What is CPEC?
CPEC (China Pakistan Economic Corridor) is considered economically vital to Pakistan in helping it drive economic growth. The Pakistani media and government have called CPEC investments a "game and fate changer" for the region, while both China and Pakistan intend that the massive investment plan will transform Pakistan into a regional economic hub and further boost the deepening ties between the two countries. The corridor will "serve as a driver for connectivity between South Asia and East Asia."
China's 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.
CPEC will provide China an alternative and shorter route for energy imports from the Middle East, thereby reducing shipping costs and transit times. The currently available sea-route to China is roughly 12,000 kilometres long, while the distance from Gwadar Port to Xinjiang province is approximately 3,000 kilometres, with another 3,500 kilometres from Xinjiang to China's eastern coast.
The Transit Trade Agreement provides Afghanistan access to the Port of Karachi to conduct export trade with India, and allows Afghan goods to be transited up to any border of Pakistan, but neither guarantee Afghan trucks the right to traverse the Wagah Border, nor does the agreement permit Indian goods to be exported to Afghanistan via Pakistan.
In February 2016, the Pakistani government signaled its intention to completely bypass Afghanistan in its quest to access Central Asia by announcing its intent to revive the QATT so that Central Asian states could access Pakistani ports via Kashgar instead of Afghanistan, thereby allowing the Central Asian republics to access Pakistan's deep water ports without having to rely on a politically unstable Afghanistan as a transit corridor. The heads of various Central Asian republics have expressed their desire to connect their infrastructure networks to the CPEC project via China. The Tajik premier also expressed his government's desire to join the Quadrilateral Agreement on Traffic in Transit to use CPEC as a conduit for imports and exports to Tajikistan by circumventing Afghanistan.
CPEC passes though the disputed region of Kashmir where Indian and Pakistani border guards have occasionally exchanged fire across the Line of Control, although no CPEC project is located near the Line of Control. Chinese intelligence agencies reportedly also shared information with Pakistani authorities regarding alleged efforts by the India's Research and Analysis Wing to subvert the project. Pakistan has responded that it will vigorously guard itself and its allies from Indian-backed militants.
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.
The CPEC Alignments will improve connectivity to restive Xinjiang, thereby increasing the region's potential to attract public and private investment. CPEC is considered central to China–Pakistan relations; its central importance is reflected by China's inclusion of the project as part of its 13th five-year development plan.
Under a slogan "Pakistan-China friendship is higher than the mountains, deeper than the oceans, sweeter than honey, and stronger than steel", Pakistan and China on 20 April 2015 signed an agreement to commence work on the $46 billion agreement, which is roughly 20% of Pakistan's annual GDP.
The current form of the project was first proposed by General Pervez Musharraf but it was formerly launched during the Pakistan Muslim League-N’s current tenure. CPEC, is a collection of projects currently under construction at a cost of46 billion USD. project will result in the creation of 700,000 direct jobs of Pakistanis between 2015–2030, and add 2 to 2.5 percentage points to the country's annual economic growth.
CPEC will eventually link the city of Gwadar in southwestern Pakistan to China's northwestern autonomous region of Xinjiang via a vast network of highways and railways. infrastructure projects are worth approximately $11 billion including 1,100 kilometre long motorway that will be constructed between the cities of Karachi and Lahore, while the Karakoram Highway between Rawalpindi and the Chinese border will be completely reconstructed and overhauled. The Karachi–Peshawar main railway line will also be upgraded to allow for train travel at up to 160 kilometres per hour by December 2019. Pakistan's railway network will also be extended to eventually connect to China's Southern Xinjiang Railway in Kashgar.
Over $33 billion worth of energy infrastructure are to be constructed which amount to over 4,500MW and over 10,400MW of energy generating capacity is to be developed between 2018 and 2020. Electricity from these projects will be generated by coal, though wind projects are included under CPEC, whereas the construction of one of the world's largest solar energy plants at Bahawalpur is nearly completion.
Pakistan and China have already cooperated in the field of space research and a joint satellite syst em will be monitoring the road activities from space.
