CPECChallenges and opportunities for Pakistan

Jumana NoorHira MirMuneeba DaudRaima RashidGhanwa Ejaz

Introduction

The 21st century has encouraged geo-economical and geostrategic partnership among

countries. China has been an integral part of Pakistan’s foreign policy objectives, as China is Pakistan’s strategic partner. Pak-China ties have kept growing and have strengthened ever since

1951. The China–Pakistan Economic Corridor(CPEC) is a development megaproject which aims to connect Gwadar Port in southwestern Pakistan to China's northwestern autonomous region of Xinjiang (kashgar city), via a network of highways, railways and pipelines for trading purposes.

China-Pakistan Economic Corridor

Two Major Parts

CPEC ROUTE

CPECThe

Planning And

Development Minister ( Ahsan Iqbal )

Disclosed Three

Routes Of The

Economic Corridor.

Route of the Corridor

Central route

Eastern route

Westernroute

WESTERN ROUTEThe Western Route Originating From Gwadar Will Pass Through Turbat, Panjgur, Nag, Basima, Sorab, Qalat, Quetta, Qilla Saifullah And Zhob And Reach Dera Ismail Khan Before Leading To Islamabad.

CENTRAL ROUTE The central route will originate from Gwadar and reach Dera Ismail Khan via Basima, Khuzdar, Sukkur, Rajanpur, Layyah, Muzaffargarh and Bhakkar.

EASTERN ROUTEThe eastern route includes Gwadar, Basima, Khuzdar, Sukkur, Rahimyar Khan, Bahawalpur, Multan and Lahore/Faisalabad and then reach Islamabad.

CPEC

Comparative Analyses

A comparative analysis of the three routes

Western Route

Central Route

Eastern Route

Gawadar PortLocation:

Gwadar port is located on the shores of the Arabian Sea in the western province of Balochistan. It is about 533 km from Karachi and 120 km from the Iranian border.

Gawadar Port and Pakistan:place the Pakistan Navy in a very strong position and would act as an act as an international trade hub for Pakistan thus strengthening it confidence.

Gawadar Port and China:China will a really short trade route through which it can perform trade with middle east and south Asian countries

Gawadar port

m

Geographical importance of Gawadar Port

CPEC and challenges for Pakistan

CPEC appears as a huge issues to india as it cannot see Pakistan flourish.RAW has opened a special office in Delhi and has been allotted $300 million to disrupt CPEC.

Political parties such as ANP, Baloch nationalists, PkMAP raised serious objections to the CPEC project even PTI and JUI (F) showed negative attitude towards the cause.

Other issues such as the kidnappings of Chinese workers and the state of unrest and terror has createdhurdles for the Pakistani Government.

CPEC and Balochistan factor:

What is the balochistan issue?Basically balochistan wants to become independent state and if the corridor is established then the dream will be tarnished, they do not want to see Balochistan to develop as an economic and trade hub unless it becomes independent. They fear that if Balochistan develops and Gwadar port becomes a thriving port, then outsiders would move in. That would make the Balochs further less in majority, and the chance of an independent state would be ruined.

The baloch extremists have development have blown up numerous gas pipelines and trains and have attacked Chinese engineers. Brahamdagh Bugti, the leader of the outlawed Baloch Republican Party , criticized the CPEC and said that the government is strong arming balochs to get their work done.

KPK FACTOR

• Original route was from Khunjerab to Gwadar.• Eastern route comprises area of Sindh and Punjab.• China preferred Eastern route over Original route.• KPK parties were not happy and warned that nation will be divided• A resolution was passed which said original route should be

followed.• It will help connnect underdeveloped areas of Pakistan to corridor.• Unstable political system is another problem in the way of CPEC.

SECURITY CONCERNS

• Military extends from Xinjiang to Gwadar comprising of different gatherings.

• Support from agencies like CIA and RAW are helping opponents to create an envioronment of fear.

• Many Chinese Nationals wre killed.• The armed forces promised 10,000 men for protecting the

venture.A new compel, SSD, was made consisting of nine brigade and six wings of paramiliatry strength.

• Special attention is given to areas of Afghanistan where oppressors like Al-Qaeda etc are concentarted.

ECONOMIC FACTOR

• Main challenge comes from competitors i.e Iranian port.• It is fundamentally aided by India ($85 millions)• It is a way for energy imports between Gulf region to China to

Afghansitan and Central Asia.• Also to Middle East and Europe for exports.• It is has not yet started so Gwadar is given more importance.• It will become a trade hub for Pakistan increasing its economy.• India's interest in Chabhar is due to Paksitan's refusal to travel

through Afghanstan.• Otherwise India would not work on Chabahar.

