The China-Pakistan Economic Corridor (CPEC) Opportunities and Challenges.

MUHAMMAD WAQAS AKBAR
Ph.D. Scholar in Public Finance,
Shanxi University of Finance and Economics

(Deeper than Seas, Higher than Mountains)
The China-Pakistan Economic Corridor
(CPEC) Opportunities and Challenges.

Introduction.
Total Area, Projects and Cost Included.
Opportunities and Challenges to Pakistan and China.
Comparison to Chabahar Port.
Research Areas.
Conclusion.
Q&A Session.
Shanxi University of Finance and Economics.
Outline
CPEC

CPEC is not just a name
of any single road project
rather it’s a portfolio of
projects. It will connect
Gwadar Port with
Khunjrab through Western,
Central and Eastern routes
to be executed
simultaneously.
INTRODUCTION

A Glance over PAK & CHINA Relations
Pakistan was the first Muslim country and the third non-communist state
to recognize the People Republic of China in 1950.
First Country to establish Official Ties with China.
Support for China’s seat in UN (1961).
Facilitated Beijing in early 1970 for SINO-AMERICAN contract.
Karakoram Highway ( Shahrah e Raisham).
Trade Agreements.
Top Supplier for Military Hardware.
Diplomatic Support at every level.
INTRODUCTION

The CPEC is a part of the Belt and Road Initiative (BRI) introduced by
China, which aims to “promote the connectivity of Asian, European and
African countries and their adjacent seas to strengthening the partnerships
among the countries along the Belt and Road.”
The project includes over 60 countries, about 65% of the global
population and approximately 40% of the world’s GDP. Since its launch
in 2013, China has invested $60 billion in BRI related projects and is
committed to invest $800 billion over the next five years (Chen et al.,
2018).
What is CPEC?

One Belt One Road
It is also important for Regional and global connectivity for economic prosperity
and development.
Refers two ambitious development proposals
Maritime Silk Road
Silk Road Economic Belt (SREB)
It refers to the New Silk Road Economic Belt, which will link China with Europe
through Central and Western Asia.
The 21st Century Maritime Silk Road, which will connect China with Southeast
Asian countries, Africa and Europe.
CPEC

 The land-based Silk Road Economic Belt and its six corridors and the
ocean-going Maritime Silk Road
CPEC

History
Formal construction commenced under Pakistan’s President Pervez
Musharraf in 2003, with economic and technical assistance from China.
The Pakistani military felt that existing ports were not sufficient for
defensive purposes, and was seeking a second option.
Asif Ali Zardari paid several visits to translate this idea into reality.
Later on it was formally commenced when Chinese president paid official
visit to Pakistan.
Today, CPEC is an essential component of One Belt, One Road project.
CPEC

CPEC is not only the pivot of China-Pakistan politico-economic
relations, but holds similar promise for the region and beyond.
CPEC has the capability to connect the overland Silk Road Economic
Belt with the Maritime Silk Road.
The strategic partnership between China and Pakistan for infrastructure
construction was announced during Premier Li Keqiang’s visit to
Pakistan in 2013.
Following the visit of Xi Jinping in 2015 a total of 51 agreements were
signed mutually by China and Pakistan with a total worth of $46 billion.
CPEC

Now, the original investment of China for CPEC has been
expanded to $62 billion dollars.
The amount exceeds all foreign direct investments from last
several years and is substantially more than all the aid Pakistan
has received from the US since 9/11 (Ali, 2015).
The China-Pakistan Economic Corridor (CPEC) is a 3,000-
kilometers network of roads and railways to transport oil and
gas from southern Pakistan's Gwadar Port to Kashgar, a trading
hub in the western Chinese region of Xinjiang.
CPEC

Pakistan will gain a massive network of roads, railways,
pipelines, highways and energy supply with the realization of
this project.
The agreement on the CPEC is recorded in the document “Long
Term Plan for China-Pakistan Economic Corridor (2017-
2030)”,
CPEC

CPEC
 Eastern Alignment: This route passes through central Punjab and Sindh,
connecting the cities Thakot-Mansehra-Islamabad-Lahore-Multan-Hyderabad
through Rohri and Dadu.
 Central Route: From Dera Ismail Khan, Dera Ghazi Khan,
Dera Murad Jamali, Khuzdar, Punjgur, Turbet to Gwadar.
 Western Alignment: Passes through Dera Ismail Khan,
Zhob, Qila Saifullah, Quetta, Kalat, Punjgur,
Turbet and Gwadar..
Northern route: Which
will connect all the three
Pakistani alignments
with the Pakistani-China
border at Kunjarab and
continues on Chinese
territory.

