CPEC: From Himalayas to Gwadar and Beyond

China-Pakistan Economic Corridor (CPEC), a framework of regional connectivity as part of ‘One Belt-One Road’ initiative, has the potential to result in regional economic integration through infrastructural development. It is not only a win-win situation for the primary beneficiaries, China and Pakistan but it also has a capacity to cater the needs of the neighbours including Afghanistan, Iran, India and landlocked Central Asian States. On one hand, CPEC will stimulate Pakistan’s economic growth while providing shortest and economical trade route to China, the fastest growing economy in the world.

CPEC is a fate changing development project for Pakistan but it is a part of China’s long-term ambitious plan which seeks to physically and economically connect China to the markets in Asia, Africa and Europe. This way CPEC will link China with half of the world’s population by serving as a bridge of trade and connectivity. Hence, it will enhance the cooperation among well integrated region of shared destiny, development and harmony.

China Pakistan Economic Corridor is a 3,218 kilometer long route consisting of highways, railway lines and oil and gas pipelines, which will be completed over the next decade. The estimated cost of CPEC is projected as US$75 billion, out of which an amount of around US$46 billion will guarantee that the economic corridor develops into an operational form by 2020. The remaining portion of the multi-billion dollars investment will be allocated to the energy generation projects, building of economic zones and related infrastructural development.

The CPEC has been divided into multiple phases, the first phase is the construction of Gwadar International Airport and the development of Gwadar Sea Port. This is estimated to be completed by the end of year 2017. Besides building new highways and railways, CPEC grand plan includes the extension of Karakoram  Highway and the placement of fiber-optic cable which will ensure better communication as well as monitoring of the CPEC project. According to a study, if all the planned projects are successfully executed, the fiscal value of those projects will exceed all the foreign direct investments in Pakistan and will equate 17 percent of Pakistan’s 2015 GDP. Moreover, CPEC is expected to create around 700,000 employment opportunities during the period between 2015–2030 and will contribute up to 2.5 percentage points to growth rate of Pakistan.

The much anticipated US$45 billion CPEC will enter Pakistan through the footholds of the beautiful Gilgit Baltistan region in the north that will connect Xinjiang, China’s western province with the world through Gwadar port city in Pakistan’s southern province, Balochistan. This mega infrastructural development project is destined to take the already strong bilateral relationship between China and Pakistan to new heights. CPEC is a beginning of a new journey which is expected to revolutionize Pakistan’s economy and help fill Pakistan’s power gap.

The emerging power dynamics in the regional strategic diaspora pose serious challenges to the CPEC. However, if these challenges are effectively overcome, it will lead the region to economic interdependence which could serve as a milestone for shared peace and economic development for the world at large. Including a huge investment of $46 billion which has now been extended to $54 billion, the project is the channel by which China can have access to the quickest and cheapest availability of energy from the Middle East though bypassing the Straits of Malacca and the troubled South China Sea. China committed such a large investment only after ensuring the guaranteed safety of transported goods from Pakistan’s Military. The deployment of thousands of army troops, maritime security by Pakistan Navy, air protection by Pakistan Air Force, satellite monitoring, alignment of civil and military leadership for the CPEC projects, work speed, transparent development methods and the overwhelming welcome by Pakistani people encouraged the Chinese authorities to broaden the project further with increased investments.

Pakistan holds a key strategic position in the region. On its eastern side lies India which is one of the biggest emerging market in the world. Its western side borders with war-torn Afghanistan which is among the most troubled zones in the world. China, the most economically dominant and the second largest economy, is situated on the northern side touching the heights of Himalayas. Pakistan’s western border connects with Afghanistan, Iran and the Gulf states. Moreover, the Strait of Hormuz from where one-third of the world’s oil passes through, lies near the Gwadar port. Therefore, Pakistan is serving as a pivotal bridge between the crossroads of oil rich countries and the largest economies.

Chinese president Xi Jinping announced “One Belt, One Road” (OBOR) policy in 2013, which is a long term transformational strategy connecting Asia, Africa and Europe through an integrated network of highways, ports  and railways. China took this initiative to broaden its access to global markets as China is the second largest economy and an emerging superpower. “One Belt, One Road” project mainly consists of two components. One inspired by the ancient ‘Silk Route’ is called the “New Silk Road” and the other is “Maritime Silk Road” which connects China to Southeast Asia, Indonesian archipelago, Arabian peninsula to Egypt and all the way to Europe. The China-Pakistan Economic Corridor is one of the key components of the global “One Belt, One Road” policy.

Due to Gwadar’s strategic and maritime importance, the CPEC was under consideration since long. In 2013, Chinese Premier Li Keqiang paid an official visit to Pakistan when both the countries signed Memorandum of understanding (MoU) for handing over the operations and development of Gwadar port to china. 2015 is marked as a landmark period in the history of the two countries when President of China, Xi Jinping made a historic visit to Pakistan. During that visit, Pakistan and China mutually signed 51 MoUs worth 46 billion dollars under China-Pakistan Economic Corridor project. It was the largest ever Foreign Direct investment in Pakistan’s history. It included development of huge infrastructure such as roads, restructuring of railways, energy generation projects, economic and industrial zones. The implementation of CPEC has already started from Pakistan’s deep sea port, Gwadar to China’s Xinjiang province, Kashgar.

