PAK CHINA ECONOMIC CORRIDOR

INTRO
TheChinaPakistan Economic Corridor(CPEC)is a
ongoing

developmentmegaprojectwhich

aims

to

connectGwadar portin southwestern Pakistan to Chinas

northwestern

region

ofXinjiang,

via

network

highways, railways and Pipelineto transport oil and gas

of

AIM
To brief regarding China Pakistan Economic Corridor
(CPEC) imp and progress while analyzing its benefits to
its stake holders

SEQ
Hist of Pak-China relationship
Hist of Gawadar Port
Backgr of CPEC proj
Imp of CPEC
Routes of CPEC
Major projects under CPEC
Benefits of CPEC
Controversies in CPEC

HIST OF PAK-CHINA
RELATIONSHIP

HIST OF PAK CHINA RELATIONS

PakistanChina relations began in 1950
Strategic alliance was formed in 1972 and economic cooperation began in 1979
China has invested

$20 billion in various energy and

mega infrastructural projects in Pakistan

HIST OF GAWADAR PORT

HIST BACKGR OF GAWADAR PORT

On 8 September 1958, Prince Karim Agha Khan purchased
Gawadar Enclave for Pakistan from Oman for worth $3 Million
In 1993, The government of Pakistan conceived a plan to
develop Gawadar into a major port city
Phase-1 of Gawadar was completed in 2007, and inaugurated
on 20 March 2007

BACKGR OF CPEC PROJECT

BACKGR OF CPEC PROJECT

Vision for the economic corridor stretches far back as
President Musharraf era
Project was proposed by Chinese premier Li Keqiang
during his visit to Pakistan in May 2013
Pak-China Economic Corridor was inaugurated in
Islamabad on 27 August 2013
On 20 April 2015, Pakistan and China signed an agreement
to commence work on the $46 billion proj named CPEC
that incl various energy and infrastructural / dev projects

IMP OF CPEC

CPEC IMP TO CHINA

Chinese industries are facing problems to compete in global market due
to high transportation cost and delivery time
China is using a longest way due to which transportation cost and time
increases, which gives a competitive edge to competitors e.g. Japan,
USA
It would decrease the travel distance and cost greatly from China to Gulf
Even if China uses CPEC for 50% of its Oil supplies then it will save $6
Million every day, almost $2 billion every year
Independent path from India and USAs interference
New business market in another country

CPEC IMP TO CHINA

2000
KM

12900
KM

CPEC IMP TO PAK

Req of Strategic and economic trade routes
Higher poverty rate
Poor growth indicators
Energy starved country
Meagre rd infrastructure
Unstable business envmt

GEO STRAT IMP

CPEC ROUTES

ROUTES OF CPEC

LONG
LONG
TERM
TERM
ROUTE
ROUTE
ROUTE
ROUTE
1
1
ROUTE
ROUTE
2
2

ROUTE
ROUTE
3
3

MAJ CITIES IN CPEC

MAJ PROJECTS IN CPEC

MAJOR PROJECTS
Sales

Energy ($33.8 billion)

Infrastructure ($11.8
billion)
Communication ($44
Million)
Cotton biotech research

Total $46 billion projects

MAJOR ENERGY PROJECTS

Total 18 x Power project under CPEC
Total cost worth 33.8$ billion
Energy

MW

Cost USD (Billion)

Coal

7560

8.8

Wind

300

0.5

Hydel

1590

4.2

Solar

1000

1.7

Second Phase

6445

9.5

9.0

16895

33.8

Mining Exp
TOTAL

MAJOR INFRASTRUCTURAL PROJECTS

Total 8 x infrastructural project under CPEC
Total cost worth 11.8$ billion
Infrastructural

Cost USD (Billion)

Road

5.8

Rail

3.7

Mass transit in lahore

1.6

Gawadar Port

0.7

TOTAL

11.8

MAJOR INFRASTRUCTURE PROJECTS

Gawadar Port up
gradation

Eastern
Alignment (KLM)

Western
Alignment

HavelianKhujerab
Railway

Gwadar
Ratodero
Motorway

Hazara
Motorway

Lahore Orange
Lane Metro Train

KKH Upgradation

BENEFITS OF CPEC

BENEFITS TO PAK
CPEC focuses on building the nec infrastructure and energy self sufficiency for Pakistans economic take-off
Net Foreign Direct Investment over the years

Total CPEC Investment

Sectors

Energy (Priority ) MW
Energy (Actively
Promoted) MW
Road (Km)
Rail (Km)

MW/KM

Est. Cost
(US $ Bn)

10,400

15.506

6,645

18.287

832

5.900

1,736

3.690
24,020

Gwadar (including sea,

air, land links)

