China Pakistan Economic Corridor (CPEC)

Submitted by:

Muhammad Babar Usman Shahid

Shahzada Waseem
Nayab Siddique
Submitted to:

Maam Farhat

NATIONAL UNIVERSITY OF MODERN LANGUAGES

ISLAMABAD
02 December, 2016
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TABLE OF CONTENTS
Topic

Page

1. Introduction 3
2. Historical Background....... 4
3. Infrastructure.... 5
4. Challenges for Pakistan.... 6
5. Indian Concerns with CPEC.... 6
6. Benefits for Pakistan.. 6
7. Conclusion................................... 7
8. References.. 8

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1. Introduction
The Geographic location of a country determines its role in global politics and it has a huge impact
on a countrys internal as well as external affairs. Territorial location determines that how a country
is beneficial to other countries in social, political and cultural aspects. If we look at the map we
can see that Pakistan is located at a strategically important location. Pakistan is situated near the
worlds emerging economic giants like China and India and countries full of natural resources like
Iran and Afghanistan [1].
China and Pakistan have developed strong relations in trade and economic sectors. The
Cooperation among Pakistan and china is based on years of friendship. Relationships in trade and
commercial exchange between these two countries were established first time in January 1963
when the first bilateral longterm trade agreement was signed. Free Trade Agreement (FTA)
between China and Pakistan was signed on November 24, 2006.
The China-Pakistan Economic Corridor (CPEC) is a milestone to further strengthen the
relationships between China and Pakistan in trade and economic cooperation. Chinese Premier Li
Keqiang underlined the construction of the CPEC during his tour to Pakistan in May 2013. The
Pakistani government has also shown great interest in this project. The corridor will connect
Gwadar Port in Baluchistan (Pakistan) to Kashgar in north-western part of China. It will make
Gwadar a fully operational and deep sea port in South Asian region. For the very first time Gwadar
was opened for trade in 2007 and the control of Gwadar Port was transferred to China Overseas
Ports Holding in February 2013. This corridor will serve as a primary gateway for trade between
China and the Middle East, Africa and Europe when it will become fully operational. The corridor
will reduce the 12 000 kilometer route that Middle East oil supplies must have to cover in order to
reach Chinese sea ports [2].

Figure 1: China's benefits in terms of Distances [4]

CPEC is a comprehensive and long term development program that involves the linking of Gwadar
Port Pakistan) to Chinas northwestern region of Xinjiang by a network of highways, railways, oil
and gas pipelines, and an optical fibers for the sake of communication . Basic infrastructure that
will be build includes 2700 kilometer highway from Kashgar to Gwadar through Khunjrab Pass,
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railways lines for trains between Gwadar and Khunjrab connecting to China, and
the Karachi-Lahore motorway. The extension of the Karakorum Highway that links Xinjiang
(China) with Pakistan's northern region Gilgit Baltistan and Khyber Pakhtunkhwa is also a part of
CPEC project [3]. The project also becoming a cause of establishing several economic zones
alongside the corridor throughout the Pakistan. An Energy Planning Working Group of the CPEC
has been established that will start fast track implementation of power projects related to the CPEC.
Those projects of 21690 MW power productions will be undertaken with the help of China under
the CPEC plan.

2. Historical Background
Gwadar holds central place in the project of the China Pakistan Economic Corridor because
without making the Gwadar Port fully functional, it would be difficult to see the expected corridor
as an energy corridor. Because it is one of its main objectives behind the construction of the CPEC
project. Gwadar could play a key role in boosting up China's trade to other world through Pakistan
as it provides a much shorter route than the current 12900 km route from the Persian Gulf [4].
Gwadar will also put China and Pakistan in a strategically advantageous position along the Arabian
Sea. On the other hand as India is also in need of energy so it looks forward toward developing
Irans Chabahar sea Port thats why in October 2014 India decided to develop this Port.
Gwadar port can also serve as a secure outlet as well as a storage and trans-shipment hub for the
Middle East and Central Asia oil and gas suppliers through a corridor passing through Pakistan.
The operational control of the port will enable Chinas access to the Indian Ocean, which is
strategically important for China as it expands its influence across the region. Gwadar port will be
connected with Chinas western province of Xingjiang through rail and road links. China eastern
seaboards are 3500 km away from the city of Kashgar in western China while the distance from
Kashgar to Gwadar port is only 1500 km.
The vision of CPEC was first came into notice in Musharraf era. Idea of this project was speculated
for many years but it gained more attraction when Chinese Premier Li Keqian visited Pakistan and
signed CPEC agreement in May 2013. Pakistani Prime Minister Nawaz Sharif visited china in
2013 and signed eight agreements which cost $18 billion that included construction of 200
kilometers tunnels for the CPEC. Pakistani President Mamnoon Husain also visited China in
February 2014 to discuss the plans of the corridor. Later on PM of Pakistan again visited china
and signed 19 agreements with Chinese government.
Then Chinese President Xi Jinping visited Pakistan in April 2015. Total 51 agreements were signed
between China and Pakistan during his visit. These agreements worth $46 billion which also
included the development of China Pakistan Economic Corridor (CPEC) [5]. The amount is far
greater than all foreign investments that Pakistan has received in the past several years and is
considerably more than all the aid Pakistan has received from the US since the start of this so
called war on terrorism.

