TIC Focus l

Times are changing, the world is transforming, with Asia being the epicenter of this 21st century transformation. The center of economic power is shifting from the west towards the east partly because of the global economic recession of 2008-09, and partly because of the implementation of futuristic vision by China in the form of Belt and Road Initiative (BRI).[1] The CPEC serves as the flagship project of BRI and this vision. CPEC which is seventh economic corridor of BRI, provided Pakistan and the surroundings countries enormous opportunities as it gives an integrating platform for over three billion people in Middle East and Africa.[2]

The surge in trade investment and financial flow would bring not just peace and prosperity to these regions through enhancement in the competitiveness of the economies of the countries, but also better living standards seeking to reduce regional disparities and social inequality and improve life expectancy as well as quality of life in the country and in adjoining region. Through CPEC, Pakistan is harnessing its strategic location into geo economic advantage and the region will be integrated into an economic hub, promising a great future for its populous.[3]

The CPEC project epitomizes the growing mutuality of interest and the vision of a shared politico economic future on the part of Pakistan and China. It creates a new framework of interaction on the basis of economic connectivity and regional cooperation which will have far reaching positive implications for the two countries as well as the adjoining regions. CPEC is an integral part of BRI which seeks to turn silk route into an economic reality; therefore, it won’t be an exaggeration to call CPEC a game changer for Pakistan, Asia and wider region.[4]

There is no doubt that the future of Asia is linked with BRI, CPEC serves as the primary platform building sustainable and prosperous future which depend upon the contribution and trust of international partners and countries. China is connected with Pakistan through Karakoram Highway. Karakoram Highway was started in 1959 & completed in 1979 (Open to public since 1986). Its total length is 1,300 km (Pakistan 887 km & China 413 km). It connects China’s Xinjiang Region with Pakistan’s Gilgit Baltistan & Khyber Pakhtunkhwa region. CPEC is collection of projects which links Gwadar Port in Southwestern Pakistan to China’s Northwestern autonomous region of Xingiang.[5]

Economic Gateway Gwadar

On 8th Sep 1958, Pakistan purchased Gwadar from Oman for $3 Million. Gwadar Port is located at mouth of Persian Gulf. It is a planned free trade port for which NHA began construction of 653 km long Makran Coastal Highway linking Gwadar with Karachi.

 

One Belt One Road (OBOR) Initiative

Silk Road Economic Belt & 21st-century Maritime Silk Road are also known as One Belt and One Road (OBOR) Initiative, and Belt and Road Initiative (BRI). Development Strategy of China focuses on connectivity & cooperation between Eurasian countries, primarily People’s Republic of China (PRC), land-based Silk Road Economic Belt (SREB) & ocean-going Maritime Silk Road (MSR). BRI is one of largest infrastructure & investment mega-projects in history, covering more than 68 countries, equivalent to 65% of world’s population & 40% of global GDP as of 2017. Belt and Road Initiative is geographically structured along 6 corridors, & Maritime Silk road.

  1. New Eurasian Land Bridge, running from Western China to Western Russia through Kazakhstan.
  2. China–Mongolia–Russia Corridor, running from Northern China to Eastern Russia.
  3. China–Central Asia–West Asia Corridor, running from Western China to Turkey.
  4. China–Indochina Peninsula Corridor, running from Southern China to Singapore.
  5. China–Myanmar–Bangladesh–India Corridor, running from Southern China to Myanmar.
  6. China–Pakistan Corridor, running from South-Western China to Pakistan

Benefits to China

Chinese industries are facing problems to compete in global market due to high transportation cost & delivery time. CPEC will decrease travel distance & cost significantly from China to Gulf. Even if China uses CPEC for 50% of its Oil supplies, it will save $ 6 Million everyday & almost $ 2 Billion every year. Currently export of goods from China to Middle East and Africa via Strait of Malacca takes about 45 days that could be reduced to less than 10 days, if transported through Gwadar Port. In broader view, the CPEC will closely connect Central Asia, West Asia and Gulf states through energy and economic cooperation.[6] Through CPEC, China will get autonomous path that will be free from India & USA’s influence.

