CPEC: Masterpiece for Strategic and Economic

Development in Pakistan
Syed Tahir Hussain Bukhari

(Engineer in 720MW Karot Hydropower Project, CPEC)

Abstract:
Geography of any country defines its role in the global politics. Geo-politically Pakistan is
located at the energy gifted to the energy lacking countries juncture, which give her unique
importance. Pakistan took advantage of its Geo-political position and become a part of Chinese
concept of “Share destiny” through OBOR’s, a strategic and economic craft. CPEC a flagship
project which is well design and planned project that is likely to lead to a process of significant
and broader cooperation between the two all season neighboring friends, China and Pakistan.
Gwadar is a masterpiece to attract and commencement of these mega projects. This project will
embark the formation of new framework of alliance for economic commitment and regional
collaboration that will have far-reaching political and go-economic implications not only for
Pakistan and China but also for the neighboring regions of Central Asian Republics and the
Middle East also for the west Asia.
Key Words: CPEC, OBOR, BRI, GDP, SEZ, FDI, CARs, FY
1. Introduction:
Geographically Pakistan is located at the
juncture of energy gifted to the energy
lacking countries which give her unique
strategical importance [1]. Taking
privilege of its strategic location
Pakistan wholeheartedly accepted
Chinese premier Li Keqiang’s proposal
of CPEC during May 2013 his state visit
of Pakistan [2].
President Xi Jinping’s “One Belt One
Road” initiative is ideal plan for
economic order globalization under the
grand umbrella of OBOR initiative
which has deep roots in earliest ancient
silk route. 21ST Century silk road is
comprised of land routs (roads and
railways), Maritime silk road connecting
different regions, countries and
continents.
OBOR is a grand communication link of
roads network, Railways, seaways and
sea ports. OBOR also provides
Economic zones and industrial areas.
This intends to connect South Asia,
Central Asia, East Asia, West Asia,
Africa and Europe [5].
These corridors will trigger economic
and trade growth, galvanize
transportation and communication,
kindle mining, electrify energy projects.
As well as these project will create
political flexibility, altering world
economic order.
The OBOR initiative covers over 60
countries with a total population of 4.4
billion and a total economic volume of
$21 trillion, 63% and 29% respectively
of the total world [4].
OBOR comprises of six economic
corridors. These six are discussing
bellow:
1. China-Mongolia-Russia Economic
Corridor (CMREC)
2. Bangladesh-China-India-Myanmar
Economic corridor (BCIMEC),
3. China-Indochina Peninsula Economic
Corridor (CIPEC),
4. China-Central and West Asia
Economic corridor (CCWAEC)
5. The new Eurasian Land Bridge
(NELB).
6. China-Pakistan Economic Corridor
(CPEC)
In the shape of CPEC it is the biggest
investment Pakistan has involved since
its independence and on the other hand
largest by China in any foreign country
from the world. Economically CPEC is
considered vital to Pakistan in helping in
economic growth. The economic experts
have called CPEC investments a "game
changer" not only for Pakistan but also
for region at large. The both two
countries China and Pakistan aims to
change Pakistan into a “regional
economic hub”
The CPEC Connecting Gwadar with
Kashgar is a flag ship of OBOR and is
evidence of China’s policy of "Peaceful
coexistence and development for shared
ambitious destiny of two governments"
[3]. During President Xi’s first state visit
to Pakistan in April 2015, he said “This
will be my first trip to Pakistan, but I
feel as if I am going to visit the home of
my own brother”.
CPEC include projects of industrial
development, infrastructure construction,
Special Economic Zones (SEZ) and
livelihood improvement, ambitious
about socioeconomic development,
prosperity revival, poverty elevation,
and peace and security betterment.
These projects will lift-up chronic
energy and economic crises of Pakistan
which it is facing since 1947.
With about $62bn in 2017 up from the
original $46bn in 2015 which is 20%
annually GDP of Pakistan. OBOR is one
of the single largest capitalized projects
ever attracted by Pakistan. Other OBOR
projects at the same time around the
world do not provide same advantage to
China as single CPEC does offer.
Gwadar is crux of CPEC and on 13 Nov
2016 first Chinese cargo over land to
Gwadar port was further transported the
shipment of maritime to the West Asia
and Africa.
Acknowledging energy needs and to
crush current energy deficits huge
investment of $34bn on numerous
energy projects using fossil fuels, hydel-
power, wind and solar as a source.
About 10400MW of electricity will be
produced as a part of fast track “Early
Harvest” project of CPEC’s project.
Which will also ride off over 4500MW
chronic energy shortage? $11bn has
allocated for vast network of modern
transportation comprising of the network
of roads and railways are to be
constructed under CPEC.
Network of oil and gas pipeline will be
laid down as a part of CPEC including
$2.5billiob pipeline from Gwadar to
Nawabshah to transport gas from Iran.
These projects will offer 2.3mn jobs
from 2015-2030.