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3. Infrastructure
The construction period of the CPEC is from 2014 to 2030. It includes an extension of Chinas
proposed 21st century Silk Road initiative. Implementation of the projects under the CPEC has
been divided into three phases. The short term projects related with CPEC are predictable to be
completed by 2017, midterm term projects by 2025 and the long-term by 2030 [6]. The overall
construction costs are estimated at $46 billion. It includes the network of highways, railways and
pipelines to transport oil and gas. The first phase includes development at Gwadar Port and the
construction of an international airport. It will be completed in 2017. The Karakoram Highway
connecting the two countries will also be broadened and the rail network between Peshawar in the
north and Karachi in southern Pakistan will be upgraded. The two countries also have a plan of
fiber-optic communication links.
This project is assumed to run through most of Pakistan starting from Gwadar in Baluchistan and
ending in Kashgar in western China bypassing through parts of Punjab, Sindh, Baluchistan,
Khyber Pakhtunkhwa provinces and Gilgit Baltistan in northern Pakistan to reach the Khunjrab
Pass and to China [6].

Figure 2: CPEC corridor route [7]

Pakistan has prepared a plan to construct corridor after active consultation with the Chinese
authorities. The argument that some parts of the country are being deprived of the corridors
benefits is being upraised by some political parties and communities of Baluchistan and KPK
provinces. So the route map is still under discussion between government and opposition. All
provincial capitals are named as nodes. These are the key corner stones of CPEC on which it will
be constructed. These nodes are at Peshawar, Islamabad, Lahore, Sukkar, Karachi, Gwadar and
Quetta.
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4. Challenges for Pakistan

Pakistan is facing many challenges in the implementation of the China Pakistan Economic
Corridor (CPEC) project. These challenges includes external and internal factors on CPEC.
Political unrest, security situation and administrative issues of Pakistan are some of the greatest
challenges in the way of successful completion of the corridor. If everything is done as planned
then the construction of this corridor can grant Pakistan the position of economic pivot for the
whole region. This shift in circumstances is a cause of great worry for the enemies of Pakistan.
Some political parties like ANP, people of Baluchistan and PkMAP raised serious objections to
the CPEC project. Even PTI and JUI (F) showed objections of CPRC [8]. Objections were being
raised despite assurances by the government that this project will provide equal opportunities to
all the provinces. There are many internal and external challenges for Pakistan over CPEC project.

5. Indian Concerns with CPEC

CPEC project of China has left India confused and puzzled. India is also concerned about Chinas
huge investment in Pakistan particularly its recent decision to fund for China Pakistan Economic
Corridor. China is also helping Pakistan in producing plutonium at the Chinese built Kyushu
reactor and will also sell 8 submarines worth $5 billion [9]. Pakistan may become a trade hub in
the region after Gwadar Port starts functioning fully and duty-free economic zones are set up.
Many Central Asian states have also expressed interest in becoming part of the corridor after the
completion of CPEC [10]. This strategic partnership between Pakistan and China has upset India
that openly voiced its opposition and even premier Narendra Modi pressed the president of China
during his visit to Beijing to cancel the plan of developing the corridor [11]. However, China did
not came in to the pressure and promised to push ahead with work on the project.

