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China-Pakistan Economic Corridor(CPEC)

What is CPEC?:China-Pakistan Economic Corridor (CPEC) is a major and pilot project of the Belt
and Road Initiative which is proposed by Chinese President Xi Jinping. CPEC has
become the framework and platform for comprehensive and substantive cooperation
between China and Pakistan. CPEC is the important consensus reached by the leaders of
both countries. The leaders of our two countries have attached great importance as well as
rendered active promotion to the construction of CPEC. It has also won across-board
support from the political parties and peoples of our two countries, which provided
profound and solid public support for CPEC.
In May 2013, Chinese Premier Li Keqiang proposed the initiative of CPEC during
his visit to Pakistan, which immediately got positive response and support from the
Pakistani government. In July 2013, during Prime Minister Sharifs visit to China, an
MOU was signed to start work on CPEC. Up to now, a series of major projects are being
implemented in a steady manner, and are under smooth construction in general. CPEC
has gradually entered into the state of full implementation from planning, which is
playing an increasing role in leading and promoting the bilateral substantive cooperation
between China and Pakistan.
CPEC is of great significance to the development of China-Pakistan all-weather
strategic cooperative partnership and the building of the community of shared destiny
between China and Pakistan. CPEC will provide new opportunities, new vision as well as
new impetus to China-Pakistan relations. CPEC is facing Pakistan as a whole and will
bring benefits to Pakistani people. It will effectively promote the economic and social
development of Pakistan. The construction of CPEC will enhance connectivity and
integration of development strategies of China and Pakistan, which is in the fundamental
interests of our two peoples. Both sides are committed to building CPEC and completing
a number of major projects with high quality and on schedule, so as to achieve win-win
results and bring benefits to people in China and Pakistan as well as other countries in the
region.

CPEC: A game changer:-

Besides India, it is the UK which is not comfortable with the growing relations
based on the Pak-China economic corridor. Background interaction with UK policy
makers in Islamabad and elsewhere have revealed that Britain considers the ongoing
cooperation between the two neighboring countries as an act of selling its soul in return
for USD 45 billion. What constitutes political consternation in Britain is that at the end of
the day Pakistan can realign its political and economic focus on China, instead of UK and
EU.

In order to address the foregoing ill-conceived comprehension on the part of


Britain and other EU states, we need to clarify that the China and Pakistan Economic
Corridor (CPEC) project symbolizes the growing mutuality of interest and the vision of a
shared politico-economic future on the part of two neighboring countries that has nothing
to do with UK-EU fears. It creates a new framework of interaction on the basis of
economic connectivity and regional cooperation which will have far reaching positive
implications for the two countries as well as the adjoining regions, as economic uplift of
any region or country has the potential to send peace and development signals across the
continents. What Pakistan needs to impress upon its European detractors is that instead of
radicalism, we need to export peace and prosperity.
The proposed CPEC recognizes the new realities of global and regional politics
by cultivating a more systematic, up-graded and need-based interaction for socioeconomic, industrial, energy and trade development. This also provides an opportunity to
china and Pakistan to improve their interaction with Central Asia, West Asia, the Middle
East and Europe. Both Pakistan and China are expected to gain from the proposed
connectivity through highways, railways, sea lanes, energy pipelines and electricity
transmission lines. They will equally contribute to socio-economic development of other
countries that become part of these arrangements.
Chinese Premier Li Keqiangs decision to include Pakistan in his first foreign visit
in May 2013, after assuming office in March 2013, underscored the importance Chinese
leadership attaches to Pak-China relationship. The visits timing significantly indicated a
process of political-economic decision making in china as it took place immediately after
elections in Pakistan.
The visit of Prime Minister Muhammad Nawaz Sharif to China in July, 2013
marked a new phase in the development of the relationship by putting economic
cooperation and connectivity squarely at the centre of the bilateral agenda. During the
visit MoU on China-Pakistan Economic Corridor (CPEC) was signed. The aim of MoU is
to enable the two governments to cooperate in the planning and development of the
Economic Corridor-based relationship, facilitate and intensify economic activity along
the corridor map. The MoU further envisages development of long term plan for
economic corridor up to 2030.
China and Pakistan are not expected to face any political problem in expanding
their mutual connectivity as they have developed strong mutual trust through the
multifaceted bilateral interaction over the last six decades. This experience demonstrates
that there are no contradictions in the strategic and political goals of Pakistan and China,
and they have found out over the years that their relationship is mutually rewarding.
There is unanimity of views among various political parties in Pakistan to strengthen
Pakistans ties with China.