Worth of CPEC was considered to be
equivalent to all FDI in Pakistan since
1970, and 17% equal to 2015 GDP of
Pakistan.
2. Historical Background
China and Pakistan are all weather
friends since their diplomatic relations
established in May 21, 1951. Gradually
started maturing, initially the relation
among both neighboring countries were
limited to Political and military
cooperation. China supported Pakistan
in 1965 war. Supported Pakistan in
missile and nuclear program, and
economically even during the sanctions
enforced by the US in 1980s, 1990s and
2000s. On the other hand, in 1950,
Pakistan was one of the first Muslim
countries to recognize China. Pakistan
also supported the admission of China in
United Nations system and in 1971
China becomes permanent member of
UNSC (United Nations Security
Council). In 1972 Pakistan played a role
in developing the diplomatic relations
between United States and China.
Friendly attitudes from both sides lead
to confidence building of relations
between the China and Pakistan. CPEC
is a consequence of this confident
standing friendship between both
countries. Now Pakistan and China has
entered new era of relations.
President Xi’s policy of “Constructive
engagement” gave a new direction to the
foreign policy of China [6]. The idea of
modern Silk Road was floated by
President Xi “One Belt One Road” with
a goal to transform Chinese economic
development plan from trade oriented to
investment oriented and to share
balanced economic development
destination across Asia [7].
China aims to access to Indian Ocean
through Gwadar port. Gwadar is crux of
CPEC, which is a strategically important
deep sea port in the world which is
located close to international shipping
line through which world’s 40% of oil
passes. In 1998 work on Gwadar was
initiated by a Chinese firm and was
completed in December 2006. China
was awarded the expansion project of
Gwadar in 2013 to make this port able to
work at full fulcrum for the Chinese
supplies. China embarked mega
development projects in Pakistan to
make it well balance in terms of
economy, socially, energy wise and in
all other terms which likely accelerate
its advancement in every field.
3. Impact of CPEC on Pakistan,
China and for the Region at large
CPEC is a win win initiative and its
potential will be multidimensional in
affecting Pakistan, China and region at
large. It will redesign South Asian geo-
politics. It is not only a transit corridor
instead it is economic corridor having
potential to address Pakistan’s chronic
energy and economic issues; this will
stabilize Pakistan economy and improve
security condition.
Strait of Malacca is a check point from
where 80% of China’s oil import passes.
In the shape CPEC china will bypass
Strait of Malacca and get shortest, safest
access for 60% of its supplies especially
China’s oil import.
CPEC will lift economic condition of its
Western autonomous province. Which is
home of problems like poor economic
condition, unrest political situation and
due to religious and ethnic pressure,
Uighur people have been linked with
terrorist groups in Afghanistan.
It will also provide access to Indian
Ocean to the land locked countries like
Afghanistan, CARs.
3.1.1. Impact on Pakistan: A Revival
Plan for Strategic Economic
Development
Geographic location of Pakistan is in
South Asian region sharing border in the
north with China, in West with
Afghanistan, In West-South with Iran, in
East with India and Arabian Sea in
South. Strategically it is situated at the
cross road of Asia [8].
Understanding the importance of
Pakistan and needs of its westerns
regions, China planned to connect its
western region with new Maritime Silk
Road through CPEC which will bridge
to link it with Asia, Africa and Europe.
CPEC design is a (1+4) model of
economic cooperation. During state visit
to Pakistan, Chinese Present Xi signed
more than 51 MOUs. 22 of which are
fast track projects among them 11 have
completed and 9 special economic zones
[28]. CPEC will increase the
geostrategic importance of Pakistan
making it a fulcrum between China and
Asia, Africa, Europe. Immense
investment in China Pakistan economic
projects are divided into three layers
[10]. These investment layers are, short-
term project, mid-term project and long-
term project carried out by 2017, 2025
and 2030 respectively. First two layers
are operational now, however the long-
term project will be finished till 2030
[13]. CPEC comprises of five
‘1+4’components; Gwadar (Gwadar
project including port, Gwadar region,
city and socioeconomic development of
the region), Energy (Energy projects
including LNG, Transmission lines,
Coal, Hydel, Wind and Solar), Transport
Infrastructure (Highways, Railway,
Aviation), Industrial Cooperation
(Investment in constructing Gwadar
Free Zone and industrial parks to be
finalized), Science and Technology
projects (Agriculture, Fiber-optics, etc. )
CPEC will offer diverse investment
opportunities in the field of cooperation
in Industrial area, Cooperation by
Financial, Cooperation in Agriculture,
Support Tourism, Human resource
development, Health Care Centers,
People to people contact, Increase in
opportunities of livelihood, Enhance
stability and security of the region,
Educational Linkage[9].
Pakistan the future industrial and trade
hub of commercial activities in the
region will be equipped with many
industrial and economic zones with
better infrastructure of roads and
railways under CPEC will improve
Pakistan image at international level and
it will also encourage foreign investors,
stakeholder and financiers to invest in
Pakistan.
