China and Pakistan: Friends in Deed

Islamabad: NUST Publication, 2016, pp.125-138

China Pakistan Economic Corridor and Regional Economic Development

Challenges and Opportunities
Dr. Nazir Hussain

The CPEC is an ambitious project aims at changing the geo-economic dynamics

of Pak-China relations and boosting the trade activity in the region. It envisages
infrastructure development, upgrading rail and road links, creation of energy
projects and establishing exclusive economic zones. The multi-billion dollar
project offers a long term investment in Pakistan involving the regional
countries as well. However, the project is being challenged with
implementational issues, domestic controversies and external opposition. At the
same time, the security guarantees provided by Pakistan Army, a parliamentary
committee to oversee the fast-track completion of the project and chances of
regional connectivity raises the hope for its success. Nevertheless, the success of
the CPEC depends on political resolve and successful implementation of the
project in full spectrum.

Key Words: CPEC, Geo-economics, Economic Connectivity, Trade and Energy Corridor

Due to the regional security environment, Pakistan has suffered in the last few decades
hampering its economic progress and development. On the other hand, the phenomenal rise of
China in the regional and international financial/economic sphere has been jealously seen by
many developed countries. However, the Chinese rise is a blessing for Pakistan, as Pak-China
friendship transcends the governments and leadership in both the countries. Pakistan’s strategic
location, linking many sub-regions, and Chinese quest for regional economic reach have paved
the way for a strategic understanding to transform the region into economic, trade and energy
corridor. The launch of multi-billion China-Pakistan Economic Corridor (CPEC) could serve the
purpose of Pakistan’s economic progress and regional economic development. The CPEC is to
be completed in 15 years in four phases with three different routes having 51 various projects
with an estimated cost of $46 billion.

Though China is ready to invest multi-billion dollars for the project but Pakistan’s domestic
politics, controversies over route, terrorism and long time period for its completion cast heavy
shadows on the Corridor project. Moreover, Indian unease and covert actions to sabotage the
project along with the US reservations add further challenges to the project. However, given the
political resolve by both Pakistan and China, guarantees by Pakistani army to safeguard the
project, initiation of the project on fast-track and financial commitment by China augur well for
the project. The China-Pakistan Economic Corridor has the capability to transform the conflict-
ridden region into an economic, trade and energy hub for the regional progress and development.
Therefore, this research paper endeavors to discuss the CPEC project in economic perspective,
highlighting the bilateral benefits, regional economic connectivity, and looking at various
challenges and opportunities for its successful completion.


Associate Professor at the School of Politics and International Relations, Quaid-i-Azam University, Islamabad.

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Conceptual Context
Geography has always played a vital role in how states behave and act with other states and what
policies they formulate. But it is historically proven that geography coupled with politics always
had more charge in the global affairs, which in many cases lead to wars or high level diplomacies
among states. Global political environment is passing through new wave of multi-polarity which
has changed the dynamics of interactions; geopolitics is being taken over by geo-economics.
More states are getting head to head with each other in the global race for prosperity and some
are still in the process of development. So in the new phase of interactions among states, the
powerful states are exploiting as well as exploring the geographies they are either surrounded
with or those which are resource rich.

It has been manifested that for the past few years, this shift towards geo-economics has been
swift and rapid. States have made it a part of their greater strategy and global need that economic
prosperity must come first and fast for economic expansion to take place, which would
ultimately lead to an ‘economic hegemony’ among smaller or lesser powerful states. This can be
attempted through providing aid or helping in mass development that will not only benefit the
smaller states but also the benefactors as well. This rapid change has indeed been well sought
after and thought out by the big actors. The importance of geo-economics has greatly been
enhanced over geopolitics.

Another importance of geo-economics is that the alliances built on the pretext of geopolitics are
not very steady while those based on geo-economics have proven to be more solid. A typical
example is the triangle between US-Pakistan-China and how there has been an imbalance
between the US-Pakistan alliance while Pakistan-China relation has been steadier. The CPEC is
perhaps to become the next big example of geo-economics over geopolitics when completed.

Economic Perspective
In talking about geo-economics, it becomes essential to take a look at the economic
fundamentals as well as trends of Pakistan and China. It is no big secret that both states are at a
very different level of economic standing; China reigning in the fiscal world and Pakistan still
struggling to find a steady footing. And there is no doubt that both states have an augmented,
strong, pertinent and interesting relation with each other.