0.662

Mass Transportation
Orange Line

1.600

Cross-Border Fibre Optic

Cable System

0.044

DTMB Pilot Project

0.002

Total

45.651

5,011
1,134
1980s

1990s

2000-2010

2010-2020

Source: State Bank of Pakistan

2020-2030
Page 30

BENEFITS TO PAK
Due to the energy initiatives under CPEC, Pakistan is expected to meet its
electricity demand by 2018
2016

2017

2018

33000
31000
29000
27000
25000

Total Demand Supply (MW)

23000
21000
19000
17000
15000
Demand
31

Planned Supply

BENEFITS TO PAK
Sustainable Growth

Indirect Impact
$46 Billion
Chinese
Investment
1.5 % additional
GDP Growth
Direct Impact

Rise in GDP
Potential
Incremental
Private Sector
Investment

Baseline 4-5 %
GDP Growth rate
rises above 6-7%
in medium term

Overall Impact

Source: BMA Capital Management Limited, Investor 360

BENEFITS TO PAK
Employment
Growth- related : Jobs created through
improved services and lower costs to existing
businesses (electricity supply, access to
infrastructure)
Induced: Increased consumption through new
job creation spurs employment in providers of
goods and services
Indirect : Jobs created through backward and
forward linkages in the supply chain

Direct: Jobs created directly in the energy and

infrastructure sector

BENEFITS TO PAK
Employment

Average
Household
Size=6.7

Number of
Lives
touched
30 million

Employme
nt
4-5 million
Source Jobs Study 2013 , IFC World Bank

BENEFITS TO PAK
MISC

Connect all provinces

Development of Fata, KPK and Baluchistan
Equalization among Provinces

BENEFITS TO CHINA
Independent path from India and USAs interference
New business market in another country
Chinas stake in Gwadar will also allow it to expand its
influence in the Indian Ocean
China is that it will be able to bypass the Strait of Malacca
Economic adv to China

BENEFITS TO THE REGION

INDIA

Gravity Model* suggests a potential increase of 10-15 times of the current trade with
central Asia if routed through Pakistan & Afghanistan.
CPEC will double the Indian trade with china.
After improvement in bilateral relations, India can secure 2.6 billion USD trade in
addition to the current 3 billion USD with Pakistan.
Pakistani Ports will be the convenient transit for North western India as compared to
Mumbai and Calcutta.
Central Asian fuel will cater growing Indian energy needs.

*trade

1 2

GDP1 GDP2 / D1 2

n
Bl
.7
$5
n
n
to
Bl
Bl
ln
8
$6
M
$
to
70
to
ln
$5
ln
M
M
00
00
$6
$8

BENEFITS TO THE REGION

CENTRAL ASIA

Gwadar will be a gateway for Central Asia.

Central Asia can be connected to CPEC via Tirmiz, the southern city of Uzbekistan.
CPEC and its related future projects can cater both Turkmenistan and Uzbekistans

liquid cargo through pipelines and Kazakhstan and Kyrgyzstans dry cargo via road.
Can increase energy market share in Western China and India. .
For Landlocked countries, distance coefficient of gravity model is 5.5% (every 1%
*trade

GDP1 GDP2 / D1 2

decrease in distance from port increases the trade by 5.5% and CPEC will decrease this
1 2

distance by 22%.)

Bl
.7
$5
n
to
Bl
ln
M
$8
70
to
$5
ln
M
00
$8

BENEFITS TO THE REGION

AFGHANISTAN

Afghanistan can be connected to western alignment of CPEC from Chaman

and eastern alignment with Peshawar from Jalalabad.
CPEC will provide shortest and most cost effective route for landlocked
Afghanistan to China, India and Indian ocean.
Approx. 600km less as compared to the other nearest port of Chabahar.
CPEC will also help in making Afghanistan a transit route for energy rich
Central Asia and energy starved South Asia.
Improve Geo-Political scenario for early completion of CASA 1000 and
*trade
TAPI
1 2

GDP1 GDP2 / D1 2

0
$6

ln
M

to

$6

Bl

CONTROVERSIES IN CPEC

CONTROVERSIES IN CPEC
CPEC is a potential threat especially for the local industries of
Pak, that can saturate local markets with Chinese products and
eff the business of local producers
Native Baloch fear that under the banner of economic
development and prosperity, CPEC might turn them into a
minority within their own land and deprive them of jobs and
other opportunities like the past

CONTROVERSIES IN CPEC
India has formally registered a protest with China regarding
the land route used in the project, which is connecting western
China to the Arabian sea through Kashmir
KPK has reservations against federal govt for prioritizing
Eastern route over western route, like wise no megaprojects
have been linked to CPEC in KPK except rd

CONCLUSION
Pak-China relationship holds great importance in the world. It is not
only at political level but people of both countries shares a deep and
special bond.This historic friendship is termed as stronger than
steel, sweeter than honey, deeper than ocean, higher than
mountain