Benefits to Pakistan

CPEC will prove as a Game Changer for Pakistan. It will result in the establishment of Strategic & Economic trade routes within as well as outside the country. Development and uplift of new and existing infrastructure is being undertaken under the umbrella of CPEC. The corridor will focus on development of some of the most under developed regions of Pakistan like FATA, KPK, Baluchistan & Southern Punjab.[7] Increased trade activity in Pakistan will result in generation of Job Opportunities. Investments by China will boost Pakistan’s $ 304.3 Billion GDP by over 15%. Pakistan can avail great opportunities from China’s expertise in various sectors like energy, technology & education sectors.

Three years back in 2015, CPEC was an unknown word. Today, CPEC is a word known not only in Pakistan, but around the world.  Pakistan is indeed privileged in the sense that CPEC will open western China and Central Asia with connectivity to the sea with the most efficient route to sea through Gwadar. It will provide two way trade routes to the world, not only Pakistan but for Afghanistan, Central Asia and western China.[8] It will provide rail and road links, gas, power and information (IT) links, in addition to providing this region with access to the world through the BRI. Two power projects have already come online and the third one is near to completion. Thar coal, which was a dream for many, is today a reality.[9]

Above all, the special economic zones will provide entrepreneurs from Pakistan, China and all over the world as opportunity to increase trade, to improve their output, to increase efficiency and that is where the real Fruits of CPEC lie. The projects under CPEC are built under two basic principles. The first principle is economically viability and the second is environmental sustainability.[10] Even the coal plants are being built to diversify energy needs that will replace the very inefficient oil generation mechanism, and will also be environmentally positive.

Routes of CPEC

The Gwadar Port is presently connected with Karachi via coastal highway, whereas three routes (Eastern, Central and Western) for CPEC connecting public have shown concern over grievances of various political parties and other stake holders regarding route of the China Pakistan Economic Corridor (CPEC).[11] The Government should take all concerned into confidence and alleviate the growing concerns.

Calling an All Parties Conference (APC) in this regard has received a welcoming response, wherein all Provincial Governments and political parties were duly represented. Preliminary reports suggest that a much needed consensus has been reached by the APC, allaying the fears that the CPEC will be province-biased and hence the disquieting impasse will hopefully end.[12] According to the planning commission, now there will be three routes for CPEC traffic to reach Gwadar Port as:

Route No 1

Gwadar – Turbat – Punjgor – Nag – Kalat – Quetta – Pashin – QilaSaifullah – Zhob – D I Khan – Peshawar – ManSehra/ Abbotabad – Raikot – Khunjrab – China

Route No 2

Gwadar – Turbat – Hoshab – Panjgor – Nag – Khuzdar – RatoDero – DeraMuradJamali – Rajanpur – D G Khan – Layyah – Bhakkar – Mianwali – Islamabad – Peshawar – Mansehra / Abbotabad – Ranikot – Khunjrab – China

Route No 3

Gwadar – Karedir – Hyderabad – Sukkhar – Multan – Faisalabad/ Lahore – Mandi Bahaudin – Islamabad

– Peshawar – Mansehra/ Abbotabad – Ranikot – Khunjrab – China

Sectors of Cooperation

The corridor (CPEC) connects through the 2000 km road and rail link including the Kashghar in West China autonomous region to Pakistan’s South Western part of Gwadar (Baluchistan).[13] This is multifaceted deal which involves the following broad areas of cooperation:

Coal-fired power plants

Hydroelectric wind generated power

Solar power stations

Coal supplies

Road rail network

Sea and Air Ports

Infrastructure development for Industrial Zones

The corridor is also expected to keep in focus some of the most under developed areas of Pakistan to reduce poverty and generate job opportunities, while on the other hand it would considerably reduce the transportation time of goods and energy for Chinese products. CPEC is defined as game changer for Pakistan.[14] China has pledged to invest $60 billion in a highway network from Khunjrab to Gwadar, energy projects and the establishment of Economic Zones. The stated policy of the Pakistan government is to spread the benefits of this investment through the equitable distribution of resources and projects to all provinces.