There have been many factors which attribute to Pakistan’s economic lag. Resultantly, many
international reports claim that Pakistan has had many economic setbacks as well as
vulnerabilities and due to these factors Pakistan has been pushed backwards in the race of
economic progress. Pakistan has turned into a state which has been heavily indebted by the
international funds. Domestically, Pakistan faces economic setbacks and these accumulate into a
greater problem for Pakistan’s international growth. According to the IMF, Pakistan’s fiscal
growth has been very substandard and that its gross product growth had only an average of 3%.
While in 2015, it has only shown a mild progress of 4.4%, even states like Bangladesh and Sri
Lanka have moved ahead of it.1 Most of these hindrances have been due to a host of problems
that Pakistan faces and has been facing since a long time and especially since its involvement in
the War on Terror. A blowback of that are terrorism and militancy in Pakistan as well as many
armed operations in Swat and Waziristan, the stifling situation in Karachi and the ongoing
1
Editorial, Express Tribune, April 16, 2015.

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sectarianism through which many industries including the tourism industry went through a
shocking setback. Pakistan has great resources and potential to turn into strong economic
grounds but due to the internal displacements and a lack of grip on its trade policies, Pakistan has
not been able to perform in this field as vitally as it could have. This has turned Pakistan into a
state which needs to recover from this lag in the fiscal field.

On the contrary, China has proved its iron-will and great economic strategies by turning into an
economic giant of this century. Over the years, China has managed its economic policies so very
well that it has turned out to be an emerging super power. Indeed most of the big powers are not
only involved in trade with China but also manage their own economies because of China. It
seems that what started as a steady and healthy growth has now turned into surplus growth,
which has enabled China to become a fast growing economy of the world. It has managed well
between 7-10% growth rates. What is important that Chinese five year plan of 2011-2015 entails
that China addresses any economic lags that it may have shown, which means that their desire to
become the number one economic powers has just begun to gain momentum. As per the World
Bank, China has outnumbered many European states in the context of wise economic strategies
and reducing poverty rates.2

Therefore, to draw parallels or perhaps anti parallels, it can be safely assume that with Pakistan’s
falling behind, China took the fast train ahead but this was nowhere seen as insecurity by
Pakistan because of its harboring relations with China. Pakistan and China both knew and still
know how to use this to their advantages. China has fast-growing economy, which means that
since it is ever-growing it needs to expand its economic influence into other parts of the world
and other regions. Here comes geo-economics with its full contextual play. China has had this
scope of influence in many regions; most accounted for among these have been Pakistan,
Afghanistan and other South Asian states.3 Moreover, it has held a massive chain of influence
through economic over-reach in Africa and somewhat in Latin America as well. It has moved
forward in Middle East as well but is very careful in involving itself into that turmoil ridden
region. It worked its way somewhere along the European markets as well when their markets hit
with economic crisis. “According to the report, the China Development Bank (CDB) and the
China Export Import Bank made loans totaling $110 billion to governments and companies in
developing countries in 2009 and 2010.”4 Another such endeavor then leads China towards
Central Asia, which is a resource-rich ground to utilize, expand and make use of.

Since China wishes to further indoctrinate Central Asia with its economic fervor, no time suits it
better than this and no state suits it better than Pakistan, which in one phase acts as a road
towards economic extension. Pakistan’s strategic placement has perhaps a lot to do with this
expansion design. Since it is like an opening for China towards Central Asian States, Pakistan
and CPEC projects are even more important to China. Gwadar is one very important aspect of
this route, which enhances Pakistan’s position in the ‘eco-strategic’ sphere. This placement is not
just important for Central Asia but for Africa and Middle East as well, since China also wishes to
establish a solid economic ground for these regions as well. This will put Pakistan in the center

2
The World Bank Report, ‘China Overview’ available at www.worldbank.org of September 18, 2015.
3
Andrew Small, The China Pakistan Axis: Asia’s New Geopolitics, New York: Oxford University Press, 2015.
4
Laura Reston, “The Untold Cost of Chinese Economic Growth” The Forbes, July 2, 2015.