According to Pakistan 2025, a plan for
economic enlargement published in
2014 by Ministry of Planning and
Development, Pakistan intends to
improve its economic prestige from
being a lower-middle-income nation to
an upper-middle-income nation by 2025
(Ministry of Planning).
3.1.2. Energy Harvest plan from
CPEC:
Electricity is a operator of social and
economic development. From very
beginning Pakistan is facing chock point
in reliable supply of electricity thus
hindering its economic growth which
furthers kindling poor economy, energy
crisis, poor land communication,
ignorance of Baluchistan province [11],
limited or no attraction for foreign
investment. CPEC will assist Pakistan in
addressing its chronic issues impeding
its smooth growth and development [18].
According to World Bank report in 2016,
5 million people were living without
grid provided electricity. Poor
availability or no electricity has shed an
estimated 2.6% ($5.8 billion) of the
annual GDP of Pakistan. [27].
CPEC aims to address Pakistan’s
unbaiting electricity crisis as
accordingly:
Energy generation projects are
categorized as priority projects and
actively promoted projects. Among 26
energy generation projects, 15 are
priority projects with total generation
capacity of 11, 110MW, 7 are completed
and operational now. Remaining are
under construction as actively promoted
projects of 6911MW. Total energy
generation will be 18021 MW[28].
CPEC focuses to meet energy demand in
Pakistan intends to create 25% of its
electricity requirements by using
renewable energy resources till 2030.
3.1.3. CPEC as Economic Transit
Route:
The corridor originate from port city
Gwadar and terminate at Kashgar, the
western province of China passing over
Baluchistan, Sindh, Punjab, KPK
provinces and GB in Northern Pakistan.
The CPEC will upgrade the
transportation structure at the cost of
$11billion which includes $6bn for the
construction of ‘Early Harvest’
roadways.
a. Transit Route:
Land route of Transit economic corridor
comprises of three alignments shown in
figure 1:
Figure 1: CPEC Highways transit route [26]
1. The Eastern alignment
2. The Central alignment
3. The Western alignment
I. The Eastern Alignment: It passes
through the provinces of Punjab and
Sindh which are heavily dense provinces
where most industries are situated
II. The Western Alignment It passes
through the provinces of Khyber
Pakhtunkhwa and Baluchistan which are
sparsely populated and less developed.
III. Central Alignment It will pass
through the provinces of Khyber
Pakhtunkhwa, Baluchistan and Punjab.
The CPEC will upgrade existing
Karakoram Highway (KKH spans the
887 kilometers long distance between
the border of China-Pakistan.
b. Railway Projects
Pakistani ageing railway system will be
upgraded by 2020 under CPEC, which
includes rebuilding of Main Line 1
which handles about 70% railway traffic
of Pakistan. Also ML2 and ML3 will be
upgraded. These projects support
Pakistani railway system to transport
Chinese and East Asian imports to
Karachi and Gwadar till 2030.
Figure 2: CPEC railways transit route [26]
3.1.4. Tourist Industry
Transit route through GB and hydel
power station in AJK will bring
prosperity and better road infrastructure
and other facilities. Which will attract
more investment and tourists in this area,
consequently will improving the
financial condition of the locals.
3.1.5. Industrial Cooperation:
For a country to be called a developed, it
needs strong industries and maximum
affective use of its resources, for
yielding maximum output.
Special Economic Zones is important
concern to promote industrialization.
Trade liberalization and to attract FDI
around the globe, SEZ plays key role
[24].
In November 2015, China agreed at
Pakistan’s proposal of industrial
cooperation in steel, cement, automobile,
textile etc. Industries. 9 SEZs are
planned to design. SEZ Bill (2015) to
give exemption from all taxes is an
endeavor to create the essence for
bolster interest of local and foreign
investors. The Government of Pakistan
has planned for the construction of 29
industrial parks mineral zones these are
29 and 21 in numbers respectively. The
status of Special economic zone is given
to the 27 parks. The most progressive of
these projects is the development of the
project 9 km2 Gwadar SEZ, which will
lodge industrial units for minerals, and
mines, for food processing,
advancement in agriculture and
livestock, and energy projects. Special
economic zone (SEZ) expected to be
completed in end of 2017. It is a
geographically confined area having a
central management for facilitating by
providing benefits of physical location
under zones. These zones have their own
separate customs area to gain liberal
laws and duty-free environment (World
Bank 2009).
In Pakistan about 40% population below
the poverty line, Pakistan need well
define system and techniques to address
its economic issues, so that advantage
of CPEC may be enjoyed by all ranks of
the society including below poverty line
[15].
SEZs accumulate direct and indirect
economic benefits for the people like
generation of employment and earnings
through foreign exchange and also
developed urban growth to make people
stable in their life style. [16].
3.1.6. Gwadar-The Heart of CPEC:
Gwadar port is the crux of whole CPEC
and a master piece of Pak-China
strategic cooperation. It is visualize
picture to the link between China’s
ambitious OBOR which is Maritime Silk
Road project of 21st century. More than
$1bn value projects are undertaken to
develop Gwadar port.