Gwadar forms the core of the CPEC project, as it is envisaged to be the link between China's ambitious One Belt, One Road project, and its Maritime Silk Road project. In total, more than $1 billion worth of projects are to be developed around the port of Gwadar by December 2017. The expanded port will be located near a 2,282 acre free trade area in Gwadar which is being modeled on the lines of the Special Economic Zones of China. It will be a free port like Dubai for 23 years from the day of its operation. By 2025, it is envisaged that manufacturing and processing industries will be developed, while further expansion of the zone is intended to be complete by 2030. The port will be developed with 300 MW coal power plant, a desalinization plant, and a new 300 bed hospital.
Between China and Pakistan up to Gwader, three corridors have been identified for cargo transport: the Eastern Alignment though the heavily populated provinces of Sindh and Punjab where most industries are located, the Western Alignment through the less developed and more sparsely populated provinces of Khyber Pakhtunkhwa and Balochistan, and the future Central Alignment which will pass through Khyber Pakhtunkhwa, Punjab, and Balochistan. The entire Eastern Alignment motorway project is divided into four sections: a 136 kilometre long section between Karachi and Hyderabad also known as the M9 motorway, a 296 kilometre long section between Hyderabad and Sukkur, a 387 kilometre long section between Sukkur and Multan, and a 333 kilometre section between Multan and Lahore via the town of Abdul Hakeem.
The CPEC project envisages an expanded and upgraded road network in the Pakistani provinces of Balochistan, Khyber Pakhtunkhwa, and western Punjab Province as part of the Western Alignment will result in the upgrading of several hundred kilometre's worth of road into 2 and 4-lane divided highways by mid-2018, with land acquisition sufficient for upgrading parts of the road to a 6-lane motorway in the future.
The CPEC project envisages re-construction of 870 kilometres of road in Balochistan province alone as part of the Western Alignment; of those 620 kilometres have already been rebuilt by January 2016. The Western Alignment roadway network will begin at the Barahma Bahtar Interchange on the M1 Motorway near the towns of Burhan and Hasan Abdal in northern Punjab province. It will consist of 11 interchanges, 74 culverts, and 3 major bridges spanning the Indus, Soan, and Kurram Rivers. At the southern terminus of the new Brahma Bahtar-Yarik motorway, the N50 National Highway will also be upgraded between Dera Ismail Khan in Khyber Pakhtunkhwa and Zhob in neighbouring Balochistan province, with eventual reconstruction between Zhob and Quetta. The upgraded roadway will consist of a 4 lane dual-carriageway spanning the 205 kilometre distance between the two cities. The first portion of the N50 to be upgraded will be the 81 kilometre portion of the N50 between Zhob and Mughal Kot, with construction works having begun in January 2016. The project's cost will not be financed by Chinese state-owned banks, but instead by Asian Development Bank under a 2014 agreement which preceded CPEC as well as by a grant provided by the United Kingdom's Department for International Development.
Heading south from Quetta, the Western Alignment of the CPEC will continue to the town of Surabin central Balochistan as the N25 National Highway. From Surab, a 470 kilometre long route known as the N85 National Highway will connect central Balochistan with the town of Hoshab in southwestern Balochistan province near the city of Turbat. This portion of roadway between Surab and Hoshab is 51% complete as of January 2016, and is expected to be completed in December 2016. The towns of Hoshab and Gwadar are connected by a newly-built 193 kilometre long portion of the M8 Motorway completed and inaugurated in February 2016. The Karakoram Highway south of the city of Mansehra will also be upgrade into a controlled-access highway to officially be known as the E-35 expressway. While it is considered to be a crucial part of the route between Gwadar and China, the E35 will not be financed by CPEC funds. The project will instead be financed by the Asian Development Bank with a $121.6 million grant from the United Kingdom towards the project. Once completed, the E35 Expressway, the M4 Motorway, and Karachi-Lahore Motorway will provide continuous high-speed road travel on controlled-access motorways from Mansehra to Karachi – 1,550 kilometres away. Approximately halfway between Zhob and Quetta, the town of Qilla Saifullah in Balochistan lies at the intersection of the N50 National Highway and the N70 National Highway. The two roads form the 447 kilometre route between Quetta and Multan in southern Punjab. While the N70 project is not officially a part of CPEC, it will connect the CPEC's Western Alignment to the Karachi-Lahore Motorway at Multan. Reconstruction works on the 126 kilometre portion of the N70 between Qilla Saifullah and Wagum are slated for completion by 2018, and are financed as part of a $195 million package by the Asian Development Bank, and by a $72.4 million grant from the United Kingdom's Department for International Development. Long-term plans for a "Central Alignment" of the CPEC consist of a network of roads which will commence in Gwadar and travel upcountry via the cities of Basima, Khuzdar, Sukkur, Rajanpur, Layyah, Muzaffargarh, and terminating in Dera Ismail Khan, with onward connections to Karakoram Highway via the Brahma Bahtar–Yarik Motorway.
