English Title: China Pakistan Economic Corridor and Its Social Economic impacts
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The history of Pakistan is that the history of the region, that nowadays is Pakistan. CPEC can open its doors to a large amount of money and product opportunities not only for Pakistan but can also physically create a Chinese Association in its markets in Asia, Europe and beyond.
Most XVIII from large plates and cups of oil is currently transported from the Malacca Strait to Shanghai (takes three months) and Gawadar becomes able to work, the space will be changed to an alternative way not 5 000 km If all goes well on the list with the details of the twenty agreements for energy over a period of time with gas, coal and solar energy at the same time will be able to leave 10,400 megawatts of energy at a time until March 2018 with harmonized China Newspaper, they come to leave 16, 400 MW of power for a certain period of time.
Impact of CPEC projects on social welfare for Pakistan related to its three dimensions of welfare; education, health and housing. The development strength of this project indicates that there will be 5.21 percent growth in social welfare in Pakistan, up till 2020. At provincial level highest growth in social welfare impact can be ranked as Baluchistan (6.4 percent), Sindh (6.31 percent), KP (5.19 percent), and Punjab (3.5 percent).
The net impact can also be depicted by its three dimensions of social welfare:-
Education 3.85 percent,
Health 4.74 percent
Housing 8.6 percent
Districts which have high level of poverty and unemployment will significantly improve quality of life relative to other districts. Moreover, districts which are located on its three routes also portray considerable growth in its welfare dimensions. Finally, the realization of CPEC is an indicator of the shared dream of unparalleled prosperity for the region.
Keywords: China Pakistan economic corridor; social impact, capital stock, economic interest
2.2 ????????…………………………………… ……………………………….23
5 . ?????………………………………………………………………….68
Table of Contents
1.1 Vision and scope………………………………………………………………………………………7
1.2 Supervision …………………………………………………………………………………………….7
1.3 Infrastructure Network……………………………………… ……………………………………. 8
1.4 Land Corridor Including ……………………………………… …………………………..9
1.5 China Pakistan Economic Corridor……………………………………………………………..9
1.5.1 Maritime Silk Road………………………………………………………………………. 9
1.5.2 Ice Silk Road………………………………………………………………………………..10
1.6 Cultural and Educational Plan……………………………………………………………………12
1.6.1) Union of Silk Road Universities………………………………………………………..12
1.7 Financial Institutions………………………………………………………………………………..13
1.7.1 AIIB ……………………………………… …………………………………………………..13
1.7.2 Silk Road Funds……………………………………. …………………………….13
1.7.3 Make full use of China’s infrastructure expertise………………………………….13
1.8 Chinese Population 14
1.9 History of China……………………………………… ………………………………………………15
1.10 China Economic History………………………………………………………….16
1.11 Economic History of Pakistan…………………………………………………….17
2. Literature Review
2.1 China Pakistan Economic Corridor ………………………………………………20
2.1.2 CPEC Announcement…………………………………….. ….. ……………………21
2.1.3 Follow-up Development Project…………………………………………………………22
2.2 Gwadar Port Complex…………………………………………………………………….23
2.2.1 Projects in Gwadar City……………………………………………………………………………24
2.3 Road Projects…………………………………………………………………………………………….25
2.4 Eastern Calibration…………………………………………………………………………………….26
2.5 Western Unity…………………………………………………………………………………………….27
2.6 Related Road Projects ………………………………………………………………………………..30
2.7 Energy Sector Project……………………………………………………………………………….32
2.8 Other areas of the company ……………………………………………………………………….34
2.9 Impact on Pakistani Economy…………………………………………………………………….36
2.10 What is CPEC……………………………………………………………………36
2.11 Economic Outlook of CPEC………………………………………………………38
3. Social Impact of CPEC
3.1 Social Impact of CPEC……………………………………………………………39
3.3 Social Sector Improvement……………………………………………………….41
4. Discussion ; Analysis
4.1 Discussion and Conclusions………………………………………………………46
4.2 Power Sector Development ………………………………………………………50
4.3 CPEC Energy Development Project…………………………………………………………….52
4.4 Industrial Development Opportunities…………………………………………….53
4.5 Direct Investment in Pakistan……………………………………………………..55
4.6 Development of entrepreneurs in Pakistan………………………………………..57
4.7 Agricultural Development in Pakistan…………………………………………….58
4.8 Tourism Development ……………………………………………………………..60
4.9 Skills Labor Development……………………………………… …………………………… 61
4.10 Development of the banking industry……………………………………………………….. .64
4.11 Environmental Impact ……………………………………………………………………………… 65
5 . SWOT Analysis
5.1 Strength …………………………………………………………………………..66
6. Summary and Conclusion……………………..………………………………72
The Silk Road Economic Belt and the 21st-century Maritime Silk Road or The Belt and Road Initiative (BRI) is a development strategy proposed by the HYPERLINK ;https://en.wikipedia.org/wiki/Government_of_China; o ;Government of China; Chinese government that focuses on connectivity and cooperation between Eurasian countries, primarily the HYPERLINK ;https://en.wikipedia.org/wiki/People%27s_Republic_of_China; o ;People’s Republic of China" People’s Republic of China (PRC), the land-based HYPERLINK ;https://en.wikipedia.org/wiki/Silk_Road_Economic_Belt; o ;Silk Road Economic Belt; Silk Road Economic Belt (SREB) and the ocean-going HYPERLINK ;https://en.wikipedia.org/wiki/Maritime_Silk_Road; o ;Maritime Silk Road; Maritime Silk Road (MSR). The initiative was known in English as the One Belt and One Road Initiative (OBOR) until 2016. The Chinese government calls the initiative ;a bid to enhance regional connectivity and embrace a brighter future,; while critics call it a push by China
1.1 Vision and Scope
The initiative was unveiled by HYPERLINK ;https://en.wikipedia.org/wiki/Xi_Jinping; o ;Xi Jinping; Xi Jinping in late 2013, and was thereafter promoted by HYPERLINK ;https://en.wikipedia.org/wiki/Premier_of_the_People%27s_Republic_of_China; o ;Premier of the People’s Republic of China" Premier HYPERLINK "https://en.wikipedia.org/wiki/Li_Keqiang" o "Li Keqiang" Li Keqiang during HYPERLINK "https://en.wikipedia.org/wiki/State_visit" o "State visit" state visits to HYPERLINK "https://en.wikipedia.org/wiki/Asia" o "Asia" Asia and HYPERLINK "https://en.wikipedia.org/wiki/Europe" o "Europe" Europe. The initiative quickly was covered by the official media intensively, and became the most frequently mentioned concept in the official newspaper HYPERLINK "https://en.wikipedia.org/wiki/People%27s_Daily" o "People’s Daily; People’s Daily by 2016.
The initial focus has been infrastructure investment, education, construction materials, railway and highway, automobile, real estate, power grid, and iron and steel. Already, some estimates list the Belt and Road Initiative as one of the largest infrastructure and investment projects in history, covering more than 68 countries, including 65% of the world’s population and 40% of the global GDP as of 2017.
The Belt and Road Initiative addresses an ;infrastructure gap; and thus has potential to accelerate economic growth across the HYPERLINK ;https://en.wikipedia.org/wiki/Asia_Pacific; o ;Asia Pacific; Asia Pacific area and HYPERLINK ;https://en.wikipedia.org/wiki/Central_and_Eastern_Europe; o ;Central and Eastern Europe; Central and Eastern Europe: a report from the HYPERLINK ;https://en.wikipedia.org/wiki/World_Pensions_%26_Investments_Forum; o ;World Pensions ; Investments Forum; World Pensions Council (WPC) estimates that Asia, excluding China, requires up to US$900 billion of infrastructure investments per year over the next decade, mostly in debt instruments, 50% above current infrastructure spending rates. ;The gaping need for long term capital explains why many Asian and Eastern European heads of state ;gladly expressed their interest to join this new international financial institution focusing solely on ‘real assets’ and infrastructure-driven economic growth;.
The Leading Group for Advancing the Development of One Belt One Road was formed sometime in late 2014, and its leadership line-up publicized on February 1, 2015. This steering committee reports directly into the HYPERLINK ;https://en.wikipedia.org/wiki/State_Council_of_the_People%27s_Republic_of_China; o ;State Council of the People’s Republic of China" State Council of the People’s Republic of China and is composed of several political heavyweights, evidence of the importance of the program to the government. Vice-Premier HYPERLINK ;https://en.wikipedia.org/wiki/Zhang_Gaoli; o ;Zhang Gaoli; Zhang Gaoli, who is also a member of the 7-man HYPERLINK ;https://en.wikipedia.org/wiki/Politburo_Standing_Committee; o ;Politburo Standing Committee; Politburo Standing Committee, was named leader of the group, with HYPERLINK ;https://en.wikipedia.org/wiki/Wang_Huning; o ;Wang Huning; Wang Huning, HYPERLINK ;https://en.wikipedia.org/wiki/Wang_Yang_(politician); o ;Wang Yang (politician); Wang Yang, HYPERLINK ;https://en.wikipedia.org/wiki/Yang_Jing; o ;Yang Jing; Yang Jing, and HYPERLINK ;https://en.wikipedia.org/wiki/Yang_Jiechi; o ;Yang Jiechi; Yang Jiechi being named deputy leaders.
In March 2014, Chinese Premier HYPERLINK ;https://en.wikipedia.org/wiki/Li_Keqiang; o ;Li Keqiang; Li Keqiang called for accelerating the Belt and Road Initiative along with the Bangladesh-China-India-Myanmar Economic Corridor and the HYPERLINK ;https://en.wikipedia.org/wiki/China-Pakistan_Economic_Corridor; o ;China-Pakistan Economic Corridor; China-Pakistan Economic Corridor in his government work report presented to the annual meeting of the country’s legislature.
1.3 Infrastructure networks
The Belt and Road Initiative is geographically structured along several land corridors, and the maritime silk road. Infrastructure corridors encompassing around 60 countries, primarily in Asia and Europe but also including HYPERLINK "https://en.wikipedia.org/wiki/Oceania" o "Oceania" Oceania and HYPERLINK "https://en.wikipedia.org/wiki/East_Africa" o "East Africa" East Africa, will cost an estimated US$4-8 trillion The initiative has been contrasted with the two US-centric trading arrangements, the HYPERLINK "https://en.wikipedia.org/wiki/Trans-Pacific_Partnership" o "Trans-Pacific Partnership" Trans-Pacific Partnership and the HYPERLINK "https://en.wikipedia.org/wiki/Transatlantic_Trade_and_Investment_Partnership" o "Transatlantic Trade and Investment Partnership" Transatlantic Trade and Investment Partnership.
1.3.1 Silk Road Economic Belt
When Chinese leader HYPERLINK "https://en.wikipedia.org/wiki/Xi_Jinping" o "Xi Jinping" Xi Jinping visited HYPERLINK "https://en.wikipedia.org/wiki/Astana,_Kazakhstan" o "Astana, Kazakhstan" Astana, Kazakhstan and HYPERLINK "https://en.wikipedia.org/wiki/Southeast_Asia" o "Southeast Asia" Southeast Asia in September and October 2013, he raised the initiative of jointly building the Silk Road Economic Belt and the 21st-Century Maritime Silk Road. Essentially, the ‘belt’ includes countries situated on the original HYPERLINK "https://en.wikipedia.org/wiki/Silk_Road" o "Silk Road" Silk Road through Central Asia, HYPERLINK "https://en.wikipedia.org/wiki/West_Asia" o "West Asia" West Asia, the Middle East, and HYPERLINK "https://en.wikipedia.org/wiki/Europe" o "Europe" Europe. The initiative calls for the integration of the region into a cohesive economic area through building infrastructure, increasing cultural exchanges, and broadening trade. Apart from this zone, which is largely analogous to the historical Silk Road, another area that is said to be included in the extension of this ‘belt’ is HYPERLINK "https://en.wikipedia.org/wiki/South_Asia" o "South Asia" South Asia and Southeast Asia. Many of the countries that are part of this belt are also members of the China-led HYPERLINK "https://en.wikipedia.org/wiki/Asian_Infrastructure_Investment_Bank" o "Asian Infrastructure Investment Bank" Asian Infrastructure Investment Bank (AIIB). North, central and south belts are proposed. The North belt would go through Central Asia, HYPERLINK "https://en.wikipedia.org/wiki/Russia" o "Russia" Russia to HYPERLINK "https://en.wikipedia.org/wiki/Europe" o "Europe" Europe. The Central belt goes through Central Asia, West Asia to the HYPERLINK "https://en.wikipedia.org/wiki/Persian_Gulf" o "Persian Gulf" Persian Gulf and the Mediterranean. The South belt starts from HYPERLINK "https://en.wikipedia.org/wiki/China" o "China" China to Southeast Asia, South Asia, to the HYPERLINK "https://en.wikipedia.org/wiki/Indian_Ocean" o "Indian Ocean" Indian Ocean through HYPERLINK "https://en.wikipedia.org/wiki/Pakistan" o "Pakistan" Pakistan. The Chinese One Belt strategy will integrate with Central Asia through HYPERLINK "https://en.wikipedia.org/wiki/Kazakhstan" o "Kazakhstan" Kazakhstan’s Nurly Zhol infrastructure program.
1.4 The land corridors include:
The New Eurasian Land Bridge
The HYPERLINK ;https://en.wikipedia.org/wiki/New_Eurasian_Land_Bridge; o ;New Eurasian Land Bridge; New Eurasian Land Bridge runs from Western China to Western Russia through Kazakhstan, and includes the Silk Road Railway through China’s Xinjiang Autonomous Region, Kazakhstan, Russia, Belarus, Poland and Germany.
The China–Mongolia–Russia Corridor
The China–Mongolia–Russia Corridor will run from Northern China to Eastern Russia.
The China–Central Asia–West Asia Corridor
The China–Central Asia–West Asia Corridor will run from Western China to Turkey.
The China–Indochina Peninsula Corridor
The China–Indochina Peninsula Corridor will run from Southern China to Singapore.