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of a Greater South Asia which will further give impetus to its strategic placement as it will not
only become a trade hub but also an important transit route.5

China Pakistan Economic Corridor

The MOU for the CPEC was signed in Beijing during Prime Minister Nawaz Sharif’s visit to
China in July 2013. It enabled to cooperate in planning and development of CPEC through
Pakistan’s Ministry of Planning and Development and China’s National Development and
Reform Commission.6 Later, during the visit of Chinese President Xi Jinping to Pakistan in April
2015, various MOUs and agreements worth $46 billion were signed to further the processing of
the CPEC projects.7

The CPEC is part of the Chinese ‘One Belt, One Road’ plan, which was initiated by President Xi
Jinping in 2013. The OBOR policy envisages development of several corridors across the region
to build regional economies to the tune of $2.5 trillion to be benefited by over 4.4 billion people
across 65 countries.8 In this context, CPEC assumes added importance and China wants to
implement the project on fast-track bases on its time-tested relations with Pakistan. Thus CPEC
is the flag-post of success for the OBOR to be fully implemented in the next decade. It is perhaps
the most anticipated as well as feared mega project of the century. This corridor is a combination
of strategy, economy and diplomacy. What distinguish this project are routes, the many sub-
projects which enhance its importance and the financing.

The Pakistani side has prepared a plan for the route where they have divided it into three zones;
the western alignment, the central alignment and the eastern alignment. The western route would
begin from Gwadar and move through cities of Baluchistan, Turbat, Nag, Basima, Sorab,
Panjgur, Quetta, Qalat and Zhob and Dera Ismail Khan, from where it will ultimately lead to
Islamabad. The central route will also start from Gwadar and move through Basima, Khuzdar to
Sukkur, Muzaffargarh, Bhakkar, Layyah and finally reach Dera Ismail Khan. The eastern route
begins from Gwadar and moves towards the Punjab belt and ultimately reaches Islamabad. It is
also planned that the eastern route will link certain Sindh cities like Hyderabad and Dadu from
Multan. There is also a northern route which begins from where all other routes meet; i.e.
Islamabad and go all the way up to Khunjerab.9

These routes hold great importance for the entire region because they are heavily financed. There
are about 51 projects; these mainly constitute energy and infrastructure projects. One important
project under the CPEC is Karot, which is a hydropower project of 720MW. There is possibility
of renewal of Peshawar-Lahore-Karachi railway line along with coal-fire and coal mining
projects at Thar. Another massive project is Gwadar-Nawabshah gas pipeline. At Port Qasim,
construction of a coal base power plant and construction of a solar power plant at Bahawalpur.

5
Andrew Small, The China Pakistan Axis: Asia’s New Geopolitics, New York: Oxford University Press, 2015.
6
‘Pak-China Economic Corridor (News & Highlights)’ Islamabad, Ministry of Planning and Development, Govt. of
Pakistan, available at www.pc.gov.pk accessed on March 30, 2016.
7
‘Xi Jinping, President Peoples Republic of China Visit to Pakistan, 20-21 April 2015’ Islamabad, Ministry of
Planning and Development, Govt. of Pakistan, available at www.pc.gov.pk accessed on December 29, 2015.
8
Nurzhanat Ametbeck, ‘Pakistan in China’s ‘One Belt, One Road’ Initiative’ Journal of Turkish Weekly, May 20,
2015, available at www.turkishweekly.net
9
‘Pak-China Economic Corridor (News & Highlights)’ Islamabad, Ministry of Planning and Development, Govt. of
Pakistan, available at www.pc.gov.pk accessed on March 30, 2016.

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There are plans to the extension of Karakoram Highway linked to Hawelian-Islamabad.

Moreover, a wind power plant at Jhimpir and finally the construction of Gwadar Airport.10 There
is also development of Khunjerab Railway line, extension of Khunjerab railway line to
Hawelian, Hazara Motorway, Ratodero-Gwadar Motorway and a Joint Cotton Bio-Tech
Laboratory as well. And most importantly, the Pakistan-Iran pipeline is to be taken for
construction as well. These are some of the important projects under the CPEC clout.

The final phase is obviously the budgeting and financing, which is a very critical matter and
especially in mega projects like the CPEC where so much is going to be at stake. For the
funding, the Silk Road Co Fund has been set up by China. But apart from this Fund, China Exim
Bank along with China Development Bank have set up a fund of approximately $40 billion. For
the Karot project, Silk Road Fund has presented $1.6 billion. The Silk Road Fund has signed a
‘MoU’ with the Three Gorges Corporation (China) and the Private Power and Infrastructure
Board (PPIB) for many of its energy and hydro projects. The project overall will take up to $46
billion, which will be taken care of by the Silk Road Fund. For the energy projects, ‘$33.7bn;
$5.9bn for roads, $3.6bn for railway network, $1.6bn for Lahore Mass Transit, $66m for Gwadar
Port and a fiber optic project worth $4m.’11

