China Pakistan Economic Corridor

China Pakistan Economic corridor (CPEC) refers to a collection of projects a clutch of major infrastructure projects currently under way in Pakistan. The corridor mainly consists of road, rail and power projects. It is intended to increase and rapidly expand Pakistan's infrastructure and also increase the relationship between China and Pakistan. Corridor is extremely important to China, it has been included in China's 13th five year plan. It is considered as an extension of Chinese one Belt, one road initiative. This corridor intends to link Kashgar in Xinjiang province of China to Gwadar deep sea port close to Pakistan’s border with Iran. Proposed infrastructure projects are worth approximately $11 billion, and will be financed by heavily-subsidized concessionary loans that will be dispersed to the Government of Pakistan by the Exim Bank of China, China Development Bank, and the Industrial and Commercial Bank of China. Over $33 billion worth of energy infrastructure are to be constructed by private consortia to help alleviate Pakistan's chronic energy shortages.

Corridor has been planned for more than seven decades now. First such plan of a corridor from Chinese border to Pakistan's deep water ports on the Arabian Sea came in 1950s. Again in 1998 China showed interest in Pakistan's deep-water harbour at Gwadar finally in 2002 China began construction at Gwadar port which was completed in 2006. The current form of the project was first proposed by General Pervez Musharraf, however it was postponed owing to the political instability in the country that followed Musharraf's step down. Finally Chinese Premier Li Keqiang and the Pakistani President Asif Ali Zardari have agreed to build an economic corridor between the two countries. Both sides have decided to further enhance mutual connectivity and both sides are connected to develop the long term plan for a China-Pakistan economic corridor. 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. On August 2015, China and Pakistan signed 20 more agreements worth $1.6 billion to further augment the scale and scope of CPEC. Then in November of the same year China included the CPEC into its 13th five-year development plan.

The CPEC is part of China’s regional transnational ‘One Belt One Road’ (OBOR) initiative that connects large patch of Asia and Eastern Europe. The primary aim of the “One Belt, One Road” (OBOR) initiative is to position China as the epicentre of regional as well as global economics and geopolitics. The OBOR has two important components: the Silk Road Economic Belt (SREB) and the Maritime Silk Road (MSR). ‘One Belt’, mainly known as SREB, implies land corridor connectivity from China to Central Asia and West Asia, going all the way to Europe; whereas ‘One Road’, known as MSR, implies maritime connectivity through the Strait of Malacca to India, and onwards to West Asia and East Africa. India, therefore, factors prominently in China’s exposition of the OBOR.

There are various benefits which are attached to China from CPEC. These benefits have economic, political and geographical dimensions. Some of these benefits are given below:

1. Gwadar Port is located close to the Strait of Hormuz. International oil trade is decided by this region. China can bypass a long route from South East Asia when CPEC is complete.

2. The CPEC will give China land access to the Indian Ocean, cutting the nearly 13,000 km sea voyage through the Strait of Malacca and around India to 2,000 km road journey from Gwadar to Kashgar. It could open up an energy and trade corridor from the Gulf region across Pakistan to western China.

3. CPEC will also help China in establishing its foothold more in Indian ocean region. China has been developing ports in various Indian ocean countries like Sri Lanka, Pakistan etc.

4. China western region is mostly underdeveloped. This region contains 71.4% of mainland China's area, but only 28.8% of its population, as of the end of 2002, and 19.9% of its total economic output, as of 2009. The development of Kashgar as a trade terminus will reduce isolation of the underdeveloped Xinjiang province and deepen its engagement with the rest of China.

5. Central Asian countries are also keen about CPEC due to their geographical isolation from important seas. It will allow Central Asian countries access to the Indian Ocean, while contributing to the OBOR initiative.

Gains are not only limited only to China Pakitan will also significantly gain from the current project. Corridor has the capacity to bhuilt the ruined economy of Pakistan. Country is in dire need of investments from abroad. Pakistan's economy has been severely dampened by the constant struggle between civilians and terrorist organisations. Pakistan also expects the CPEC will bind it closer with close friend China, giving it greater strategic leverage with both United States and India in the Indian Ocean region.

Click Here to Read Full Article

Click Here to Join Online Coaching for IAS (Pre.) Exam

<< Go Back To Magazine Articles Main Page