The Bangladesh-China-India-Myanmar Economic Corridor
The Bangladesh-China-India-Myanmar ( HYPERLINK "https://en.wikipedia.org/wiki/BCIM_Forum" o "BCIM Forum" BCIM) Economic Corridor, runs from southern China to Myanmar and is officially classified as "closely related to the Belt and Road Initiative".
1.5 The HYPERLINK "https://en.wikipedia.org/wiki/China%E2%80%93Pakistan_Economic_Corridor" o "China–Pakistan Economic Corridor" China–Pakistan Economic Corridor
The HYPERLINK "https://en.wikipedia.org/wiki/China%E2%80%93Pakistan_Economic_Corridor" o "China–Pakistan Economic Corridor" China–Pakistan Economic Corridor ( HYPERLINK "https://en.wikipedia.org/wiki/Simplified_Chinese_characters" o "Simplified Chinese characters" Chinese: ??-????????; HYPERLINK "https://en.wikipedia.org/wiki/Urdu_language" o "Urdu language" Urdu: ???????-??? ??????? ?????????; also known by the HYPERLINK "https://en.wikipedia.org/wiki/Acronym" o "Acronym" acronym CPEC), also classified as "closely related to the Belt and Road Initiative, which is a US$62 billion collection of infrastructure projects throughout HYPERLINK "https://en.wikipedia.org/wiki/Pakistan" o "Pakistan" Pakistan that aims to rapidly modernize Pakistan’s transportation networks, energy infrastructure, and economy.. On November 13, 2016, CPEC became partly operational when Chinese cargo was transported overland to HYPERLINK ;https://en.wikipedia.org/wiki/Gwadar_Port; o ;Gwadar Port;Gwadar Port for onward maritime shipment to HYPERLINK ;https://en.wikipedia.org/wiki/Africa; o ;Africa; Africa and HYPERLINK ;https://en.wikipedia.org/wiki/West_Asia; o ;West Asia; West Asia.
1.5.1 Maritime Silk Road
The Maritime Silk Road, also known as the ;21st Century Maritime Silk Road; (21????????) is a complementary initiative aimed at investing and fostering collaboration in Southeast Asia, Oceania, and North Africa, through several contiguous bodies of water: the HYPERLINK ;https://en.wikipedia.org/wiki/South_China_Sea; o ;South China Sea; South China Sea, the HYPERLINK ;https://en.wikipedia.org/wiki/South_Pacific_Ocean; o ;South Pacific Ocean; South Pacific Ocean, and the wider HYPERLINK ;https://en.wikipedia.org/wiki/Indian_Ocean; o ;Indian Ocean; Indian Ocean area.
The Maritime Silk Road initiative was first proposed by HYPERLINK ;https://en.wikipedia.org/wiki/Xi_Jinping; o ;Xi Jinping; Xi Jinping during a speech to the Indonesian Parliament in October 2013. Like its sister initiative the Silk Road Economic Belt, most countries in this area have joined the China-led Asian Infrastructure Investment Bank.
1.5.2 Ice Silk Road
In addition to the Maritime Silk Road, HYPERLINK ;https://en.wikipedia.org/wiki/Xi_Jinping; o ;Xi Jinping; Xi Jinping also urged the close cooperation between HYPERLINK ;https://en.wikipedia.org/wiki/Russia; o ;Russia; Russia and HYPERLINK ;https://en.wikipedia.org/wiki/China; o ;China; China to carry out the Northern Sea Route cooperation to realize an ;Ice Silk Road; to foster the development in the Arctic region. China COSCO Shipping Corp. has completed several trial trips on Arctic shipping routes, the Transport departments from both countries are constantly improving policies and laws related to development in the Arctic, and Chinese and Russian companies are seeking cooperation on oil and gas exploration in the area and to advance comprehensive collaboration on infrastructure construction, tourism and scientific expeditions.
In May 2014, Premier HYPERLINK ;https://en.wikipedia.org/wiki/Li_Keqiang; o ;Li Keqiang; Li Keqiang visited Kenya to sign a cooperation agreement with the Kenyan government. Under this agreement, the HYPERLINK ;https://en.wikipedia.org/wiki/Mombasa%E2%80%93Nairobi_Standard_Gauge_Railway; o ;Mombasa–Nairobi Standard Gauge Railway; Mombasa–Nairobi Standard Gauge Railway was constructed connecting Mombasa to Nairobi. After completion, the railroad stretches approximately 300 miles (480 km) costing around $250 million HYPERLINK ;https://en.wikipedia.org/wiki/USD; o ;USD; USD. In September 2015, China’s HYPERLINK "https://en.wikipedia.org/wiki/Sinomach" o "Sinomach"Sinomach signed a strategic, cooperative memorandum of understanding with HYPERLINK "https://en.wikipedia.org/wiki/General_Electric" o "General Electric" General Electric. The memorandum of understanding set goals to build wind turbines, to promote clean energy programs and to increase the number of energy consumers in sub-Saharan Africa.
During his 2016 HYPERLINK "https://en.wikipedia.org/wiki/Policy_address_of_Hong_Kong" o "Policy address of Hong Kong" policy address, HYPERLINK "https://en.wikipedia.org/wiki/Hong_Kong" o "Hong Kong" Hong Kong chief executive HYPERLINK "https://en.wikipedia.org/wiki/CY_Leung" o "CY Leung" CY Leung’s announced his intention of setting up a Maritime Authority aimed at strengthening Hong Kong’s maritime logistics in line with Beijing’s economic policy. Leung mentioned ;One Belt, One Road; no fewer than 48 times during the policy address, but details were scant.
1.6 Cultural and Educational Initiative
1.6.1 HYPERLINK ;https://en.wikipedia.org/wiki/University_Alliance_of_the_Silk_Road; o ;University Alliance of the Silk Road; University Alliance of the Silk Road
A university alliance centered at HYPERLINK ;https://en.wikipedia.org/wiki/Xi%27an_Jiaotong_University; o ;Xi’an Jiaotong University" Xi’an Jiaotong University aims to support the Belt and Road initiative with research and engineering, and to foster understanding and academic exchange. The network extends beyond the economic zone, and includes law school alliance to ;serve the Belt and Road development with legal spirit and legal culture.;
1.7 Financial institutions
The HYPERLINK ;https://en.wikipedia.org/wiki/Asian_Infrastructure_Investment_Bank; o ;Asian Infrastructure Investment Bank; Asian Infrastructure Investment Bank, first proposed by China in October 2013, is a development bank dedicated to lending for projects regarding infrastructure. As of 2015, China announced that over one trillion yuan ($160 billion US) of infrastructure projects were in planning or construction.
The primary goals of AIIB are to address the expanding infrastructure needs across Asia, enhance regional integration, promote economic development and improve the public access to social services. On June 29 2015, the Articles of Agreement of the Asian Infrastructure Investment Bank (AIIB), the legal framework was signed in HYPERLINK ;https://en.wikipedia.org/wiki/Beijing; o ;Beijing; Beijing. The proposed multilateral bank has an authorized capital of $100 billion, 75% of which will come from Asian and HYPERLINK ;https://en.wikipedia.org/wiki/Oceania; o ;Oceania; Oceania countries. China will be the single largest stakeholder, holding 26% of voting rights. The bank plans to start operation by year end.
1.7.2 Silk Road Fund
In November 2014, HYPERLINK ;https://en.wikipedia.org/wiki/Xi_Jinping; o ;Xi Jinping; Xi Jinping announced plans to create a $40 billion HYPERLINK ;https://en.wikipedia.org/wiki/USD; o ;USD; USD development fund, which will be distinguished from the banks created for the initiative. As a fund, its role will be to invest in businesses rather than lend money for projects. The HYPERLINK ;https://en.wikipedia.org/wiki/Karot_Hydropower_Project; o ;Karot Hydropower Project;Karot Hydropower Project in HYPERLINK ;https://en.wikipedia.org/wiki/Pakistan; o ;Pakistan; Pakistan is the first investment project of the Silk Road Fund, and is not part of the much larger CPEC investment.
In January 2016, the Sanxia Construction Corporation began work on the HYPERLINK ;https://en.wikipedia.org/wiki/Karot_Hydropower_Station; o ;Karot Hydropower Station;Karot Hydropower Station 50 kilometres (31 mi) from HYPERLINK ;https://en.wikipedia.org/wiki/Islamabad; o ;Islamabad; Islamabad. This is the Silk Road Fund’s first foreign investment project. The Chinese government has already promised to provide HYPERLINK "https://en.wikipedia.org/wiki/Pakistan" o "Pakistan" Pakistan with at least $350 million HYPERLINK "https://en.wikipedia.org/wiki/USD" o "USD" USD by 2030 to finance the hydropower station.
Commentary and Criticism
The Belt and Road Initiative has garnered much media attention, and has been analyzed from a number of perspectives.
A new kind of multilateralism
In his March 29, 2015 speech at the HYPERLINK "https://en.wikipedia.org/wiki/Boao_Forum_for_Asia" o "Boao Forum for Asia"Boao Forum for Asia (BFA) annual conference, President HYPERLINK "https://en.wikipedia.org/wiki/Xi_Jinping" o "Xi Jinping" Xi Jinping said:The Chinese economy is deeply integrated with the global economy and forms an important driving force of the economy of Asia and even the world at large. China’s investment opportunities are expanding. Investment opportunities in infrastructure connectivity as well as in new technologies, new products, new business patterns, and new business models are constantly springing up. China’s foreign cooperation opportunities are expanding. We support the multilateral trading system, devote ourselves to the HYPERLINK "https://en.wikipedia.org/wiki/Doha_Round" o "Doha Round" Doha Round negotiations, advocate the Asia-Pacific free trade zone, promote negotiations on regional comprehensive economic partnership, advocate the construction of the Asian Infrastructure Investment Bank (AIIB), boost economic and financial cooperation in an all-round manner, and work as an active promoter of HYPERLINK "https://en.wikipedia.org/wiki/Economic_globalization" o "Economic globalization" economic globalization and regional integration.
Xi also insisted that, from a HYPERLINK "https://en.wikipedia.org/wiki/Geoeconomics" o "Geoeconomics" geo-economic standpoint, the Silk Road Fund and the Asian Infrastructure Investment Bank would foster "economic connectivity and a new-type of industrialization and promote the common development of all countries as well as the peoples’ joint enjoyment of development fruits.;
1.7.3 Leveraging China’s infrastructure expertise
China is a world leader in infrastructure investment. In contrast with the general under-investment in transportation infrastructure in the industrialized world after 1980 and the pursuit of export-oriented development policies in most HYPERLINK "https://en.wikipedia.org/wiki/Asia" o "Asia" Asian and HYPERLINK "https://en.wikipedia.org/wiki/Eastern_Europe" o "Eastern Europe" Eastern European countries, China has pursued an HYPERLINK "https://en.wikipedia.org/wiki/Infrastructure-based_development" o "Infrastructure-based development" infrastructure-based development strategy, which has resulted in engineering and construction expertise and a wide range of modern reference projects from which to draw, including roads, bridges, tunnels, and HYPERLINK "https://en.wikipedia.org/wiki/High_speed_rail" o "High speed rail" high speed rail projects.
Members of the HYPERLINK "https://en.wikipedia.org/wiki/World_Pensions_%26_Investments_Forum" o "World Pensions & Investments Forum" World Pensions Council (WPC), a non-profit policy research organization, have argued the Belt and Road initiative constitutes a natural extension of the HYPERLINK "https://en.wikipedia.org/wiki/Infrastructure-based_development" o "Infrastructure-based development" infrastructure-driven economic development framework that has sustained the rapid economic growth of China since the adoption of the HYPERLINK "https://en.wikipedia.org/wiki/Chinese_economic_reform" o "Chinese economic reform" Chinese economic reform under chairman HYPERLINK "https://en.wikipedia.org/wiki/Deng_Xiaoping" o "Deng Xiaoping" Deng Xiaoping, which could eventually reshape the HYPERLINK "https://en.wikipedia.org/wiki/Eurasia" o "Eurasia" Eurasian economic continuum, and, more generally, the international economic order.