Projects and Cost of CPEC
Major Projects of CPEC
• Energy • Infrastructure and Transportation • Gwadar Port related Project
• Other Projects

Projects and Cost of CPEC CPEC Energy Projects

Zoenergy Solar Power Plant
6,500 acre Located At Bhawalpur
$1.5 Billion Project
3,92,158 Solar Modules
1,000 MW Production Expected
Build In 3 Phases
1st phase has been Completed at the
end of 2016 and generating 100 MW
By Zonergy Company
CPEC

Suki Kinari Hydro Power
Plant (SK Hydro)
Is in Kaghan Valley of
Pakistan's KPK province
870 MW Produce
Started in 2017
3.1 kilometer long reservoir
with a capacity of 9 million
cubic meters of water.
Cost of $1.9 billion
End in 2021est.
By SK Hydro Group

Karot Hydro Power Plant
It is on Jhelum river near to
the Islamabad
Produce 720 MW
$1.65 Billion Project
17 Milles long reservoir with
a capacity of 164.5 million
cubic meters of water.
Complete in 2020
By Karot Power Company
(PVT) LTD.

Thar Engro Coal Power
Tharparkar District Sindh
$1.13 Billion
660 MW
Primary fuel from Lignite Coal.
16th largest coal reserves in the
world.
175 billion tonnes of coal
By Engro Powergen Thar Ltd.

Port Qasim Power
Port Qasim Sindh
Produce 1320MW
$2.09 Billion
Complete by the end of 2017
By Sino hydro Resources
Limited and Port Qasim
Energy Holding (Al Mirqab
Capital)

Projects and Cost of CPECCPEC Transport Infrastructure

Karakorum Highway Realignment
Attabad Barrier Lake
$275 million Project
24 KM Long Series of
Bridges
5 KM Worth Of Tunnels
2 Large Bridges
78 Small bridges
Realignment restored the
road link with China.

Gwadar-Ratodero Motorway
$238 Million Project
4-Lanes Motorway
892 kilometers Long
Ratodero, Khuzdar, Awaran,
Hoshab, Turbat and Gwadar.
556 kilometers have already
been constructed

Karachi–Peshawar main railway line
Over haul and Reconstruction of
Rail
$3.65 billion Project
Train travel at up to 160 kilometers
per hour
First Stage Peshawar to Multan
Second Stage Multan to Hyderabad
Third Stage Hyderabad to Karachi
Expected completion by December
2019

Gwadar Projects
The main reason of CPEC is Gawadar Port.
Apart from work going on establishment of Gwadar Port in
Pakistan, Chinese intend to develop such ports in Piraeus (Greece),
Zarubino (Russia), Djibouti and Mombasa (Africa) and Kyaukpyu
(Myanmar).
The Gwadar port naturally build world’s deepest-sea port, located
in Gwadar, 533 km from Pakistan's largest city, Karachi, and is
approximately 120 km from the Iranian border, 380 km away from
Oman, and near key oil shipping lanes from the Persian Gulf.
Gwadar Projects

It is the southern hub of the CPEC, which connects China’s
northwestern province Xinjiang to the Arabian Sea.
The port is favorably located at the intersection of the Arabian
Sea and the Gulf of Oman and is about 400 kilometers from the
Strait of Hormuz, the main channel for global oil supply.
The Gwadar port plays a key role in China’s energy security
because it not only shortens the distance to China by about
5,000 miles but also allows China to avoid and reduce its
reliance on shipments through the potentially insecure Malacca
chokepoint (Chen et al., 2018).
Gwadar Projects

CPEC
Gwadar Projects

Kashgar is 4,000 KM away from the East China Sea. Gwadar is 2,400 KM
from Kashgar. From Harmoz to Xinjaing is 14,500KM Thus, China would
save time with the realization of the pipeline and save logistic costs for
running oil to the western provinces.
Gwadar Projects
Harmoz to Xinjaing is
9,062 Miles
Sea Port to Xinjaing is
6,250 Miles