Special Economic Zones

The first model Special Economic Zone (SEZ) will be developed at Gwadar under $ 60 billion China-Pakistan Economic Corrido., It will spread over an area of 3,000 acres, fully functional by end of           2017.[15] It would be developed by China (Dawn, p10, Jan 28, 2016) and will be comprising of:

Industrial Units for mines/minerals

Food processing Units

Agricultural Units

Live stocks Units

Energy Units

The remaining SEZs would be developed and designed on the same lines. A total of 27 SEZs would be set up in Pakistan under CPEC. Out of these 27, the 250-acres SEZ for Gilgit-Baltistan (GB) would be located at Moqpondass for mining and food processing.[16] Khayber Pakhtunkhwa will have eight SEZs, the highest among all provinces, followed by seven each in Punjab and Baluchistan, three in Sindh and one each in Gilgit-Baltistan and Islamabad. (ibid)

The largest of all 27 SEZs would be based in the Punjab’s Pind Daden Khan Industrial City which would be spread over 10,000 acres and would have industrial units for agriculture, textile, food processing, livestock, manufacturing and energy.[17] 

Investment Portfolio

CPEC is also proving to be a major attraction for domestic investors who see it as catalyst for Pakistan to grow its economy at a pace achieved by leading regional peers. Punjab Board of Investment and Trade has reported that CPEC is not only attracting domestic investors but also foreign capital. Several foreign companies are keen on partnering with local investors and provincial government to launch projects in different sectors of the economy.[18] The CPEC $ 60 billion investment until 2030 will finance a series of transport infrastructure projects ($ 11 billion, mostly public investment) and energy projects ($ 33 billion). These investments will turn Pakistan into the center of global economic activities.[19]

It is pertinent to mention that the $ 60 billion figure commonly associated with CPEC is only for the first phase. Depending upon the early and satisfactory completion, more investment with no fixed limit can be poured in by China under “One belt and one road (OBOR) Initiative. CPEC is part of China’s massive OBOR transcontinental and transoceanic initiative. Via a network of rail, road and motorways envisioned under CPEC, the Port of Gwadar will connect China with Central Asia, Africa, Middle East and Europe.[20]

 

[1] Yiping Huang, “Understanding China’s Belt & Road initiative: motivation, framework and assessment.” China Economic Review 40 (2016): 314-321. https://www.sciencedirect.com/science/article/pii/S1043951X16300785

[2] Michael D. Swaine, “Chinese views and commentary on the ‘One Belt, One Road’initiative.” China Leadership Monitor 47, no. 2 (2015): 3. https://www.hoover.org/sites/default/files/research/docs/clm47ms.pdf

[3] Peter Cai, “Understanding China’s Belt and Road Initiative.” (2017). https://think-asia.org/handle/11540/6810

[4] Weidong Liu and Dunford Michael, “Inclusive globalization: Unpacking China’s belt and road initiative.” Area Development and Policy 1, no. 3 (2016): 323-340. https://rsa.tandfonline.com/doi/abs/10.1080/23792949.2016.1232598

[5] Yong Wang, “Offensive for defensive: the belt and road initiative and China’s new grand strategy.” The Pacific Review29, no. 3 (2016): 455-463. https://www.tandfonline.com/doi/abs/10.1080/09512748.2016.1154690

[6] Moonis Ahmar, “Strategic meaning of the China-Pakistan economic corridor.” Strategic Studies 34, no. 4/1 (2014). http://www.issi.org.pk/wp-content/uploads/2015/12/Moonis-Ahmar_3435_SS_41_20142015.pdf