Many local and Chinese companies are involved in the financing and implementation of the
projects, for instance the Thar Coal projects are in the hands of the Sindh Engro Coal Mining
Company, as per the contribution of Chinese investment. For Port Qasim and its projects,
Chinese banks are involved in facilitating the budget. For the solar plant, China Exim Bank
along with the China Development Bank and Zonergy Co Ltd has involvement. China
Development Bank is also the investors in the Jhimpir wind plant. The Chinese loans have been
insured by the China Exports and Sinosure, which is the Credit Insurance Corporation. It is
believed that Sinosure would be charging a fee for debt servicing which has been reserved at
7pc. The interest during the construction has been allowed to be set at the rate of 33.3pc for the
first and second years and 13.3pc for third while 20pc for fourth year.12 UK has also shown its
interest to join and is keen to invest $121 million into the CPEC.13 This will reduce the amount
of debt that Pakistan might end up getting. Importantly, China is not giving any loan or aid to the
Government of Pakistan for the CPEC, instead it is directly investing through its companies;
however, GOP provides the sovereign guarantees.

Regional Economic Development

For many reasons, the CPEC is termed as a major game changer, yet this game changer status is
subject to Pakistani and Chinese commitments. The regional development context can be seen as
multi-dimensional as its reach is going to be for major sectors like the economic and trade
corridor, energy sector, enhancement of intra-regional trade, infrastructure development and also
in socio-economic development.

10
Hussain Ahmed Siddiqi, “CPEC projects: status, costs and benefits” Dawn, July 13, 2015.
11
Ibid.
12
Ibid.
13
Shahbaz Rana, ‘Development collaboration: UK to fund part of corridor project’ The Express Tribune, September
2, 2015.

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For Pakistan, the benefits would be large as through the CPEC it can expand its sphere of trade.
Since Gwadar will become a hub for trade and trade routes, Pakistan can not only ease its way
through Middle East and Gulf but also make sure that these regions and states within these
regions can engage in trade with Pakistan. Local markets will benefit because they can
participate in major businesses. Pakistan will benefit in another way, this route will make sure
that Pakistan gets to cut out on ocean routes through Southeast Asia. For China, the benefits are
also great as China can have an easy way towards expanding its trade into Central Asia; it can
move towards Middle East and Africa in shorter time due to much shorter routes. The CPEC is
also going to benefit other states of Central Asia as well; there will be an axis formation between
Pakistan-China-Central Asia, which will undercut major international businesses and spawn a
large amount in revenues, overall enhancing their economies and building bridges for trading.
Trading will become a more common aspect for developing states which obviously need an
economic push and a booster which CPEC will prove to be.

Much more than the trading and enhancing of economies, this project will work for the benefit in
the energy sector. Pakistan has been lagging in the energy sector and has a shortfall of around 5-
6000MW. This will be a breakthrough for Pakistan as this project commands many energy
projects like the Solar Park and the Wind Power Plants, Hydro Power Plants as well as the Coal
Power generation. This will mean that Pakistan can come close to evading the enormous energy
crisis which has curbed its development for a very long time as these projects are possibly to
generate more than 16,000MW of electricity collectively. Importantly, for China the CPEC is
also a door opening for its energy security. The Central Asian states are resource-rich, which
means that China has designs not just to expand into this region by economic sphere but also to
fulfil its energy security. China is one of the major oil importers of the world and CPEC is going
to help in maintaining routes as well as other requirements at less time and comparatively less
budget. Since oil refineries are also to be set up along with facilities for storage, this project will
also be crucial for the energy sector. Especially with the Iran-Pakistan Gas Pipeline, this will
serve as a mean to end the massive energy crisis in Pakistan.

Through the development of CPEC, it is safe to say that South Asia will benefit and will turn
into a competitive hub for business ventures as well as infrastructure. It is very much on the
surface that with the construction of Peshawar-Lahore-Karachi railway, it will be a major
breakthrough for Pakistan. Apart from this, the building of the actual roads when take place will
augment the entire schemes of infrastructure of Pakistan and through that the region, because it
will also benefit Afghanistan and Iran. It is not too soon to assume that other states of South Asia
can and should benefit from this project because it will be less expensive to them as well.

