ChinaPakistan Economic Corridor

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ChinaPakistan Economic Corridor

-

System information
Length:

2,442 km (1,517 mi)

The ChinaPakistan Economic Corridor (CPEC)[a] is a ongoing development megaproject

which aims to connect Gwadar Port in southwestern Pakistan to Chinas northwestern
autonomous region of Xinjiang, via a network of highways, railways and pipelines to transport
oil and gas.[1] The economic corridor is considered central to ChinaPakistan relations and will
run about 3,000 km from Gwadar to Kashgar. Overall construction costs are estimated at over
$46 billion, with the entire project expected to be completed in several years.[2][3] The Corridor is
an extension of Chinas proposed 21st century Silk Road initiative.[4][5] According to a Firstpost
report, "this is the biggest overseas investment by China announced yet and the corridor is
expected to be operational within three years and will be a strategic gamechanger in the region,
which would go a long way in making Pakistan a richer and stronger entity than ever before."[6]
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.[7][8] China and Pakistan hope the massive investment plan will
transform Pakistan into a regional economic hub as well as further boost the growing ties
between Pakistan and China.[9] The Pakistani media and government called the investments a
"game and fate changer" for the region.[10][11] According to The Guardian, "The Chinese are not
just offering to build much-needed infrastructure but also make Pakistan a key partner in its
grand economic and strategic ambitions."[12] The project will also open trade routes for Western
China and provide China direct access to the resource-rich Middle East region via the Arabian
Sea, bypassing longer logistical routes currently through the Strait of Malacca.[13]
During the state visit of President of China Xi Jinping to Pakistan in April 2015, he wrote in an
open editorial that "This will be my first trip to Pakistan, but I feel as if I am going to visit the
home of my own brother." During his visit, Islamabad was dotted with slogans and signboards

such as "Pakistan-China friendship is higher than the mountains, deeper than the oceans, sweeter
than honey, and stronger than steel." [14]
In August 2015, the two countries signed 20 more agreements worth $1.6 billion to further boost
the corridor.[15]

Contents
[hide]

1 History

2 Strategic importance

3 Infrastructure

4 Projects

5 Financing

6 Security

7 Controversy
o 7.1 Strategic implications

8 See also

9 Notes

10 References

History[edit]
External video
China Reaches Out to Pakistan With Massive Economic
Plan.

The project was first proposed by Ex President Asif Ali Zardari, Chinese Premier Li Keqiang and
Nawaz Sharif on 22 May 2013 in Islamabad. .[16][17] The Pak-China Economic Corridor Secretariat

was inaugurated in Islamabad on 27 August 2013.[18] In February 2014, Pakistani President

Mamnoon Hussain visited China to discuss the plans for an economic corridor in Pakistan.[19]
Two months later, Pakistan Prime Minister Nawaz Sharif met with Premier Li Kequiang in China
to discuss further plans.[20] While the project took shape during Sharif's tenure, the vision for an
economic route stretches as far back as the Musharraf era.[21]
In November 2014, Chinese government announced that it will finance Chinese companies to
build $45.6 billion worth of energy and infrastructure projects in Pakistan as part of CPEC.
Documents quoted by Reuters show that China has promised to invest around $33.8 billion in
various energy projects and $11.8 billion in infrastructure projects which will be completed by
2017 at most. The deal includes $622 million for Gwadar Port. According to Reuters, under the
CPEC agreement, $15.5 billion worth of coal, wind, solar and hydro energy projects will add
10,400 megawatts of energy to the national grid of Pakistan.[22]
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,[23] with approximately $28 billion in
immediate projects and the rest allocated for projects in the pipeline.[24]
The deal includes a $44 million fibre optic cable[25] and will add 10,400 Megawatts to Pakistan's
energy grid through coal, nuclear and renewable energy projects.[26] Also included are major
upgrades to Pakistan's transport infrastructure, including:

Karakorum Highway (Havelian in the Abbottabad District to Thakot)

Karachi-Lahore Motorway (Multan to Sukkur)

The Gwadar Port East Bay Expressway Project

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.
Some cities have been made sister cities Chengdu in Sichuan province and Lahore, and Zhuhai
in Guangdong province and Gwadar.[27]

Strategic importance[edit]

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.
Bloomberg Business on April 1,
2015, [28]

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,[23] and oil pipelines through Pakistan would cut out ocean travel through Southeast Asia.
[29]