A series of Meetings of Joint Cooperation Committee (JCC) and Joint Working


Group on Transport Infrastructure, Energy and Planning were held, followed by the
findings and recommendations of Working Groups Meeting wherein a list of priority
projects/Early Harvest Project (EHP) of Pak-China Economic Corridor (CPEC) have
been finalized during 3rd JCC meeting which was held on August 27, 2014.
The first progress is on the long term planning: the outline for long term planning
of China-Pakistan Economic Corridor has been prepared on the basis of understanding
reached in the 2nd JCC meeting on the basic contours of the long term plan and
experience in the context of economic corridors development. It identifies the key areas
and major projects including spatial structure and functional zones, construction of an
integrated transport system, IT connectivity, energy cooperation, industries and parks,
agriculture development and poverty alleviation, cooperation in livelihood areas and
people to people communications.
The second progress is on Transport Infrastructure Projects: the salient features of
progress on early harvest projects include CPEC transport planning, road map of future
work and port related issues which are the key elements of Transport Infrastructure
Projects. It has been agreed that further efforts are still required to increase the pace of
work on implementation of Early Harvest Projects (EHPs) in rail and port sectors. Both
countries are stressing the importance of sustainable development of the Gwadar Port and
Balochistan region. The primary focus is on associating the local community in the
development initiative at Gawadar and building public ownership through social and
economic development project.
Historically, sea waters have always been used as a trade route since long and the
modern trade has further enhanced the need of trade through waters. Pakistan being a
gateway to the strategically important Strait Of Hormuz in the Indian Ocean, blessed
with hidden treasures and bordering two Islamic Republics, Afghanistan and Iran, has
always been a centre stage for regional politics. The emergence of Gawadar Port as a
vibrant regional economic hub has provided an opportunity to regional and extra regional
powers to develop strategic and infrastructural connectivity with Gawadar Port. Geopolitical environment is considered as important factor influencing the development of
human society. The most critical element of the environment is the sea, which occupies
almost three-quarters of the surface of earth.
The location of Gawadar port gives it two advantages; it is a warm water port
making it available for operations throughout the year.
Secondly it is to be a deep-sea port, which is a reality on the earth and allows
large-scale trade and economic activity. Gawadar can be a trading point for all the
countries, making it the maintenance and fuelling hub. The construction of the Gawadar
port has recently been handed over to china which has long term strategic interest in the
port. The Chinese economy, which has been growing for past three decades, is expected

to become the worlds largest economy in future. Also the presence of US forces in the
region especially the Strait of Malacca through which more than 80% of trade passes, risk
has increased for the Chinese economy. They are planning to use the Gawadar port in
case of a military threat or war in the region. The United States will shift more than 70%
of its naval fleets into Asia Pacific.
The third progress is on the Energy Sector: both sides have agreed on the
developments relating to energy planning. A meeting of the energy planning expert group
was held in the first week of August, 2015 where discussions focused on energy
development plan, guiding principles of power planning, power grid development and list
of Priority Projects like Gaddani Power Park and other energy resources so as to reduce
energy imports. There was agreement amongst experts that hydropower, domestic coal,
wind power and solar power should be developed and utilized actively.
The list of priority in energy sector projects calculates a total capacity of 10400
MW of power generation in Pakistan at an estimated cost of $15,506 million. Both the
sides have entered in to serious deliberations to evaluate return on the projects and risk
management. The primary focus is thermal and wind power in order to put them in to
operation by the year 2017-18 and the hydro power projects are envisaged to be
operational around 2020.
The political determination to implement various aspects of the projects has to be
demonstrated time and again so that the bureaucrats and others involved in its different
phases do not slack. It is important to make sure that all Memorandums of Understanding
and any new policy arrangements that may be agreed in the future by China and Pakistan,
are implemented in their true spirit without any delay.
Main

Projects under CPEC:-

Transportation Infrastructure:
Project Name

Company Name

Status

KKH PhaseII (HavelianThakot Section), 120 km

China Road and


Bridge Corporation

Under construction

Karachi-Lahore Motorway
(Sukkur-Multan Section),
392 km

China State
Construction
Engineering
Corporation Limited

Under construction

Joint Feasibility Study for


Establishment of

China Railway

Government
Framework

Havelian Dry port

Agreement Signed

Upgradation
of
ML-1
(Multan-Lahore Section,
339
km;
HyderabadMultan Section, 749 km;
Kemari-Hyderabad
Section, 182 km)

TBD

Feasibility Study
Completed

Khuzdar-Basima Highway
(N-30), 110 km

TBD

Feasibility stage

KKH Phase III (RaikotThakot Section) 280km

TBD

Feasibility stage

D.I.Khan-Quetta Highway
(N-50), 533km

TBD

Feasibility stage

Project Name

Company Name

Status

2x660MW Port Qasim


Coal-fired Power Plant

Power China
Resources Ltd.