Between 2014 and 2016, China’s total trade volume in the countries along Belt and Road exceeded $3 trillion, created $1.1 billion revenues and 180,000 jobs for the countries involved. However, the worries in partnering countries are whether the large debt burden on China to promote the Initiative will make China’s pledges declaratory.1.8 Demographic of China
Language Mandarin Chinese
President of China Xi Jinping
Prime Minister of China Li Keqiang
GDP Per Capita 8481
Population 1,373, 541,278 (Jul 2016 est)
National Bird Red-Crowned Crane
National Sports Ping Pong / Table Tennis
National Flower Peony
National Dance Dragon Dance & Lion Dance
National Fruit Fuzzy KiwiFruit
1.9 History of China: China is currently the most important standard country in the world. Let’s start with most of the history about China. According to the history of China, the history dates from 1500 BC to the dynasty (1600-1046 BC). In several books and ancient historical generals, together with the book ;The records of a good historian; (100 BC).And therefore the bamboo analysis (before 296 BC). It describes the beliefs and rituals of Civilizations. Within the size of the Chou government, many Chinese cultures, psychology, lifestyle and innovation have evolved, but in an extremely short time, the Chow government began to weaken due to internal and external pressure on the Chow government. VIII century. Due to the weaker government, the government finally divided into peaceful countries. These countries work independently and establish their own management rules. This is often the cause of China’s war started in 1972 China’s history reflects the darkness of several kingdoms and control systems and receives alternative countries to attack. China covers a significantly increasing amount, moving from a centrally planned economy to a market economy. Today, China could be a country with a better average economic benefit complicates the development desires in which the Bank continues to play a very important role in development. When the struggle and development of so many years and now China has become one of the most powerful countries in the world. At present, China exports all raw materials to the world. Chinese culture, rituals and traditions reproduce the state of financial gain and the corresponding increase in per capita income in a very short time. China’s finances in several countries, mainly in Pakistan, CPEC project represents new horizons for the event and the consolidation of China-China relations CITATION CPE17 l 1033 (CPEC, 2017). 1.10 Economic History of China China’s spectacular upsurge over the past half century is the most outstanding examples of the impact of introducing an economy into global markets. China has experienced a swing from a fundamentally agricultural society to an industrial capital over the period of time. In the early 1990s China’s economy recuperated momentum. In early 1992, China’s dominant leader at the time Deng Xiaoping made a series of political statement sprem editated to give new incentives and revive the process of economic reform. Later in that year the 14th National Communist Party Congress supported by Deng’s rehabilitated impetus for market reforms. In 1993, happenings like rise in productivity and prices and in investment outside the state budget, also more than 2,000 special economic zones powered the economic development, the government sanctioned added long-term reforms which intended to give a chance to market oriented organizations and control over the financial structure.State enterprises would continue to control many vital industries in what was now termed a "socialist market economy". To overcome the hyperinflation, government starts speculative loans, increases interest rates, and reexamined investment projects. Consequently the growth rate was strengthened, and the inflation rate dropped to8% in early 1996 from over 17% in 1995. Chinese economy persistent to grew at rapidly in 1996 at the rate of about 9.5%, along with low inflation. However, economy observed slow pace for the next 3 years, partially influenced by the Asian Financial Crisis. The official growth rate in 1997 is 8.9%,in 1998 is 7.8% and 7.1% for 1999. Inflation rate dropped between “1995 to 1999″because of tighter monetary policies and solid measures to regulate food prices. China developed as the second largest economy of the world in 1999, with its 1.25 billion people but GDP of just $3,800 per capita.Chu, Katy (February 14, 2011
In October 2003, Chinese lawmakers disclosed several recommended modifications to the state constitution succeeding the Chinese Communist Party’s Third Plenum. The most important proposal was to provide protection for private property rights. Officials also specified that there would be a fresh emphasis on certain phases of overall government economic policy which comprises of the efforts to diminish unemployment, rebalance income dispersal among urban and rural areas, and to uphold economic development whereas shielding the environment and refining social parity. National People’s Congress permitted the modifications in March 2004. In October 2005, Fifth Plenum approved the 11th Five-Year Economic Program (2006–2010) intended to build a "socialist harmonious society" through more composed wealth distribution and developed facilities like education, medical care, and social security. The National People’s Congress approved the 11th Five-Year Program in March 2006. The plan designed for a comparatively traditional 45% increase in GDP and a 20% decrease in energy intensity (energy consumption per unit of GDP) by 2010. During the period 1990–2004, China’s economy nurtured at an average rate of 10% per year, which is the highest growth rate in the world. In 2003, China’s GDP grew 10.0%, in 2004 rate is 10.1%, and even faster 10.4% in 2005. China’s total trade in 2006 exceeded $1.76 trillion, which makes China the world’s third-largest trading nation after U.S. and Germany. China’s gross domestic product raised at US$3.4 trillion while Germany’s GDP was USD $3.3 trillion for 2007,thus making China the world’s third largest economy by GDP. Established on these figures, in 2007 China recorded its fastest growth since 1994 when the GDP grew by 13.1 percent. Social and economic indicators have enhanced after several modifications, but there was also mounting discrimination between highly developed coastal provinces and the less developed inland provinces. In 2007, according to UN evaluations, about 130 million people in China mostly living in rural areas of the inland provinces are poor, and consume less than $1 a day and about 35% of the Chinese population lives under $2 per day. China launched its Economic Stimulus Plan to deal specifically with the Global financial crisis of 2008–2009. It has mainly concentrated on increasing inexpensive accommodation, facilitation credit limitations for mortgage and SMEs and lower taxes like on real estate and commodities sales which will push more public investment into infrastructure development, such as the rail network, roads and ports.
The GDP value of China represents 18.06 percent of the world economy. The Gross Domestic Product (GDP) in China was worth 11199.15 billion US dollars in 2016. GDP in China be around 1790.50 USD Billion from 1960 until 2016, attaining an all-time high of 11199.15 USD billion in 2016 and a record low of 47.21 USD Billion in 1962.
Fig 1-1 China GDP (1990-2016)
Recent Development and Poverty Alleviation in China During the last 20 years China has financed intensively in public infrastructure. Like in transportation sector, it has enabled access to markets, facilitated local market incorporation. Also, this investment dropped costs of production and transportation which allowed China to contest both domestically and internationally. Moreover contributing to growth, this investment also directly assisted to decrease poverty by increasing access to services and economic opportunities. Targeted infrastructure expenditure has also been a part of National Poverty-Alleviation Programs. The Chinese government’s investment in transportation infrastructure has been increased sharply since 1990 with its pre-emptive fiscal policy to incentive economic growth and cuts poverty through enhanced transportation infrastructure. Countless development has been made in developing quantity as well as quality of countryside highways. Highways in China are more reachable than other transportation infrastructure and thus play a vital role in economic growth and poverty decline in countryside. In 1984, the Chinese government lunched Food-for-Work program to build irrigation, water conservation projects, and rural highways. This program not only delivered essential infrastructure in deprived areas but also short-term jobs for poor populations. Under the program government offers food, cotton, and industrial products free and those products are used as payment to workers of rural highway. Local governments were supposed to provide corresponding resources to pay for materials and equipment. Throughout the 8-7 National Poverty Reduction Program that intended to encourage and help 80 million people out of poverty from 1994 to 2000, the Chinese government spent 0.92 billion Yuan every year on construction countryside highways in 529 poor counties in 21 provinces. Under the plan period not only42,000 kilometers of new rural highways were constructed yearly but also quality of rural highways has significantly improved. In 1998, the Chinese government decided to fast-track construction of infrastructure especially county and township highway networks. China inaugurated to gadget a highway construction program in 2002, to stretch to counties in the western areas. This new program is an important part of the Chinese government’s campaign to progress transportation and uphold economic development in the western China which covers 17 provinces and 252 construction projects that resulting in 26,098 kilometers of roads. The total investment is estimated to reach 31 billion Yuan in which 16.7 billion invested by the central government and 14.3 billion by native governments. In 2003, the Chinese government launched another nationwide inter-county and rural highway construction program. Under this program more than 5,300 projects started which includes 78,000kilometers of roads of construction for a deliberate investment of 75 billion Yuan. This program is a significant signal that China will encourage speedy development of rural highways in its efforts to eliminate poverty. In the mid-1990s The Roads Improvement for Poverty Alleviation (RIPA) program was started with sustenance of World Bank in designated provinces. This program emphasis on connecting those rural villages which does not has access to the current road systems. Number of vehicles, and passenger and cargo transportation developed rapidly in the RIPA influence zone. With the development of transportation infrastructure and progress of the farmer’s income there will be more and more rural domestic purchased vehicles to commence non-agricultural industries or facilitate travel. The effective execution of poverty-targeted involvements such as the RIPA projects which results in the productive role of governments at numerous stages and they accounted for 66.05 % of the total investment in RIPA. To tackle with capital deficiencies, local governments approved tax discounts and formulated privileged terms for land, materials, water, electricity, and so on. Significant regulations and international principles were the main reasons for the successful implementation of RIPA. Dependable maintenance guaranteed sustainability after completion of RIPA projects. Measures comprised of establishing township maintenance stations for professional maintenance, implementing maintenance contests, planting trees to improve the environment of the highways, and formulating regulations to ensure the smooth operation of the highways.1.11 Economic History of Pakistan:
Pakistan’s economy is the HYPERLINK "https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)" o "List of countries by GDP (PPP)" 24th largest in the world in terms of HYPERLINK "https://en.wikipedia.org/wiki/Purchasing_power_parity" o "Purchasing power parity" purchasing power parity (PPP), HYPERLINK "https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)" o "List of countries by GDP (nominal)" 42nd largest in terms of nominal HYPERLINK "https://en.wikipedia.org/wiki/Gross_domestic_product" o "Gross domestic product" gross domestic productand HYPERLINK "https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita" o "List of countries by GDP (PPP) per capita" 147th in the world for 2016 as per nominal HYPERLINK "https://en.wikipedia.org/wiki/GDP_(nominal)_per_capita" l "Per_unit_GDP" o "GDP (nominal) per capita" GDP per capita of $1,629. Since the independence of Pakistan in 1947, the HYPERLINK "https://en.wikipedia.org/wiki/Economy_of_Pakistan" o "Economy of Pakistan" economy has emerged as a semi-industrialized, which is heavily based on agriculture, HYPERLINK "https://en.wikipedia.org/wiki/Textiles" o "Textiles" textiles, and food production, though recent years have seen a flow towards technological change. Agriculture sector accounts as of 2014for more than one-fifth of production and two-fifths of employment. Textiles sector account for most of the earnings from Pakistan’s export and inflation has increased rapidly. (Pak Economic Indicators 2016-17)
Pakistan’s GDP expanded 4.71 percent in 2016 from the last year. GDP Growth Rate in Pakistan averaged 4.91 percent from 1952 until 2016, touching an all-time high of 10.22 percent in 1954 and a record low of -1.80 percent in 1952.
Figure 1-2 GDP Growth Rate
In 2016, Pakistan’s GDP per capita was 1181.60 US dollars. Pakistan’s GDP per Capita is equivalent to 9 % of the world’s average. From 1960 until 2016, GDP per capita in Pakistan averaged 703.68 USD reaching an all-time high of 1181.60 USD in 2016 and a record low of304.70 USD in 1960.
Figure 1-3 GDP per Capita
Inflation Rate in Pakistan averaged 7.80 percent from 1957 until 2017, reaching an all-time high of 37.81 percent in December of 1973 and a record low of -10.32 percent in February of 1959.
Figure 1-4 Inflation Rate
2. Literature Review
2.1 China Pakistan Economic Corridor
China–Pakistan Economic Corridor ( HYPERLINK ;https://en.wikipedia.org/wiki/Simplified_Chinese_characters; o ;Simplified Chinese characters; Chinese: ??-????????; HYPERLINK ;https://en.wikipedia.org/wiki/Urdu_language; o ;Urdu language; Urdu: ???????-??? ??????? ?????????; also known by the HYPERLINK ;https://en.wikipedia.org/wiki/Acronym; o ;Acronym; acronym CPEC) is a collection of infrastructure projects that are currently under construction throughout HYPERLINK ;https://en.wikipedia.org/wiki/Pakistan; o ;Pakistan; Pakistan. Originally valued at $46 billion, the value of CPEC projects is now worth $62 billion. CPEC is intended to rapidly modernize Pakistani infrastructure and strengthen its economy by the construction of modern transportation networks, numerous energy projects, and HYPERLINK ;https://en.wikipedia.org/wiki/Special_economic_zone; o ;Special economic zone; special economic zones. On 13 November 2016, CPEC became partly operational when Chinese cargo was transported overland to HYPERLINK ;https://en.wikipedia.org/wiki/Gwadar_Port; o ;Gwadar Port;Gwadar Port for onward maritime shipment to HYPERLINK ;https://en.wikipedia.org/wiki/Africa; o ;Africa; Africa and HYPERLINK ;https://en.wikipedia.org/wiki/West_Asia; o ;West Asia; West Asia, while some major power projects were commissioned by late 2017.
A vast network of highways and railways are to be built under the aegis of CPEC that will span the length and breadth of Pakistan. Inefficiencies stemming from Pakistan’s mostly dilapidated transportation network are estimated by the government to cause a loss of 3.55% of the country’s annual HYPERLINK ;https://en.wikipedia.org/wiki/GDP; o ;GDP; GDP. Modern transportation networks built under CPEC will link seaports in HYPERLINK ;https://en.wikipedia.org/wiki/Gwadar; o ;Gwadar;Gwadar and HYPERLINK ;https://en.wikipedia.org/wiki/Karachi; o ;Karachi; Karachi with northern Pakistan, as well as points further north in western HYPERLINK ;https://en.wikipedia.org/wiki/China; o ;China; China and HYPERLINK ;https://en.wikipedia.org/wiki/Central_Asia; o ;Central Asia; Central Asia. A 1,100 kilometre long HYPERLINK ;https://en.wikipedia.org/wiki/Motorway; o ;Motorway; motorway will be built between the cities of HYPERLINK ;https://en.wikipedia.org/wiki/Karachi; o ;Karachi; Karachi and HYPERLINK ;https://en.wikipedia.org/wiki/Lahore; o ;Lahore; Lahore as part of CPEC, while the HYPERLINK ;https://en.wikipedia.org/wiki/Karakoram_Highway; o ;Karakoram Highway; Karakoram Highway between HYPERLINK ;https://en.wikipedia.org/wiki/Rawalpindi; o ;Rawalpindi; Rawalpindi and the HYPERLINK ;https://en.wikipedia.org/wiki/China%E2%80%93Pakistan_border; o ;China–Pakistan border; Chinese border will be completely reconstructed and overhauled. The HYPERLINK ;https://en.wikipedia.org/wiki/Karachi%E2%80%93Peshawar_main_railway_line; o ;Karachi–Peshawar main railway line; Karachi–Peshawar main railway line will also be upgraded to allow for train travel at up to 160 km per hour by December 2019. Pakistan’s railway network will also be extended to eventually connect to China’s HYPERLINK ;https://en.wikipedia.org/wiki/Southern_Xinjiang_Railway; o ;Southern Xinjiang Railway; Southern Xinjiang Railway in HYPERLINK ;https://en.wikipedia.org/wiki/Kashgar; o ;Kashgar;Kashgar.The estimated $11 billion required to modernize transportation networks will be financed by subsidized HYPERLINK ;https://en.wikipedia.org/wiki/Loan; l ;Concessional; o ;Loan; concessionary loans.
Over $33 billion worth of energy infrastructure are to be constructed by private consortia to help alleviate Pakistan’s chronic energy shortages, which regularly amount to over 4,500MW, and have shed an estimated 2–2.5% off Pakistan’s annual gross domestic product. Over 10,400MW of energy generating capacity is to be brought online by the end of 2018, with the majority developed as part of CPEC’s fast-tracked HYPERLINK "https://en.wikipedia.org/wiki/China%E2%80%93Pakistan_Economic_Corridor" l "%22Early_Harvest%22_projects" "Early Harvest" projects. A network of pipelines to transport liquefied natural gas and oil will also be laid as part of the project, including a $2.5 billion pipeline between Gwadar and HYPERLINK "https://en.wikipedia.org/wiki/Nawabshah" o "Nawabshah"Nawabshah to eventually transport gas from HYPERLINK "https://en.wikipedia.org/wiki/Iran" o "Iran" Iran. Electricity from these projects will primarily be generated from HYPERLINK "https://en.wikipedia.org/wiki/Fossil_fuel" o "Fossil fuel" fossil fuels, though hydroelectric and wind-power projects are also included, as is the construction of HYPERLINK "https://en.wikipedia.org/wiki/Quaid-e-Azam_Solar_Park" o "Quaid-e-Azam Solar Park" one of the world’s largest solar farms.