6. Benefits for Pakistan

China Pakistan Economic Corridor will make economic, commercial as well as geostrategic
improvements in Pakistan. It will be helpful in minimizing the problems of poverty and
unemployment of undeveloped provinces. CPEC will prove to be a game changer and will make
China a real stakeholder in Pakistans stability and security. It is a win win situation for both. It
will expand the scope for the sustainable and stable development of Chinas economic
development. Investments by China will boost Pakistans $274 billion GDP by over 15 % [12].
Chinas economic and military assistance will help Pakistan in minimizing its ever widening gap
in economic-military-nuclear fields with other countries and in bettering its defense potential.
Ambassador of China to Pakistan Sun Weidong while talking about the corridor said that the
energy, transport, infrastructure and industrial projects under China Pakistan Economic Corridor
(CPEC) would benefit all the provinces of Pakistan. He said that the CPEC was not limited to just
a road but it will connect the country with a number of motorways and infrastructure projects. He
explained that infrastructure projects included Gwadar port, the second phase of the upgrading
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project of Karakoram Highway, motorway project between Karachi and Lahore, Thakot-Havelian
motorway, Gwadar port expressway, Gwadar international airport and Karachi Sukkur motorway,
adding further that the project will increase collaboration in areas of energy, finance, commerce,
banking, industry and education [13].

Here are some benefits which Pakistan will take after the completion of CPEC.

Overcoming energy crises

Infrastructural development
Economic development
Balancing environment in South Asia
Removal of poverty
Peace and prosperity among provinces

7. Conclusion
China Pakistan Economic Corridor can be a game changer project if Pakistani government keep
in view the wishes of people of Pakistan especially of Baluchistan region because Gwadar the
main hub of CPEC belong to Baluchistan. Objections of all parties over CPEC should be taken
into notice. CPEC will incorporate a 2000 kilometer transport link between Kashgar in
northwestern China to the Gwadar port on the Arabian Sea. This will significantly reduce the cost
of Chinese shipment towards the Indian Ocean in order to reach European and African markets.
Oil from the Middle East could be off loaded at Gwadar when this corridor will be completed, and
transported to China through Baluchistan and over the Karakoram Mountain. This will boost up
Pakistans economy and will make it an economically stable country, but still there are several
challenges and many voices that must be listened by Govt of Pakistan associated with this project.
Pakistan could have many benefits from this corridor if it keep on going as planned.

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References
[1] Safdar Sial. Pakistan Institute of Peace Studies, The ChinaPakistan Economic Corridor: an
assessment of potential threats and constraints, sanpips.com/download.php ?f=268.pdf, Accessed
November 25 2016
[2] Riffat Hussain, SinoPakistan Ties: Trust, Cooperation and Consolidation,
http://www.nust.edu.pk/INSTITUTIONS/Directortes/GTTN/Download%20Section/1.%20Sino
Pakistan%20TiesTrust,%20Cooperation,%20and%20Consolidation%20by%20Dr.%20Rifaat%2
0Hussain.pdf , accessed November 25 2016
[3] Arif Muhammad. 2014. Fourth Ministerial Conference of Heart of Asia-Istanbul Process
held in Beijing, China. Nihao-Salam, October 31st. <http://www.nihao-salam.com/newsdetail.php?id=NzA2Mw>
[4] Pakistans Potential as a Transit Trade Corridor and transportation challenges, pg 268.
[5] Ali, Syed. Muhammad. (2015, June 19). The Far Reaches of the Corridor. The Tribune.
Islamabad.
[6] Jawad, Rana (2013, July 5). Chinese firms ready to invest billions of dollars in Pakistan. The
News. Karachi.
[7] Sial, Safdar. (2014).The China-Pakistan Economic Corridor: An Assessment of Potential
Threats and Constraints. Conflict and Peace Studies, Vol.6, No.2, p. 24.
[8]
Falak,
Jawad.
CPEC:
Internal
Significance
and
Challenges
URL:
www.stratagem.pk/strategic-pulse/cpecinteranl-significance-and-challenges
(accessed
on
December 2, 2016
[9] Bhutta, Zafar. (2015, October 5) Ties with Central Asia: Poised to gain wider influence. The
Express Tribune
[10] Pakistan China Relations: Prospects & Challenges, Centre for Pakistan and Gulf Studies,
February 1, 2014, accessed August 23, 2016, http://cpakgulf.org/wpcontent/uploads/2014/02/PakChina-Report.pdf.
[11] Ayesha Ishfaq. (2015,August 31) India bid to halt Pakistan projects fails. The Express
Tribune
[12] Syed, Baqir. Sajjid. (2013, May 24).China praises Pak Strategy against terror. Dawn.
Islamabad
[13] Jabri, Parvez. (2015).CPEC projects to benefit all provinces of Pakistan: Chinese envoy.
Associated Press of Pakistan. www.brecorder.com/top-news/108-pakistan-top-news/240096cpec-projects-to-benefit-allprovinces-of-pakistan-chinese-envoy.pdf

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