Under construction

2x660MW Sahiwal CoalFired Power Plant

Huaneng Shandong
Ruyi (Pakistan)
Energy (Private) Ltd.

Under construction

4x330MW Engro Thar


Coal-fired Power Plant
and Surface Mine in
Block II of Thar Coal Field

China Machinery
Engineering
CorporationCMEC

Under construction

900MW
Quaid-e-Azam
Solar Park in Bahawalpur

Zonergy Company
Ltd.

Under
construction/First
300MW completed

UEP Wind Power

Under construction

Energy:

100MW

Jhimpir

Wind

Farm

(PVT) Ltd.

1100MW Kohala HydroPower Station

China Three Gorges


South Asia
Investment Ltd.

Negotiation in
Process

2x660MW Muzaffargarh
Coal-fired Power Plant

China Machinery
Engineering
Corporation (CMEC)

Feasibility stage

Gawadar Port City:


As part of the China-Pakistan Economic Corridor, and by
extension, that of the Silk Route Initiative, Gawadar holds pivotal
importance. The port city of Gwadar is a hub of connectivity for the
Corridor and an indispensable interchange for the Silk Route. Through
its deep-sea port, Gwadar has helped China and Pakistan realize the
goal of a 21st Century Maritime Silk Route, which will benefit not only
China and Pakistan, but also Central Asia by becoming the regions key
entry port.
The China-Pakistan Economic Corridor, however, plans not to
limit Gwadar to a connecting port only, but enriches it as an economic
hub that will cater to the local population by improving their
livelihoods. Projects planned for the Gwadar Port City aim at
capacitating Baluchistan to its full economic, social, technical, and
energy potential, and closely integrating it within the economic
framework of Pakistan and China.

Project Name

Company Name

Status

Gwadar
Eastbay
Expressway
(19
km,
connecting Gwadar Port
to
Mehran
Coastal
Highway)

TBD

Government
Framework
Agreement Signed

Gwadar
New
International Airport

TBD

Government
Framework

Agreement Signed
Fresh Water Supply,
Wastewater Treatment
Plants for Gwadar City
Gwadar Free Zone

Gwadar Primary School

Gwadar
Friendship
Upgradation

TBD

Feasibility stage

China Overseas Ports


Holding Company
Ltd. (COPHC)

Under construction

China
Communications
Construction
Company Ltd.

Completed

TBD

Feasibility study
under way

Pak-China
Hospital

Industrial Cooperation:
In addition to enhancing economic cooperation and connectivity
across the region, the China-Pakistan Economic Corridor serves to
enhance industrial cooperation between difference parts of Pakistan as
well.

Projects aimed at engaging various regions of Pakistan into


industrial cooperation through resource mobility, economic integration,
and information connectivity are stated below.

Project Name

Company Name

Status

Gwadar-Nawabshah LNG
Terminal and Pipeline,
700 km

China Petroleum
Pipeline Bureau

To be inaugurated

Haier & Ruba Economic


Zone Phase II

Haier Electrical
Applications

Feasibility stage

Corporation Ltd.
Optical Fiber Cable from
Rawalpindi to Khunjrab
Lahore
Orange
Metro Train

Line

Huawei Technology
Co., Ltd.

