover factory buildings as the mass adoption of solar panels sweeps Pakistanis looking to blunt the impact of soaring state energy tariffs.

While this may be good news for the environment and global efforts to adopt cleaner forms of energy production, the shift could bring new headaches for the government as demand for energy from the state power grid shrinks and Islamabad juggles its tenuous financial outlook with the corresponding drop in revenue.

Protesters gather in Karachi for demonstrations against inflated electricity bills that erupted across several Pakistani cities in July in which demonstrators burned their monthly bills.
Protesters gather in Karachi for demonstrations against inflated electricity bills that erupted across several Pakistani cities in July in which demonstrators burned their monthly bills.

Kaiser Bengali, an economist who worked as an adviser to the chief minister of Pakistan's southeastern Sindh Province, says the influx of Chinese panels has sparked an episode of "circular debt" where those left reliant on the expensive state power grid need to choose between saving money to switch to solar or refuse to pay their bills -- which could, in turn, spark a cascade of unpaid debt from one government company to another.

"[This] means there is a water-supply company that is providing water to us and, of course, they use power, because water has to be pumped," Bengali told RFE/RL. "But if people don't pay their water bills then the water company can't pay the electricity company. And because the electricity company is using gas, they can't pay the gas company, and so on."

Consumption of electricity from the national grid fell by 10 percent in 2023 compared to the previous year amid rising electricity prices and this decrease could deepen as Islamabad faces pressure to increase electricity prices in budget-balancing moves to repay a loan from the International Monetary Fund (IMF).

Pakistanis Looking Off Grid

Against this backdrop, Pakistanis are adapting however they can.

It's not clear exactly how many people are switching to solar panels as an alternative source of electricity. Some households have opted for simple set-ups for their own needs, while others have invested large sums in hopes of selling the energy to the national grid.

Abrar Khan, from the Swabi district in Khyber Pakhtunkhwa Province, says he has been fitting solar-panel systems on houses and businesses for 20 years, but the energy crisis and falling trust in the government's ability to resolve it has triggered a major uptick in installations.

"Domestic and industrial users were fed up with high rates and frequent power outages," he told RFE/RL. "This is why this year and the past year the demand for solar systems has increased enormously."

Workers install Chinese-made solar panels in Pakistan's Khyber Pakhtunkhwa Province.
Workers install Chinese-made solar panels in Pakistan's Khyber Pakhtunkhwa Province.

The roots of Pakistan's power-sector crisis go back decades but picked up steam in 1994 when Islamabad offered lucrative deals to foreign investors to build power plants as the government and its rapidly growing population pursued economic growth.

Called independent power producers (IPPs), these operators secured liberal provisions from the government in the form of sovereign-backed, dollar-indexed returns and commitments to pay for even unused electricity.

Financing mostly flowed to the coal-fired or gas-fueled plants, which left electricity prices largely tied to fluctuations in the global market for fossil fuels, with power tariffs in Pakistan more than doubling in the past three years alone.

The government also scaled-back subsidies and passed the capacity payments made to power producers to consumers, a bane for large sections of society in a developing country like Pakistan where roughly 40 percent of the population lives below the UN-defined poverty line.

An aerial view of Chinese-made solar panels installed to power a factory in Mardan, Pakistan.
An aerial view of Chinese-made solar panels installed to power a factory in Mardan, Pakistan.

Industrial groups complain that energy costs are double those of businesses in India and Bangladesh, and some factories have been forced to shut down.

"Whoever's business is surviving -- [and] I am among them -- it's because of using these solar-energy systems," Ijaz Bacha, a factory owner and spokesman for the marble industry in Khyber Pakhtunkhwa Province, told RFE/RL.

Marble processing is a major industry in the province, and Bacha says between 30 percent and 40 percent of manufacturers there have gone out of business in the past two years.

Bacha says the electricity bill for his facility has dropped significantly since he switched to solar, with his monthly bill going from 2 million rupees ($7,300) to 1.2 million rupees ($4,300). He adds that those savings have kept his business afloat but were only possible thanks to a 25 million rupee ($90,000) investment, a sum many Pakistani business owners would have difficulty raising.

"I believe that in the next year, the majority of the industries [in Pakistan] will switch to solar because survival is impossible without it," Bacha said.

Grappling With Uncertainty

In navigating the intertwined debt and energy problems, consumers say they're dealing with policy whiplash.

In 2017, Pakistan started a system for "net metering" where people can sell excess electricity produced by their solar panels back to the national grid. But in March, the government indicated it wanted to end the net-metering policy to meet IMF criteria for state spending as it tries to stabilize its economy.