Gwadar Projects

Cost of Gwadar Projects
Cost for city and port is 1.62 Billion.
Loans for Gwadar totaling $757 million would be converted 0%
interest, only required to repay principle amount.
$140 million East Bay Expressway.
Breakwaters in Gwadar which will cost $130 million.
$360 million coal power plant.
$27 million project to dredge berths.
$100 million 300-bed hospital in Gwadar.
$230 million Gwadar International Airport project (Free).
Gwadar Projects

Opportunities and Challenges
Can benefit new emerging Regional Cooperation.
Chinese industries are facing problem to compete in global market due
to high transportation cost and delivery time. Save time, cost and freight
charges.
It will lower the competitive edge to competitors e.g. Japan, USA.
It will allow reaping of full benefits of development, economic and
social uplift.
China hopes that the CPEC can also provide a boost to China's slacking
economy, especially in the western, landlocked province of Xinjiang.

The corridor should create incentives for both state and private
enterprises to expand economic activity, create jobs, and raise
consumption levels in this under-developed region.
Stabilizing peace environment in western China.
Increase the economic collaboration between both countries by
connecting western china to Gwadar.
Pakistan received US$ 975.4 million as FDI during July-March 15/16.
Regional stability in Asia as a whole.
Pakistan can avail great opportunities from chine’s expert in various
sectors like Energy, Technology and Education sector.

Create 2 Million direct and indirect job opportunities.
Pakistan and china both collectively target the half of the world’s
population, it will provide great opportunity for both countries to
expend their market.
Strategic and economic trade routes.
Development of Infrastructure.
Connect all the Province and development of FATA, KPK and
Baluchistan.
Removal of poverty.
Peace and prosperity in provinces.

Pakistan’s economy will go up by 15% after CPEC.
Given the solid foundation of friendship.
It would decrease the travel distance and cost greatly from
china to gulf.
Even if china uses CPEC for its Oil supplies then it will save
0.25 Million per hour, $6 Million every day, almost $2 billion
every year.
Independent path from India and USA’s interference.
New business market in another country.

Security Concerns
Indian aggression.
Police station recently set up in Gilgit Baltistan with 300 personnel and
25 vehicles gift from china to ensure smooth flow of traffic on the
439km stretch of the CPEC project.
Pak navy and china collaborating on special marine battalion to ensure
Gawadar’s security.
Special division of Pakistan army dedicated to security of Chinese
engineers.
Sindh planning to hire 2000 retired army men for CPEC’s security in
the province.

Pakistan’s ministery for planning reforms and development has
said those protesting against CPEC will be charged under anti
terrorism laws.
This project can give birth to many other challenges like the
biggest FDI inflow to Pakistan can give birth to corruption.
The importance of Gilgit Baltistan.
A showcase of maturity by the political parties in Pakistan.
Energy projects should be completed as soon as possible.

Comparison to Chabahar Port
After signing the agreement, Iran's ambassador to Pakistan,
Mehdi Honerdoost, stated that the agreement was "not
finished", and that Iran would welcome the inclusion of both
Pakistan and China in the project. While clarifying that
Chabahar Port would not be a rival or enemy to
Pakistan's Gwadar Port. He further stated that Pakistan and
China had both been invited to contribute to the project before
India, but neither China nor Pakistan had expressed interest in
joining.

Gwadar vs Chabahar Port
Location
Gwadar Port Chabahar Port
Gwadar, Balochistan,
Pakistan
Chabahar, Sistan and Baluchestan
Province
Land area 2,292 Acre 1,100 acres
No of berths 11 10
Annual cargo
tonnage
30 million tons 8.5 million tons
However, eventually,
Iranian ambassador made
it clear that Iran doesn't
consider Chahbahar to be
a project which could
feasibly rival of CPEC as
he said "Iran is eager to
join CPEC with its full
capabilities, possibilities
and abilities“.

Research Areas
Business Partnership Culture.
Finding Gaps for Investing opportunities and development of
feasibilities.
Entrepreneurship – Opportunities for Small Industries and Service
Centers.
Concern of local societies.
Socio–economic Impacts.
Gwadar Port
National Interest and harmony.

Conclusion
Natural Gateway for China as CPEC conect china with Central Asian States,
Russia and Europe
Positive response by both countries through mutual cooperation .
Both countries are keen to enhance trade activities in the region.
Infrastructural improvement and development of Dams and energy
production.
Stability of economy by investment in different sectors. Increase regional
connectivity
Economic and diplomatic relations with its neighbors
Trade and economic cooperation

Q&A Session.

Thank You 

The China-Pakistan Economic Corridor (CPEC) Opportunities and Challenges.

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