China Pakistan Economic Corridor Review
History:-
Pakistan and China are not only the atomic powers of the world, but also they have good economic relations. China has invested in many projects in Pakistan, for the development of Pakistan. China always wants a strong and developed Pakistan.
For making this friendship relation more strong, the Chinese President Xi Jinxing had come to Pakistan in the month of April, 2015. During his tour to Pakistan, many mega-projects had signed between the governments of both sides, in which one of the most important and valued project was the project of China-Pakistan Economic Corridor.
What is CPEC?
China-Pakistan Economic Corridor (CPEC) is the project of highways, railways and pipelines for the transportation of oil, gas and to continue many other trades. China will be the starting point of the highway and its destination will be Gwadar, Pakistan. The route of this highway will pass through all the provinces of Pakistan, including AJK and Gilgit Baltistan. The total length of the highway is being estimated up to 3,000km and cost of $46 billion is the initial estimated cost of this mega-project. This project is expected to be completed up to 2030.
The agreement worth $46 billion is for the China-Pakistan Economic Corridor (CPEC), which is considered to be the largest investment by China in a foreign country. This Corridor is of high significance, as it shall run through one of the most vital geostrategic locations in South Asia. It shall mainly act as a trade bridge between China, the Middle East and Europe through Pakistan but will generate thousands of jobs and revenue worth billions of dollars for both countries.
Other than transport infrastructure, the economic corridor will provide Pakistan with telecommunications and energy infrastructure. The project also aims to improve intelligence sharing between the countries.
The Corridor is an extension of China’s proposed 21st century Silk Road initiative. The corridor is expected to be operational within three years and will be a strategic fate changer in the region, which would go a long way in making Pakistan a richer and stronger entity than ever before.
Financing:-
According to South China Morning Post, Beijing does not plan to use either the Asian Infrastructure Investment Bank or its Silk Road Fund to finance the US$46 billion for Pakistan-China economic corridor, with money to come from both countries instead:
“Several different facts will be utilized for the financing of these projects. Both sides will increase cooperation, to jointly provide financing support. As to whether the AIIB or the Silk Road Fund will be used, at present these [projects] are being looked into, or are in the planning stages. So at the moment we are not considering using these mechanisms or platforms or financial organizations to provide financing.”
Liu Jianchao, assistant Foreign Minister of China.
Prime Minister Nawaz Sharif has said the funding is "neither a loan, nor a grant, but an investment ”. R1
Why China is interested in CPEC?
According to the ‘String of Pearls’ Theory, this corridor is one of the many megaprojects planned by China in Central, South and South East Asia for expanding its political and economic influence to counter the relatively better established US sphere of influence in the region. The US has a similar agenda in the form of ‘Pivot to Asia’, which is aimed at countering China’s economic and military expansion in Asia-Pacific. According to a report published in 2013 by London based policy think tank Chatham House was:
“The increasing complexity of the Asia-Pacific region demands US attention, and the United States remains well-positioned to play a pivotal role in the region through the 21st century.’ This means that the US has partnered itself with key players in the region such as India, Japan, Indonesia and Singapore to prevent the Chinese ‘dragon’ from spreading its influence.”
Therefore, China plans to build oil storage facilities and a refinery at Gwadar Port, with oil transported to its Xinjiang Uighur Autonomous Region via road and pipeline. This will let it move energy and goods to inland China without going through the Strait of Malacca, which could be blocked by the U.S. or India should hostilities break out in the region. The project will also lead to development in western China.
Why Pakistan is interested in CPEC?
Pakistan is interested in CPEC because the common people are so much worried of load shedding, bad infrastructure, transport and many more. Therefore, in the term of China-Pakistan Economic Corridor, Pakistan will get better infra structure, better transport and will get relief from the “Evil of Load Shedding”.
Planned investments in Pakistan are heavily concentrated in energy (74%) followed by coal mining (20%) and road networks (13%). While Pakistan’s primary area of interest is cheap energy through coal, the economic corridor significantly shortens the length of the trade route from South West China to the Middle East, Africa and Europe and is equally advantageous to both countries.