The CPEC project emphasizes rebuilding of the entire Main Line 1 railway between Karachi and Peshawar by 2020. The CPEC plan also calls for completion of a rail link over the 4,693-meter high Khunjerab Pass. The railway will provide direct access for Chinese and East Asian goods to Pakistani seaports at Karachi and Gwadar by 2030.
Energy generation will be a major focus of the CPEC project, with approximately $33 billion expected to be invested in this sector. As part of the "Early Harvest" scheme of the CPEC, an estimated 10,400 MW of electricity are slated for generation by March 2018 as part of CPEC's "Early Harvest" projects. Despite several renewable energy projects, the bulk of new energy generation capacity under CPEC will be coal-based plants, with $5.8 billion worth of coal power projects expected to be completed by early 2019 as part of the CPEC's "Early Harvest" projects. The Shanghai Electric company of China will construct two 660MW power plants as part of the "Thar-I" project in the Thar coalfield of Sindh province, while "Thar-ll" will be developed by the China Machinery Engineering Corporation in conjunction with Pakistan's Engro Corporation will construct two 330MW power plants separate consortium. The facility will be powered by locally sourced coal, and is expected to be put into commercial use in 2018.
In Punjab, the $1.8 billion Sahiwal Coal Power Project is an under construction project in central Punjab that will have a capacity of 1,320MW. It is being constructed by a joint venture of two Chinese firms ~ The Huaneng Shandong Company and Shandong Ruyi Science & Technology Group, who will jointly own and operate the plant. Pakistan will purchase electricity from the consortium at a tariff of 8.36 US cents/kWh, initially.
The $589 million project to establish a coal mine and a relatively small 300MW coal power plant to be built in the town of Pind Dadan Khan by China Machinery Engineering Corporation in Punjab's Salt Range. Pakistan's NEPRA has been criticized for considering a relatively high tariff of 11.57 US cents/kWH proposed by the Chinese firm, which had been initially agreed at 8.25 US cents/kWH in 2014. The Chinese firm argued that coal transportation costs had greatly increased due to the no availability of coal from nearby mines which had initially been regarded as the primary coal source for the project. The company argued that coal would instead have to be transported from distant Sindh province, which along with inefficiencies in mining procedures, increased the cost of fuel by 30.5%.
In Balochistan province, a $970 million coal power plant at Hub, near Karachi, with a capacity of 660MW to be built by a joint consortium of China's China Power Investment Corporation and the Pakistani firm Hub Power Company as part of a larger $2 billion project to produce 1,320MW from coal.
A 300MW coal power plant is also being developed in the city of Gwadar, and is being financed by a 0% interest loan.
The Chinese government has announced its intention to build a $2.5 billion 711 kilometre long liquid natural gas pipeline from Gwadar to Nawabshah in province as part of CPEC. The pipeline is designed to be a part of the 2,775 kilometre long Iran–Pakistan gas pipeline, with the 80 kilometre portion between Gwadar and the Iranian border to be connected when sanctions against Tehran are eased; Iran has already completed a 900 kilometre long portion of the pipeline on its side of the border. Pakistan will achieve 4500 MW Energy capacity by 2018. The on-going energy production projects in Pakistan are tabulated as under.
CPEC Projects are about 363 packages (including 312 road packages) in number and it will boost the economy of Pakistan within three years to a rise of 2.5 % GDP per year. By 2035, Pakistan will be among the top G-22 countries and its position will be 13th in international economy with its GDP to rise by 30%, apart from being the third nuclear power of the world.
