ASSIGNMENT

TOPIC : CPEC
CHAINA PAKISTAN ECONOMIC CORRIDOR
 BACKGROUND :
Plans for a corridor stretching from the Chinese border to
Pakistan's deep water ports on the Arabian Sea date back
to the 1950s, and motivated construction of the
Karakoram Highway beginning in 1959. Chinese interest in
Pakistan's deep-water harbour at Gwadar had been
rekindled by 1998 and in 2002 China began construction at
Gwadar port which was completed in 2006. Expansion of
Gwadar Port then ceased thereafter owing to political
instability in Pakistan following the fall of General Pervez
Musharraf and subsequent conflict between the Pakistani
state and Taliban militants.

In 2013, the then Pakistani President Asif Ali Zardari and

Chinese Premier Li Keqiang decided to further enhance
mutual connectivity. A memorandum of understanding on
cooperation for long-term plan on China–Pakistan
Economic Corridor between the two governments was
inked by Xu Shao Shi and Shahid Amjad Chaudhry.
 In February 2014, Pakistani President Mamnoon Hussain
visited China to discuss the plans for an economic corridor
in Pakistan.[39] Two months later, Pakistan Prime Minister
Nawaz Sharif met with Premier Li Kequiang in China to
discuss further plans, resulting in the full scope of the
project to be devised under Sharif's tenure. In November
2014, Chinese government announced its intention to
finance Chinese companies as part of its $45.6 billion
energy and infrastructure projects in Pakistan as part of
CPEC.

 INTRODUCTION :
China-Pakistan Economic Corridor is a framework of regional
connectivity. CPEC will not only benefit China and Pakistan but
will have positive impact on Iran, Afghanistan, India, Central
Asian Republic, and the region. The enhancement of
geographical linkages having improved road, rail and air
transportation system with frequent and free exchanges of
growth and people to people contact, enhancing understanding
through academic, cultural and regional knowledge and culture,
activity of higher volume of flow of trade and businesses,
producing and moving energy to have more optimal businesses
and enhancement of co-operation by win-win model will result
in well connected, integrated region of shared destiny,
harmony and development.
China Pakistan Economic Corridor is journey towards economic
regionalization in the globalized world. It founded peace,
development, and win-win model for all of them.

China Pakistan Economic Corridor is hope of better region of

the future with peace, development and growth of economy

 ANNOUNCEMENT OF CPEC :
During the state visit of Xi Jinping to Pakistan in April 2015,
he wrote in an open editorial stating: "This will be my first
trip to Pakistan, but I feel as if I am going to visit the home of
my own brother." On 20 April 2015, Pakistan and China
signed an agreement to commence work on the $46 billion
agreement, which is roughly 20% of Pakistan's annual GDP,
with approximately $28 billion worth of fast-tracked "Early
Harvest" projects to be developed by the end of 2018.

 CPEC VISION AND MISSION :

To improve the lives of people of Pakistan and China by
building an economic corridor promoting bilateral
connectivity, construction, explore potential bilateral
investment, economic and trade, logistics and people to
people contact for regional connectivity.
It includes:
Integrated Transport & IT systems including Road, Rail,
Port, Air and Data Communication Channels
Energy cooperation
Spatial layout, functional zones, industries and industrial
parks
Agricultural development & poverty alleviation
Tourism cooperation & people to people communication
Cooperation in livelihood areas
Financial cooperation
Human Resource Development
CPEC Vision and Mission includes the enhancement of
geographical linkages having improved road, rail, maritime
and air transportation system with frequent changes of
growth and people to people contact, enhancing
understanding through academic, cultural, regional
knowledge and culture, activity of higher level of flow of
trade and businesses, producing and moving energy to
have more optimal businesses and enhancement of
cooperation by win-win model will result in well
connected, integrated region of shared destiny, harmony
and development.

Improving the lives of people of Pakistan and China by

building economic corridor promoting bilateral
 connectivity, construction, explore bilateral investment,
economic and trade, logistics and people to people contact
for regional connectivity.