We expect the local component of this investment to be around USD18bn, assuming a higher local component for investments in Hydal, Road, Rail, Mining and Gwadar Port (50% to 80%) and lower for Machinery intensive coal based power plants (20%). This alone could add 2.1pp to GDP growth each year during FY16-18 which would lift GDP growth above 6% during FY16-18using FY14 growth (4.1%) as a base.
Impact of Chinese Investment - Direct Contribution to GDP Growth
GDP - FY15 $BN 287
Local Component of Investment $BN 18.1
Local Component of Investment % of GDP 6.3%
Time Period Years 3
Annual Addition to GDP Growth is: % of GDP 2.1%
On 20 April 2015, Pakistan and China signed an agreement to commence work on the $46 billion agreement, which is roughly 20% of Pakistan's annual GDP, with approximately $28 billion in immediate projects and the rest allocated for projects in the pipeline.
The deal includes a $44 million fiber optic cable and will add 10,400 Megawatts to Pakistan's energy grid through coal, nuclear and renewable energy projects. Also included are major upgrades to Pakistan's transport infrastructure, including:
Ø Karakorum Highway (Havelian in the Abbottabad District to Thakot)
Ø Karachi-Lahore Motorway (Multan to Sukkur)
Ø The Gwadar Port East Bay Expressway Project
Ø Gwadar International Airport
The plan also includes projects to address climate change, joint research in cotton Biotech and marine research, cooperation between China's General Administration of Press and Publication and Pakistan's Ministry of Information and Broadcasting as well as an agreement between China Central Television, PTV and the Pakistan Television Foundation on the rebroadcasting of CCTV news and documentary programs in Pakistan.
Strategic Importance:-
The move represents a shift toward greater economic cooperation between Pakistan and China, which have long had close security ties amid common disputes with neighboring India. The corridor would give China access to the Indian Ocean and lead to investments that would help ease power shortages that are hindering economic growth in Pakistan.
When the corridor is constructed, it will expand the number of trade routes between China, the Middle East and Africa. Energy security is a key concern for China, as it is the world's biggest oil importer, and oil pipelines through Pakistan would cut out ocean travel through Southeast Asia.
The Asian Development Bank terms the project as "CPEC will connect economic agents along a defined geography. It will provide connection between economic nodes or hubs, centered on urban landscapes, in which large amount of economic resources and actors are concentrated. They link the supply and demand sides of markets."
According to Chinese Foreign Ministry Spokesperson Hua Chunying, the corridor will "serve as a driver for connectivity between South Asia and East Asia."
Security:-
China has expressed concern that some separatist groups in Xinjiang may be collaborating with insurgents in Pakistan, and has expressed a desire to strengthen security ties. The outlawed Tehrik-i-Taliban has claimed responsibility for past attacks on some Chinese nationals, and Chinese commentators have raised concerns that construction workers could be kidnapped and ransomed. The Express Tribune reports that Pakistan plans to train 12,000 security personnel to protect Chinese workers on the corridor. Presently, 8,000 Pakistani security officials are deployed for the protection of over 8,100 Chinese workers in Pakistan.
Some militant separatist groups operate in Balochistan, including the Balochistan Liberation Army and Jundallah, which have carried out bombings.
The route of the Economic Corridor passes though Azad Kashmir, one of the regions that has been contested in the Kashmir conflict between India and Pakistan, and border guards have occasionally exchanged fire. Chinese intelligence agencies also shared information with Pakistani authorities regarding "foreign hostile agencies" who could support anti-state elements to sabotage the project, a reference mainly to the Indian intelligence agency, Research and Analysis Wing.
Route:-
The route of CPEC will starts from Kashgar China and will pass through all four provinces including AJK and Gilgit Baltitan and will ends on Gwadar Pakistan.
Conclusion:-
After the visit of the Chinese Prime Minister, the China-Pakistan Economic Corridor project got so much famous in the mean of development, jobs, energy, transportation and infrastructure. This project brings prosperity in both countries. As we know that “to start a good work or doing there will so much hurdles to stop it”. So, according to me it is fate changer program for Pakistan. Because everyone wants success and CPEC is a step towards success and prosperity.
IN SHAA ALLAH we will get rid of different problems which are involved in to stop the Pakistan to success. And will see Pakistan’s success and famousness around the globe.
Ameen…….!
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