CPEC’s potential impact on Pakistan has been likened to that of the HYPERLINK "https://en.wikipedia.org/wiki/Marshall_Plan" o "Marshall Plan" Marshall Plan undertaken by the HYPERLINK "https://en.wikipedia.org/wiki/United_States" o "United States" United States in HYPERLINK "https://en.wikipedia.org/wiki/Aftermath_of_World_War_II" o "Aftermath of World War II" post-war Europe. Pakistani officials predict that CPEC will result in the creation of upwards of 2.3 million jobs between 2015–2030, and add 2 to 2.5 percentage points to the country’s annual economic growth.
Were the initial $46 billion worth of projects to be implemented, the value of those projects would be roughly equivalent to all foreign direct investment in Pakistan since 1970, and would be equal to 17% of Pakistan’s 2015 gross domestic product. CPEC is seen as the main plank of Chinese President HYPERLINK "https://en.wikipedia.org/wiki/Xi_Jinping" o "Xi Jinping" Xi Jinping’s HYPERLINK ;https://en.wikipedia.org/wiki/Belt_and_Road_Initiative; o ;Belt and Road Initiative; Belt and Road Initiative.
Plans for a corridor stretching from the Chinese border to Pakistan’s deep water ports on the HYPERLINK "https://en.wikipedia.org/wiki/Arabian_Sea" o "Arabian Sea" Arabian Sea date back to the 1950s, and motivated construction of the HYPERLINK "https://en.wikipedia.org/wiki/Karakoram_Highway" o "Karakoram Highway" 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 HYPERLINK ;https://en.wikipedia.org/wiki/Gwadar_Port; o ;Gwadar Port;Gwadar Port then ceased thereafter owing to political instability in Pakistan following the fall of General HYPERLINK ;https://en.wikipedia.org/wiki/Pervez_Musharraf; o ;Pervez Musharraf;Pervez Musharraf and HYPERLINK ;https://en.wikipedia.org/wiki/War_in_North-West_Pakistan; o ;War in North-West Pakistan; subsequent conflict between the Pakistani state and Taliban militants.
The current form of the project was first proposed by the Pakistan Muslim League. Nawaz Sharif invited heads of all the political parties to a luncheon in honour of the Chinese Premier HYPERLINK ;https://en.wikipedia.org/wiki/Li_Keqiang; o ;Li Keqiang; Li Keqiang at the HYPERLINK ;https://en.wikipedia.org/wiki/Aiwan-e-Sadr; o ;Aiwan-e-Sadr;Aiwan-e-Sadr on 22 May 2013. 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 HYPERLINK ;https://en.wikipedia.org/wiki/Mamnoon_Hussain; o ;Mamnoon Hussain;Mamnoon Hussain visited China to discuss the plans for an economic corridor in Pakistan. Two months later, Pakistan Prime Minister HYPERLINK ;https://en.wikipedia.org/wiki/Nawaz_Sharif; o ;Nawaz Sharif;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.
2.1.2 Announcement of CPEC
During the HYPERLINK "https://en.wikipedia.org/wiki/Xi_Jinping%27s_visit_to_Pakistan_2015" o "Xi Jinping’s visit to Pakistan 2015; 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.
2.1.3 Subsequent developments
On 12 August 2015 in the city of HYPERLINK "https://en.wikipedia.org/wiki/Karamay" o "Karamay"Karamay, China and Pakistan signed 20 more agreements worth $1.6 billion to further augment the scale and scope of CPEC. Details of the plan are opaque, but are said to mainly focus on increasing energy generation capacity. As part of the agreement, Pakistan and China have agreed to co-operate in the field of HYPERLINK "https://en.wikipedia.org/wiki/Space_research" o "Space research" space research.
In September and October 2015, the government of the United Kingdom announced two separate grants to the Government of Pakistan for construction of roadways that are complementary to CPEC. In November 2015, China included the CPEC into its 13th five-year development plan, while in December 2015, China and Pakistan agreed on a further $1.5 billion investment to set up an information and technology park as part of the CPEC project. On 8 April 2016, during the visit of HYPERLINK "https://en.wikipedia.org/wiki/Xinjiang" o "Xinjiang"Xinjiang’s Communist Party chief HYPERLINK ;https://en.wikipedia.org/wiki/Zhang_Chunxian; o ;Zhang Chunxian; Zhang Chunxian companies from Xinjiang with their Pakistan counterparts signed $2 billion of additional agreements covering infrastructure, solar power and logistics.
The first convoy from China arrived in Gwadar on November 13, 2016, thereby formalizing operation of CPEC. On December 2, 2016, the first cargo train, launching the direct rail route and sea freight service between China and Pakistan, departed from HYPERLINK ;https://en.wikipedia.org/wiki/Yunnan; o ;Yunnan; Yunnan. A cargo train loaded with 500 tonnes of commodities left HYPERLINK ;https://en.wikipedia.org/wiki/Kunming; o ;Kunming; Kunming for the port city of HYPERLINK ;https://en.wikipedia.org/wiki/Guangzhou; o ;Guangzhou;Guangzhoufrom where the cargo will be loaded on ships and transported to HYPERLINK ;https://en.wikipedia.org/wiki/Karachi; o ;Karachi; Karachi, marking the opening of the new route. The new rail, sea freight will cut logistics cost, including that of transport, by 50 per cent.
In November 2016, China announced an additional $8.5 billion investment in Pakistan with $4.5 billion allocated to upgrade Pakistan’s main railway line from Karachi to Peshawar including tracks, speed and signalling, and $4 billion toward an LNG terminal and transmission lines to help alleviate energy shortages. In February 2017, the HYPERLINK "https://en.wikipedia.org/wiki/Egypt" o "Egypt"EgyptianAmbassador to Pakistan expressed interested in CPEC cooperation. In January 2017, the Chief Minister HYPERLINK "https://en.wikipedia.org/wiki/Pervez_Khattak" o "Pervez Khattak"Pervez Khattak of Khyber Pakthunkhwha stated that he had received assurances from Chinese investment companies that they would invest up to $20 billion for projects. In March 2017, an agreement was signed for the projects which include: a $1.5 bn oil refinery, irrigation projects worth $2 billion, a $2 billion motorway between HYPERLINK "https://en.wikipedia.org/wiki/Chitral" o "Chitral"Chitral and HYPERLINK "https://en.wikipedia.org/wiki/DI_Khan" o "DI Khan" DI Khan, and $7 billion worth of hydro-electric projects.
As of September 2017, more than $14 billion worth of project were under construction. In March 2018, Pakistan announced that following the completion of under-construction energy projects, future CPEC energy projects would be geared towards hydropower projects.
Figure 2-1 Projects in Gwadar Port and City
Figure2-2 Gwadar Port has been operational since 2007.
A view of the Gwadar Promontory.
HYPERLINK "https://en.wikipedia.org/wiki/Gwadar" o "Gwadar" Gwadar forms the crux of the CPEC project, as it is envisaged to be the link between China’s ambitious HYPERLINK ;https://en.wikipedia.org/wiki/One_Belt,_One_Road; o ;One Belt, One Road; One Belt, One Road project, and its HYPERLINK ;https://en.wikipedia.org/wiki/Maritime_Silk_Road; o ;Maritime Silk Road; Maritime Silk Road project. In total, more than $1 billion worth of projects are to be developed around the port of Gwadar by December 2017.
2.2 Gwadar Port Complex
Initial infrastructure works at HYPERLINK ;https://en.wikipedia.org/wiki/Gwadar_Port; o ;Gwadar Port;Gwadar Port commenced in 2002 and were completed in 2007, however plans to upgrade and expand HYPERLINK ;https://en.wikipedia.org/wiki/Gwadar; o ;Gwadar;Gwadar’s port stalled. Under CPEC agreement, Gwadar Port will initially be expanded and upgraded to allow for docking of larger ships with HYPERLINK "https://en.wikipedia.org/wiki/Deadweight_tonnage" o "Deadweight tonnage" deadweight tonnage of up to 70,000. Improvement plans also include construction of a $130 million HYPERLINK "https://en.wikipedia.org/wiki/Breakwater_(structure)" o "Breakwater (structure)" breakwater around the port, as well as the construction of a HYPERLINK "https://en.wikipedia.org/wiki/Floating_liquefied_natural_gas" o "Floating liquefied natural gas" floating liquefied natural gas facility that will have a capacity of 500 million cubic feet of liquefied natural gas per day and will be connected to the Gwadar-Nawabshah segment of the HYPERLINK "https://en.wikipedia.org/wiki/Iran%E2%80%93Pakistan_gas_pipeline" o "Iran–Pakistan gas pipeline" Iran–Pakistan gas pipeline.
The expanded port is located near a 2,282-acre free trade area in Gwadar which is being modelled on the lines of the HYPERLINK "https://en.wikipedia.org/wiki/Special_Economic_Zones_of_China" o "Special Economic Zones of China" Special Economic Zones of China. The swathe of land was handed to the China Overseas Port Holding Company in November 2015 as part of a 43-year lease. The site will include manufacturing zones, logistics hubs, warehouses, and display centres. Businesses located in the zone would be exempt from customs authorities as well as many provincial and federal taxes. Business established in the special economic zone will be exempt from Pakistani income, sales, and federal excise taxes for 23 years. Contractors and subcontractors associated with China Overseas Port Holding Company will be exempted from such taxes for 20 years, while a 40-year tax holiday will be granted for imports of equipment, materials, plant/machinery, appliances and accessories that are to be for construction of Gwadar Port and special economic zone.
The special economic zone will be completed in three phases. By 2025, it is envisaged that manufacturing and processing industries will be developed, while further expansion of the zone is intended to be complete by 2030. On 10 April 2016, Zhang Baozhong, chairman of China Overseas Port Holding Company said in a conversation with HYPERLINK "https://en.wikipedia.org/wiki/The_Washington_Post" o "The Washington Post" The Washington Post that his company planned to spend $4.5 billion on roads, power, hotels and other infrastructure for the industrial zone as well as other projects in Gwadar city.
2.2.1 Projects in Gwadar city
China will grant Pakistan $230 million to construct a new international airport in Gwadar which is to be operational by December 2017. The provincial government of Balochistan has set aside 4000 acres for the construction of the new $230 million HYPERLINK "https://en.wikipedia.org/wiki/Gwadar_International_Airport" o "Gwadar International Airport"Gwadar International Airport which will require an estimated 30 months for construction, the costs of which are to be fully funded by grants from the Chinese government which Pakistan will not be obliged to repay.
The city of Gwadar is further being developed by the construction of a 300MW coal power plant, a desalinisation plant, and a new 300 bed hospital. Plans for Gwadar city also include construction of the East Bay Expressway – a 19 kilometre controlled-access road that will connect Gwadar Port to the HYPERLINK "https://en.wikipedia.org/wiki/Makran_Coastal_Highway" o "Makran Coastal Highway"Makran Coastal Highway. These additional projects are estimated to cost $800 million, and are to be financed by 0% interest loans extended by the HYPERLINK "https://en.wikipedia.org/wiki/Exim_Bank_of_China" o "Exim Bank of China"Exim Bank of China to Pakistan.
In addition to the aforementioned infrastructure works, the Pakistani government announced in September 2015 its intention to establish a training institute named HYPERLINK "https://en.wikipedia.org/wiki/Pak-China_Technical_and_Vocational_Institute_at_Gwadar" o "Pak-China Technical and Vocational Institute at Gwadar" Pak-China Technical and Vocational Institute at Gwadar, which is to be developed by the Gwadar Port Authority. The institute is to be completed by March 2016 at the cost of 943 million rupees, and is designed to impart to local residents the skills required to operate and work at the expanded Gwadar Port.
2.3 Roadway projects
Figure2-3 A map of the CPEC roadway network.
The CPEC project envisages major upgrades and overhauls to Pakistan’s transportation infrastructure. Under the CPEC project, China has announced financing for $10.63 billion worth of transportation infrastructure so far; $6.1 billion have been allocated for constructing ;Early Harvest; roadway projects at an interest rate of 1.6 percent. The remainder of funds will be allocated when the Pakistani government awards contracts for construction of road segments which are still in the planning phase.
Three corridors have been identified for cargo transport: the Eastern Alignment though the heavily populated provinces of Sindh and Punjab where most industries are located, the Western Alignment through the less developed and more sparsely populated provinces of Khyber Pakhtunkhwa and Balochistan, and the future Central Alignment which will pass through Khyber Pakhtunkhwa, Punjab, and Balochistan.
Highlighted in red is the route of HYPERLINK ;https://en.wikipedia.org/wiki/Karakoram_Highway; o ;Karakoram Highway; National Highway 35, which is to be completely rebuilt and upgraded under the CPEC agreement. Highlighted in blue is the 175 kilometre road between HYPERLINK ;https://en.wikipedia.org/wiki/Gilgit; o ;Gilgit;Gilgit and HYPERLINK ;https://en.wikipedia.org/wiki/Skardu; o ;Skardu;Skardu which is to be upgraded to a 4-lane highway.
Figure2-4 China and Pakistan already conduct trade via the Karakoram Highway.