As for the socio-economic progress is concerned, this will create a state of harmony among the
peoples of all the states and will make it easier for them to communicate and also serve as a
mean of easy transportation. Local labors and businesses will also get a boost through this
common connectivity of populations. Small businesses from Pakistan can easily make way
towards Afghanistan, Iran and Central Asia and then also towards the Gulf. Following the ease
of transportation, there will be a large void filled due to the mass tourist opportunities as well.
The project is likely to serve the local population, business, infrastructural development and
connectivity. In fact, the very success of the CPEC depends on its connectivity with Iran,

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Afghanistan, India and Central Asia for enhanced trade, communication and regional economic
development.

Challenges
The CPEC is no doubt a grandiose project which means that its coming together and the actual
implementation as well as the carrying out of this massive development will generate some
factors of antagonism and challenges. Owing to the magnitude of the entire project, it faces
multi-dimensional challenges. The first set of challenges comes from the implementation of the
entire project, the second set of challenges is domestic imbalances within Pakistan and third set
of challenges comes from international player; these can cause delays for the project and can
severely undermine the entire project if not taken seriously.

Implementation Challenges
There are some challenges of technical nature, which obviously involve some implementation
factors regarding the CPEC; for instance the time-frame of the project and its infrastructure
costs; its overall cost-benefit analysis, the load on the roads as well as railway and Pakistani
exports.

The projected time-frame allocated by both states has been set from 2018-2030. It has by and
large been urged that the project initiates in its given time and speeds from there, yet it has seen
some shorthand delays due to the challenges as mentioned earlier. The actual implementation of
the project went through a lag due to some political tussles as well but both sides have
acknowledged that due to immense importance it must be carried out as soon as possible and it
must then be completed at the earliest. This owes much to the ongoing international power
games regarding this trade route and the expansion towards Central Asia.

One challenge is the massive amount of infrastructure costs and how it will be managed and at
what level of transparency will it be implemented on the project itself. This is more of a
psychological challenge at the moment which is yet to be converted into a possible complex
matter. For the time being many analysts as well as politicians and economists have been
thinking in terms of this challenge but not many are actually vocal about it. Moreover, concerns
are great because of the report on the failure of Nandipur project in Pakistan and some mass
discrepancies attached to it. The Gwadar Port episode; built by China but handed over to
Singapore for operational control. The infrastructure costs of the Metro Bus projects are also
massive, which make the mind evasive of certain key questions about the implementation of the
costs of overall infrastructure that CPEC will endure.

The cost-benefit analysis attached to the project is also important. Are the overall costs going to
outweigh the benefits or is it going to be vice versa is another challenge that has yet remained
unanswered. While most believe that the cost-benefit analysis is in good terms for both states but
how well will the actual project be carried through is another part of the equation. Because if the
costs are far more than the benefits then there will be an implementation halt which will be a
severe blow not only to the project but between the relations of the two states as well.

Then the road construction, planning, carrying through and finally implementation of the roads
as well as railways are massive. It is a serious challenge as to how swiftly will it be carried

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through and how will it be divided between time constraints as well as labor and the available
materials for the projects. These are not yet on the surface of the project but at the moment such
challenges must be thought out before they are carried through. This is in fact a sub part of the
cost-benefit analysis, because the work on these projects is going to be vital as well as massive
and if there are any problems within their concentric circle they must be recognized beforehand
otherwise there will be many loopholes which can be exploited by other powers.

These problems will be obviously vexing for both parties but these are keys to the success of
CPEC and the overall question of good economic relations between Pakistan and China.
Moreover, the international system at the moment compel that the two states must somehow
manage and maintain this mega project if they want to be a part of the ‘survival of strategies and
economies’ factor.

Domestic Challenges
Pakistan’s domestic structure has been somewhat staggering and is prone to security challenges
from all sides, which make the progress of CPEC somewhat vulnerable. The foremost of the
shifty domestic challenges comes from the recently evolved controversy sparked by the
provincial parties over the routes. The government has planned to proceed with the eastern route
first after making some changes to it, that it now cuts through the Punjab-Sindh belt instead of
the Baluchistan-KPK belt, because they believe that it will be fast paced as compared to other
routes, which are going to take a long time as they are present in the Northern belt of Pakistan.
This has obviously been seen by the politicians of that belt as a feature which will favor Punjab
over all other provinces. It is also being suggested that this route will curb the efficiency of the
project because it will inflate the cost of the project artificially. Then there is the proposition that
this is being done by the government because it would then materialize all such costs for its own
benefits, which are not inconclusive of corruption. It is being considered, particularly by the
Baloch parties that this sudden revision of the routes is focused to provide Punjab major benefits
and undercutting those which would have otherwise gone to Baluchistan and KPK.14 They also
claim that this preferred route is not going to be viable at all since it will pass through densely
populated areas and will neither be cost effective nor time managed.15

There is also the energy crisis to be taken into account, which can undoubtedly undermine the
progress and development of the project. This is going to be a costly venture that can challenge
the entire project to be prolonged more than it should. The construction work along with the
infrastructure development can be commenced if there is smooth flow of all energy resources for
the actual work. Yet the shortfall is great and will have to be taken care of, which means that
monetary debt will have to be taken in a surplus amount, making the feasibility of the project to
come under question.

