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 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 $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 Firstpostreport, "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 muchneeded 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, 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 "PakistanChina friendship is higher than the mountains, deeper than the oceans, sweeter than honey, and
stronger than steel." [14]
Contents
[hide]

1 History

2 Strategic importance

3 Infrastructure

4 Projects

5 Financing

6 Security

7 Controversy
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 proposed by Chinese Premier Li Keqiang during his visit to Pakistan in May 2013.[15]
[16]
The Pak-China Economic Corridor Secretariat was inaugurated in Islamabad on 27 August 2013.
[17]
In February 2014, Pakistani President Mamnoon Hussain visited China to discuss the plans for an
economic corridor in Pakistan.[18]Two months later, Pakistan Prime Minister Nawaz Sharif met with
Premier Li Kequiang in China to discuss further plans.[19] While the project took shape during Sharif's
tenure, the vision for an economic route stretches as far back as the Musharraf era.[20]
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 Reutersshow 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.[21]
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,[22] with approximately $28 billion in
immediate projects and the rest allocated for projects in the pipeline.[23]
The deal includes a $44 million fibre optic cable[24] and will add 10,400 Megawatts to Pakistan's
energy grid through coal, nuclear and renewable energy projects.[25] 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 Sukur)

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.[26]

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, [27]

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,[22] and oil pipelines through Pakistan would cut out ocean travel through Southeast Asia. [28]
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."[29]
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."[18]
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. [30][31] 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. [32]
CPEC is considered economically vital to Pakistan in helping it drive economic growth. [33] 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.[34] A study by the Pew Research Center in 2014 found that 78% of Pakistanis have
a positive view of China.[25][35]

in 2014, the Chinese government committed to spending $45.6 billion over the next six years to build the China
Pakistan 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.
[36][37]
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.[38]
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.[39]

Projects[edit]
A total of 51 memorandums of understanding were signed in diverse sectors between China and
Pakistan during visit of Chinese president to Pakistan on 20 April 2015. [40]Major projects under the
corridor umbrella are:
Project

Details

Gwadar Port

Completed, handed over to China for 40

years starting 2015[41]

Upgrading of KarachiPeshawar Main Line

Feasibility study underway[42]

Khunjerab Railway

Feasibility study underway[40]

Karachi - Lahore Motorway (KLM)

Approved, Construction to begin 2015[40]

Havelian to Khunjrab Rail track

Approved[43]

Hazara Motorway

Under construction[40]

IranPakistan gas pipeline

Under construction, Iran's part of the

pipeline is complete.[40]

Gwadar-Ratodero Motorway

Under construction, approx. 820-km long,

expected completion Dec, 15[40]

Economic Corridor Support Force

Completed, armed division of the army for

security of workforce, cost$250 million[44]

Havelian Dry Port

Feasibility study underway for the container

port

Orange Line (Lahore Metro)

Approved[40]

Project

Details

Upgrading of Gwadar International Airport

Approved[40]

China-Pakistan Joint Cotton Bio-Tech Laboratory

Approved[40]

Gwadar-Nawabshah LNG Terminal and Pipeline Project

Approved[40]

70 MW Hydro-Electric Suki Kinari Hydropower Project

Approved[40]

Port Qasim 2x660MW Coal-fired Power Plants

Approved[40]

720MW Karot Hydropower Project

Approved[40]

Zonergy 9x100 MW solar project in Punjab

Approved[40]

Jhimpir wind Power project

Approved[40]

Thar Block II 3.8Mt/a mining Project

Approved[40]

Thar Block II 2x330MW Coal Fired Power project

Approved[40]

Development of Private Hydro Power Projects

Approved[40]

Dawood Wind Power Project

Approved[40]

Hubco Coal-fired Power Plant Project

Approved[40]

Cross-border fibre optic data communication system project,

a digital terrestrial multimedia broadcast pilot project at

Approved[40]

Project

Details

Murree

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 Pakistan-China 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.[45]

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. [22] The
outlawed Tehrik-i-Taliban has claimed responsibility for past attacks on some Chinese nationals,
[46]
and Chinese commentators have raised concerns that construction workers could be kidnapped
and ransomed.[47] The Express Tribune reports that Pakistan plans to train 12,000 security personnel
to protect Chinese workers on the corridor.[48][49][50] Presently, 8,000 Pakistani security officials are
deployed for the protection of over 8,100 Chinese workers in Pakistan.[51]
Some militant separatist groups operate in Balochistan, including the Balochistan Liberation
Army and Jundallah, which have carried out bombings.[24]
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.[52][53] 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.[54]

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[55] 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.[20][56]
[57]
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.[58]
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...". [59]
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.[47]
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 Hasan Abdal to Gwadar, passing through Mianwali District, Dera Ismail
Khan and Zhob.[60]

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.[33] It would provide links from the Caspian Sea to the Strait of
Hormuz, and enable Gwadar to compete with Persian Gulf ports.[58] 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.[58]
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.[61] However, Chinese President
Xi Jinping dimissed the statements, describing CPEC as a "commercial project." [62] India may also
have apprehensions over China's access to the sea, [31] and has invested significantly in the Port of
Chabahar in neighbouring Iran. The development of Chabahar, which lies a few miles away from
Gwadar, is part of India's efforts for access to landlocked Afghanistan and Central Asia while
bypassing rival Pakistan.[58]