A local market in Karachi is plunged into darkness following a major power breakdown that left much of the country without electricity in January 2023.
A local market in Karachi is plunged into darkness following a major power breakdown that left much of the country without electricity in January 2023.

Despite concern from the federal government, the provincial governments of Punjab -- home to more than half of the country's population -- and Sindh (more than 50 million people) are now offering free or subsidized solar panels to help low-income households.

The federal government is also renegotiating debts, with the hope of stabilizing the grid and reducing its reliance on fossil fuels.

Pakistani Energy Minister Awais Leghari told the Financial Times in September that the government was renegotiating with Chinese and domestic investors over power-sector debts and exploring ways to privatize certain companies.

But the minister also expressed concern that the continued interest and use of solar panels risks making the grid "unaffordable" due to a sustained loss of paying customers.

"Demand is shrinking off the grid. That's a big concern for us," he said.

A TV screen showing preliminary results for the U.S. presidential election hangs in a restaurant in Hong Kong on November 6.
A TV screen showing preliminary results for the U.S. presidential election hangs in a restaurant in Hong Kong on November 6.

Welcome back to the China In Eurasia briefing, an RFE/RL newsletter tracking China's resurgent influence from Eastern Europe to Central Asia.

I'm RFE/RL correspondent Reid Standish and here's what I'm following right now.

Xi's Upside And Downside

Former President Donald Trump has declared victory in the U.S. election against Vice President Kamala Harris.

It's an outcome that will have implications far beyond the United States, so here's what another Trump administration could look like for China.

Finding Perspective: Beijing and Washington are the world's two largest economies and another Trump term will have a major impact on where the relationship between the two rival powers goes.

There is something of a consensus in Washington when it comes to Beijing, with a focus on constraining China's continued rise on the world stage.

Trump's previous term saw a trade war, with him slapping tariffs on hundreds of billions of dollars' worth of Chinese goods and launching a global campaign against Chinese telecoms giant Huawei.

Four years of President Joe Biden, meanwhile, saw him adopt a more measured tone than Trump, but his administration also targeted Chinese tech industries with investment and export controls, as well as tariffs on items like Chinese electric vehicles (EVs).

Despite that overlap, there are still important differences in the short and long term for Chinese leader Xi Jinping.

The View On Trump: If Harris represented a more predictable approach and a more traditional U.S. foreign policy, Trump is the ultimate wild card for Beijing.

The former president has threatened upwards of 60 percent tariffs on all imports from China and has spoken openly of his desire to ramp up another trade war. None of that is good for Beijing as it grapples with a slowing economy and weighs how to use a potential fiscal stimulus.

But that short-term pain comes with potential long-term upside for Xi.

Chinese analysts have sometimes seen Trump's divisiveness at home and his "America First" brand of foreign policy as a net gain for Beijing as it tries to overtake Washington on the global stage.

That could look more appealing on the horizon if Trump, who has questioned traditional U.S. alliances, strains relations with U.S. partners in Europe and Asia and leaves diplomatic openings for Beijing.

Analysts saw Harris as looking to continue Biden's emphasis on building a network of allies and partners to constrain China, something that Philip Gordon, her national-security adviser, said in May, before Biden dropped out of the race, was an American advantage against Beijing and other potential U.S. adversaries.

"We're in a favorable position to win this geopolitical competition, to the degree it's Russia and China and other autocracies aligning against us.... It's why the president and the vice president have invested so much time in those alliances."

Yes, But: Trump has said that he wants to quickly push for the end of the war in Ukraine and has said that Taiwan isn't paying Washington enough money for the U.S. government's support, but the upside for Beijing isn't so straightforward.

While Trump bringing an end to the war in Ukraine -- if possible -- could embolden Beijing to act on Taiwan in the future, it could also free up Washington to devote more resources to the Indo-Pacific to more directly challenge China.

Why It Matters: Regardless of who would have won the U.S. election, Beijing expected little improvement in its tense ties with Washington.

Trump's victory now comes at a pivotal time for both countries, especially as Xi looks to turn China into an alternative center of global power.

Xi believes that the West -- and particularly the United States -- is in decline, and he remarked to Russian President Vladimir Putin last year that we are now living in a period of great historical change the likes of which we have "not seen in 100 years."

Kevin Rudd, Australia's ambassador to Washington who has met Xi several times, says that these views reflect how Chinese policymakers see the United States' trajectory and that Xi "sees the forces of history moving decisively in China's direction."

In his second term, Trump will be in a pivotal position to prove Xi right or wrong.

Three More Stories From Eurasia

1. Kazakhstan Inks Billions In New Deals

Kazakhstan signed eight commercial agreements worth $2.5 billion with Chinese companies on November 4.

The Details: The agreements were signed during a visit to Shanghai by Kazakh Prime Minister Olzhas Bektenov.

