The document summarizes China-Pakistan Economic Corridor (CPEC), a $46 billion investment in infrastructure projects between China and Pakistan. CPEC aims to transform Pakistan into a regional economic hub through projects like roads, railways, pipelines and industrial zones. It will generate employment, reduce poverty, and improve infrastructure. CPEC will also benefit China by providing cheaper access to Middle Eastern oil through the Gwadar port, reducing transportation time from 45 to less than 10 days. The projects will be funded through various Chinese and Pakistani government investment funds and loans.

1. Pakistan and China have entered into
an arrangement for economic
development and regional
connectivity through a three stages
plan translated into US $46 billion
called China Pakistan Economic
Corridor (CPEC).
CPEC is a strategic economic
partnership to transform Pakistan into
a geo-economic hub. The multitude
of projects will lift millions out of
poverty, providing employment
through textile garment, industrial
park projects, construction of dams,
and installation of nuclear reactors.
The networks of highways, railway
lines and optic fiber connectivity will
surely increase private funding and
employment.
Fully equipped hospitals, technical
and vocational training institutes,
water supply and distribution in
undeveloped areas will also improve
the quality of life of people.
Investments by China will
approximately double the Pakistan
current growth rate thus having a
positive impact on the present GDP
of USD $275 billion. The corridor for
Pakistan would generate more
business ,reduce poverty ,create job
opportunities and above all provide
infrastructure to almost the entire
region with an access to warm waters.
One of the significant role in the
economic growth is expected through
Gawadar Port.
A need assessment clearly identified
CPEC to be the best option as it
reduces the energy time and cost for
China.
The corridor would closely connect
Central Asia ,West Asia and Gulf
states for economic and energy co
operation.
The Project includes building of
highways, railways Optic fiber
connectivity and economic zones. It is
among the six economic corridors
conceived under Chinas Silk Road
Economic Belt
Gawadar is the third largest port of
the world with a natural depth of
over 18 meters and 120 Berths and
one of the largest in the region .
China export through this port to
Middle east and Africa through Malacca
reduces from 45 days to less than 10
days approximately .
The Chinese economy is dependent on
imported oil, and has a daily
consumption of 10.3 million barrels of
oil. With an average cost of US $ 400
million per day.
Furthermore, 82% of this import of oil
is through China’s coast situated on its
Eastern side, as Western China is
landlocked.
On an average the transportation of oil
takes up to 3.5 months. In contrast if
the oil imported by China
through Gawadar port, the timeline
for the transportation of this oil to
East China, would be reduced to 28
days approximately. The map above
shows the current route through
which China receives 80% of its
energy imports starting from the
Persian Gulf to the South China Sea
and finally reaching East China. The
current route increases transportation
and storage costs for China.
The Costs are not the only reason
why china is trying to find an
alternative route. There is political
tension between China, Vietnam,
Philippines, Malaysia and Brunei on
who have control over the Spartley
and Paracel islands (Shipping route)
Game Changer & Harbinger
of Regional Prosperity

2. • In the energy sector, project totaling
10,400 megawatts had been
included in the early harvest (first
priority) programme, which could
be completed by 2018.
• In all, Chinese firms will put up $35
to $37bn in the foreign direct
investment for independent power
production (IPP)under an
investment policy that was available
to all investors.
• There have been several agreements
that have been signed between
Pakistan and China in regards to
ease off entry and exit between
China and Pakistan
China has assumed the main
responsibility for project financing at
the initial stage. Regarding some
projects with significance to CPEC,
feasibility of using multiple channels
like government funds from both
sides has been analyzed.
The Conclusion to this was that the
two central banks promote currency
swaps and help and maintain
Pakistan exchange rate stability.
Policy related banks and commercial
banks in both countries may conduct
strategic cooperation and organize
consortium loans without interest or
with low interest rates.
Based on the preliminary plan,
diversified financing methods have
been designed according to the
nature of the projects in different
areas, such as: increased Chinese
capital support for Pakistan,
including free aid, interest – free
loans and preferential loans;
• After the complementation of this
Project, Pakistan will become
modernize and then by spreading
out markets for manufactured
good.
• The areas adjacent to the corridor
would become attractive locations
for manufacturing, agricultural and
services industries, Small and
medium enterprises would be
special beneficiaries.
• Employment and economic
growth expand significantly
Benefits of CPEC
Energy (G2G) Infrastructure
• These projects would be based on
wind, solar, coal and hydropower
generation of 16,400 MW as well
as the transmission system and
would be located in all the
provinces and Azad Kashmir.
• China will be setting up10 projects
of 6,600MW in the Thar Desert
that would transform this remote
and underdeveloped region into
Pakistan’s energy capital and open
up economic opportunities for the
people
encouraging more Chinese
enterprises to invest in Pakistan,
including the establishment of
industry parks, project contracting,
labour export, and equity
participation on a stand alone basis
or through a strategic collaboration
with Pakistani enterprises etc.
China on the whole, through the
Asian Infrastructure Investment
Bank, a multilateral development
bank, is intending on investing US
$113 billion various regional
connectivity to promote economic
ties within the region.
In a significant development, the
United Kingdom has become a
partner in China-Pakistan
Economic Corridor and agreed to
provide $121.6 million in grant to
fund construction of Burhan-
Havelian Expressway, which falls
on the northern route of the
corridor.
The Asian Development Bank
(ADB) and the Department for
International Development
(DFID) of the United Kingdom
will co-finance the $327 million
cost of the 59km-long
Hassanabdal-Havelian Expressway
(E-35) project, according to a
handout issued by the Manila-based
lending agency on Tuesday.
Two separate funding bodies have
been set up. One consists of
money invested by the Chinese
government which will contract out
only to Chinese companies from
the private sector. Similarly, the
second fund consists of funds
allocated by the Pakistan
Government body which will only
employ contractors that have a
minimum of 60% Pakistani
ownership.
Sources of Funding