All You Need to Know About CPEC – Pak China Economic Corridor
Despite the fact that the CPEC affair has been flurrying massively since the last few years, however, this issue has still not been able to receive much limelight, at least to my knowledge. Although there are blended notions owing to the benefits and drawbacks of CPEC, but let us first explore What exactly CPEC is all about!
What is CPEC?
CPEC is basically a congregation of several different projects being carried out in Pakistan, with help from China, Worth $62 billion USD. Moreover, the basic agenda of CPEC is to boost the Pakistani infrastructure and economy by linking Gwadar to the Chinese province Xinjiang.
Firstly, bear in mind that this project is not a loan, rather an investment. But, how is it an investment? Let’s take a look at the statistics here.
$35 billion worth out of the total $45 billion are for Power projects. In addition, the debt to equity ratio of these projects is 80 to 20. Furthermore, the lender in case of this project are the Chinese banks and the borrowers are the Chinese companies.
Consequently, 1 to 1.2% of the venture includes the soft financing, which include the infrastructure projects. Now, keeping in mind all these statistics, we can foresee that Gwadar will be the focal point connecting all these projects together, owing to its strategic and regional importance and also due to the development of Gwadar International airport.
CPEC is believed to benefit Pakistan in many ways, aiding to its financial and economic development. Moreover, it will help enhance the strategic importance of Pakistan and also bridge the gap between it and the European, Asian and African continents at the same time.
Another important fact that needs realization here is that the whole focus of the western world is now shifting to South Asia because of cheap labor as well as low direct costs.
Besides, Pakistan and China have always supported each other in core interests and CPEC can undoubtedly be called as one of the most significant investments known in history, where one country is having such a huge investment in another one.
So, let’s take a look at the strategic importance of Gwadar and why it is so critical for both the nation.
Strategic Importance of Pak China Economic Corridor
China and Pakistan together have always had bilateral trade agreements between the two nations in the areas of politics as well as military affairs but slowly they are now converging their attention to the domain of economics.
The two regions are gradually increasing their collaboration in commerce and trade. Attributing to this fact, the two nations celebrated Pak-China Friendship in 2011.
Therefore, we can say that CPEC is basically an endorsement and an open manifestation of the continuing progressive relations between the two nations.
Gwadar is the point of convergence between the two nations, as it provides access to China to the Gulf, middle east. According to some estimates, the time required for logistics to reach Europe for China will reduce from 40 – 45 days to mere 10 days only. Owning to the warm waters of Arabian Sea, we have for long been studying about.
Xinjiang, is believed to be of significant importance because it has a lot of mineral wealth and also links to key central Asian countries. This integration between the nations, promotes the idea of regionalism, as apparent by the expression of official interest by Iran, Kazakhstan, Afghanistan and even Turkey in Pak China Economic Corridor.
Owing to the above stated facts, we can not say that CPEC is a bilateral project benefiting the two nations, but its a regional interest of all the neighboring countries as well.
CPEC Benefits to Pakistan
Undoubtedly, Pak China Economic Coridor has changed the whole scenario or rather it would be better to say, it has altered the overall landscape of the two nations as a whole. Primarily, because if you tend to visit the areas of Gilgit and Baltistan and happen to see the Karakorum Highway, you will be startled by the deeply structured tunnels and the depth of engineering techniques there.
So, now through all this not only the traffic flow has gone really spontaneous but also at the same time, the trade has increased. Apart from the projects and investments discussed earlier, it has also provided the residents of Gilgit and Baltistan direct access to Xinjiang. Henceforth, we can say that CPEC has been a major driver of upward and social mobility in the two regions.
The slow and gradual opening of Karakorum Highway is giving small business operators to enter in to new variable markets, giving them a chance to expand their operations. Therefore, all the residents of Gilgit/Baltistan and Xinjiang need is a permit, that is all. On account of that, the two nations can enter into bigger markets, opening up a lot of job opportunities for the residents of the two regions.
Another essential attribute that needs to be realized is that, big and powerful businesses, do need sub contractions, even if they do not want them. It is not pragmatically possible to engineer or fabricate each and everything on your own. So, basically all this bridges in the gap between destitute and solidarity of the two divisions.
The basic aim of CPEC was to enhance the economic ties and bilateral relations between the two nations, owing to the concept of OBOR – One Belt, One Road Project. Accordingly, the two nations are making strides to develop the eastern and western routes of CPEC. Let’s talk a little about these two in detail.
CPEC Western Route
The western route of CPEC would basically link the port of Gwadar with Quetta through Khuzdar, which is expected to reach completion by 2018. However, the parliament has been accusing the government that the western route is constantly being neglected. The Minister of Planning, Development and Interior Ahsan Iqbal has already expressed his gratitude towards the progress of CPEC western route.
Western route is believed to be the shortest route of the CPEC project. It starts from Khunjrab, passing through Burhan (Hakla), DI Khan (Yarik), Zhob, Quetta, Surab and Hoshab, it ultimately ends at Gwadar, and is 2,463 km in length.
As reported by one of the planning commission officials, the Havelian, Abbottabad and Manshehra division, about 40 km will be completed by May, 2018. Moreover, this segment is one of the most important extensions of the CPEC project.
CPEC Eastern Route
The purpose of Eastern Route is to connect Gwadar with Khujarab via Karachi, Lahore, Islamabad & Raikot. To connect Karachi with Gwadar, Makran Coastal highway will be used. Though this highway existed for long but minor development work is going on as it has to bear the load of heavy vehicles consistently.
The purpose of this route is to connect all the Major Cities of Pakistan with Gwadar including Islamabad, Lahore, Multan, Faisalabad but one must not forget the role Motorway will play in it.
As the name suggests, Western route will connect West Part of Pakistan with Gwadar whilst Eastern Route is supposed to connect rest of Pakistan with Gwadar. Both hold pivotal importance in the success of Pak China Economic Corridor and neither can be ignored.
Most importantly, due to incompetency in Previous Eras, Balochistan has been neglected for long and entire country had to face major repercussions because of it. Development of Western Route will not only empower the local Balochi’s, rather it will help eradicate poverty, illiteracy & extremism.
Such International Exposure, is surely to play a pivotal role in the personal development of Balochi’s. We must keep in mind that the development will come along this Route infrastructure. Investors will be inclined to invest on such Routes as it will help them reduce logistics costs.
Nonetheless, regardless of what the economists, journalists or analysts have to say, CPEC – Pak China Economic Corridor is surely going to play a vital role in the revival of Pakistan’s Econmoy, It’s access to International Markets & Products. The air has swayed in favor of Pakistan lately and this corridor has helped Pakistan improve it’s International Presence.
One must keep in mind that CPEC is a part of OBOR – One Belt One Road, an initiative by proposed by Xi Jinping in 2013. Quoted as a “Project of Century“, it aims to connect the more than 70 Countries by; “One Belt” part of it refers to the Silk Road Economic Belt while the “One Road” refers to the 21st-century Maritime Silk Road. Source – QZ
Nonetheless, we would love to hear your views about CPEC – Pak China Economic Corridor and how it will impact Pakistan either in a Good or Bad way. Don’t forget to leave your thought’s in the comments section!