For the management of global logistics
longer transit time and higher cost are
the most important challenges.
Gwadar’s unique strategic location made
it strategically important for region, as it
is located at the tail of CPEC in the
Arabian Sea at 72Km from Iran, 320KM
from Oman and 400KM from Strait
from Hormuz and at the confluence of
most of the world’s oil producing states,
its capacity of 200,000ton tankers,
international airport, crude oil refineries
hence Gwadar has potential to become
largest trans-shipment ports and trade
hub of the region. Gwadar has been
added to China’s string of Pearl strategy.
With the Joint effort of Chinese and
Pakistani government, for Gwadar 80%
of the cost is provided by China which is
$288millions and COPHC will be
responsible for operational activities of
the port. Will be capable of handling
containers offload of 300~400millions
tons annually [19].
Chinese economy is growing rapidly
which has caused 80% increase in its
energy consumption and for energy it
mostly depends on oil imports from
Middle East. The imported oil passes
through the Strait of Malacca the only
chock point through its seaway. Gwadar
and over land route through Pakistan
will help China bypass Strait of Malacca,
making her able to have direct access to
Indian Ocean which will also cut down
travel time and cost and lifting up
economic condition of Western China’s
autonomous province Xinjiang home of
10million Uighur people.
Naval base in Gwadar and Chinese
naval presence in Indian Ocean will
enable observation of SLOC (Sea Lines
of Communication) for China. SLOCs
laid just about 460 Km away from
Karachi. SLOCs to monitors the India
Naval Bases of Mumbai and Gujrat as
well as the United States maritime
located in the Persian Gulf.
Gwadar port will play an important role
for China as it gives a strategic position
to China in the rich Caspian Region,
which is the most rich energy rich region.
Gwadar port situated at the mouth of the
Strait of Hormuz will be important place
for China, it will get an opportunity way
to use the straight entrance to the Persian
Gulf and Gulf of Aden by just traveling
about 2500 Km on the existing Silk
route.
Figure 3: Existing seaway for oil shipping and
string of pearls route[25]
Seaway distance from Strait of Hormuz
via Strait of Malacca to Shanghai Sea
Port 15000KM that is current Chinese
supplies maritime route. [1]
From Gwadar to Kashgar it is only about
2000km, Kashgar to Shanghai Sea Port
4500km, Gwadar to Strait of Hormuz
600KM and Gwadar to Chabahar is no
more than 80km. Hence CPEC is
shortest and safest route for China and
will facilitate estimated 60% of Chinese
supplies.
The expanded port is situated in free
trade area of Gwadar which is
constructed on lines of special economic
zones of China having 2282-acre area.
In November 2015 the track of land was
handed to the Port Holding Company of
China as share of a 43-year lease.
Business established in the special
economic zone will be freed from
Pakistani sales, income and federal
excise taxes for the time period of 23
years.
a. Projects in Gwadar city
City improvement plans include
facilities for the gas by constructing
liquid natural gas terminal and
connected to the Gwadar Nawabshah,
which is also part of Iran-Pakistan gas
pipeline. The liquefied natural gas will
be capable to transport about 500
million cubic feet per day.
China government will grant $230
million to Pakistani Government for the
construction of a new international
airport in Gwadar.
1. Project includes the construction of a
coal power plant of 300 MW.
2. 300 beds of Modern hospital.
3. To connect the Makran Coastal
Highway to Gwadar port a 19 Kilometer
road will be built as an East Bay
Expressway.
The expected cost of these projects is
about $800 million, and is to be financed
by China Government at 0% interest
loans.
4. The Pakistani government aims to
construct a training Pak-China Technical
and Vocational Institute at Gwadar, The
expected cost of these projects is 943
million rupees.
3.1.7. Liquefied Natural Gas (LNG)
Projects
Liquefied natural gas (LNG) power
projects are also considered important
projects to CPEC. As a part of CPEC
711 kilometers gas pipeline laid down
from Gwadar to Nawabshah. As a part
of long Iran-Pakistan gas pipeline a gas
pipeline is designed this is about 2,775
kilometer. The gas pipeline has 80
kilometer located between Iranian
border and Gwadar. Iran has completed
about 900 Kilometer pipeline on its side.
The gas pipeline will have capacity to
transport 1 billion cubic feet of LNG per
day. The additional capacity of 500
million cubic feet terminal of LNG to be
planned is also completed. The project
will provide access to the exporters to
Pakistani market and allow China to
protect a route way for its own imports.
3.1.8. Others Areas of Cooperation
Beside infrastructure and economic
development projects CPEC extends its
cooperation in other fields
a. Agriculture
CEPC also intend to strengthen
agricultural infrastructure in Pakistan.
New irrigation technologies to be
introduced like drip irrigation
technology to save water. Well
connected highways infrastructure will
overcome the cost of transport and leads
to increase the chance of farmer’s
purchasing efforts by 29 to 35 percent
according to the season which will
encourage farmers to invest more and
strengthen economy as well.