How would CPEC Project influence the world economy?
• The Chinese items will lower in its price by 15 % throughout the world, including fruits and grains after getting a 6000 kilometers shorter road to the deep seas.
• The Korean and Malaysian markets and the Russian belt will lower its price of items by 13 % at the international market after getting a free port at Gwadar.
• Chinese items will be sold at 17 % lower rates in UK. The existing higher cost is due to large detour of ships to UK.
• UK currency and EURO will rise by 7% against US Dollar.
It will directly or indirectly influence 3 billion people of South East Asia.
CPEC is a game changer project which will lift millions of Pakistanis out of poverty and misery. The project embraces the construction of textile garment, industrial park projects, construction of dams, the installation of nuclear reactors and creating networks of road, railway line which will generate employment and people will also take ownership of these projects. Fully equipped hospitals, technical and vocational training institutes, water supply and distribution in undeveloped areas will also improve the quality of life of people.
CPEC is not only the name of road, port and railway system but a multi-dollars mega project which will bring peace and prosperity in all the provinces of Pakistan. CPEC would not only benefit Balochistan but also prove beneficial for the country’s three other provinces. CPEC would bring more prosperity in the whole country and would reduce unemployment in Pakistan. Functioning of Gwadar port will bring an economic revolution and business activities will get a much needed boost
Major Conclusions
The construction of CPEC is an important consensus reached by the leaders of China and Pakistan. It will optimize the trade and energy cooperation between China and Pakistan and benefit over three billion people in China, South Asia and Middle East.
CPEC realizes the new realities of global and regional politics by cultivating a more systematic, up-graded and need-based interaction for socio-economic, industrial, energy and trade development.
Pakistan’s leadership describes the CPEC as a game changer for Pakistan and the region at large.However, the dividends of CPEC will be realized over a period of 10-15 years. It therefore requires a continued determination on part of China and Pakistan to stay firm on the course.
It is important to make sure that all Memorandums of Understandings (MoUs) and any new policy arrangements that may be agreed to in the future by China and Pakistan, are implemented in their true spirit without any delay.
A strict scrutiny of the performance and quality of work on different projects will be needed. Similarly, safeguards are needed against corruption. The creation of Prime Minister’s Delivery Unit (PMDU) in April 2015 to monitor the implementation of the projects under the CPEC is a positive move.
Pakistan will have to provide security to engineers, technicians and labour that will work on the corridor projects. In April 2015, the Pakistan Army announced establishment of a special security division, headed by a Major General, for providing security. This special security division comprises nine Army battalions and six wings of paramilitary forces (Rangers and Frontier Corps), numbering around 10,000 personnel.
The CPEC project will transform Pakistan’s geographic location into an asset. The business community and private sector needs to come forward, and play their role in making CPEC a success.
The CPEC Project will ease Pakistan’s energy crisis while connecting the country’s economy with its neighbours on three sides, the east, north and the west. India is the only missing link in the Belt and Road project. It raised objections to the planned construction of the Corridor through Gilgit-Baltistan.
China’s engagement with Pakistan gives an opportunity to counter-balance the Indian-US strategic partnership. The anti-state elements opposing construction of the corridor may try to misguide the local people of Balochistan, Khyber Pakhtunkhwa and Gilgit-Baltistan.
Extremist/ethnic elements could also be exploited to sabotage construction of CPEC. Meanwhile, the East Turkistan Islamic Movement (ETIM) in Xinjiang may also create problems. To counter these disgruntled elements and to thwart the hidden nefarious agendas, the government needs to employ a multi-dimensional strategy encompassing both soft and hard power. A Pakistan-China joint counter terrorism mechanism is required.
The role of think tanks, media and educational exchanges will also be useful in allaying the negative perceptions and apprehensions over the CPEC project.
If US strategies with India may turn up then USA may lose its friend Pakistan forever who had been its well-wisher since long ago. No doubt that Pakistan has lost more than 60000 souls in War against Terror, by the side of USA; however, turning their eyes away from Pakistan will not benefit its long interests in the region. USA has to play neutral role in such circumstances.