The next major concern is terrorism and militancy, which have been prevailing in Pakistan and
have somehow worked its way into the roots of the state as well. Firstly, the fabric of economy
as well as politics, security and society have been taken over by this malicious storm of
terrorism, either in the face of sectarian violence or extremist elements committing such acts,

14
Shafqat Ali, “Government Unveils CPEC Routes” The Nation, May 26, 2015.
15
Shahbaz Rana, ‘Development collaboration: UK to fund part of corridor project’ The Express Tribune, September
2, 2015.

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which has disrupted the entire security stricture of Pakistan. In a situation like this, the
undertaking of such a mighty project is going to be critical because it is going to be always at the
stake of multiple vulnerabilities all of which attribute to what may happen if it falls prey to
terrorist activities. Secondly, the presence of such extremist actors makes it worthwhile to ponder
that what if this project is to be sabotaged at the hands of these elements in a way that puts the
state of Pakistan accountable and leaves it embarrassed.

Thirdly, it amounts to the safety and security of the routes as well as the Chinese workers and
engineers present in Pakistan. For one thing, there have been past incidents of abductions and
killing of Chinese workers present in Pakistan, which is an alarm bell for both Chinese security
as well as that of Pakistan’s security fabric. In fact, this is going to be a massive undertaking
which Pakistan needs to take into account seriously. For another factor, the protection of routes
is also going to be a big challenge because it needs to be acknowledged that certain
precautionary measures must be taken into account, which starts at the natural disasters and go
on to the protection from land mafias and terrorists as well. Otherwise such a heavy investment
will go to complete waste along with the cherished friendship between Pakistan and China.

External Challenges
The next set of challenges this development project faces is the international antagonism. Two
actors are fervently involved in making somewhat of a menace of the situation. These are India
and the US; two powers which are verily concerned about the sudden shifts in the balance-
imbalance equation along with safeguarding their own economic interests.

The grounds for Indian opposition are primarily due to its fear of the Gwadar Port
overshadowing the Chahbahar Port, and the possibility of a stable Pakistan which will prove to
be a threat to India. The secondary reason is mainly the Pakistan-China bonds, which is proving
to be a very costly endeavor for India in terms of security and balance of power in the region.
Chahbahar Port, which is India’s way to bypass the CPEC and establish economic foothold for
its longing to become the major powers of the region. India’s top most priority is to gain
economic momentum which is being challenged by the Gwadar Port. With the creation of
Gwadar, Chahbahar Port will become a second priority for the international business and this is
obviously unsettling for India. Then the major factor is also the issue of Kashmir, as Pakistan is
considering to link Kashghar with Gwadar; the northern route will cross Azad Jammu and
Kashmir (AJK). The unsettling Kashmir issue has resurfaced as a major problem for this entire
plan. India has shown its reservations to both Chinese and Pakistani leadership, and it can go to
any extent to curb the CPEC.16 In a bid to tamper the project it has also went forward to UAE
and established ties as UAE is another state threatened by the Gwadar Port. What perhaps vexes
the Indian leadership is also the surmounting importance on strategic grounds this route will give
to Pakistan as well as China, two states India neither trusts nor feels secure about.

The US considers CPEC as an underlying challenge to its hegemony and in direct contest with
the balance of power it has maintained until now. The US has had alliance with Pakistan but
even then Pakistan managed its relations well with China, or perhaps it was the other way
around. But the Pakistan-China duo has never been seen in a positive light by the US. For one,