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."[30]
According to Chinese Foreign Ministry Spokesperson Hua Chunying, the corridor will "serve as
a driver for connectivity between South Asia and East Asia." Mushahid Hussain, chairman of the
Pakistan-China Institute, told China Daily that the economic corridor "will play a crucial role in
regional integration of the 'Greater South Asia', which includes China, Iran, Afghanistan, and
stretches all the way to Myanmar."[19]
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, where tensions are simmering from activities by radical
separatists.[31][32] Iran has also responded positively over the proposal to link the IranPakistan gas

pipeline with China, with the Iranian ambassador to China describing it as a "common interest"
between the three countries.[33]
CPEC is considered economically vital to Pakistan in helping it drive economic growth.[34]
Moody's Investors Service has described the project as a "credit positive" for Pakistan. In 2015,
the agency acknowledged that much of the project's key benefits would not materialise until
2017, but stated that it believes at least some of the benefits from the economic corridor would
likely begin accruing even before then.[35] A study by the Pew Research Center in 2014 found that
78% of Pakistanis have a positive view of China.[26][36]
in 2014, the Chinese government committed to spending $45.6 billion over the next six years to build the
ChinaPakistan Economic Corridor, which will include the construction of highways, railways, and natural gas
and oil pipelines connecting China to the Middle East. Chinas stake in Gwadar will also allow it to expand its
influence in the Indian Ocean, a vital route for oil transportation between the Atlantic and the Pacific. Another
advantage to China is that it will be able to bypass the Strait of Malacca. As of now, 60 percent of China's
imported oil comes from the Middle East, and 80 percent of that is transported to China through this strait, the
dangerous, piracy-rife maritime route through the South China, East China, and Yellow Seas.
Council on Foreign Relations[13]

Infrastructure[edit]

Karakoram Highway

Gwadar Port
The first phase involves development at Gwadar Port and the construction of an international
airport. It will be carried out by 2017, with Chinese companies expected to participate. The
Karakoram Highway connecting the two countries will also be widened, while the rail network
between Karachi in southern Pakistan and Peshawar in the north will be upgraded. The two
countries also plan a fiber-optic communications link between them.[citation needed]

The project received a major boost when control of Gwadar Port was transferred to China's stateowned China Overseas Ports Holding in February 2013.[citation needed] Built by Chinese workers and
opened in 2007, Gwadar is undergoing a major expansion to turn it into a full-fledged deep-water
commercial port. Pakistan and China have signed agreements for constructing an international
airport at Gwadar, upgrading a section of the 1,300-kilometre Karakorum Highway connecting to
Islamabad and laying a fibre-optic cable from the Chinese border to the Pakistani city of
Rawalpindi.[37][38] With the development of the corridor Central Asia, traditionally an economically
closed region owing to its geography and lack of infrastructure, will have greater access to the
sea and to the global trade network.[39]
The world's largest solar power project will be undertaken at the Quaid-e-Azam Solar Park in
Bahawalpur. The project will be worth 900 megawatts on an investment of $1.5 billion by the
Chinese company Zonergy Limited.[40]

Projects[edit]
A total of 51 memoranda of understanding were signed in diverse sectors between China and
Pakistan during visit of Chinese president to Pakistan on 20 April 2015.[41] Major projects under
the corridor umbrella are:
Project
Details
Gwadar Port
Completed, handed over to China for 40 years starting 2015[42]
Upgrading of KarachiPeshawar
Feasibility study underway[43]
Main Line
Khunjerab Railway
Feasibility study underway[41]
Approved, Under construction 2015.[41] Project is expected to
be completed by end of 2017. After project is completed,
Karachi will be connected with Sukkhar, Multan, Lahore,
Faisalabad, Rawalpindi, Islamabad, Peshawar by a high speed,
Karachi - Lahore Motorway
controlled access 6 lane highway where commuters can travel
(KLM)
at 120 km/hr. The network of Pakistan motorways will be
connected to Karakorum Highway near Rawalpindi/
Islamabad. Hazara Motorway will be connected to M-1 and
M-2 near the capital.
Havelian to Khunjrab Rail track
Approved[44]
Under construction. Connect with M-1 and M-2 at Burhan,
near Islamabad/ Rawalpindi. This motorway connects
Hazara Motorway (Also known
Havalian, Abbatobad and Manshera with Burhan. 120 km high
as E35expressway)
speed, access controlled 6 lane road. The project is expected to
be completed before end of 2016[41]
IranPakistan gas pipeline
Under construction, Iran's part of the pipeline is complete.[41]
Under construction, approx. 820-km long, expected
Gwadar-Ratodero Motorway
completion Dec, 2015[41]
Economic Corridor Support
Completed, armed division of the army for security of
Force
workforce, cost $250 million[45]

Project
Havelian Dry Port
Orange Line (Lahore Metro)
Upgrading of Gwadar
International Airport
China-Pakistan Joint Cotton BioTech Laboratory
Gwadar-Nawabshah LNG
Terminal and Pipeline Project
700 MW Hydro-Electric Suki
Kinari Hydropower Project
Port Qasim 2x660MW Coal-fired
Power Plants
720MW Karot Hydropower
Project
Zonergy 9x100 MW solar project
in Punjab
Jhimpir wind Power project
Thar Block II 3.8Mt/a mining
Project
Thar Block II 2x330MW Coal
Fired Power project
Development of Private Hydro
Power Projects
Dawood Wind Power Project
Hubco Coal-fired Power Plant
Project
Cross-border fibre optic data
communication system project, a
digital terrestrial multimedia
broadcast pilot project at Murree

