The document discusses the costs and benefits of the China-Pakistan Economic Corridor (CPEC) project in South Asia. Some key benefits include reducing transportation costs by shortening the route between China and Pakistan, boosting exports, generating 700,000 jobs, and helping solve Pakistan's energy crisis. However, some costs and risks include security issues that could stem from making the route safe, environmental pollution from increased traffic, loss of cultivable land, and potential for increased smuggling. The project aims to enhance regional connectivity and integration through infrastructure development and industrialization.

1. Cost and Benefits Forecasting of China-Pakistan Economic Corridor (C-PEC)
(A Case study of South Asia)
Abstract: China-Pakistan have been signed an agreement (July 05, 2013) of building up China
Pakistan Economic Corridor (CPEC) which is a project of one belt consist on roads, railway
lines, fiber optic pipeline and energy production. Almost 19 projects have been signed by two
countries in November, 2014 including Orange Line Metro Train in Lahore city of Punjab. The
economic zone (China-Pakistan Economic Corridor) approximately consists on 2000km
transportation connectivity between Kashgar (situated in north-west of China) and Gwadar port
of Pakistan (situated on the Arabian Sea) linking to Iran border also known as “Persian Gulf”.
This route will be the cheapest and shortest for China-Pakistan to link world markets. It is
expected that this economic corridor (C-PEC) will bring peace, employment and economic
prosperity among the people of South Asia. In this regard, Pakistan has multi challenges
(internally and externally) to this Mega project. However, the project can be a fate changer for
the region of South Asia because it will modernize and accelerate trade not only in Pakistan but
also in the entire region. It will boost-up trade, increase cultural and regional harmony, overcome
the energy crisis of Pakistan, generate employment and improve overall economic status of
people of Republic of China and especially of Pakistan as well. With this passion, President of
republic of China (Xi Jinping) visited Pakistan last year (April 20-21, 2015), signed fifty one
(51) MOU’s of worth $28bn plus $17bn on pipeline and increased the overall investment from
$26bn to $46bn. This study will provide help to assess cost and benefits to the people of South
Asia associated with the project of C-PEC.
Keywords: C-PEC; Pakistan; Employment; route; Energy; Transportation
Route Graph

2. CPEC Source: (Indian News Paper K&J)
Benefits
Reduction in Transportation Cost: Presently, China’s near about 80% of oil imports transit is
done through the Malacca Strait to Shanghai which is near about 16000Km long distance and it
takes 2-3months to transport. But with the development and when becoming operational Gwadar
and C-PEC distance will reduce to 2395Km.Moreover (Zand, 2016) this corridor will link 3
billion people of South Asia (including Africa and Europe) through Maritime Silk Route.
Boost up to Exports: The area of Baltistan is well known for exports of fresh fruits like apples,
cherries and apricots; CPEC will be a fate changer not only for the people of this region(local
exporters) but also for importers to avail business opportunities by securing a huge transportation
cost. Now a day, fruits are exported by air-cargo via Abu-Dhabi but it would be cheaper and
faster when sent through the route of C-PEC via road. Except this, other industrial and

3. agricultural export products of the region of Karachi, KPK, Baluchistan and Punjab as well could
be transported economically. This will lead to increase the trade volume of the region and
exports of Pakistan as well.
Employment Generation: It is forecasting of analysts in (Gilgit Times: Ministry of reform Unit,
Govt. of Baluchistan, 2016) that if all the projects included in C-PEC are implemented then this
investment is 17% of 2015’s GDP reaching an all-time high since 1970 in Pakistan. Such huge
investment will not only create employment for investors but also for local businessmen. Further,
it has been forecasted that CPEC will create a sum of 700,000 direct job opportunities for the

4. people of South Asia between the duration of 2015 to 2030 and will contribute 2.5% of country’s
economic growth (Pakistan times, 2015).
Solution to Energy Crisis: Energy crisis is a hot burning issue of Pakistan’s economy as it is
leading continuous contraction of economy. Because, even existing investment of Pakistan is
getting shuffle to India, Bangladesh, Malaysia, Sri Lanka, Saudi Arabia and Dubai due to energy
shortfall. China has signed 21 energy related agreements (would be able to provide 16400 MW
of energy) based on coal, gas and solar energy in which 14 projects will be operative and provide
10400 megawatts (MW) by the month of March,2018. Moreover Chinese companies have been
started work on six main power projects in the province of Gilgit-Baltistan in which Harpo,
Dassu, Yalbo, Bashu and Phandar are remarkable to overcome the energy crisis of Pakistan
(Gilgit Times: Ministry of reform Unit, Govt. of Baluchistan, 2016). Solution of energy crisis
will not only be beneficial for Pakistan but also leave positive effects on the region of South
Asia.
Improvement of Infrastructure: CPEC project can be a golden opportunity for improvement of
infrastructure of Pakistan; as worth of $11bn finance approximately has been allocated which
will be able to construct 1100Km motorway joining the two important industrial cities of
Pakistan Karachi and Lahore. Karakoram Highway (1300 km) situated between China border
and Rawalpindi will completely be re-constructed and maintained. The Railway line Peshawar to
Karachi will also be upgraded by December, 2019 in order to accelerate traveling speed 160
Km/hr. Railway network of Pakistan will also be extended to Xinjiang Railway of Southern
China in Kashgarh. In addition to it, pipeline network in order to carry LNG, including
installation of pipeline of worth $2.5bn for transportation of Gas from Iran to Gwadar and
Nawabshah.