16
Rezaul H. Laskar, ‘India, Pakistan spar over economic corridor passing through POK’ Hindustan Times, June 1,
2015.

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the US wants to downplay the Chinese economic extension towards Central Asia at the cost of a
curbed US influence in that region. This would only make China more solid economy and a
stronger contestant for the US. Then it voices concern regarding the state of security within
Pakistan and the impacts it will have on this development project. The US believes that the
Chinese progression towards Central Asia is actually a strategy aimed at security and military
gains attired as an economic progression, which is the secondary purpose for this development.17
As it is recalled that, “China has watched the US military presence in AfPak since 2001 very
closely. The US ability to project military power dominates China’s threat perception of the
United States and China’s attendant defense planning. China will observe the deployment and
presence of US military forces in Central Asia as key indicators of US intentions toward China
itself, especially in the broader context of the Obama administration’s stated policy of
rebalancing to Asia.”18 But given all that, the US has not overtly fumed over this project as its
major focus is more on curbing the non-state actors but this does not entirely mean that China,
Pakistan and CPEC are the factors which the US is out-rightly ignoring. So to manage its
concerns obviously, the US will partner up with some state which holds a similar tilt towards the
CPEC, for instance India. These two overarching challenges will have to be met by using both
strategy as well as diplomacy.

Opportunities
A closer navigation of all the pros and cons reveals that the prospects and opportunities that
CPEC will bring with it are going to be immense. And perhaps the prospects it has weigh much
more than the challenges it has to face. For instance, with the commencement of this
development work it will not be just Pakistan, China or South Asia that will benefit, one of the
great aspects about CPEC will be that it is going to serve as a bridge between regions. Through
this regional connectivity great benefits can be derived. Regions like Central Asia, Middle East,
Gulf and Africa will find it easy and much more cost-efficient to connect with South Asia. This
will perfectly fit in the geo-economics approach, because a major plus shall be given to the fiscal
schemes between states as well as regions.

All of this will ultimately lead to economic cooperation and that again will not be just limited to
Pakistan or China or South Asian states but it will actually lead up to the economic integration of
a much greater scope. In other words, geo-economic shall work out towards a more global
sphere. It shall of course start with the regional level in South Asia, when it becomes easier for
its states to engage with each other on economic grounds. States which are not part of it can still
benefit from it by utilizing the facilities it has to present, like Sri Lanka, Bangladesh,
Afghanistan. They can also bridge the gap between their own economic lag and work out on
mutual benefits. This will ultimately lead to integration of not just economic scope but widen the
prospects towards telecommunication and infrastructure as well. Ultimately, it will pilot towards
a dream of regional economic connectivity coming true.

But the most potent panorama which CPEC presents is going to be the foundation of a strong
eco-strategic power play. It has been assumed that this route will actually work very well for

17
John Hudson, ‘China Has a Plan to Take Over Central Asia - and America Loves it’ Foreign Policy, September
18, 2015.
18
Andrew Schobell, Ely Ratner and Micheal Beckley, “China’s Strategy Towards South and Central Asia: An
Empty Fortress” Santa Monica CA: RAND Corporation, 2014.

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Islamabad: NUST Publication, 2016, pp.125-138

Pakistan and China in further improving the methods of intelligence sharing between the two. Its
placement is of such importance for Pakistan that it can easily use it for military purposes and
secure its zone of influence and perhaps it can increase this influence as well. After all this has
been characterized as a great game changer and will turn around the fate. It has the potential of
becoming a point through which strategic advantages become attainable, in short it will become
a house of strategic power play from which not just economic strategies can be carried and
spread but also security strategies as well. There is no doubt that this will become a powerful
transit route especially for Pakistan which is in a dire need to kick start on its exports.
Ultimately, it will give a quantum thrust to the economy of Pakistan and present it with nascent
opportunities to re-incorporate its economic policies with its strategy.

On securing the Chinese nationals, Pakistan Army has given security guarantees, Army chief,
Gen Raheel Sharif has categorically stated that ‘I reiterate our resolve that any attempt to
obstruct or impede this project will be thwarted at all costs.19 Later, in February 2016, Army
Chief, Gen. Raheel Sharif visited the headquarters of Special Security Division (SSD), raised
specifically for the CPEC security. ‘He reiterated Pakistan Army’s commitment to provide
security for CPEC and the work force involved terming it to be a game changer for Pakistan.
COAS said that we are totally aware of all campaigns against the corridor and I vow that the
security forces are ready to pay any price to turn this long cherished dream into reality. There is a
need to ensure peaceful environment to be able to push all planned development projects.’ 20 The
SSD is a special 12,000 strong unit, headed by Maj. Gen. Abid Rafique, for the security of the
Chinese engineers working on the 3,000-km long rout. According to the ISPR, SSD would
comprise nine army battalions and six wings of the civil armed forces.21