TAX AND POWER TARRIF ISSUES

• China has communicated with FBR to solve reservation related to tariff with different strategies.

• Imports will be exempt from sales tax.• FBR is taking too much time on this issue.• In Chinese point of view, decreasing tariff would negatively

impact on cost-viability and implemetation of the venture.• Pakistan answered tariff will be not be same and its decrease is

related to cost.• Also, internationally cost is decling.• NEPRA decides the tax, independent of government, by surveying

tax on fuels condidering global value and cost of control.

INDIAN CONCERNS

This strategic partnership between Pakistan and China has upset India that openly voiced its opposition

After the completion of CPEC, 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.

CPEC BENEFITS FOR PAKISTANPakistan has been playing a significant role in South Asia.

After the completion of China Pakistan Economic Corridor; economic, commercial as well as geostrategic environment will improve in Pakistan.President Mamnoon Hussain said

“The China Pakistan economic Corridor would prove to be a game-changer in the whole region by generating massive trade and economic activity and opening new vistas of progress and prosperity for the people of the two countries and about three billion people of the region.”

ECONOMIC REVOLUTION DUE TO CPECChina’s economic and military assistance will help Pakistan a great deal in narrowing its ever widening gap in economic-military-nuclear fields with India and in bettering its defense potential.

Economist Dr Shahid Hassan said

“CPEC would bring more prosperity in the wholecountry and would reduce unemployment in the country.Functioning of Gwadar port will bring an economic revolution and business activities will get a much needed boost.” 

OVERCOMING ENERGY CRISESDue to population growth and industrial demand, there have been severe energy crises in Pakistan.

CPEC is the ideal project which will help rid country of the energy crises. Energy availability in country will revive existing industries, such as textile to full production and add an estimated 2 percent to Pakistan’s GDP growth.Chief Minister Punjab, Shahbaz Sharif said that :

“China is extending great economic cooperation to Pakistan and that the government is making serious effort for resolving the energy crisis and a number of projects with Chinese cooperation would start producing electricity.”

 

INFRASTRUCTURE DEVELOPMENT

This project basically will improve Pakistan’s infrastructure connection with all sub regions in Asia and between Europe Asia and Africa step by step and will remove all investment and trade barriers for the creation of a sound business environment within the region and in all related countries.The areas adjacent to the corridor would become attractive locations for manufacturing, agricultural and services industries

Economic development from CPECFor a state like Pakistan, which faces severe economic challenges, CPEC can prove to be

a fortune changer.

It will provide a big opportunity for Pakistan to stabilize its economy by making Gwadar a trade and economic hub.Many Economic Zones are believed to be established in all of the provinces of Pakistan.

It is estimated the CPEC project will create some 700,000 direct jobs during the period 2015–2030 and add up to 2.5 percentage points to the country's growth rate.

Balanced environment in and around Pakistan

The execution of this wide-ranging project would bring economic revolution that can transform the fate of the local

states in a positive way.

CPEC will completely change the overall geo-political scenario of Asia.

CPEC would provide opportunity to all nationwide countries to make South Asia a flawless integrated region.

Removal of poverty and peace and prosperity in Pakistan

CPEC will turn Pakistan into the most prosperous nation in the world.

According to Prime Minister Nawaz Sharif CPEC will help regional countries in reducing poverty and to bring in durable peace.

Recommendations/Suggestions

•All political parties should express full support for the implementation of China Pakistan Economic Corridor.•All political parties should be united and resolve their political issues and act for their mutual benefits.•The government and all the provinces should work jointly for the commercial, economic and cultural development as well as peaceful environment in the country.•The government should share all details of CPEC project with all the political parties of all the provinces.•The Pakistani government should provide full support and assistance to foreign workers of different CPEC projects•The government should not delay work on CPEC because it can provide space to the terrorists and militants to create hurdles in the smooth construction of this project.

Conclusion China Pakistan Economic Corridor is the game changer project which will incorporate a 2,000 kilometer transport link between Kashgar in northwestern China to the Gwadar port on the Arabian Sea near the border with Iran. When this corridor will be completed, oil from the Middle East could be off loaded at Gwadar, which is located just outside the mouth of the Gulf, and transported to China through Balochistan and over the Karakoram Mountain. There are many challenges for Pakistan in implementing this project. At the same time, Pakistan will have many benefits from this corridor.