On the other hand CPEC also includes
projects for cooperation in management,
livestock. Water resources, distribution
and storage of agricultural construction
project and agriculture equipment,
mechanization for agriculture.
Machinery leasing project and
demonstration projects for fertilizer
produce about 800,000 tons of fertilizer.
Bio-organic fertilizer of 100,000 tons
will be implemented.
b. Science and Technology:
Under the design of CPEC both Pakistan
and China signed an agreement of
Economic and Technical Cooperation,
as well as also think about to construct
"China-Pakistan Joint Cotton Bio-Tech
Laboratory". The two countries also
assured to form the "China-Pakistan
Joint Marine Research Center". Pakistan
and China will also collaborate in the
field of space research technology.
In February 2016, the two countries
agreed to establish the "Pak-China
Science, Technology, Commerce and
Logistic Park" near Islamabad at an
estimated cost of $1.5 billion. The park
will be situated on 500 hectares, which
will be provided by Pakistan to China's
Xinjiang Production and Construction
Corps, with all investments expected to
come from the Chinese side over the
course of ten years.
c. Optical Fiber Cable: CPEC also
design to invest $44 million on 820
kilometer long an optical fiber cable that
will improve telecommunication in the
region of Gilgit Baltistan.
Figure 4: CPEC optical fiber designed path [26]
d. People to people contact:
CPEC will bring people of two countries
close to each other and accrue cultural
cooperation among them which is
essential to reinforce ongoing projects.
President Xi Jinping Said “It is the
people who advances the progress of
nations and history. The support of our
peoples is an inexhaustible source of
force fostering China-Pakistan all-
weather friendship and all-round
cooperation. We should use the
platforms of sister cities, cultural centers
and media organizations to conduct
diverse events of celebration”. There
22000 Pakistani students seeking
education in China and 25000 students
are learning Chinese language in
different universities.
e. Poverty, unemployment, Health
and Education
Projects of CPEC will create job and
business opportunities that will help
millions of people to lift out of the
poverty trap and bettering their living
standard. Under the project design the
construction of apparel and textile
industry, construction of dams and
industrial parks, the installation of
nuclear power plant and building
networks of Highways, railway, fully
equipped hospitals, and training
institutes of technical and vocational
training, water supply distribution in
undeveloped areas. These projects will
also improve the quality of life of the
people of underdeveloped area.
International labor organization reported,
CPEC will generate estimated job would
provide around 700,000 direct jobs
between 2015 and 2030”. In accordance
with the Planning Commission’s it data
shows promising results, with generating
round about 800,000 jobs in the next 15
years by CPEC. [22]
The country's annual economic growth
going to be adding by 2 to 2.5 percent
annually. The development strength of
this project will be adding 5.21 percent
growth in social welfare in Pakistan.
Influence of highest growth in social
welfare at provincial level the can be
classified as; in Baluchistan (6.4
percent), Sindh (6.31 percent), KP (5.19
percent), and Punjab (3.5 percent),
respectively. The net impact of CPEC
can also be showed by three dimensions
of social welfare as 8.6 percent on
housing, 3.85 percent on education, and
4.74 percent on health signifying high
growth in terms of these above mention
social dimensions.
3.2. Impact of CPEC on China:
Xi’s policy ‘Go West’ aims to address
grievances of China’s western province.
Any industrialization or development
there was expansive because of
geographical conditions of that region
which resulted in the backwardness of
Western China. CPEC will accelerate
social and economic development to
further its development strategy in
western China region.
3.2.1. CPEC of China:
China has included CPEC in her 13th
five years development plan. CPEC will
facilitate China by providing with
shortest and safest way for its energy
supplies and it will also lift economic
condition of its Western province
Xinjiang.
An opportunity for China is to directly
access to the Middle East and Indian
Ocean. China is considered to be a key
stake holder in the Gwadar Port and
Middle East. From the Middle East
China imports about 52% of its oil
supplies. For the year 2015 the statistics
released by the World Exporters show,
China imported about $ 69 billion from
Middle East.
3.2.2. Malacca Dilemma
Strait of Malacca provides a corridor
between South China Sea (territorial
clashes in East and South China Sea and
across the Taiwan Strait) and Indian
Ocean. Singapore has strong ties with
Anglo-American block. This can cause
hurdle for Chinese oil imports in case of
any conflict. This is called as Malacca
dilemma. The Straits of Malacca provide
China with its shortest maritime route to
Middle East, Europe, and Africa. Middle
Eastern energy imports about 80% also
passes through the Straits of Malacca.
China has a great dependence in Strait of
Malacca both strategically and
economically. China is taking serious
actions like upgrading naval power,
diversifying energy import resources,
construction of alternative ports like
Gwadar to avoid bypassing Strait of
Malacca [17].
The distance for oil supplies from China
to Middle East will be reduced from
12000 km to 3000 kilometers. In days it
the Days for supplies of energy reduced
from 6 to 12 days.