5. Industrialization: Historically it has been seen that countries got economic development
through industrialization strategy and industrialization of the world depends upon the
improvement and regulation of infrastructure. As in case of Beijing, New-
York,London,California,Honh Kong,Shanghai,Singapur,Dubai,Istambul,Amsterdam are famous
industrial cities of the world because of having benefits of sharing their boundary lines with open
sea for trade and contributing major role in the economies of their countries. (Asad, Farid and
Sabah, 2016)Wrote in their article that with the establishment of C-PEC route Xinjiang
(Southern province) of China which is less developed as compared to its Western provinces will
link from Kashgar to Gwadar port of Pakistan in addition to it will get access to the Arabian Sea.
Pakistan’s economically depressed province of Baluchistan will get link to Persian Gulf through
Gwadar and C-PEC route for trade-transit of petroleum products.
Tourism Development: Tourism of Pakistan which is currently sabotaged due to lack of
National attention security and War & Terrorism issues can be a substantial part of earning
through the opening of C-PEC by elevating above said problems. Tourism can be boosted up in
the region of 73000Km2.The region is full with beautiful valleys, lakes, mountains and glaciers.
It include Valleys of Naran-Kaghan,Risalpur(KPK), 2nd highest peak of the world k2( 8611
meters high) , Nanga Parbat(8126 meters high) located in the region of Pakistan ;Gilgit-Baltistan
and other prodigious mountains(Gilgit Times).Except these Tashkurgan(3094 meters high) in

6. Xinjiang,China can be Centre of attention not only for South Asians but also for the world’s
tourists.
Regional and Economic Integration: Experts are of the opinion that after the initiative of
CPEC the region of south Asia will be most integrated region economically. This project may be
ambitious and monumental for China and Pakistan to boost up the regional and global economic
muscle. It has been said by the chines official that CPEC is a “Flagship Project”-One Belt, One
road which will connect China to the Asian and World’s markets. Moreover new Silk Road will
link China to European markets through central Asia and maritime Silk Road will link China
shipping safely through southern China Sea and Indian Ocean.
Costs and Conflicts
Security Issues: Analysts and Indian concerns are of the opinion that Gwadar seaport will
become China Naval base in Indian Ocean through C-PEC project and Chines will be able to
monitor American and Indian Naval movements in Beijing. India will left frustrated of getting
her ambition of turning the Ocean into Indian Lake, while Pakistan Navy will be modernize by
Chines directions (Bhattacharjee, 2015).Except this, there may be hindrances of war and terror
attacks by militants directed and supported by foreign agencies or local rebels during transit.

7. Pakistan and China both have to keep the cost of security provision along 2395Km long route in
mind in order to make the transit save and sound.
Environmental Pollution: One of the drawbacks of C-PEC project is environmental pollution
will be created during construction of route through the use of heavy machinery, heavy transport
during trade-transit, swallowing agricultural land (containing natural environment).It has been
said by (Bengali, 2016) that 3,000 –6,000 trucks will pass through the route from Kashgar to
Gwadar leaving pollutants and carbon monoxide a damage to the health of surrounded residents.
Above said problems can affect human health whose opportunity cost can be greater than the
benefits of C-PEC.Further, this environmental pollution can affect tourism of the region.
Loss of Cultivable Land: It is said that 1% (approximately) of cultivable land of Pakistan will
be swallowed by C-PEC route, is a loss to the permanent employment of an agrarian country.
Pakistan is just self-sufficient in the production of wheat and hardly meeting the food
requirements of fast growing (2%) population. Cut-off in 1% agricultural land will create
problems of increase in imports, contraction in exports, and deficit in balance of payments,
unemployment, food shortage and dependence on other countries. (Bhengali, & et al,
2015)Investigated that as per APC decision about 76000 hectare of cultivable land (producing
wheat,rice,sugar-cane and cotton) having production capacity of 183,8000 tones will come under
the route where population density is 1,485.
Smuggling: The hindrance of smuggling can be expected through C-PEC as it is exploitation
and social evil exists almost over trade routes of the world especially sea-ports like? .China and
Pakistan have to pay the cost of vigilant security along the sea-ports and entire route as well in
order to minimize the hindrance of smuggling.
Economic Imbalances between Provinces: The opaqueness regarding the C-PEC project has
not only been felt by the externals but also by the domestic businessmen and some political
parties. Some analysts and politicians are of the view that most of the agreements regarding
energy, improvement of infrastructure are related to Punjab province and rest of the provinces
are left unfavoured.Consequently, economic growth will be ‘immiserising’ in the region and
create imbalances between provinces.

8. Indian’s Concerns: Indian concerns are of the opinion that china should give equal importance
to exercise economic interests in the region. They further says that this route will create security
issues in India through border incursions when China extends its military and people’s armed
police which force India to be defensive.( Bhatta charjee, 2015) Wrote in his article that China is
lowering his profile of claims and expectations by reciprocating its neighbourer.He further says
that chines policy and manners are not transparent regarding provision of aid and Social
development of its neighboring country as its per white paper which was issued by China in
2011.
Conclusion
No doubt C-PEC has multiple hindrances of security, loss of cultivable land, smuggling,
environmental pollution, staunch opposition by some domestic political parties and a neighbor
country but the benefits and social welfare of South Asia attached with it can be far more than
the cost of above said dangers. In addition to it dangers and problems can be avoided through
effective planning and precautions. It can be a fate and game changer for the people of South
Asia. In short, the economic prosperity is expected with the injection of this $46bn investment
project.
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