HYPERLINK ;https://en.wikipedia.org/wiki/Reconstruction_of_the_Karakoram_Highway; o ;Reconstruction of the Karakoram Highway; Reconstruction of the Karakoram Highway
The CPEC projects call for reconstruction and upgrade works on National Highway 35 (N-35), which forms the Pakistani portion of the HYPERLINK ;https://en.wikipedia.org/wiki/Karakoram_Highway; o ;Karakoram Highway; Karakoram Highway (KKH). The KKH spans the 887 kilometre long distance between the China-Pakistan border and the town of HYPERLINK ;https://en.wikipedia.org/wiki/Burhan,_Pakistan; o ;Burhan, Pakistan;Burhan, near HYPERLINK ;https://en.wikipedia.org/wiki/Hasan_Abdal; o ;Hasan Abdal;Hasan Abdal. At Burhan, the existing HYPERLINK ;https://en.wikipedia.org/wiki/M1_motorway_(Pakistan); o ;M1 motorway (Pakistan); M1 motorway will intersect the N-35 at the Shah Maqsood Interchange. From there, access onwards to Islamabad and Lahore continues as part of the existing M1 and M2 motorways. Burhan will also be at intersection of the HYPERLINK ;https://en.wikipedia.org/wiki/China%E2%80%93Pakistan_Economic_Corridor; l ;Eastern_Alignment; o ;China–Pakistan Economic Corridor; Eastern Alignment, and HYPERLINK ;https://en.wikipedia.org/wiki/Western_Alignment; o ;Western Alignment; Western Alignment.
Upgrades to the 487 kilometer long section between Burhan and Raikot of the Karakoram Highway are officially referred to in Pakistan as the Karakoram Highway Phase 2 project. At the southern end of the N-35, works are already underway to construct a 59-kilometer-long, 4-lane HYPERLINK ;https://en.wikipedia.org/wiki/Controlled-access_highway; o ;Controlled-access highway; controlled-access highway between Burhan and HYPERLINK ;https://en.wikipedia.org/wiki/Havelian; o ;Havelian;Havelian which upon completion will be officially referred to as the HYPERLINK ;https://en.wikipedia.org/wiki/E35_expressway_(Pakistan); o ;E35 expressway (Pakistan); E-35 expressway. North of Havelian, the next 66 kilometres of road will be upgraded to a 4-lane HYPERLINK ;https://en.wikipedia.org/wiki/Dual_carriageway; o ;Dual carriageway; dual carriageway between Havelian and HYPERLINK ;https://en.wikipedia.org/wiki/Shinkiari; o ;Shinkiari;Shinkiari, Groundbreaking on this portion commenced in April 2016.
The entire 354 kilometres of roadway north of Shinkiari and ending in Raikot, near HYPERLINK ;https://en.wikipedia.org/wiki/Chilas; o ;Chilas;Chilas will be constructed as a 2-lane highway. Construction on the first section between Shinkiari and HYPERLINK ;https://en.wikipedia.org/wiki/Thakot; o ;Thakot;Thakot commenced in April 2016 jointly with construction of the Havelian to Shinkiari 4-lane dual carriageway further south. Construction on both these sections is expected to be completed with 42 months at a cost of approximately $1.26 billion with 90% of funding to come from China’s EXIM bank in the form of low interest rate concessional loans.
Between HYPERLINK "https://en.wikipedia.org/wiki/Thakot" o "Thakot"Thakot and Raikot spans an area in which the government of Pakistan is currently either planning or actively constructing several hydropower projects, most notably the HYPERLINK "https://en.wikipedia.org/wiki/Diamer-Bhasha_Dam" o "Diamer-Bhasha Dam"Diamer-Bhasha Dam and HYPERLINK "https://en.wikipedia.org/wiki/Dasu_Dam" o "Dasu Dam"Dasu Dam. Sections of the N-35 around these projects will be completely rebuilt in tandem with dam construction. In the interim, this section of the N-35 is currently being upgraded from its current state until dam construction commences in full force at a later date. Improvement projects on this section are expected to be completed by January 2017 at a cost of approximately $72 million. The next 335 kilometres of roadway connect Raikot to the China-Pakistan border. Reconstruction works on this section of roadway preceded the CPEC, and were initiated after severe damage to roadways in the area following the HYPERLINK "https://en.wikipedia.org/wiki/2010_Pakistan_floods" o "2010 Pakistan floods" 2010 Pakistan floods. Most of this section of roadway was completed in September 2012 at a cost of $510 million.
A large earthquake rocked the region nearest to the China-Pakistan border in 2010, triggering massive landslides which dammed the Indus River, resulting in the formation of the HYPERLINK "https://en.wikipedia.org/wiki/Attabad_Lake" o "Attabad Lake"Attabad Lake. Portions of the Karakoram Highway were submerged in the lake, forcing all vehicular traffic onto barges to traverse the new reservoir. Construction on a HYPERLINK "https://en.wikipedia.org/wiki/Karakorum_Highway_Realignment_(China-Pakistan_Friendship_Tunnels)" o "Karakorum Highway Realignment (China-Pakistan Friendship Tunnels)" 24 kilometre series of bridges and tunnels to HYPERLINK "https://en.wikipedia.org/wiki/Attabad_Lake" o "Attabad Lake"Attabad Lakebegan in 2012 and required 36 months for completion. The bypass consists of 2 large bridges and 5 kilometres worth of tunnels that were inaugurated for public use on 14 September 2015 at a cost of $275 million. The 175 kilometre road between HYPERLINK "https://en.wikipedia.org/wiki/Gilgit" o "Gilgit"Gilgit and HYPERLINK "https://en.wikipedia.org/wiki/Skardu" o "Skardu"Skardu will be upgraded to a 4-lane road at a cost of $475 million to provide direct access to Skardu from the N-35.
2.4 Eastern Alignment
HYPERLINK "https://en.wikipedia.org/wiki/M5_motorway_(Pakistan)" o "M5 motorway (Pakistan)" M5 motorway (Pakistan) and HYPERLINK "https://en.wikipedia.org/wiki/M-9_Super_Highway" o "M-9 Super Highway" M-9 Super Highway
The term Eastern Alignment of CPEC refers to roadway projects located in HYPERLINK "https://en.wikipedia.org/wiki/Sindh" o "Sindh"Sindh and HYPERLINK "https://en.wikipedia.org/wiki/Punjab,_Pakistan" o "Punjab, Pakistan" Punjab provinces – some of which were first envisioned in 1991. As part of the Eastern Alignment, a 1,152 km long motorway will connect Pakistan’s two largest cities, Karachi and Lahore with 4 to 6-lane controlled access highway designed for travel speeds up to 120 kilometres per hour. The entire project will cost approximately $6.6 billion, with the bulk of financing to be distributed by various Chinese state-owned banks.
The entire Eastern Alignment motorway project is divided into four sections: a 136 kilometre long section between Karachi and Hyderabad also known as the HYPERLINK ;https://en.wikipedia.org/wiki/M-9_Super_Highway; o ;M-9 Super Highway; M9 motorway, a 345 kilometre long section between Hyderabad and Sukkur, a 392 kilometre long section between HYPERLINK ;https://en.wikipedia.org/wiki/M5_motorway_(Pakistan); l ;Third_Section:_Multan_to_Sukkur; o ;M5 motorway (Pakistan);Sukkur and Multan, and a 333 kilometre section between Multan and Lahore via the town of HYPERLINK ;https://en.wikipedia.org/wiki/Abdul_Hakeem,_Pakistan; o ;Abdul Hakeem, Pakistan; Abdul Hakeem.
The first section of the project will provide high speed road access from the Port of Karachi to the city of Hyderabad and interior Sindh. Upgrade and construction works on this section currently known as HYPERLINK ;https://en.wikipedia.org/wiki/M-9_Super_Highway; o ;M-9 Super Highway; Super Highway between Karachi and Hyderabad began in March 2015, and will convert the road into the 4-lane controlled access M9 Motorway which will be completed in an estimated 30 months. In February 2017, a completed 75 kilometre stretch of the motorway was opened for public use by Prime Minister Nawaz Sharif.
At the terminus of the M9 motorway in Hyderabad, the Karachi-Lahore Motorway will continue onwards to Sukkur as a six lane controlled-access motorway known also as HYPERLINK ;https://en.wikipedia.org/wiki/M6_motorway_(Pakistan); o ;M6 motorway (Pakistan); M6 motorway that will be 345 kilometers long, The planned cost for this project is $1.7 billion, and will provide high speed road access to interior Sindh – especially near the towns of HYPERLINK ;https://en.wikipedia.org/wiki/Matiari; o ;Matiari;Matiari, HYPERLINK ;https://en.wikipedia.org/wiki/Nawabshah; o ;Nawabshah;Nawabshah, and HYPERLINK ;https://en.wikipedia.org/wiki/Khairpur; o ;Khairpur;Khairpur. The project will require the construction of seven interchanges, and 25 bridges on the Indus river and irrigation canals. The planned route of the motorway runs roughly parallel to the existing National Highway and Indus Highway at various portions. In July 2016, the Pakistani government announced that the project would be open to international bidders on a HYPERLINK ;https://en.wikipedia.org/wiki/Build%E2%80%93operate%E2%80%93transfer; o ;Build–operate–transfer; build-operate-transfer basis, with Chinese and South Korean companies expressing interest in the project.
The 392 kilometre HYPERLINK ;https://en.wikipedia.org/wiki/M5_motorway_(Pakistan); l ;Third_Section:_Multan_to_Sukkur; o ;M5 motorway (Pakistan);Sukkur to Multan section of the motorway is estimated to cost $2.89 billion,HYPERLINK ;https://en.wikipedia.org/wiki/China%E2%80%93Pakistan_Economic_Corridor; l ;cite_note-Global_Construction_Review-93;93 with construction works inaugurated on this section of roadway on May 6, 2016. The road will be a six lane wide controlled access highway, with 11 planned interchanges, 10 rest facilities, 492 underpasses, and 54 bridges along its route. The Pakistani government in January 2016 awarded the contract to build this section to HYPERLINK ;https://en.wikipedia.org/wiki/China_State_Construction_Engineering; o ;China State Construction Engineering; China State Construction Engineering, but final approvals required for disbursement of funds were not granted by the Government of the People’s Republic of China until May 2016. 90% of the project’s cost is to be financed by concessionary loans from China, with the remaining 10% to be financed by the government of Pakistan. Construction on this segment is expected to last 36 months.
Construction of the HYPERLINK ;https://en.wikipedia.org/wiki/M5_motorway_(Pakistan); l ;Fourth_Section:_Multan_to_Lahore; o ;M5 motorway (Pakistan); portion between Multan and Lahore costing approximately $1.5 billion was launched in November 2015 as a joint venture between the HYPERLINK ;https://en.wikipedia.org/wiki/China_Railway_Construction_Corporation_Limited; o ;China Railway Construction Corporation Limited; China Railway Construction Corporation Limited and Pakistan’s Zahir Khan and Brothers Engineers The total length of this motorway section is 333 kilometres; however, the first 102 kilometres of the road between HYPERLINK "https://en.wikipedia.org/wiki/Khanewal" o "Khanewal"Khanewal and HYPERLINK "https://en.wikipedia.org/wiki/Abdul_Hakeem" o "Abdul Hakeem" Abdul Hakeem is designed as part of the HYPERLINK "https://en.wikipedia.org/wiki/M4_motorway_(Pakistan)" o "M4 motorway (Pakistan)" M4 Motorway, and is being funded by the HYPERLINK "https://en.wikipedia.org/wiki/Asian_Development_Bank" o "Asian Development Bank" Asian Development Bank. The portion of motorway between Abdul Hakeem and Lahore that is under construction as part of CPEC will consist of the remaining 231 kilometers.
The HYPERLINK "https://en.wikipedia.org/wiki/Western_Alignment" o "Western Alignment" Western Alignment of CPEC is depicted by the red line. The 1,153-kilometer route will link the Brahma Bahtar Interchange of the HYPERLINK "https://en.wikipedia.org/wiki/M1_motorway_(Pakistan)" o "M1 motorway (Pakistan)" M1 Motorway with the city of HYPERLINK "https://en.wikipedia.org/wiki/Gwadar" o "Gwadar"Gwadar in HYPERLINK "https://en.wikipedia.org/wiki/Balochistan_(Pakistan)" o "Balochistan (Pakistan)"Balochistan province. The portion depicted by the orange line between Basima and HYPERLINK "https://en.wikipedia.org/wiki/Shahdadkot" o "Shahdadkot"Shahdadkot is sometimes regarded as part of the Western Alignment.
HYPERLINK "https://en.wikipedia.org/wiki/Western_Alignment" o "Western Alignment" Western Alignment and HYPERLINK "https://en.wikipedia.org/wiki/Brahma_Bahtar-Yarik_Motorway" o "Brahma Bahtar-Yarik Motorway" Brahma Bahtar-Yarik Motorway
The CPEC project envisages an expanded and upgraded road network in the Pakistani provinces of HYPERLINK "https://en.wikipedia.org/wiki/Balochistan_(Pakistan)" o "Balochistan (Pakistan)"Balochistan, HYPERLINK "https://en.wikipedia.org/wiki/Khyber_Pakhtunkhwa" o "Khyber Pakhtunkhwa" Khyber Pakhtunkhwa, and western HYPERLINK "https://en.wikipedia.org/wiki/Punjab,_Pakistan" o "Punjab, Pakistan" Punjab Province as part of the Western Alignment. The Western Alignment project will result in the upgrading of several hundred kilometres worth of road into 2 and 4-lane divided highways by mid-2018, with land acquisition sufficient for upgrading parts of the road to a 6-lane motorway in the future. In total, the CPEC project envisages re-construction of 870 kilometres of road in Balochistan province alone as part of the Western Alignment. Of those 870 kilometres of road, 620 kilometres have already been rebuilt as of January 2016.