 SIGNIFICANCE OF CPEC FOR PAKISTAN :

In Pakistan, the significance of the China-Pakistan
Economic Corridor (CPEC) is poorly understood. The Straits
of Malacca connect China with global trade through an
expansive 12,000km sea route. Then, to transport their
goods to the Xingjiang region, the Chinese must travel
another 3,500km over land. A quarter of the world’s, and
most of China’s oil, passes through the Straits, whose
control is continually challenged for domination by the US
Navy and Indian pretensions giving rise to the ‘Malacca
Dilemma’. The CPEC reduces China’s route from the Indian
Ocean to 3,000km across Pakistani territory from the
Gwadar Port and avoids the Straits altogether. It facilitates
trade by road and rail, while at the same time boosting oil
and gas pipelines through infrastructure enhancement.
Gwadar has a 200,000 tonne tanker capacity, which
presents unmatched opportunities for boosting global
economic interactivity within Pakistan. Located
strategically at the tail of the Corridor, yet at the
confluence of most of the world’s oil-producing states,
Gwadar automatically becomes one of the largest
transshipment ports. It is envisaged to have an
international airport, crude oil refineries and the ability to
dock larger ships, turning it into a robust trade and
transportation hub.

Apprehensions about interdiction and disruption of the

CPEC are understandable, with India, the Middle East and
the US, all likely to be affected by the deal. Pakistan can
expect to find itself targeted by those focused intently on
containing China. Afghanistan has already threatened to
block energy pipelines from Central Asia, quid pro quo for
Pakistan blocking land access to India. Fortunately, China
has reincarnated the Silk Route through Kyrgyzstan via
Kashgar as a way to circumvent Afghanistan. Encouraged
by Indian instigation, Afghanistan has now rejected the
Durand Line with new vigour, negatively impacting the
CPEC by inciting Pakhtun sentiment.

India, too, has rediscovered new urgency to integrate

Gilgit-Baltistan into Indian-occupied Kashmir. It envisages
severing a Pak-China land connection and is at pains to
present new maps to the world, which project Gilgit as
Indian territory, a shameless attempt to shape
international opinion. Also, with its huge coal reserves, the
Thar desert in southern Pakistan is another hotspot due to
being instrumental in energy generation projects
integrated into the CPEC. This area could be uniquely
vulnerable to Indian interference. A potential for future
conflict looms ominously and puts Pakistan in a dangerous
situation, with there being threats at its extremities, i.e., at
Gilgit, Thar, as well as the western border.
Pakistan is likely to suffer even more political instability,
insurgency, terrorism, ideological conflicts and separatist
movements as the CPEC progresses. For its part, Pakistan
must become more adept at diplomacy and supplement
those efforts with political reforms at home. If the CPEC is
to be a success, the military will play a key role in
balancing dynamic responses to repel hostile activity at
the limbs while also protecting China’s projects from
terrorism. The CPEC’s security would further benefit by
integrating more stakeholders, especially the Balochis,
who could significantly benefit from the success of the
Gwadar Port but currently feel neglected. Of the possible
foreign partners, Russia is positioned to be a beneficiary of
the new trade route and thus makes a natural target for
support. Its involvement would be a way to counter the
Indo-US nexus. The competitive nature of the US may even
inspire Russia to jump into the fray at some point. No
matter how you cut it, the global implications of the CPEC
 can’t be ignored and Pakistan must be prepared to fight on
all fronts to achieve success.

 ADVANTAGES OF CPEC FOR PAKISTAN AND CHAINA :

