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China-Pakistan Economic Corridor (CPEC) is a mega project undertaken by China and Pakistan
with $ 62 billion Chinese investment to connect Kashghar city of the Xinjiag Autonomous
Region of China to Gwadar port city of Balochistan province of Pakistan. These two cities are
being connected through construction of a vast network of highways, railways, airports, oil/gas
pipelines, many energy projects, construction of special economic zones (SEZs) along the route
and laying of fibre optics for telecommunications and internet. Modern transportation networks
built under the CPEC will link Gwadar and Karachi seaports with northern Pakistan, including
Quetta, Lahore, Peshawar, Muzaffarabad, Gilgit-Baltistan, western China and Central Asia.

The CPEC plan includes the construction of an 1100 kilometre motorway from Karachi to
Lahore, complete reconstruction of the Karakoram Highway from Rawalpindi to China’s border,
upgradation of main Karachi-Peshawar railway line so that trains could travel at over160
kilometres of speed, that will be finally connected to the Xinjinag province railway system of
China up to Kashghar. This entire transportation network will cost 11 billion. The CPEC projects
also include construction of oil and gas pipelines from Gwadar port to Kashghar, China. To
address the issue of energy shortage in Pakistan energy projects worth $33 billion are being built
in Pakistan as part of the CPEC plan. While the SEZs will be constructed to give a boost to
industrial development, fibre optic will be laid to do the business through fast track
communication networks. This entire network of energy, transportation and communication
projects under CPEC, after completion is expected to give major strategic and economic
advantages to Pakistan and China.

Firstly the CPEC gives China an alternate shorter route for transportation of oil and gas from
West Asia and Middle East and for trade to and from West Asia, Middle East, Africa and
Europe. A large oil/gas depot will also be constructed for storage and further transportation to
China through pipelines. The route is only about 2500 kilometres long as compared with the
route through Malacca Straits to Shanghai, which is about 14500 kilometres long. While the
route to China through Gwadar reduces the distance by about 12000 kilometres and likewise the
travelling time, this route will also prove to be a good alternative to keep the supplies going even
during any tensions in South East Asia and South China Sea, which might cause closure of the
Malacca Straights. This route would also provide an easy and quick access to China to the Indian
Ocean and the Arabian Sea.

The CPEC would provide a major boost to Pakistan’s economy by substantially increasing its
trade volumes with China, Central Asia, Russia, Middle East and Europe. Apart from this, during
the construction phase and after completion of the CPEC, Pakistan economic growth by about 3
percent due to increase in its industrial output due to the availability of electricity and because of
enhanced production out of the SEZs and also based on an increase in the agricultural production
due to cooperation with China and sharing of technology as well with our all-weather friend.
Moreover, after completion of the CPEC foreign investment in Pakistan would also increase,
which will further enhance the economic growth rate. Another major advantage to Pakistan
would be a major increase in the revenue to be earned due to transiting goods of other countries.
Another major advantage would be that CPEC would create employment opportunities for the
Pakistani people to the tune of about two to three million. The CPEC would also increase
tourism in Pakistan, which will facilitate flourishing of the tourism and hotel industry of Pakistan
centred around commercial activities in Gwadar city.

Since many regional and extra-regional countries would be joining the CPEC, this would
enhance Pakistan’s international stature, people-to-people contacts and this will create an
environment of peace and stability in South Asia. Hence we can expect that South Asian
countries will also prefer CPEC lead geo-economics over geopolitics and they will be able to
resolve their major disputes like Jammu & Kashmir and achieve peace in South Asia, including
Afghanistan. This would in turn facilitate South Asia’s interconnectivity and its connectivity
with China, Central Asia, West Asia and Russia and even with other regions.

Another major benefit to Pakistan would be that Pakistan-China strategic partnership would be
further cemented and it would further enhance Pakistan’s defence capabilities. This will be
because of two factors, one that Pakistan-China’s defence cooperation will further increase and
having stakes in Pakistan’ security and stability, China will be standing with Pakistan in case of
tensions in South Asia. Moreover, some other major powers like Russia and some European
powers will also develop their partnerships with Pakistan and contribute towards peace and
stability in South Asia. While this will facilitate stability in the region, Pakistan will also be able
to import defence technology from Western countries and Russia and Pakistan’s defence will be
further strengthened.

In the overall perspective, it can be concluded that CPEC will bring many major strategic and
economic advantages to Pakistan and China and while this will give a big opportunity to become
an advanced major economic power and it will also become a major military power to defend its
national interests.