3.2.3. Consumption of China’s
Surplus Output Potential:
Since 2009 China is facing issues of
surplus volume of its products. The four
industries of China (Steel, Cement, flat
glass and aluminum) face problem of
excessive production. In 2015
According to the steel wire, China
produced 805 million tons of steel. The
China’s steel accounts chart shows that
the production of steel for more than
double the combined output of the world
biggest steel markets (Russia, Japan, US
and India) in the World. In years of
2011-12, China produced as much
cement as United State produced during
the whole 20th century. As part of the
CPEC Construction of Highways,
railways, energy projects and economic
zones generate positive economic signs
for China.
3.2.4. Development in Western China
Province:
CPEC will also facilitate China to
provide opportunity for the development
of western China provinces that are
Xinjiang, Tibetan Qinghai,
economically and socially by attracting
public and private investment and by
becoming a gateway for Chinese imports
and exports.
Materials coming from Middle East and
South Asia will make it an industrial
center making it an engine of economic
growth by exporting Chinese products to
and importing oil and gas from Middle
East. It was reported that the first
consignment were 10% cheaper of Sea
food through CPEC arriving from Indian
Ocean to Xinjiang as compared to those
brought from Eastern Coastal Cities of
China.
3.3. Regional Benefit of CPEC:
CPEC will not only significant for
Pakistan and China only but also for the
region at large. Afghanistan, Iran, CARs,
UAE can reap advantage from CPEC by
becoming part of it.
Afghanistan is a landlocked country. In
geo-strategic sense CPEC has a vital
importance for Afghanistan.
Afghanistan can become a major
beneficiary of this project as in the
extension of CPEC to the Afghanistan.
In future this project will contribute to
the economic development of
Afghanistan by improving economic
activities in the area. These economic
activities can bring the brittle economy
of Afghanistan back to normality. In
order to link up Afghanistan with CPEC,
Islamabad pledged to construct 265 km
long Peshawar to Kabul motorway.
The Central Asian States are located in
the core heart of Eurasia. These states
present special benefit as key transport
for the passage. Due to their important
geo-strategic location and resources of
oil and natural gas, Pakistan and China
are interested to get into closer relations
with these states.
Initially, Iran was against CPEC and
Gwadar development, now Iran has
considered options of contribution in
CPEC.
Gwadar may cause 70% lose in UAE’s
business which is port dependent
country. However, UAE should realize
the ground realities which show that the
drawbacks of CPEC are not for longer
time period. In future, if UAE makes
investment in construction and real
estate in Gwadar, it can produce vast
profit for UAE.
By leaving aggression, opposition and
by investing in CPEC India can become
a part of CPEC and one of the
beneficiaries. By this development war
mongering by India itself will be diluted
and rather environment of peaceful
coexistence will grow up.
4. Environmental Impact of CPEC
The Northern Pakistan is a home to
approximately 5218 glaciers. The
Northern region is blessed with three out
of seven world’s largest glaciers. These
glaciers are the significant sources to
stabilize the climatic condition not only
regional but globally also. These
glaciers are also major source of water.
By the year 2100, the total glaciers
mountain will disappear according to the
IPCC (Intergovernmental Panel on
Climate Change). Almost 7000 truck per
day in CPEC project will pass through
glaciers mountain way and leading to
the release of CO2 up to 36.5 million
tons.
Such release of CO2 will brutally reduce
the mass of the glaciers that will be
result in dangerous flooding. One of the
severe penalties will be in the form of
water famine. As early as in 2025 water
famine will be predicted. The ultimate
outcome of the water famine will be in
the form of negatively affected the field
of agriculture, food yield against the fast
growing population, water-based
operating industries and generation of
hydroelectricity generation [12].
Apparently, CPEC seems to be blessings
for the involved countries as it improve
the economy. On the other hand, it will
be a tsunami for the glaciers in Northern
Area, causing change in natural
environment, and also disturb the
biodiversity of Northern Pakistan.
Therefore, it is very vital to have a
deeper look down into the negative
impacts and penalties of the CPEC
project. There is a need for deeper
monitoring, planning, and managing the
risks related to environment and
biodiversity by involving expert
scientists from both the countries, China
and Pakistan. The biodiversity should be
treated on a priority basis because of the
environmental alterations, melting of
glaciers, flooding rivers. Moreover, for
the reduction of the release of carbon,
electric vehicles should be activated
instead of oil-based vehicles. The
hazardous resulting wastes should be
managed and disposed of carefully in
order to save the environment.
5. Challenges and Threats for CPEC
at National and at international level
In south Asia the geopolitical
environment is inherently unbalanced.
World power’s policy towards this
region might add to the uncertainty. The
combination of national, international,
regional, and extreme terrorist factors
might cause troublesome activities in
building of CPEC projects. Not only
external threats can hurt CPEC projects
but also there are some political
challenges [20].