[7] Mir Sherbaz Khetran, “CPEC: Benefits for Balochistan.” (2016). https://www.issi.org.pk/wp-content/uploads/2016/02/Final-Issue-brief-Mir-Sherbaz-Khetran-dated-15-2-2016.pdf

[8] Atif Shan Makhdoom, Aisha Bashir Shah, and Kiran Sami. “Pakistan On The Roadway To Socio-Economic Development: A Comprehensive Study Of China Pakistan Economic Corridor (Cpec).” The Government-Annual Research Journal of Political Science. 6, no. 6 (2018). http://sujo-old.usindh.edu.pk/index.php/THE-GOVERNMENT/article/view/4029

[9] Faaiz Amir, “CPEC and Regional Integration.” Pakistan Development Review 56, no. 4 (2017): 579-597. https://go.galegroup.com/ps/i.do?id=GALE%7CA538247450&sid=googleScholar&v=2.1&it=r&linkaccess=abs&issn=00309729&p=AONE&sw=w

[10] Muhammad Mansoor Ali, Islamabad NUML, and Farida Faisal. “CPEC, SEZ (Special Economic Zones) and Entrepreneurial Development Prospects in Pakistan.” Pakistan Development Review 56, no. 4 (2017): 143-155. https://www.pide.org.pk/psde/pdf/AGM32/papers/CPEC_SEZ.pdf

[11] Ruilian Zhang, Andam  Francis, and Shi  Guoqing. “Environmental and social risk evaluation of overseas investment under the China-Pakistan Economic Corridor.” Environmental monitoring and assessment 189, no. 6 (2017): 253. https://link.springer.com/article/10.1007/s10661-017-5967-6

[12] Khalid Manzoor Butt,, and Anam Abid Butt. “Impact of CPEC on Regional and Extra-Regional Actors.” The Journal of Political Science 33 (2015): 23. http://www.academia.edu/download/47946635/Butt-Butt.pdf

[13] Ali, Yousaf, Zaeem Rasheed, Noor Muhammad, and Salman Yousaf. “Energy optimization in the wake of China Pakistan Economic Corridor (CPEC).” Journal of Control and Decision5, no. 2 (2018): 129-147. https://www.tandfonline.com/doi/abs/10.1080/23307706.2017.1353929

[14] Jamal Nasir. “CPEC triggered investment.” Dawan News Paper Pakistan 11January, 2016 2016, Front Page (2016). https://www.issi.org.pk/wp-content/uploads/2015/04/Doc-92.pdf

[15] Aslam Sabah, Farid Khan, and Asad Rafi. “CPEC: Pakistan’s way to success.” Special Report. IICR (2016). http://iicr.org.pk/wp-content/uploads/2016/09/IICR-Special-Report-on-CPEC.pdf

[16] Ali Akber. “China Pakistan Economic Corridor (CPEC): Prospects and challenges for regional integeration.” International Journal of Social Sciences and Humanity Studies7, no. 1 (2015): 1-15. http://dergipark.gov.tr/ijsshs/issue/26213/275986

[17] Chen Xiangming, S. K. Joseph, and Hamna Tariq. “Betting big on CPEC.” (2018). https://digitalrepository.trincoll.edu/facpub/204/

[18] Umbreen Javaid, “Assessing CPEC: Potential threats and prospects.” Journal of the Research Society of Pakistan 53, no. 2 (2016). http://pu.edu.pk/images/journal/history/PDF-FILES/18-Paper_53_2_16.pdf

[19] Abid Massarrat, and Ayesha Ashfaq. “CPEC: Challenges and opportunities for Pakistan.” Journal of Pakistan Vision 16, no. 2 (2015): 142-169. http://pakistanhouse.net/wp-content/uploads/2016/11/CPEC-challenges.pdf

[20] Zhang Ruilian, and Guoqing Shi, “Social impacts assessment for China-Pakistan Economic Corridor investment activities.” Energy 33 (2016): 76. https://conferences.iaia.org/2016/Final-Papers/Zhang,%20Ruilian%20-%20SIA%20for%20China-Pakistan.pdf

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