Under construction

China Railway-China
North Industries
Group Corporation
(CR-NORINCO)

Under construction

Special Zones of CPEC:The main zones of CPEC are as previously discussed in details are given as follows:
Transportation infrastructure
(1) Roads Construction
(2) Railway Track Construction
Industrial Development
Development of Gawadar Port City
Energy Projects to overcome Energy Crisis in Pakistan
Effect on Employability of Country:CPEC is a game changer project which will lift millions of Pakistanis out of
poverty and misery. The project embraces the construction of textile garment, industrial
park projects, construction of dams, the installation of nuclear reactors and creating
networks of road, railway line which will generate employment and people will also take
ownership of these projects. Fully equipped hospitals, technical and vocational training
institutes, water supply and distribution in undeveloped areas will also improve the
quality of life of people.
China Pakistan Economic Corridor will help build a robust and stable economy in
Pakistan and will create a significant opportunity for Pakistan to revive its industry and
advance its economic interests. It will also help in overcoming the psychological barriers
to flows of foreign investment from other sources. Despite its restrictive economic
regime, over 150 private equity funds, foreign and domestic, are active in India. Only
three or four such funds are dedicated to investing government, with the participation of
the private sector, to encourage foreign direct investment in Pakistan is indispensable.
Finance Minister Ishaq Dar said war phobia can also be defeated through economic
development. Peace and prosperity can be achieved with economic advancement. This
project will go beyond regional ambits to bring about enormous changes not only to the
national economies of the benefiting states but also to the economics of the people at the
grassroots level.
Key Challenges to make CPEC Successful:-

The CPEC project while it is underway, presently also faces a variety of challenges that
seek to undermine its beneficial impact for all involved. The threats can be categorized
into internal and external, as well as, divided along political, economic and security
themes.

Political:
Political instability is the greatest impediment to any project around the world and the
CPEC is no exception. In September 2014, Chinese President Xi Jinpings visit to
Pakistan was cancelled in light of the sit-ins in Islamabad led by Imran Khans
Tehreek-e-Insaaf (PTI) and Pakistan Awami Tehreek (PAT). While the issue has been
resolved between the government and the PTI through a judicial commission and the
PTI has played an appreciative role in calling for national support for the CPEC, the
danger has not eroded. All sides should refrain from initiating a course of action that
could lead to impairment of this nation building enterprise.
Iran has a stake in the CPEC through the proposal to link the IranPakistan
gas pipeline with China, which has been described as a common interest
between the three countries.
Recently a new course of action has been initiated by some sub-nationalist parties that
are alleging a change in the routes by the Federal government, that would only favor
the eastern provinces of Pakistan and deprive the western provinces. Despite this
allegation meeting no facts on the ground, the Pakistani and Chinese governments
have tried to allay the fears, by interacting with the political parties that are making
the allegations. There is also a stark need to engage the common man on the ground
to stop the public from taking part in acts such as agitation that could halt work on the
CPEC.
Political challenges also exist on the International front. There is talk of India
approaching a diplomatic route to stop the construction of the CPEC in GilgitBaltistan, which it considers to be an integral part of its territory. The USA also has
been apprehensive of Chinese strategic access to the Arabian Sea and its presence in
the region. It has reportedly tried numerous times to dissuade Pakistan from involving
China in the development, including advocating the port authority of Singapore as a
suitable operator for Gwadar, at one time. Its significance as a provider of military
and financial aid to Pakistan, as well as the second largest export destination after the
European Union, could make it difficult to ignore. There is a stark need to engage in a
diplomatic campaign to hold off any such attempts by foreign governments.

Economic:
As an economic enterprise, for the CPEC, the greatest challenge comes from
competitors. The most significant is the Iranian port of Chabahar. India intends to
invest significantly ($85 million) in the development of Chabahar, which lies a few

miles away from Gwadar and is part of its efforts for access to landlocked
Afghanistan and Central Asia while bypassing rival Pakistan. Chabahar will
effectively be a way station for energy imports coming from the Gulf region and
destined for Afghanistan and Central Asia. It will also be a gateway to the Middle
East, and possibly Europe, for exports originating from Afghanistan and Central Asia.
While the Chabahar project is not yet started due to ongoing talks on the Iranian
nuclear issue, the Gwadar port has already become functional. However there is no
need for contention between these two ports. Iran has a stake in the CPEC through the
proposal to link the IranPakistan gas pipeline with China, which has been described
as a common interest between the three countries.
Also the Indian involvement in Chahbahar is linked to Pakistans refusal to allow
India access for transit to and from Afghanistan, so India sees Iran as the next-best
option. If Pakistan extends transit permissions to India, then India may not be
interested in building up Chahbahar. In recent years India has been particularly active
in engaging Central Asian states for the sake of pursuing energy deals. India can be
easily accommodated via the CPEC itself through eastern interface in Punjab and
Sind and transformed into a stakeholder in the success of both Gwadar and the CPEC.