The Western Alignment roadway network will begin at the Barahma Bahtar Interchange on the HYPERLINK "https://en.wikipedia.org/wiki/M1_motorway_(Pakistan)" o "M1 motorway (Pakistan)" M1 Motorway near the towns of HYPERLINK "https://en.wikipedia.org/wiki/Burhan,_Pakistan" o "Burhan, Pakistan"Burhanand HYPERLINK "https://en.wikipedia.org/wiki/Hasan_Abdal" o "Hasan Abdal"Hasan Abdal in northern Punjab province. The newly reconstructed Karakoram Highway will connect to the Western Alignment at Burhan, near where the new 285-kilometre-long controlled-access HYPERLINK "https://en.wikipedia.org/wiki/Brahma_Bahtar-Yarik_Motorway" o "Brahma Bahtar-Yarik Motorway" Brahma Bahtar-Yarik Motorway will commence. The motorway will terminate near the town of HYPERLINK "https://en.wikipedia.org/wiki/Yarik" o "Yarik"Yarik, just north of HYPERLINK "https://en.wikipedia.org/wiki/Dera_Ismail_Khan" o "Dera Ismail Khan"Dera Ismail Khan. Groundbreaking for the project took place on May 17, 2016. The motorway will traverse the HYPERLINK "https://en.wikipedia.org/wiki/Sindh_Sagar_Doab" o "Sindh Sagar Doab"Sindh Sagar Doab region, and cross the Indus River at HYPERLINK "https://en.wikipedia.org/wiki/Mianwali" o "Mianwali"Mianwali before entering into Khyber Pakhtunkhwa province. It will consist of 11 interchanges, 74 culverts, and 3 major bridges spanning the HYPERLINK "https://en.wikipedia.org/wiki/Indus_River" o "Indus River" Indus, HYPERLINK "https://en.wikipedia.org/wiki/Swan_River_(Islamabad)" o "Swan River (Islamabad)"Soan, and HYPERLINK "https://en.wikipedia.org/wiki/Kurram_River" o "Kurram River"KurramRivers. Total costs for the project are expected to be $1.05 billion.
At the southern terminus of the new Brahma Bahtar-Yarik motorway, the HYPERLINK "https://en.wikipedia.org/wiki/N-50_National_Highway" o "N-50 National Highway" N50 National Highway will also be upgraded between Dera Ismail Khan in Khyber Pakhtunkhwa and HYPERLINK "https://en.wikipedia.org/wiki/Zhob" o "Zhob"Zhob in neighbouring Balochistan province, with eventual reconstruction between Zhob and Quetta. The upgraded roadway will consist of a 4 lane dual-carriageway spanning the 205 kilometre distance between the two cities. The first portion of the N50 to be upgraded will be the 81 kilometre portion of the N50 between Zhob and Mughal Kot, with construction works having begun in January 2016. HYPERLINK "https://en.wikipedia.org/wiki/China%E2%80%93Pakistan_Economic_Corridor" l "cite_note-dawn.com-120" 120 Construction on this portion is expected to be completed by 2018 at a cost of $86 million. While the project is considered a vital link in the CPEC’s Western Alignment, the project’s cost will not be financed by Chinese state-owned banks, but instead by Asian Development Bank under a 2014 agreement which preceded CPEC, as well as by a grant provided by the United Kingdom’s HYPERLINK ;https://en.wikipedia.org/wiki/Department_for_International_Development; o ;Department for International Development; Department for International Development.
Heading south from Quetta, the Western Alignment of the CPEC will continue to the town of HYPERLINK ;https://en.wikipedia.org/wiki/Surab,_Pakistan; o ;Surab, Pakistan;Surab in central Balochistan as the HYPERLINK ;https://en.wikipedia.org/wiki/N-25_National_Highway; o ;N-25 National Highway; N25 National Highway. From Surab, a 470 kilometre long route known as the HYPERLINK ;https://en.wikipedia.org/wiki/N-85_National_Highway; o ;N-85 National Highway; N85 National Highway will connect central Balochistan with the town of Hoshab in southwestern Balochistan province near the city of HYPERLINK ;https://en.wikipedia.org/wiki/Turbat; o ;Turbat;Turbat. The stretch of road between these cities was completed in December 2016, as per schedule.
Along the Western Alignment route, the towns of Hoshab and Gwadar are connected by a newly-built 193 kilometre long portion of the HYPERLINK ;https://en.wikipedia.org/wiki/M8_motorway_(Pakistan); o ;M8 motorway (Pakistan); M8 Motorway – the Hoshab to Gwadar portion of the motorway was completed and inaugurated in February 2016 by Prime Minister Nawaz Sharif. The Western Alignment will be flanked by special economic zones along its route, with at least seven special economic zones planned to be established in Khyber Pakhtunkhwa.
2.6 Associated roadway projects
ADB funded projects
The 184 kilometre long HYPERLINK ;https://en.wikipedia.org/wiki/M4_motorway_(Pakistan); o ;M4 motorway (Pakistan); M-4 Motorway between Faisalabad and Multan does not fall under the scope of CPEC projects, but is nevertheless considered vital to the CPEC transportation project. It will instead be financed by the HYPERLINK ;https://en.wikipedia.org/wiki/Asian_Development_Bank; o ;Asian Development Bank; Asian Development Bank and the HYPERLINK ;https://en.wikipedia.org/wiki/Asian_Infrastructure_Investment_Bank; o ;Asian Infrastructure Investment Bank; Asian Infrastructure Investment Bank, and will be the first project jointly financed by those banks. Further funding comes from an additional $90.7 million grant announced in October 2015 by the government of the United Kingdom towards the construction of portion of the M4 Motorway project.
The Karakoram Highway south of the city of Mansehra will also be upgrade into a HYPERLINK ;https://en.wikipedia.org/wiki/Controlled-access_highway; o ;Controlled-access highway; controlled-access highway to officially be known as the HYPERLINK ;https://en.wikipedia.org/wiki/E35_expressway_(Pakistan); o ;E35 expressway (Pakistan); E-35 expressway. While it is considered to be a crucial part of the route between Gwadar and China, the E35 will not be financed by CPEC funds. The project will instead be financed by the Asian Development Bank with a $121.6 million grant from the United Kingdom towards the project. Once completed, the E35 Expressway, the M4 Motorway, and Karachi-Lahore Motorway will provide continuous high-speed road travel on controlled-access motorways from Mansehra to Karachi – 1,550 kilometres away.
Approximately halfway between Zhob and Quetta, the town of HYPERLINK ;https://en.wikipedia.org/wiki/Qilla_Saifullah; o ;Qilla Saifullah;Qilla Saifullah in Balochistan lies at the intersection of the N50 National Highway and the HYPERLINK ;https://en.wikipedia.org/wiki/N-70_National_Highway; o ;N-70 National Highway; N70 National Highway. The two roads form the 447 kilometre route between Quetta and HYPERLINK ;https://en.wikipedia.org/wiki/Multan; o ;Multan; Multan in southern Punjab. While the N70 project is not officially a part of CPEC, it will connect the CPEC’s Western Alignment to the Karachi-Lahore Motorway at Multan. Reconstruction works on the 126 kilometre portion of the N70 between Qilla Saifullah and Wagum are slated for completion by 2018, and are financed as part of a $195 million package by the HYPERLINK "https://en.wikipedia.org/wiki/Asian_Development_Bank" o "Asian Development Bank" Asian Development Bank, and by a $72.4 million grant from the United Kingdom’s HYPERLINK ;https://en.wikipedia.org/wiki/Department_for_International_Development; o ;Department for International Development; Department for International Development.
HYPERLINK ;https://en.wikipedia.org/wiki/Karachi%E2%80%93Peshawar_Railway_Line; o ;Karachi–Peshawar Railway Line; Karachi–Peshawar Railway Line
The CPEC ;Early Harvest; plan includes a complete overhaul of the 1,687 kilometre long HYPERLINK ;https://en.wikipedia.org/wiki/Karachi%E2%80%93Peshawar_main_railway_line; o ;Karachi–Peshawar main railway line; Main Line 1 railway (ML-1) between Karachi and Peshawar at a cost of $3.65 billion for the first phase of the project, with the first phase expected to be completed by December 2017. In June 2016, China and Pakistan unveiled plans for the second phase of the project, with a total cost of $8.2 billion for both phases of the project. The second phase of the ML-1 overhaul project is expected to be completed in 2021.
Upgrading of the railway line will permit train travel at speeds of 160 kilometres per hour, versus the average 60 to 105 km per hour speed currently possible on existing track, and is expected to increase Pakistan Railways’ annual revenues by approximately $480 million. The upgrades are also expected to cut transit times from Karachi to Peshawar by half. Pakistani railways currently account for 4% of freight traffic in the country, and upon completion of CPEC, Pakistani railways are expected to transport 20% of the country’s freight traffic by 2025.
The first part of the expedited first phase of the project will focus on upgrading the Multan to Peshawar section, which will then be followed by the Hyderabad to Multan section, and finally by the Hyderabad to Karachi section.
At the time of CPEC’s announcement, the ML-1 consisted of mostly dual track railway between Karachi, and the Lahore suburb of HYPERLINK "https://en.wikipedia.org/wiki/Shahdara_Bagh" o "Shahdara Bagh"Shahdara, with long stretches of single track. From Shahdara, the track mainly consisted of a single track until the city Peshawar. Construction works to dualize the entire track between Karachi to Shahdara were completed and inaugurated in January 2016. As part of the first phase of the CPEC railway project, the remaining stretch of track between Shahdara and Peshawar is to upgraded to a dual track railway.
The 676 kilometer portion between HYPERLINK "https://en.wikipedia.org/wiki/Lalamusa" o "Lalamusa"Lalamusa, north of Lahore, and Peshawar will require complete reconstruction with the addition of tunnels, culverts, and bridges, while over 900 kilometers south of Lalamusa towards Karachi will be upgraded to handle cars with a 25-ton axle load capacity. A spur from HYPERLINK "https://en.wikipedia.org/wiki/Taxila" o "Taxila"Taxila to HYPERLINK "https://en.wikipedia.org/wiki/Havelian" o "Havelian"Havelian will also be constructed, with a HYPERLINK "https://en.wikipedia.org/wiki/Dry_port" o "Dry port" dry port to be established near the city of Havelian. Further, the entire length of track will have computerised signal systems, with stretches of track in urban areas to also be fenced off to prevent pedestrians and vehicles from crossing tracks in unauthorised areas.
HYPERLINK "https://en.wikipedia.org/wiki/Orange_Line_(Lahore_Metro)" o "Orange Line (Lahore Metro)" Orange Line (Lahore Metro)
The $1.6 billion HYPERLINK "https://en.wikipedia.org/wiki/Orange_Line_(Lahore_Metro)" o "Orange Line (Lahore Metro)" Orange Line of the HYPERLINK "https://en.wikipedia.org/wiki/Lahore_Metro" o "Lahore Metro" Lahore Metro is under construction and is regarded as a commercial project under CPEC. Construction on the line has already begun, with planned completion by Winter 2017. The line will be 27.1-kilometre (16.8 mi) long, of which 25.4 kilometres (15.8 mi) will be elevated, with the remaining portion to be underground between Jain Mandir and Lakshmi Chowk. When complete, the project will have the capacity to transport 250,000 commuters per day, with plans to increase capacity to 500,000 commuters per day by 2025.
Longer term projects under CPEC also call for construction of the 682 kilometre long HYPERLINK "https://en.wikipedia.org/wiki/Khunjerab_Railway" o "Khunjerab Railway"Khunjerab Railway line between the city of HYPERLINK "https://en.wikipedia.org/wiki/Havelian" o "Havelian"Havelian, to the Khunjerab Pass on the Chinese border, with extension to China’s HYPERLINK ;https://en.wikipedia.org/wiki/Lanxin_Railway; o ;Lanxin Railway;Lanxin Railway in HYPERLINK ;https://en.wikipedia.org/wiki/Kashgar; o ;Kashgar;Kashgar, Xinjiang. The railway will roughly parallel the HYPERLINK ;https://en.wikipedia.org/wiki/Karakoram_Highway; o ;Karakoram Highway; Karakoram Highway, and is expected to be complete in 2030.
The cost of the entire project is estimated to be approximately $12 billion, and will require 5 years for completion. A 300 million rupee study to establish final feasibility of constructing the rail line between Havelian and the Chinese border is already underway. A preliminary feasibility study was completed in 2008 by the Austrian engineering firm TBAC.
2.7 Energy sector projects
Pakistan’s current energy generating capacity is 24,830 MW, though the country currently faces energy shortfalls of over 4,500MW on a regular basis with routine power cuts of up to 5 hours per day, which has shed an estimated 2–2.5% off its annual GDP. Energy generation will be a major focus of the CPEC project, with approximately $33 billion expected to be invested in this sector. As part of the "Early Harvest" scheme of the CPEC, an estimated 10,400 MW of electricity are slated for generation by March 2018 as part of CPEC’s ;Early Harvest; projects.
The energy projects under CPEC will be constructed by private HYPERLINK ;https://en.wikipedia.org/wiki/Independent_Power_Producer; o ;Independent Power Producer; Independent Power Producers, rather than by the governments of either China or Pakistan. The Exim Bank of China will finance these private investments at 5–6% interest rates, while the government of Pakistan will be contractually obliged to purchase electricity from those firms at pre-negotiated rates.
In March 2018, Pakistan announced that hydropower projects would be prioritized following the completion of under-construction power plants. Pakistan aims to produce 25% of its electricity requirements by renewable energy resources by 2030. China’s HYPERLINK "https://en.wikipedia.org/wiki/Zonergy" o "Zonergy"Zonergy company will complete construction on the world’s largest HYPERLINK ;https://en.wikipedia.org/wiki/Solar_power; o ;Solar power; solar power plant – the 6,500 acre HYPERLINK ;https://en.wikipedia.org/wiki/Quaid-e-Azam_Solar_Park; o ;Quaid-e-Azam Solar Park;Quaid-e-Azam Solar Park near the city of HYPERLINK ;https://en.wikipedia.org/wiki/Bahawalpur; o ;Bahawalpur; Bahawalpur with an estimated capacity of 1000MW is expected to be completed in December 2016.The first phase of the project has been completed by Xinjiang SunOasis, and has a generating capacity of 100 MW. The remaining 900 MW capacity will be installed by Zonergy under CPEC.
The HYPERLINK ;https://en.wikipedia.org/wiki/Jhimpir_Wind_Power_Plant; o ;Jhimpir Wind Power Plant;Jhimpir Wind Power Plant, built by the Turkish company Zorlu Enerji has already begun to sell 56.4 MW of electricity to the government of Pakistan, HYPERLINK ;https://en.wikipedia.org/wiki/China%E2%80%93Pakistan_Economic_Corridor; l ;cite_note-168; 168 though under CPEC, another 250MW of electricity are to be produced by the Chinese-Pakistan consortium United Energy Pakistan and others at a cost of $659 million.Another wind farm, the HYPERLINK ;https://en.wikipedia.org/wiki/Dawood_wind_power_project; o ;Dawood wind power project;Dawood wind power project is under development by HYPERLINK ;http://www.hydrochina.com.cn/;HydroChina at a cost of $115 million, and will generate 50 MW of electricity by August 2016.