1. Strategic and Economic Context :
A. Gwadar Port is the cornerstone of the whole gambit and
Gateway to South West and Central Asia with its strategic
significance extending from Persian Gulf through the Indian
Ocean to South East Asia and the Far East. Almost 35 to 40% of
sea borne oil shipment transits through Strait of Harmuz.
Gwadar located at cross roads of three sub regional systems,
bridges the gap for transportation of this vital source of energy.
Therefore, it retains fundamental role in the future economic
prospects of about 20 countries of Central Asia, South Asia and
China by providing economically viable, cost effective and
shortest route for transit and supply.
B. The corridor will reduce sea land route distance
between Europe and Western China to less than half. A trial
was conducted last year for transportation of containers from
Beijing to Gwadar and Karachi through Sea Route as well as
Land Route through Khunjrab. Transportation through land
route took almost half the time with
2 approximate saving of 7 to 14 Cents per Kg that
translates into savings of Billions of Dollars per annum.
 2. Strategic and Economic Gains for Pakistan & China :
CPEC is a classic manifestation of convergence of geo strategic
and geo economic interests of the two countries with socio-
economic and diplomatic relations fostered through
vicissitudes of time. While complementarity of the economies
would serve the economic interests of the two states,
development of mutually beneficial infrastructure will further
harmonize the efforts to counter common adversaries.
Envisaged advantages and gains for the two sides are as under:-
A. China
(1) Economic development of relatively backward Western
Regions especially Xinjiang will bring peace and stability
facilitating trade with Central Asia to meet the growing energy
needs.
(2) CPEC would afford China shortest access to its markets
in AsiaaEurope and beyond. Use of Gwadar Port will facilitate
trade from Persian Gulf and Africa to Western and Northern
China reducing the distance by several thousand kilometres
(almost 12500 Km) and slashing the cost by Billions of Dollars.
(3) Almost 80% of China’s oil is currently transported from
Strait of Malacca to Shinghai. Transportation time of oil
imports from the Middle East and Africa will be reduced from
over 30 days to just 2 days after completion of pipeline projects
and will not be dependent on shipping through Straits of
Malacca and the vulnerable maritime routes. Besides economic
factor, presence in Gwadar is of great strategic value for China
and would be a great strategic advantage in case of war in Asia
and blockade of Strait of Malacca.
(4) For the Chinese investors, Pakistan has lot to offer in
multiple sectors because of low labour cost.
B. Pakistan
(1) In the strategic context, CPEC conforms to Pakistan’s
security paradigm and “Look East” policy and will serve towards
furtherance of strategic partnership.
(2) Located at the crossroads of huge supplying and
communicating markets, fully functional Gwadar Port linked
with China and Central Asia can play a vital role in economic
revival of Pakistan.
(3) It also affords us great opportunity for socio-economic
development of GB and Balochistan Province.
(4) Pakistan would benefit through investment from China
for development of requisite infrastructure and to bridge
energy shortfall. This will help Pakistan in realizing the potential
tribute become a regional trade hub and energy corridor
thereby bringing huge transit revenues and employment
opportunities.
 (5) Even the conservative estimates show projected
possible revenues of over 100 Billion US Dollars on account of
transit revenue per annum in long term besides creating
employment opportunities in hundreds of thousands.
(6) With 95% of Pakistan’s trade through sea and economy
heavily dependent on sea trade, development of Gwadar Port
and its connectivity is of extreme significance to reduce load on
Karachi and Bin Qasim ports for furtherance of Pakistan’s Sea
borne trade.
3. Key Imperatives for Pakistan :
Having seen the immense potential; what should be our
focus to make the most of this opportunity for seeking
sustained economic development and securing our socio-
economic future; Improvement and development of requisite
infrastructure is absolutely essential. Key imperatives in this
context are:-
a. Regional connectivity by linking major ports of the
country with trade routes through highways, railways and oil
pipelines.
b. Development of world class efficient Logistic Chain and
Infrastructure and Trade Facilitation.
c. Development of Special Economic Industrial Zones and
Transit Facilities along the Corridor.
 d. Increasing oil storages connected through pipelines.
e. Water and Hydro Power Development including mega
dams on Indus Cascade coupled with medium sized HPPs.
f. Exploration and development of mineral resources to
fund the economic programme.
g. Last, but not the least is development of skilled Human
Resource.
4. Pursuits and Initiatives by FWO to Exploit Opportunities
Afforded by CPEC :
FWO, being the leading infrastructure development
organization of Pakistan, is cognizant of its responsibilities.
Besides implementation of CPEC projects entrusted by the
Govt, FWO has conceived and planned projects of immense
national significance to optimally capitalize on the enormous
opportunities through Public Private Partnership and Built,
Operate and Transfer Regime. Pursuits and initiatives of FWO in
the context of CPEC are covered in ensuing paragraphs.
5. Road Infrastructure :
a. FWO is maintaining Karakoram Highway since its
construction in 1978. However, capacity has been enhanced to
keep the Khunjrab Pass opened during winters for ensuring
round the year functionality of CPEC
 b. Road Jalkhad - Chilas was completed last year and now
Road Kaghan - Jakhad - Chilas serves as an alternate route for
vulnerable portion of KKH.
c. Down from Northern Areas, FWO is playing a central role in