Security:
Security concerns remain the most primary challenge to the CPEC as yet. An arc of
militancy stretches from Xinjiang to Gwadar consisting of groups like the East
Turkestan Islamic Movement (ETIM), Tehreek-e-Taliban Pakistan (TTP), Lashkar-eJhangvi (LeJ), Daesh (ISIS),Balochistan Liberation Army (BLA), Balochistan
Liberation Front (BLF) and militant wings of political parties. Most of these groups
may not have an enmity with China itself but rather intend to use attacks on Chinese
interests like the CPEC as a means to deal with the Pakistani state. There are also
indicators of foreign intelligence agencies engaged in espionage against the CPEC. In
fact, reports of formation of a specific desk to deal with the CPEC at the Research
and Analysis Wing (RAW) have been widely circulated.
Security concerns remain the most primary challenge to the CPEC as yet. An
arc of militancy stretches from Xinjiang to Gwadar consisting of groups like the
East Turkestan Islamic Movement (ETIM), Tehreek-e-Taliban Pakistan (TTP),
Lashkar-e-Jhangvi (LeJ), Daesh (ISIS),Balochistan Liberation Army (BLA),
Balochistan Liberation Front (BLF) and militant wings of political parties.
Inside China, Xinjiang has been classified as the soft belly of China due to low
development and ethnic tensions primarily concerning the Muslim Uyghur
population. For the Chinese the ETIM is a manifestation of the three evils of
terrorism, extremism and separatism. The ETIM has been further augmented by

training from ISIS where instances of Uyghur militants being inducted in training
camps have been seen.
The Xinjiang Uyghur Autonomous Region (XUAR) emerged as a major trouble spot
domestically for China following violent riots and terrorist attacks within Xinjiang
and as far away as Kunming and Beijing. Faced with this unrest, Beijing implemented
a two-pronged strategy. First, the central government unleashed a severe crackdown
on terrorist activities, resulting in mass arrests and trials. Second, Beijing doubled
down on its previous strategy of promoting economic development in the region as a
way of addressing ethnic tensions. The central government recognizes that
unemployment and poverty among Uyghur is a major driver of discontent.
Pakistan Chinese friendship has been hailed as higher than the mountains, deeper
than the oceans, sweeter than honey, and stronger than steel . As Chinas friend, it is
up to Pakistan to counsel it on appropriate ways to deal with issues of the Uyghurs,
who along with other Chinese have a deep connection with common Pakistanis. Some
measures to promote more integration of the Uyghurs go against Islamic teachings,
which may aggravate the situation. Measures that accommodate religious values will
go a long way in battling militancy in Xinjiang and breaking the hold of outfits like
ETIM.
Inside China, Xinjiang has been classified as the soft belly of China due to low
development and ethnic tensions primarily concerning the Muslim Uyghur
population. For the Chinese the ETIM is a manifestation of the three evils of
terrorism, extremism and separatism.
Inside Pakistan itself a range of actions threaten the CPEC project. Measures by
militant outfits like kidnapping/murder of Chinese personnel, kidnapping/murder of
Pakistani personnel, bombings of installations, acts of violence in major Pakistani
cities, are a major source of danger. The recent horrifying collective murder of 43
people belonging to the Ismaili school of thought in Karachi is a means of sowing
instability in the country. As Ismailis are a major portion of the population in GilgitBaltistan, this could raise sectarian strife impairing the CPEC project.
Balochistan remains the Achilles heel of the CPEC. Baloch ethno-nationalist
separatists remain the keenest opponents of Chinese investments in the province. In
2006, three Chinese engineers lost their lives in an attack claimed by the BLA in Hub,
a town west of Karachi. A week before the Chinese presidents visit, at least 20
laborers were killed in cold blood by BLF gunmen in Turbat. Separatists routinely
attack power and energy transmission lines asides from other acts of terrorism inside
Baluchistan.
Balochistan remains the Achilles heel of the CPEC. Baloch ethno-nationalist
separatists remain the keenest opponents of Chinese investments in the province.

In order to specifically counter security threats to the CPEC, the Pakistani


government plans to establish a Special Security Division for Chinese workers. The
ETIM and its main ally, the TTP, have been broken by successful COIN operations.
However more could be done to improve security measures. Balochistan is the key to
the success of the CPEC and the strategic goals associated with it. The government
must engage the local dissidents in a dialogue process, and bring them back into the
national mainstream. A combination of Diplomacy, Intelligence networks, Economic
measures and Military tools can be used to counter foreign designs.
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.