The major obstacles faced by Pakistan’s economy include persistent industrial losses due to
energy crisis, low foreign direct investment (FDI), lack of infrastructure development, losses due
to war on terror and low exports and high imports. The average shortfall in the power sector is
4,500 megawatts, and nearly two billion cubic feet per day (BCFD) in the natural gas sector.
This chronic power shortage, in the form of load-shedding and power outages, cost the Pakistan
economy PKR 1,439 Billion (7 percent of GDP) in 2015. Major industries have seen a
downward slump in business because of being curtailed by energy shortages. Under CPEC, a
grand total of 21 energy projects have been planned. Altogether, these projects would eventually
produce 16,400 megawatts of power, roughly the same as Pakistan’s current capacity. Also, 14
Chinese constructed energy projects in Pakistan tied to the CPEC are expected to provide an
additional 10,400 megawatts of electricity by March 2018 – more than sufficient to make up for
Pakistan’s 2015 energy shortfall of 4,500 megawatts.
CPEC is a multibillion dollar initiative which aims to facilitate trade along an overland route that
connects Kashgar and Gwadar, through construction of a network of highways, railways and
pipelines. It is considered an extension of China’s ambitious Belt and Road initiative. Pakistani
officials predict that the project will result in job creation of up to 2 million direct and indirect
opportunities between 2016-2030. Also, keen interest by both the Chinese and Pakistani
governments to fast track the project means that work is expected to be completed as per a strict
timeline. Also, investments in infrastructure and energy sector has given confidence to local
businessmen that frequent power outages which had become a norm since the past decade would
be addressed.
The CPEC will open doors to immense economic opportunities not only to Pakistan but will
physically connect China to its markets in Asia, Europe and beyond. Almost 80% of the China’s
oil is currently transported from Strait of Malacca to Shanghai, (distance is almost 16,000 km
and takes 2-3 months), with Gwadar becoming operational, the distance would reduce to less
than 5,000 km. If all goes well and on schedule, of the 21 agreements on energy– including gas,
coal and solar energy will be able to provide up to 10,400 megawatts (MW) of energy by March
2018. According to China Daily, these projects would provide up to 16,400 MW of energy
As part of infrastructure projects worth approximately $11 billion, and 1,100 kilometer long
motorway 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 kilometers per hour by December 2019. Pakistan's railway network will also
be extended to eventually connect to China's Southern Xinjiang Railway in Kashgar. A network
of pipelines to transport liquefied natural gas and oil will also be laid as part of the project,
including a $2.5 billion pipeline between Gwadar and Nawabshah to transport gas from Iran.
Oil from the Middle East could be offloaded at Gwadar and transported to China through the
corridor, cutting the current 12,000 km journey to 2,395 km. It will act as a bridge for the new
Maritime Silk Route that envisages linking 3 billion people in Asia, Africa and Europe, part of a
trans-Eurasian project. When fully operational, Gwadar will promote the economic development
of Pakistan and become a gateway for Central Asian countries, including Afghanistan,
Uzbekistan, linking Sri Lanka, Iran and Xinjiang to undertake marine transport.
Over $33 billion worth of energy infrastructure will be constructed by private consortia to help
alleviate Pakistan's chronic energy shortages, which regularly amount to over 4,500MW, and
have shed an estimated 2-2.5% off Pakistan's annual GDP. With approximately $33 billion
expected to be invested in energy sector projects, power generation assumes an important role in
the CPEC project. Over 10,400MW of energy generating capacity is to be developed between
2018 and 2020 as part of the corridor's fast-tracked "Early Harvest" projects.
The expansion of cooperation in the economic, trade and investment areas under the CPEC will
not only solidify Pakistan-China strategic partnership, it will also lead to greater prosperity and
welfare of the peoples of the two countries. Recognizing the need for bringing the peoples of the
two countries closer to each other, both governments are paying special attention towards setting
up institutional mechanisms for the promotion of people-to-people contacts between Pakistan
and China.
The direct people-to-people contacts have remained limited owing to various constraints, chief
among them being the language barrier. Recognising the vital role of people-to-people contacts
in not only strengthening the bonds of Pakistan-China friendship but also in facilitating the
development work in the economic areas, especially under the CPEC, the governments of China
and Pakistan have initiated measures to enhance awareness about each other’s culture, social life
and business environment. For this purpose, the Government of Pakistan with the Chinese help
has opened China Study Programs for the teaching of Chinese language in various universities of
Tourism is yet another area in which there is vast scope for increasing cultural cooperation and
promoting people-to-people contacts. However, like other areas of people-to-people contacts,
tourism between the two countries also lies at a very low level. This should be a point for the
Pakistani policy makers to ponder upon as China is fast emerging as a country with record
number of both inbound and outbound tourists. Even with other countries of South Asia, like
Nepal, India and Sri Lanka, Chinese tourist links are expanding. In view of the vast potential of
both religious and recreational tourism, Pakistan can become an attractive destination for the
Chinese tourists provided that Pakistan builds required tourist infrastructure and improve the law
and order situation in the country.
The physical, commercial and cultural connectivity between Pakistan and China is bound to
increase under the CPEC as the project aims to build a network of rail and road connections
between the two countries. The CPEC is likely to provide an opportunity to all the regions of
Pakistan to share the fruits of economic development under the CPEC. The huge investment in
joint ventures in the economic zones linked to the CPEC will lead to the deployment of a large
number of workers of both Pakistan and the China, which will provide an opportunity to them to
interact with each other. A new generation of the Chinese oriented in th eir outlook more towards
the West has grown up. They know very little about Pakistan. Similarly, Pakistani’s knowledge
about the Chinese is also very limited. This can be enhanced only through the promotion of
people-to-people contacts for which the two countries have already started serious efforts. With
the implementation of the CPEC, these efforts will gain new momentum.
The CPEC has tremendous advantages for both China and Pakistan. Besides shortening the
distance for transportation from Shanghai to Europe and oil from the Gulf to mainland China, it
will enable China to play the role of a major imports-exports facilitator in the world. It will
increase the volume of trade between Pakistan and China and further strengthen their economic
ties. It will also expand trade with Afghanistan, create revenue prospects and job opportunities
for Pakistanis as well as help develop Baluchistan. Trade relations will usher in regional peace
and elevate the quality of life of the people in South Asia. The CPEC will address the energy
shortage issue in Pakistan as well as meet China’s growing demands for fossil fuel. To accrue
maximum benefit from the CPEC, Pakistan will have to address the political differences, create
stability and address the law and order situation besides gearing up its bureaucratic process to
match the pace of Chinese development goals.
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 Baluchistan 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.