development of Western and Eastern Routes of CPEC.
d. Along the Western Route, the most arduous and challenging
portions and missing links in Baluchistan have been
constructed by FWO where almost 900 Kms of roads have been
completed in record time of 2 years against envisaged time
frame of 6 years.
e. Completion of these projects have linked Gwadar with
China through KKH and Afghanistan and Central Asia through
Chaman and Torkham.
f. Western Route has been further connected with
Afghanistan and Ghulam Khan and Angoor Adda through
development of Central Trade Corridor in FATA last year.
g. FWO is also developing one package of Hakla - D I Khan
Motorway that constitutes part of CPEC Western Route.
h. Along Eastern Route of CPEC, Lahore - Islamabad
Motorway has been rehabilitated and modernized by FWO on
BOT Basis while 75 Kms portion of Karachi - Hyderabad
 Motorway has also been completed and inaugurated and
remaining portion shall be completed by August this yr.
6. Pilot Project Trade Convoy :
Completion of missing portions of Western Route in
Balochistan by FWO last year enabled organization of first ever
mega trade convoy from Kashgar to Gwadar. The historic event
marked the founding of 21th Century Maritime Silk Trade Route
and has set in stone the actualization of CPEC. This pilot project
was a water shed event that validated the viability of Economic
Corridor and shall prove to be a catalyst for operationalization
of CPEC. The event has further helped in identification of
certain inadequacies in legal framework for transit trade and
logistic infrastructure from futuristic perspective which are
being addressed.
7. Railway Infrastructure :
a. As for Railway Infrastructure, FWO is working in close
harmony with Pakistan Railways and Chinese Firms for
development of Pakistan - China Dedicated Freight Corridor
along ML-2 on BOT Basis to carry anticipated freight traffic of
80 Million Tons per annum.
b. In a phased undertaking, the corridor will extend from
Karachi and
Gwadar to Kashagar, which would eventually link GCC Railway
Network and New Eurasion Bridge.
c. FWO has also proposed upgradation of ML-I and ML-3
besides development of Kashmir Railway that can also be
subsequently linked with China.
8. Petroleum / Oil Sector Infrastructure / Projects :
In order to contribute
to the needs of Petrolueum Sector, FWO has planned and
proposed various projects.
a. First project is development of Oil Village along M-2
with a capacity of 50,000 MT. Work on this project has already
commenced. Project to connect the Oil Village with Bin Qasim
Port through White Oil Pipeline is in advanced stages of
approval. The Pipeline shall also be further extended to
Tarujaba in KPK where 35000 MT storage facility shall be
developed. In future, this pipeline would be extended to
Afghanistan and Central Asia.
b. Other mega project is Gwadar - Kashgar Cross Country
Oil Pipeline on Design, Build, Finance, Own and Operate Basis.
This oil pipeline shall reduce the distance between Persian Gulf
to Western China by over 7000 Kilometers ensuing huge saving
in time and cost of transportation of Oil.
c. An Oil Refinery is also being established in KPK.
 9. Energy and Water Sector Projects :
a. FWO is currently undertaking Kurram Tangi Dam in FATA
and Jagran-II HPP in Kashmir while 3 x HPPs in Chitral and
Mohmand Dam have been awarded to FWO which shall be
developed on BOOT Basis.
b. FWO has planned and proposed development of Indus
Cascade on BOOT Basis in Joint Venture with various Chinese
Firms to harness water and power potential. Proposals are at
various stages of approval with the Government.
10. Miscellaneous Infrastructure Including Transit Facilities :
a. A comprehensive plan has been formulated for
development of Industrial Zones, Smart Cities and direly
needed logistic infrastructure along M-2, M-9 and Pakistan -
China Dedicated Freight Corridor.
b. Accordingly, number of Smart Cities, Industrial Zones,
Container Terminals, Grain and Fuel Storage Facilities and Ware
Houses etcetera are planned along the Motorways. Similarly, 8
x Smart Cities, 10 x Oil Storage Facilities, 10 x Industrial Zones
and 15 x Dry Ports are planned along Freight Corridor.
11. Exploration / Development of Mineral Potential :
 In order to exploit enormous mineral potential, a special
‘Mine Exploration and Development Organization’ was created
in FWO during 2015 and pilot project in FATA has been
successfully completed. Requisite technical expertize has been
developed to undertake strategic mining.
12. Human Resource Development. FWO is presently
managing the
country’s best Technical Training Institute (CTTI) :
Realizing the requirement of huge technical and skilled
workforce encompassing an entire spectrum of skill
industry at implementation tier, General and Technical
Education System(GATES) institutes are being developed along
CPEC routes. On the request of 8 KP Govt, FWO is in the
process of taking over non functional technical institutes of KP
to manage them and organize training in line with modern day
requirement as part of Corporate Social Responsibility.
Moreover, National University of Technology and Skills
Development (NUTECH) has been conceptualized and being
established with its constituent institutes all along the
corridor especially in remotest parts to train and prepare
our youth. The university will introduce the concept of basic to
higher education in the field of technology and skills
development for the first time in Pakistan.
 13. Conclusion :
CPEC is a win win synergy for both the nations and the
region. It is a rare opportunity for Pakistan to realize its
true strategic and economic potential. FWO in its capacity is
vigorously pursuing multi sectoral initiatives in sync with our
socio-economic imperatives. This of course, if not gigantic, is at
least a colossal undertaking requiring the private sector and
financial institutions to come forward and join hands for
expeditious implementation.