SK Hydro Consortium is constructing the 870 MW HYPERLINK ;https://en.wikipedia.org/wiki/Suki_Kinari_Hydropower_Project; o ;Suki Kinari Hydropower Project;Suki Kinari Hydropower Project in the HYPERLINK ;https://en.wikipedia.org/wiki/Kaghan_Valley; o ;Kaghan Valley;Kaghan Valley of Pakistan’s HYPERLINK "https://en.wikipedia.org/wiki/Khyber_Pakhtunkhwa" o "Khyber Pakhtunkhwa" Khyber Pakhtunkhwa province at a cost of $1.8 billion, SK Hydro will construct the project with financing by China’s EXIM bank. The $1.6 billion 720 MW HYPERLINK ;https://en.wikipedia.org/wiki/Karot_Hydropower_Project; o ;Karot Hydropower Project;Karot Dam which is under construction is part of the CPEC plan, but is to be financed separately by China’s HYPERLINK "https://en.wikipedia.org/wiki/Silk_Road_Fund" o "Silk Road Fund" Silk Road Fund.
Pakistan and China have also discussed the inclusion of the 4,500MW $14 billion HYPERLINK "https://en.wikipedia.org/wiki/Diamer-Bhasha_Dam" o "Diamer-Bhasha Dam"Diamer-Bhasha Dam as part of the CPEC project, though as of December 2015, no firm decision has been made – though Pakistani officials remain optimistic at its eventual inclusion. On 14 November 2017, Pakistan dropped its bid to have HYPERLINK "https://en.wikipedia.org/wiki/Diamer-Bhasha_Dam" o "Diamer-Bhasha Dam"Diamer-Bhasha Damfinanced under the CPEC framework.
The $2.4 billion, 1,100 MW HYPERLINK "https://en.wikipedia.org/wiki/Kohala_Hydropower_Project" o "Kohala Hydropower Project"Kohala Hydropower Project being constructed by China’s HYPERLINK ;https://en.wikipedia.org/wiki/Three_Gorges_Corporation; o ;Three Gorges Corporation; Three Gorges Corporation predates the announcement of CPEC, though funding for the project will now come from CPEC fund.
Despite several renewable energy projects, the bulk of new energy generation capacity under CPEC will be coal-based plants, with $5.8 billion worth of coal power projects expected to be completed by early 2019 as part of the CPEC’s "Early Harvest" projects.
In Balochistan province, a $970 million coal power plant at Hub, near Karachi, with a capacity of 660MW to be built by a joint consortium of China’s HYPERLINK ;https://en.wikipedia.org/wiki/China_Power_Investment_Corporation; o ;China Power Investment Corporation; China Power Investment Corporation and the Pakistani firm HYPERLINK ;https://en.wikipedia.org/wiki/Hub_Power_Company; o ;Hub Power Company; Hub Power Company as part of a larger $2 billion project to produce 1,320MW from coal. A 300MW coal power plant is also being developed in the city of Gwadar, and is being financed by a 0% interest loan.
The $1.8 billion HYPERLINK ;https://en.wikipedia.org/wiki/Sahiwal_Coal_Power_Project; o ;Sahiwal Coal Power Project;Sahiwal Coal Power Project, in full operation since 3 July 2017, is a project in central Punjab that has a capacity of 1,320MW. It was built by a joint venture of two Chinese firms: the HYPERLINK ;https://en.wikipedia.org/wiki/China_Huaneng_Group; o ;China Huaneng Group;Huaneng Shandong company and HYPERLINK ;https://en.wikipedia.org/wiki/Shandong_Ruyi; o ;Shandong Ruyi; Shandong Ruyi, who will jointly own and operate the plant. Pakistan will purchase electricity from the consortium at a tariff of 8.36 US cents/kWh.
The $589 million project to establish a coal mine and a relatively small 300MW coal power plant to be built in the town of HYPERLINK ;https://en.wikipedia.org/wiki/Pind_Dadan_Khan; o ;Pind Dadan Khan;Pind Dadan Khan by China Machinery Engineering Corporation in Punjab’s HYPERLINK "https://en.wikipedia.org/wiki/Salt_Range" o "Salt Range" Salt Range. Pakistan’s NEPRA has been criticized for considering a relatively high tariff of 11.57 US cents/kWH proposed by the Chinese firm, which had been initially agreed at 8.25 US cents/kWH in 2014. The Chinese firm argued that coal transportation costs had greatly increased due to the nonavailability of coal from nearby mines which had initially been regarded as the primary coal source for the project. The company argued that coal would instead have to be transported from distant Sindh province, which along with inefficiencies in mining procedures, increased the cost of fuel by 30.5%.
The HYPERLINK ;https://en.wikipedia.org/wiki/Shanghai_Electric; o ;Shanghai Electric; Shanghai Electric company of China will construct two 660MW power plants as part of the ;Thar-I; project in the HYPERLINK ;https://en.wikipedia.org/wiki/Thar_coalfield; o ;Thar coalfield;Thar coalfield of HYPERLINK ;https://en.wikipedia.org/wiki/Sindh; o ;Sindh;Sindh province, while ;Thar-ll; will be developed by a separate consortium. The facility will be powered by locally sourced coal, and is expected to be put into commercial use in 2018. Pakistan’s HYPERLINK "https://en.wikipedia.org/wiki/National_Electric_Power_Regulatory_Authority" o "National Electric Power Regulatory Authority" National Electric Power Regulatory Authority (NEPRA) has agreed to purchase electricity from both Thar-l and Thar-ll at a tariff of 8.50 US cents/kWh for the first 330 MW of electricity, 8.33 US cents/kWh for the next 660 MW, and 7.99 US cents/kWh for the next 1,099 MW as further phases are developed.
Near the Thar-I Project, the HYPERLINK "https://en.wikipedia.org/wiki/China_Machinery_Engineering_Corporation" o "China Machinery Engineering Corporation" China Machinery Engineering Corporation in conjunction with Pakistan’s HYPERLINK ;https://en.wikipedia.org/wiki/Engro_Corporation; o ;Engro Corporation;Engro Corporation will construct two 330MW power plants as part of the HYPERLINK ;https://en.wikipedia.org/wiki/Thar_Engro_Coal_Power_Project; o ;Thar Engro Coal Power Project; ;Thar-ll Project; (having initially proposed the simultaneous construction of two 660MW power plants) as well as developing a coal mine capable of producing up to 3.8 million tons of coal per year as part of the first phase of the project.; The first phase is expected to be complete by early 2019, at a cost of $1.95 billion. Subsequent phases will eventually generate an additional 3,960MW of electricity over the course of ten years. As part of infrastructure required for electricity distribution from the Thar l and ll Projects, the $2.1 billion HYPERLINK ;https://en.wikipedia.org/wiki/Matiari_to_Lahore_Transmission_Line; o ;Matiari to Lahore Transmission Line;Matiari to Lahore Transmission Line, and $1.5 billion in Matiari to Faisalabad transmission line are also to be built as part of the CPEC project.
The 1,320MW $2.08 billion HYPERLINK ;https://en.wikipedia.org/wiki/Pakistan_Port_Qasim_Power_Project; o ;Pakistan Port Qasim Power Project; Pakistan Port Qasim Power Project near HYPERLINK ;https://en.wikipedia.org/wiki/Port_Qasim; o ;Port Qasim; Port Qasim will be a joint venture of Al-Mirqab Capital from HYPERLINK ;https://en.wikipedia.org/wiki/Qatar; o ;Qatar; Qatar, and HYPERLINK ;https://en.wikipedia.org/wiki/China; o ;China; China’s Power Construction Corporation – a subsidiary of HYPERLINK "https://en.wikipedia.org/wiki/Sinohydro" o "Sinohydro"Sinohydro Resources Limited. Pakistan’s HYPERLINK ;https://en.wikipedia.org/wiki/NEPRA; o ;NEPRA; NEPRA and SinoHydro agreed to set the levelized tariff for electricity purchased from the consortium at 8.12 US cents/kWh. The first 660 MW reactor was commissioned in November 2017.
Liquefied natural gas
HYPERLINK ;https://en.wikipedia.org/wiki/Liquefied_natural_gas; o ;Liquefied natural gas; Liquefied natural gas power LNG projects are also considered vital to CPEC. The Chinese government has announced its intention to build a $2.5 billion 711 kilometre gas pipeline from Gwadar to HYPERLINK ;https://en.wikipedia.org/wiki/Nawabshah; o ;Nawabshah;Nawabshah in province as part of CPEC. The pipeline is designed to be a part of the 2,775 kilometre long HYPERLINK ;https://en.wikipedia.org/wiki/Iran%E2%80%93Pakistan_gas_pipeline; o ;Iran–Pakistan gas pipeline; Iran–Pakistan gas pipeline, with the 80 kilometre portion between Gwadar and the Iranian border to be connected when sanctions against Tehran are eased; Iran has already completed a 900 kilometre long portion of the pipeline on its side of the border.
The Pakistani portion of the pipeline is to be constructed by the state-owned HYPERLINK ;https://en.wikipedia.org/wiki/China_Petroleum_Pipeline_Bureau; o ;China Petroleum Pipeline Bureau; China Petroleum Pipeline Bureau. It will be 42 inches in diameter, and have the capacity to transport 1 billion cubic feet of liquified natural gas every day, with an additional 500 million cubic feet of additional capacity when the planned off-shore LNG terminal is also completed.The project will not only provide gas exporters with access to the Pakistani market, but will also allow China to secure a route for its own imports.
The project should not be confused with the $2 billion 1,100 kilometre HYPERLINK ;https://en.wikipedia.org/w/index.php?title=North-South_Pipeline_(Pakistan);action=edit;redlink=1; o ;North-South Pipeline (Pakistan) (page does not exist); North-South Pipeline liquefied natural gas pipeline which is to be constructed with Russian assistance between Karachi and Lahore with anticipated completion by 2018. Nor should it be confused with the planned $7.5 billion HYPERLINK ;https://en.wikipedia.org/wiki/Trans-Afghanistan_Pipeline; o ;Trans-Afghanistan Pipeline; TAPI Pipeline which is a planned project involving Turkmenistan, Afghanistan, Pakistan, and India.
Other LNG projects are currently under construction with Chinese assistance and financing that will augment the scope of CPEC, but are neither funded by nor officially considered a part of CPEC. The 1,223MW HYPERLINK ;https://en.wikipedia.org/wiki/Balloki_Power_Plant; o ;Balloki Power Plant;Balloki Power Plant is currently under construction near HYPERLINK ;https://en.wikipedia.org/wiki/Kasur; o ;Kasur;Kasur, and is being constructed by China’s HYPERLINK "https://en.wikipedia.org/wiki/Harbin_Electric" o "Harbin Electric" Harbin Electric Company with financing from the China’s EXIM bank, is one such example. In October 2015, Prime Minister Nawaz Sharif also inaugurated construction of the 1,180MW Bhikhi Power Plant near HYPERLINK ;https://en.wikipedia.org/wiki/Sheikhupura; o ;Sheikhupura;Sheikhupura, which is to be jointly constructed by China’s HYPERLINK "https://en.wikipedia.org/wiki/Harbin_Electric" o "Harbin Electric" Harbin Electric Company and HYPERLINK "https://en.wikipedia.org/wiki/General_Electric" o "General Electric" General Electric from the United States. It is expected to be Pakistan’s most efficient power plant, and will provide enough power for an estimated 6 million homes.
As part of the ;Early Harvest; scheme of the CPEC, over 10,000 megawatts of electricity-generating capacity is to be developed between 2018 and 2020. While some ;Early Harvest; projects will not be complete until 2020, the government of Pakistan plans to add approximately 10,000 MW of energy-generating capacity to Pakistan’s electric grid by 2018 through the completion of projects which complement CPEC.
Although not officially under the scope of CPEC, the 1,223 MW HYPERLINK "https://en.wikipedia.org/wiki/Balloki_Power_Plant" o "Balloki Power Plant"Balloki Power Plant, and the 1,180 MW Bhakki power plants are also under construction, which along with the under-construction 969 MW HYPERLINK "https://en.wikipedia.org/wiki/Neelum%E2%80%93Jhelum_Hydropower_Plant" o "Neelum–Jhelum Hydropower Plant"Neelum–Jhelum Hydropower Plant and 1,410 MW HYPERLINK "https://en.wikipedia.org/wiki/Tarbela_Dam" l "Tarbela-IV_Extension_Project" o "Tarbela Dam"Tarbela IV Extension Project, competed in February 2018, will result in an additional 10,000 MW being added to Pakistan’s electricity grid by the end of 2018 with a combination of CPEC and non-CPEC projects. A further 1,000 MW of electricity will be imported to Pakistan from HYPERLINK ;https://en.wikipedia.org/wiki/Tajikistan; o ;Tajikistan; Tajikistan and HYPERLINK ;https://en.wikipedia.org/wiki/Kyrgyzstan; o ;Kyrgyzstan; Kyrgyzstan as part of the HYPERLINK ;https://en.wikipedia.org/wiki/CASA-1000; o ;CASA-1000; CASA-1000 project, which is expected to be launched in 2018.