The agreements support a broader strategy by Kazakh President Qasym-Zhomart Toqaev and Xi to double trade turnover, which reached a record $41 billion last year, the Kazakh prime minister's press service said in a statement.

At an investment roundtable, Bektenov emphasized the potential for joint projects and industrial cooperation. Major Chinese firms also outlined plans to enhance operations in Kazakhstan, including energy initiatives and localized vehicle production.

There are already around 5,000 joint ventures between the two countries.

2. Slovakia's Fico Goes To Beijing

Slovak Prime Minister Robert Fico visited Beijing for a multiday state visit where he signed a strategic partnership agreement and backed Chinese diplomacy around the war in Ukraine.

What You Need To Know: Fico met with Xi on November 1 and said afterward that China's position on the war in Ukraine "is fair, objective, and constructive" and that Bratislava was ready to join a proposal promoted by Brazil and China to resolve the war.

Despite Ukrainian President Volodymyr Zelenskiy rejecting the plan, Fico said Slovakia was willing to join other countries that China says have positively received it "and work with China to contribute to promoting a political solution to the crisis," according to a Chinese government statement.

Fico, who has criticized EU policies on Ukraine and has opposed sanctions on Russia, said Slovakia was "very keen on China's diplomatic efforts dedicated to regulating the conflict in Ukraine and have exchanged our attitudes on this fundamental issue."

3. More China-Afghan Deals

The Taliban's embassy in Beijing has announced the inauguration and operational launch of a new freight railway line connecting China and Afghanistan.

What It Means: It's another headline pointing toward warming ties between Beijing and the Taliban. Last week, China announced that it will offer the Taliban tariff-free access to its vast construction, energy, and consumer sectors.

But the devil is in the details. This rail line is not a direct connection from China to Afghanistan and instead crosses through Tajikistan and Uzbekistan before stopping in northern Afghanistan.

According to the statement, the first journey of the freight train to the Hairatan port has commenced, with an initial shipment of 50 containers expected to reach its destination within 20 days of its departure.

As with the ground-breaking ceremony for the giant Mes Aynak copper mine in July, the moves are important optics for a cash-trapped and largely isolated Taliban, but are likely to take years to truly develop into something concrete.

Beijing still has lingering security questions about Afghanistan and is hesitant about having too many direct connections between it and China.

A similar dynamic unfolded earlier this year when the Taliban announced a new road through the Wakhan Corridor leading to the border with China.

Despite the announcement of the completion of the project, however, a road link with China remains far from suitable for meaningful cross-border trade and there is little Chinese custom infrastructure at the border.

Across The Supercontinent

From Taipei to Kyiv via Vilnius: Taiwan signed an agreement with Lithuania on October 30 to donate $5 million to recovery efforts in Ukraine.

The funds will go to education, veteran rehabilitation, and safety training in explosives and hazardous materials.

Railway Collapse: The Serbian minister of construction, transport, and infrastructure resigned on November 5 following the collapse of a concrete canopy at the Novi Sad railway station that killed 14 people and left three injured, RFE/RL's Balkan Service reports.

Protests continue in Serbia and the role of Chinese and Hungarian companies involved in the construction of the station have also been in the spotlight. Serbian officials have said that while a Chinese consortium was involved in the station, it did not work on the roof that later collapsed.

Still, with the construction contracts kept secret -- a clause often requested by Chinese firms -- calls for greater transparency around the project are growing.

Finland's New Tightrope: Finnish President Alexander Stubb wrapped up a state visit to China last week where he met with Xi.

Stubb told Xi that North Korean activities with Russia were an escalation and provocation in a message delivered on behalf of NATO and the European Union.

One Thing To Watch

A survey conducted ahead of the U.S. election by pollsters at National Taiwan University in Taipei found that 56 percent of Taiwanese preferred Harris as the next U.S. president compared to only 16 percent for Trump. Twenty-three percent of those polled said they didn't have an opinion.

Winning over Trump -- who has spoken about reevaluating some tenets of Washington's traditional line towards Taiwan -- will be key for the self-governing island.

That's all from me for now. Don't forget to send me any questions, comments, or tips that you might have.

Until next time,

Reid Standish

If you enjoyed this briefing and don't want to miss the next edition, subscribe here. It will be sent to your inbox every Wednesday.

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About The Newsletter

In recent years, it has become impossible to tell the biggest stories shaping Eurasia without considering China’s resurgent influence in local business, politics, security, and culture.

Subscribe to this weekly dispatch in which correspondent Reid Standish builds on the local reporting from RFE/RL’s journalists across Eurasia to give you unique insights into Beijing’s ambitions and challenges.

To subscribe, click here.

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