In May 2017, China hosted a grand international summit ‘Belt and Road Forum for International Cooperation’ in Beijing devoted to the OBOR project in relation to land and maritime routes across the Eurasian region. The Belt and Road Forum highlighted the significance of economic, social and environmental prosperity for all the countries participating in One Road-One Belt project. Opening the most magnificent international summit in Chinese diplomatic history, President Xi Jinping said that OBOR is a global project which will benefit all the countries across the globe. “The pursuit of the Belt and Road Initiative is not meant to reinvent the wheel. Rather, it aims to complement the development strategies of the countries involved by leveraging their comparative strengths.”

The most important part of the international summit was the meeting of the Chinese and Pakistani leaders, which resulted in agreements adding almost $500 million in deals to the already pledged $57 billion for the China-Pakistan Economic Corridor. During the side line meetings of the Summit, Pakistani Prime Minister Nawaz Sharif held meetings with the leaders of Uzbekistan, Kazakhstan and Kyrgyzstan for proposing them to join hands with Pakistan in the CPEC project.

The countries of resource rich but landlocked region of Central Asia have always sought access to regional markets of India, China and Pakistan besides the West Asian countries. In this connection, CPEC serves as a strategically important opportunity for Azerbaijan, Kyrgyzstan, Uzbekistan, Turkmenistan, and Tajikistan to transport their goods for marketing them to more competitive regional and global markets. Pakistan can also access the rich resources of Central Asian countries through Afghanistan to fulfill its energy needs, while transporting goods to Central Asia.

China has long remained a key driver of investment and infrastructural construction in Central Asia ever since the mid 90s. Chinese companies have built roads, bridges, railways, and telecommunication networks in Kyrgyzstan, Tajikistan, and Uzbekistan.

 Chinese economic strategy for Central and South Asia is based upon the proposition that bringing economic prosperity in the Central and South Asian region will help neutralize the security threats posed by regional radical Islamist groups. CPEC is one extension of the same economic strategy. Moreover, by linking Central Asian states with CPEC, China plans to explore new markets carrying significant growth capacity in the region along with enhancing goodwill among the neighboring countries which will ensure lasting peace due to the shared risks and opportunities for the regional economies.

In this regard, several Central Asian states have warmly welcomed and appreciated the implementation of the CPEC project. President of Turkmenistan, Gurbanguly Berdimuhamedov held meetings regarding CPEC with Pakistan’s former-Prime Minister, Muhammad Nawaz Sharif in March 2016. Mr. Berdimuhamedov emphasized the role the project will play in promoting multilateral progress and prosperity through trade and development. Turkmenistan has signed agreement with Pakistan to use the newly developed deep seaport of Gwadar, which provides Turkmenistan with access to the Indian Ocean.

Besides other Central Asian countries, Tajikistan is also seeking access to Pakistan’s Gwadar port, which would serve as a junction to link the landlocked Tajikistan with the rest of the world. However, presently there is an absence of required connections, such as roads and railways, between Tajikistan and Pakistan. It is, however, planned that Tajikistan may provide a road connecting Pakistan with the rest of Central Asian states through its Murghab province which will require construction of a highway, because of Tajikistan’s mountainous geography. In this connection, President of Tajikistan Emomali Rahmon and the Ex-Prime Minister of Pakistan, Muhammad Nawaz Sharif jointly approved three highway projects connecting their countries which ultimately will be connected to the CPEC project.

Uzbekistan is also looking for a participation in CPEC, which will not only boost its exports to its global clients but also prove economical in terms of its imports, by transporting its products through the much cheaper and faster network of roads and railways. Deputy Prime Minister of Uzbekistan Ulugbek Rozukulov adopted a similarly supportive position while he made an official visit to Islamabad in December 2016. The inclusion of energy-rich Uzbekistan in China Pakistan Economic Corridor may almost double Pakistan’s energy production over the next years, providing the country with sustainable access to low cost electricity.

Like the rest of Central Asian countries, Kazakhstan is also seemingly desirous of launching joint projects related to infrastructure and energy under the CPEC project. In the year 2015, Prime Minister of Kazakhstan, Karim Massimov emphasized the significance of CPEC project for the growth and prosperity of Kazakhstan and the whole Central Asia.

Although, CPEC ensures a promising future for the participating countries’ economic growth, the regional security issue still seems to be a major area of concern for China as well as Central Asian countries. The major barrier in strengthening multilateral relations between Central Asian nations, Pakistan and China is the aggravating situation in the neighbouring  Afghanistan. The transport of goods and energy products from Central Asia to Pakistan is primarily dependent on peace and prosperity in Afghanistan, because the shortest possible route for Central Asian states to connect with the seaport in Gwadar, Pakistan would need to traverse through Afghan territory.

Through China-Pakistan Economic Corridor, the enhancement of geographical connectivity including improved roads, railways and air transport network with fair and frequent exchanges of goods as well as people to people contact will enhance understanding through regional and cultural interactions. The boost that economies of nations will see through increased activity of huge volume of trade and businesses, transport and production of energy will ensure well connected and deeply integrated region of shared prosperity, growth and development.

China Pakistan Economic Corridor is one step of the journey towards socio-economic regionalization in present day’s globalized world.

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About Amna Malik 61 Articles
Author is the President, Center of Pakistan and International Relations (COPAIR) and Editor-in-Chief of ‘Mélange int’l Magazine’ and ‘ The Asian Telegraph’.