Details
Feasibility study underway for the container port
Approved.[41] The work has been started. The project is
expected to be completed towards end of 2017
Approved.[41] Work has been started and project is expected to
be completed by December 2017
Approved[41]
Approved[41]
Approved[41]
Approved[41]
Approved[41]
Approved[41]
Approved[41]
Approved[41]
Approved[41]
Approved[41]
Approved[41]
Approved[41]
Approved[41]

Financing[edit]
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 PakistanChina economic corridor, with money to come from both countries instead:
Several different facets will be utilised 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 organisations to provide financing

Liu Jianchao, assistant Foreign Minister of China.[46]

Prime Minister Nawaz Sharif has said the funding is "neither a loan, nor a grant" but an
investment.[47]

Security[edit]
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.[23] The outlawed
Tehrik-i-Taliban has claimed responsibility for past attacks on some Chinese nationals,[48] and
Chinese commentators have raised concerns that construction workers could be kidnapped and
ransomed.[49] The Express Tribune reports that Pakistan plans to train 12,000 security personnel to
protect Chinese workers on the corridor.[50][51][52] Presently, 8,000 Pakistani security officials are
deployed for the protection of over 8,100 Chinese workers in Pakistan.[53]
Some militant separatist groups operate in Balochistan, including the Balochistan Liberation
Army and Jundallah, which have carried out bombings.[25]
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.[54][55] 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.[56]

Controversy[edit]
Some planning aspects and technicalities associated with the route have been criticized on
political forums and the media for varying reasons. The Provincial Assembly of Khyber
Pakhtunkhwa province adopted a resolution[57] against the alleged decision of the central
government to change the multibillion route of the proposed project by diverting the
northwestern province of Khyber Pakhtunkhwa. The provincial assembly advised the central
government to stick to the same route as agreed upon between the governments of Pakistan and
China, and passed a resolution stating that a change in the route not incorporating Khyber
Pakhtunkhwa would disadvantage the economic interests of the people of the war-torn province.
The federal Minister of Planning Development and Reform Ahsan Iqbal formally denied any
change in the alignment.[21][58][59] In addition, some local Baloch nationalists have expressed dismay
at the project, noting the difficult economic conditions of Gwadar residents and saying any such
development would deny locals control over their native resources. Other Baloch nationalists
view it as a "conspiracy" that would stimulate migration of people from other provinces and
make the Baloch a "minority" in their homeland.[60]
According to Dr Ahmad Rashid Malik, Senior Research Fellow at the Institute of Strategic
Studies Islamabad (ISSi), the route controversy is "baseless and an unfounded reality...".[61]

Wu Zhaoli, an assistant research fellow at the National Institute of International Strategy,

Chinese Academy of Social Sciences, in his article published in Global Times, argued that
"security concerns are a critical cause which helps to determine the path of this corridor.[49]
On May 28, 2015 the prime minister of Pakistan called on all parliamentary parties and all
parties assured their support for the projects.The All Parties conference agreed that the western
route of the corridor (which pass through Khyber Pakhtunkhwa and North Balochistan) would be
completed first which would be built from Attock District (Hasan Abdal) to Gwadar, passing
through Mianwali District, Dera Ismail Khan and Zhob.[62]

Strategic implications[edit]
According to experts, the completion of Gwadar would make it the economic hub of Balochistan
and create a strategic nexus between Pakistan, China and Central Asia, generating billions in
revenue and providing shorter land routes.[34] It would provide links from the Caspian Sea to the
Strait of Hormuz, and enable Gwadar to compete with Persian Gulf ports.[60] The United States,
wary of Chinese strategic access to the Arabian Sea and its presence in the region, has reportedly
tried several times to persuade Pakistan against involving China in the development. According
to one official, the US had played an instrumental role in promoting the Port Authority of
Singapore for control of the port previously.[60]
India, which maintains tense relations with Pakistan, has viewed the project with objections,
particularly as it crosses through the Pakistani-administered side of Kashmir, a region contested
between the two countries. According to the Indian foreign affairs ministry, Prime Minister
Narendra Modi during his visit to China raised his objections over the corridor.[63] However,
Chinese President Xi Jinping dimissed the concerns, describing CPEC as a "commercial
project."[64] India may also have apprehensions over China's access to the sea,[32] and has invested
significantly in the nearby Port of Chabahar in neighbouring Iran. The development of Chabahar,
which lies 170 km to the west of Gwadar, is part of India's efforts for access to landlocked
Afghanistan and Central Asia while bypassing rival Pakistan.[60]