 DISADVANTAGES OF CPEC FOR PAKISTAN AND CHAINA :

Pakistan’s economic sovereignty essentially mortgaged to
China - The CPEC is based on a $46 Billion loan that
Pakistan has taken from China. It is not a FDI that China
will recover from the proceeds of the CPEC. The success of
CPEC depends on China’s economy remaining successful
and free of global sanctions to freely move its goods to the
rest of the world. This certainty has recently turned
suspect under the new US administration. What happens a
when the CPEC fails to generate the proverbial golden
eggs? How does Pakistan propose to repay this loan?
Military sovereignty at risk too - China has sent a naval
ship and other military assets to “safeguard” its
investment. If the port is in Pakistan and the ships are
docked in Pakistan’s terrirotorial waters, what is China
protecting its investments against? It is doubtful that a
boatload of armed terrorists will arrive from Mumbai to
indiscriminately shoot the Chinese or Pakistanis! To a
casual observer, it seems an awful lot like China is setting
up a small naval base in Pakistan to militarily control this
part of the world.
China with the lions share - it is estimated that the
movement of Chinese goods over the next decade will be
$1 Trillion. And no, that is not a typo! All that business
growth for China, while Pakistan assumes all the risk and is
liable for the $46 Billion loan. Suddenly the $46 Billion
seems like loose change, which it is for China. But it is a
mountain of a loan for Pakistan.
India conflict - Pakistan’s assertion of being a peaceful
nation seeking friendly relations with its neighbors is
contradicted by this project, because this inevitably
exacerbates conflict with India. It is an unnecessary
provocation with short term economic benefit and
appeasement of China in mind. It might have been more
prudent to negotiate India’s involvement and partnership
into this venture - not as an afterthought as has been
demonstrated through some half hearted comments from
vague unknown persons in Pakistan - but as a truly well
thought out venture that could wipe out the India enmity
and the risk of the venture in one master stroke. Very
shortsighted indeed!
US relations - The US was not in good terms with China
earlier under the Obama administration, and the
relationship has exponentially worsened under Trump. In
fact, there is a real chance of military conflict between the
US and China. In an extreme scenario, China might even
implode and break apart like the erstwhile Soviet Union. In
such an event, US’s need-based “friendship” will
evaporate very quickly for China’s allies and especially its
“"all weather friend”.
Balochistan - With its track record in corruption and
catering to the powerful Pounjabi elites in civilian and
military circles, Pakistan is not expected to fairly distribute
the riches of this venture to its rightful recipients,
including the Balochistan people. This will result is further
aggravation and disillusionment of this large province that
is already trying to break away from Pakistan. This is a
tremendous opportunity to bring them back in the fold,
and away from Indian influence, and hopefully Pakistan
will play its cards well.
Indigenous industry - China has an established track
record of arriving much like a horde of locusts and
completely wiping out local indigenous industry. The
floodgates to Pakistan have been opened to the Chinese
 and it is just a matter of time before Chinese goods do the
Walmart-effect on Pakistani industry and destroy what is
left of it. Perhaps Pakistan could learn a lesson or two from
neighbouring India’s "Make in India” initiative to not only
sustain local industry but also master strategic technology
in house.
Environmental impact - A repeat of the point above,
except China’s disregard for the environment and utter
destruction of ecological systems wherever its tentacles
reach, are a sad eventuality of letting China in.

 SOURCES :
https://www.quora.com
https://tribune.com.pk
http://cpec.gov.pk
https://en.wikipedia.org