To overcome the political differences and oversee the CPEC project, an All Parties Conference
was held on May 28, 2015. Consequently, a Parliamentary Committee comprised of 11 political
parties headed by Senator Mushahid Hussain Syed has been formed to ensure the consensus
reached in the APC. The committee would monitor the implementation of CPEC and can make
recommendation for its speedy completion.22

Future of CPEC and Regional Implications

CPEC is a very ambitious project which has large potential in creating a heavy economic order
and ultimately shapes the fate of states and regions. The future that it presents carries large value
but the question remains whether its own future is secure, which at the moment cannot be
answered. As optimism rages within some circles there are also close calls of pessimism
regarding this project. Questions emerge if the negative views outweigh the positives. The
ultimate future depends on a cost benefit analysis of CPEC; is it going to be worthwhile in the
end and will it be all that what was perceived of it.23

19
Mateen Haider, ‘Army’s special security division to protect Chinese workers in Pakistan’ Dawn, April 21, 2015
and ‘Pak-China relations: Army chief vows to protect the CPEC’ Express Tribune, August 1, 2015.
20
ISPR Press Release, PR60/2016-ISPR dated February 19, 2016.
21
‘Army conscious of intrigues against CPEC: Gen Raheel’ Express Tribune, February 20, 2016.
22
‘Government forms multiparty CPEC oversight panel’ Express Tribune, September 10, 2015.
23
Ali Salman, ‘Pakistan-China Economic Corridor: a cost-benefit analysis’ Express Tribune, May 3, 2015.

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Islamabad: NUST Publication, 2016, pp.125-138

At this moment it seems that there is something very close to a New Great Game on the surface,
especially with the inclusion of UK in the project. The factor remains if the reasons for this
inclusion are purely fiscal or more so is this going to be a catalyst in starting a new wave of
interest in this project. And if so, how much will it secure the future of CPEC. This will surely
intrigue other big powers about this massive project but all cannot be positive, because most big
powers are already the economic heavy-weights and knowing that this will somewhere curb their
influence they may try to sabotage it.

Another interesting development is the attention which Iran suddenly has for CPEC, for surely it
will benefit from it as well. The curios factor is that Iran is already allied with India over
Chahbahar Port; even then it has showed willingness for CPEC. In his visit to Pakistan in August
2015, the Iranian foreign minister is reported to have meeting with Chinese officials and shown
Iranian willingness to join the project.24 This shows that other states are also foreseeing the
importance of this project and are willing to be a part of it. This somehow preserves the future of
CPEC; along with the utter resolve of Pakistan, especially the Pakistani Armed Forces and China
who have resolved to make it a reality at any case. Perhaps it has seen to the idea of benefits that
Iran-Pakistan Gas Pipeline will bring not only to Pakistan but perhaps to China as well.

The implications it will have on the region shall be immense because this will surely aggrandize
the economy along with social development, infrastructure and security. Iran has vowed not to
oppose the CPEC and Gwadar,25 it now even showing resolve to join the CPEC, India will
probably be insecure and would be coming up with ways to counter this. For this and other
reasons, they have already started small skirmishes along Pakistani borders and have managed to
further obtain the trust of Afghanistan, which can cause some trouble for CPEC and Pakistan.
But one thing is for sure that CPEC will change the balance-imbalance equation and actually
shift the power, at least a chunk of it, towards Pakistani side. It will be a quest for Pakistan to
prove that it has done all it can to create security for itself and is now ready to show it in other
fields as well.

Conclusion
China and Pakistan have been forging ties since 1950 and 2015 brought positive aspects to this
relationship in the face of CPEC framework signed by the two states. CPEC is a well thought out
framework which will usher great economic/trade activity in the region and will reshape many
economic policies in the coming years. For Pakistan, it presents a catalyst for change and for
China it is means to showcase its over-arching economic reach to the regions for its successful
culmination of ‘One Belt, One Road’ policy.

Even though the project faces many challenges, the opportunities it presents are also massive and
must not be overlooked. How the two states overcome these challenges would manifest their
resolve and the commitment to this project, and how will the major powers respond to this
marvel is yet to be fully determined. But it is for sure that the new age bringing new dynamics of
economics and geography will only give thrust to a new kind of warfare in the shape of CPEC
and OBOR to be the new battleground for competition and rivalries among the states.

24
Kamran Yousaf, ‘Iran not against CPEC, Gwadar port: Jawad Zarif’ Express Tribune, August 13, 2015.
25
Peer Muhammad, ‘Iran agrees to consider being part of CPEC’ Express Tribune, September 2, 2015.

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