5.1. Political challenges
Pakistan’s political stability is crucial to
make CPEC a success story. Political
unrest can hamper the projects in many
ways. Many internal and external
elements are constantly opposing the
execution of CPEC. The major hurdles
are poor administration, unstable
political government and terrorism.
Although there is a Positive harmony
among all the political parties to
encourage and promote the friendly
relationship with China and committed
for success of CPEC project but still
some political parties are trying to derail
the train development that is a result of
CPEC.
Despite of the fact that law and order
situation has progressed in recent years.
Still security condition can hinder the
development projects. The security of
CPEC is closely linked with regional
geopolitics, mainly with India.
Speaking against CPEC, Narendra Modi,
Indian Prime Minister, during his visit to
Beijing in June 2015, he criticized the
CPEC project as “unacceptable”.
To make CPEC a success story and reap
full advantage of the opportunity
Pakistan need to care about following
crucial facets:
1. Pakistan needs to ensure peace and
stability for the successful execution of
these projects.
2. Pakistan should meet the pace of
Chinese investment in all required
aspects. In case of failure to do so will
negatively impact on CPEC.
3. Pakistan should carryout effective
measures against negative factors
existing in its society i.e corruption,
nepotism and inefficiency, are major
obstructions and discouraging foreign
investments.
4. Insufficient concord on CPEC transit
alignments can politically victimize such
a mega project can adversely impact on
foreign investment and can damage the
chance to alter its vision of developing
as an economically stable and
flourishing country [14].
5.2. Security Issues
The most troublesome job for the
effective completion of the CPEC is the
security threat at national and
international level. This issue is
common for both China and Pakistan.
As western China Xinjiang is unsafe in
terms of security situation. Pakistan is
facing the issues of extremism and
terrorism although its intensity has
slowed down.
International factors are also funding
anti state players to curtail economic
corridor. To ensure foolproof security
Pakistan army has created a special
force for the security of CPEC. The
special security include Special Security
Division, will consist of nine battalions
of army and six parliamentary wings
forces, the Frontiers Force (FC) , the
Rangers and Special protection units of
police.
5.2.1. International Factors:
Economic development in Pakistan is
indigestible for India and she will do
anything to curtail the development
process in Pakistan. Likely India wants
to counter Gwadar by investing in
Iranian Chabahar port to get access to
Afghanistan and Central Asia for
imports of energy coming from the Gulf
region.
While Iran's ambassador to Pakistan,
stated that “Chabahar Port would not be
a rival or enemy to Pakistan's Gwadar
Port”, he said "Iran is eager to join
CPEC with its full capabilities,
possibilities and abilities".
Indian government is trying to fail the
CPEC project. India is concerned about
the huge investment of China in CPEC,
economic and strategic corridor that
intends to stabilize Pakistan’s economy
as well energy and also improve its
security situation. CPEC will make
Pakistan an industrial hub and Asian
player. Chinese help for Pakistan in
producing plutonium and as well as sold
eight submarines to Pakistan worth
about $5 billion. These purchased
submarine stretch a remarkable jump by
facilitating Pak Navy’s sea capability.
After the completion of CPEC Pakistan
will be the trade hub in the region after
Gwadar port starts functioning fully, and
duty-free economic zones are set up.
It is reported alleged efforts by the
India’s RAW to overthrow CPEC.
Recommendation
1. Government must make decision on
the basis of economic gains and
multiplier impact on the economy.
2. Route prioritization must decide on
the basis of population density (directly
relates to population displacement),
productive land under the route, loss of
production.
3. Strategic importance and its relevance
for Pakistan in short and long run must
give due importance.
4. Transparency must be ensured for
smooth functioning and equal
distribution of benefits.
5. Government must use the existing
institutions (Council for Common
Interest) for resolving all controversies
related to CPEC.
Last, but the most important aspect, all
stakeholders must have good
understanding of Chinese needs, as
China is investor of the project.
Conclusion
CPEC is fate changer for Pakistan and
opportunity for economic development
not only for Pakistan but also for the
region. There are almost 65 developing
countries under Belt and Road Initiative.
The main objective of Belt and Road
Initiative is to enhance the economic
prosperity of the B&R Initiative
countries through improving the
transport infrastructure. The One Belt
One Road countries can learn from the
experiences of China-Pakistan
Economic Corridor to maximize the
benefit of investment among different
transport infrastructure.
CPEC is a consequence of Pak China
long term trusted friendship, which
aspires to swiftly modernize
infrastructure of Pakistan and strengthen
the economy by constructing modern
networks of transportation, various
projects of energy and stable the
economy by introducing special
economic zones.
CPEC will address perennial grievances
of Baluchistan province. Political
leadership has already showed their
solidarity with China’s economic
initiative. Government of Pakistan need
to meet pace of CPEC projects in order
to timely harvest the advantage of
opportunity. Pakistan has already done
much to stabilize security situation of
Pakistan but still need more firm plan
and execution to completely curtail
engineered anti-state elements and
political intents.
Pakistan should invite neighboring
Afghanistan, Iran, UAE, CARs and
other foreign investors to invest in the Government should improve
CPEC for mutual benefits which will administration, governance and
open new doors of cooperation. transparency.
Should engage India bilateral dialogue
and trade to dilute their anti CPEC
stance.
References:
[1] Hussain, Fakhar, and Mazher Hussain. "China-Pak economic corridor (CPEC) and its geopolitical
paradigms." International Journal of Social Sciences, Humanities and Education 1.2 (2017): 79-95.
[2] Singh, Sutinder, and John Mohd Magray. "China-Pakistan Economic Corridor (CPEC), Its Impacts
on Pakistan Economy." International Journal of Innovative Research and Advanced Studies (2017).
[3] CPEC: Javaid, Umbreen. "Assessing CPEC: Potential threats and prospects." Journal of the
Research Society of Pakistan 53.2 (2016).
[4] Ahmad, Riza, and M. Hong. "China-Pakistan economic corridor and its social implication on
Pakistan: How will CPEC boost Pakistan’s infrastructures and overcome the challenges." Arts and
Social Sciences Journal 2 (2017).
[5] Rahman, Saif Ur, and Zhao Shurong. "Analysis of Chinese economic and national security
interests in China Pakistan economic corridor (CPEC) under the framework of one belt one road
(OBOR) initiative." Arts and Social Sciences Journal8.4 (2017): 1-7.
[6] Ramay, Shakeel Ahmad. "China Pakistan economic corridor: A Chinese dream being materialized
through Pakistan." (2016).
[7] Alam, Khalid Mehmood, Xuemei Li, and Saranjam Baig. "Impact of Transport Cost and Travel
Time on Trade under China-Pakistan Economic Corridor (CPEC)." Journal of Advanced
Transportation 2019 (2019).
[8] Aqeel, Muhammad. "Impact of China Pakistan Economic Corridor." Unpublished degree thesis,
BBA International Business. ARCADA (2016).
[9] http://boi.gov.pk/InfoCenter/CPEC.aspx
[10] Esteban, Mario. "The China-Pakistan Corridor: a transit, economic or development
corridor." Strategic Studies 36.2 (2016): 63-74.
[11] Haq, Rashida, and Nadia Farooq. "Impact of CPEC on social welfare in Pakistan: A district level
analysis." 32nd Annual General Meeting and Conference (2016). 2017
[12] Nabi, Ghulam, et al. "China-Pakistan Economic Corridor (CPEC): melting glaciers—a
potential threat to ecosystem and biodiversity." Environmental Science and Pollution Research25.4
(2018): 3209-3210.
[13] Shoukat, Ms Ayza, Khalil Ahmad, and Muhammad Abdullah. "Does Infrastructure
Development Promote Regional Economic Integration? CPEC’s Implications for Pakistan." Pak. Dev.
Rev 56 (2017): 455-468.
[14] Ahmar, Moonis. "Strategic meaning of the China-Pakistan economic corridor." Strategic
Studies 34.4/1 (2014).
[15] Ali, Muhammad Mansoor, and Farida Faisal. "CPEC, SEZ (Special Economic Zones) and
Entrepreneurial Development Prospects in Pakistan." Pak. Dev. Rev 56 (2017): 143-155.

[16] Ali, Liaqat, et al. "The potential socio-economic impact of china Pakistan economic
corridor." Asian Development Policy Review 5.4 (2017): 191-198.

[17] Shaofeng, Chen. "China’s self-extrication from the “Malacca dilemma” and
implications." International Journal of China Studies 1.1 (2010): 1-24.
[18] Zhang, Ruilian, and Guoqing Shi. "Social impacts assessment for China-Pakistan Economic
Corridor investment activities." Energy 33 (2016): 76.
[19] Chen, Xiangming, S. K. Joseph, and Hamna Tariq. "Betting big on CPEC." (2018).
[20] CPEC: Long Term Plan for China-Pakistan Economic Corridor (2017-2030)
[21] Employment Outlook of CPEC: A Meta Analysis By Dr Shahid Rashid,et al.” Employment
Outlook of CPEC: A Meta Analysis”. (2018)
[22] CPEC. Quarterly SPRING ISSUE ISSUE - 2018 Vol:02.
[23] Ahmad, Hafiz Zafar, Samar Fatima, and Zulfiqar Ahmad Bowra. "Cpec 2015: A Review of
Proposed Opportunities and Significance." Paradigms 11.2 (2017): 178-183.
[24] National Assembly panel approves ‘Special Economic Zones (Amend) Bill, 2015’
 https://voiceofdjibouti.com/demo/chinas-drive-integrate-africa-maritime-silk-road/
[25] http://cpec.gov.pk/maps
[26] Policy Research Working Paper 8582 Electrification and Household Welfare Evidence from
Pakistan
Hussain Samad Fan Zhang South Asia Region Office of the Chief Economist September 2018
[27] http://pk.chineseembassy.org/eng/zbgx/CPEC/t1626097.htm