Table2-1 Table of projects
;Early Harvest; Energy Project Capacity Location
HYPERLINK ;https://en.wikipedia.org/wiki/Pakistan_Port_Qasim_Power_Project; o ;Pakistan Port Qasim Power Project; Pakistan Port Qasim Power Project. 1,320 MW (2 x 660 MW plants) Sindh
Thar-l Project 1,320 MW (4 x 330 MW plants) Sindh
HYPERLINK ;https://en.wikipedia.org/wiki/Thar_Engro_Coal_Power_Project; o ;Thar Engro Coal Power Project; Thar-ll Project and coal mine 1,320 MW (2 x 660 MW plants) Sindh
HYPERLINK ;https://en.wikipedia.org/wiki/Sahiwal_Coal_Power_Project; o ;Sahiwal Coal Power Project; Sahiwal Coal Power Project 1,320 MW (2 x 660 MW plants) Punjab
Rahimyar Khan coal power project 1,320 MW (2 x 660 MW plants) Punjab
HYPERLINK ;https://en.wikipedia.org/wiki/Quaid-e-Azam_Solar_Park; o ;Quaid-e-Azam Solar Park; Quaid-e-Azam Solar Park 1,000 MW Punjab
HYPERLINK ;https://en.wikipedia.org/wiki/Suki_Kinari_Hydropower_Project; o ;Suki Kinari Hydropower Project; Suki Kinari Hydropower Project 870 MW (expected completion in 2020) HYPERLINK ;https://en.wikipedia.org/wiki/China%E2%80%93Pakistan_Economic_Corridor; l ;cite_note-212; 212 Khyber Pakhtunkhwa
HYPERLINK ;https://en.wikipedia.org/wiki/Karot_Hydropower_Project; o ;Karot Hydropower Project; Karot Hydropower Project 720 MW (expected completion in 2020) HYPERLINK ;https://en.wikipedia.org/wiki/China%E2%80%93Pakistan_Economic_Corridor; l ;cite_note-213; 213 Punjab
China Power Hub Generation Company 2X660 MW Balochistan
HYPERLINK ;https://en.wikipedia.org/wiki/Thar_Engro_Coal_Power_Project; o ;Thar Engro Coal Power Project; Thar Engro Coal Power Project 660 MW (2 x 330 MW plants) Sindh
Gwadar coal power project 300 MW Balochistan
UEP Windfarm 100 MW Sindh
HYPERLINK ;https://en.wikipedia.org/wiki/Dawood_wind_power_project; o ;Dawood wind power project; Dawood wind power project 50 MW Sindh
Sachal Windfarm 50 MW Sindh
Sunnec Windfarm 50 MW Sindh
Matiari to Faisalabad transmission line 660 kilovolt Sindh and Punjab
HYPERLINK ;https://en.wikipedia.org/wiki/Matiari_to_Lahore_Transmission_Line; o ;Matiari to Lahore Transmission Line; Matiari to Lahore Transmission Line 660 kilovolt Sindh and Punjab
2.8 Other areas of cooperation
The CPEC announcement encompassed not only infrastructure works, but also addressed areas of co-operation between China and Pakistan.
CPEC includes provisions for cooperation in management of water resources, livestock, and other fields of agriculture. Under the plan, agricultural information project, storage and distribution of agricultural equipment and construction project, agricultural mechanisation, demonstration and machinery leasing project and fertiliser production project for producing 800,000 tons of fertiliser and 100,000 tons of bio-organic fertiliser will be implemented.
Science and technology
As part of CPEC, the two countries signed an Economic and Technical Cooperation Agreement, as well as pledged to ;China-Pakistan Joint Cotton Bio-Tech Laboratory; The two countries also pledged to establish the ;China-Pakistan Joint Marine Research Center; with HYPERLINK ;https://en.wikipedia.org/wiki/State_Oceanic_Administration; o ;State Oceanic Administration; State Oceanic Administration and Pakistan’s HYPERLINK "https://en.wikipedia.org/wiki/Ministry_of_Science_and_Technology_(Pakistan)" o "Ministry of Science and Technology (Pakistan)" Ministry of Science and Technology Also as part of the CPEC agreement, Pakistan and China have agreed to co-operate in the field of HYPERLINK "https://en.wikipedia.org/wiki/Space_research" o "Space research" space research.
In February 2016, the two countries agreed to establish the "Pak-China Science, Technology, Commerce and Logistic Park" near Islamabad at an estimated cost of $1.5 billion. The park will be situated on 500 hectares, which will be provided by Pakistan to China’s HYPERLINK ;https://en.wikipedia.org/wiki/Xinjiang_Production_and_Construction_Corps; o ;Xinjiang Production and Construction Corps; Xinjiang Production and Construction Corps, with all investments expected to come from the Chinese side over the course of ten years.
In May 2016, construction began on the $44 million 820 kilometer long HYPERLINK ;https://en.wikipedia.org/wiki/Pakistan-China_Fiber_Optic_Project; o ;Pakistan-China Fiber Optic Project; Pakistan-China Fiber Optic Project, an HYPERLINK ;https://en.wikipedia.org/wiki/Optical_fiber; o ;Optical fiber; optical fiber cable that will enhance telecommunication in the HYPERLINK ;https://en.wikipedia.org/wiki/Gilgit-Baltistan; o ;Gilgit-Baltistan;Gilgit-Baltistan region, while offering Pakistan a fifth route by which to transmit telecommunication traffic.
The two nations also pledged co-operation in field ranging from anti-narcotic efforts, to co-operation in an effort to reduce climate change. The two nations also agreed to increase co-operating between the banking sectors of the two countries, as well as to establish closer ties between HYPERLINK ;https://en.wikipedia.org/wiki/China_Central_Television; o ;China Central Television; China Central Television and the HYPERLINK ;https://en.wikipedia.org/wiki/Pakistan_Television_Corporation; o ;Pakistan Television Corporation; Pakistan Television Corporation.
Approximately $11 billion worth of infrastructure projects being developed by the Pakistani government will be financed at an interest rate of 1.6%, after Pakistan successfully lobbied the Chinese government to reduce interest rates from an initial 3%. Loans will be dispersed by the HYPERLINK ;https://en.wikipedia.org/wiki/Exim_Bank_of_China; o ;Exim Bank of China;Exim Bank of China, HYPERLINK ;https://en.wikipedia.org/wiki/China_Development_Bank; o ;China Development Bank; China Development Bank, and the HYPERLINK ;https://en.wikipedia.org/wiki/Industrial_and_Commercial_Bank_of_China; o ;Industrial and Commercial Bank of China; ICBC. For comparison, loans for previous Pakistani infrastructure projects financed by the HYPERLINK ;https://en.wikipedia.org/wiki/World_Bank; o ;World Bank; World Bank carried an interest rate between 5% and 8.5%,while interest rates on market loans approach 12%.
The loan money would be used to finance projects which are planned and executed by the Pakistani government. Portions of the approximately $6.6 billionHYPERLINK ;https://en.wikipedia.org/wiki/China%E2%80%93Pakistan_Economic_Corridor; l ;cite_note-ReferenceC-94;94 HYPERLINK ;https://en.wikipedia.org/wiki/M5_motorway_(Pakistan); o ;M5 motorway (Pakistan); Karachi–Lahore Motorway are already under construction. HYPERLINK ;https://en.wikipedia.org/wiki/China%E2%80%93Pakistan_Economic_Corridor; l ;cite_note-224; 224 The $2.9 billion phase which will connect the city of Multan to the city of Sukkur over a distance of 392 kilometres has also been approved, with 90% of costs to be financed by the Chinese government at concessionary interest rates, while the remaining 10% is to be financed by the Public Sector Development Programme of the Pakistani government. In May 2016, the $2.9 billion loan were given final approvals required prior to disbursement of the funds were given by the Government of the People’s Republic of China on May 4, 2016, and will be concessionary loans with an interest rate of 2.0%.The National Highway Authority of Pakistan reported that contractors arrived on site soon after the loan received final approval.
The HYPERLINK "https://en.wikipedia.org/wiki/China_Development_Bank" o "China Development Bank" China Development Bank will finance the $920 million towards the cost of reconstruction of the 487 kilometer portion of the Karakoram Highway between HYPERLINK "https://en.wikipedia.org/wiki/Burhan,_Pakistan" o "Burhan, Pakistan"Burhan and Raikot. An addition $1.26 billion will be lent by the China Exim Bank for the construction of the Havelian to Thakot portion of this 487 kilometer stretch of roadway, to be dispersed as low-interest rate concessionary loans. $7 billion of the planned $8.2 billion HYPERLINK "https://en.wikipedia.org/wiki/China%E2%80%93Pakistan_Economic_Corridor" l "Overhaul_of_Main_Line_1_Railway" o "China–Pakistan Economic Corridor" overhaul of the Main Line 1 railway is to be financed by concessionary loans, which extended by China’s state owned banks.
The long-planned 27.1 km long $1.6 billion HYPERLINK ;https://en.wikipedia.org/wiki/Orange_Line_(Lahore_Metro); o ;Orange Line (Lahore Metro); Orange Line of the HYPERLINK ;https://en.wikipedia.org/wiki/Lahore_Metro; o ;Lahore Metro; Lahore Metro is regarded as a commercial project, and does not qualify for the Exim Bank’s 1.6% interest rate. It will instead by financed at a 2.4% interest rate after China agreed to reduce interest rates from an originally planned rate of 3.4%.
The $44 million HYPERLINK "https://en.wikipedia.org/wiki/Pakistan-China_Fiber_Optic_Project" o "Pakistan-China Fiber Optic Project" Pakistan-China Fiber Optic Project, a 820 km long fibre optic wire connecting Pakistan and China, will be constructed using concessionary loans at an interest rate of 2%, rather than the 1.6% rate applied to other projects.
The government of China in August 2015 announced that concessionary loans for several projects in Gwadar totalling $757 million would be converted 0% interest loans. The projects which are now to financed by the 0% interest loans include: the construction of the $140 million HYPERLINK "https://en.wikipedia.org/wiki/East_Bay_Expressway" o "East Bay Expressway" East Bay Expressway project, installation of HYPERLINK "https://en.wikipedia.org/wiki/Breakwaters" o "Breakwaters" breakwaters in Gwadar which will cost $130 million, a $360 million coal power plant in Gwadar, a $27 million project to dredge berths in Gwadar harbour, and a $100 million 300-bed hospital in Gwadar. Pakistan will only repay the principle on these loans.
In September 2015, the government of China also announced that the $230 million Gwadar International Airport project would no longer be financed by loans, but would instead be constructed by grants which the government of Pakistan will not be required to repay.
Private consortia $15.5 billion worth of energy projects are to be constructed by joint Chinese-Pakistani firms, rather than by the governments of either China or Pakistan. The Exim Bank of China will finance those investments at 5–6% interest rates, while the government of Pakistan will be contractually obliged to purchase electricity from those firms at pre-negotiated rates.
As an example, the 1,223MW HYPERLINK "https://en.wikipedia.org/wiki/Balloki_Power_Plant" o "Balloki Power Plant"Balloki Power Plant does not fall under the concessionary loan rate of 1.6%, as the project is not being developed by the Pakistani government. Instead, it is considered to be a private sector investment as its construction will be undertaken by a consortium of HYPERLINK "https://en.wikipedia.org/wiki/Harbin_Electric" o "Harbin Electric" Harbin Electric and Habib Rafiq Limited after they successfully bid against international competitors. Chinese state-owned banks will provide loans to the consortium that are subsidised by the Chinese government. In the case of the Balloki Power Plant, state-owned banks will finance the project at an interest rate of 5%, while the Pakistani government will purchase electricity at the lowest bid rate of 7.973 cents per unit.
While the HYPERLINK "https://en.wikipedia.org/wiki/E35_expressway_(Pakistan)" o "E35 expressway (Pakistan)" E-35 expressway is considered to be a crucial part of the route between Gwadar and China, the E35 will not be financed by CPEC funds. The project will instead be financed by the Asian Development Bank.
The N70 project is not officially a part of CPEC but will connect the CPEC’s Western Alignment to the Karachi-Lahore Motorway at Multan. The project will be financed as part of a $195 million package by the HYPERLINK ;https://en.wikipedia.org/wiki/Asian_Development_Bank; o ;Asian Development Bank; Asian Development Bank announced in May 2015 to upgrade the HYPERLINK ;https://en.wikipedia.org/wiki/N-70_National_Highway; o ;N-70 National Highway; N70 National Highway and HYPERLINK ;https://en.wikipedia.org/wiki/N-50_National_Highway; o ;N-50 National Highway; N50 National Highway. In January 2016, The United Kingdom’s HYPERLINK "https://en.wikipedia.org/wiki/Department_for_International_Development" o "Department for International Development" Department for International Development announced a $72.4 million grant to Pakistan for roadway improvements in the province of Balochistan, thereby reducing the total Asian Development Bank loan from $195 million to $122.6 million.
The HYPERLINK "https://en.wikipedia.org/wiki/M4_motorway_(Pakistan)" o "M4 motorway (Pakistan)" M-4 Motorway between Faisalabad and Multan is not to be financed by the Chinese government as part of CPEC, but will instead be the first infrastructure project partially financed by the HYPERLINK "https://en.wikipedia.org/wiki/Asian_Infrastructure_Investment_Bank" o "Asian Infrastructure Investment Bank" Asian Infrastructure Investment Bank, and will be co-financed along with the HYPERLINK "https://en.wikipedia.org/wiki/Asian_Development_Bank" o "Asian Development Bank" Asian Development Bank for a total of approximately $275 million. Portions of the project will also be funded by a $90.7 million grant announced in October 2015 by the government of the United Kingdom towards the construction of the HYPERLINK "https://en.wikipedia.org/wiki/Gojra" o "Gojra"Gojra- HYPERLINK "https://en.wikipedia.org/wiki/Shorkot" o "Shorkot" Shorkot section of the M4 Motorway project.
The importance of CkPEC to China is reflected by its inclusion as part of China’s 13th HYPERLINK ;https://en.wikipedia.org/wiki/Five-year_plans_of_China; o ;Five-year plans of China; five-year development plan. CPEC projects will provide China with an alternate route for energy supplies, as well as a new route by which HYPERLINK ;https://en.wikipedia.org/wiki/Western_China; o ;Western China; Western China can conduct trade. Pakistan stands to gain due to upgrade of infrastructure and introduction of a reliable energy supply.
On January 8, 2017, HYPERLINK ;https://en.wikipedia.org/wiki/Forbes; o ;Forbes; Forbes claimed that CPEC is part of China’s vision to write the rules of the next era of globalization and help its export and investment engines run for years to come. Writing in January 2017, Arun Mohan Sukumar of India’s HYPERLINK ;https://en.wikipedia.org/wiki/Observer_Research_Foundation; o ;Observer Research Foundation; Observer Research Foundation claimed that ;CPEC is an important enough project whose economic and strategic consequences require methodical assessment;, adding that ;CPEC may be a bilateral endeavour, but HYPERLINK ;https://en.wikipedia.org/wiki/New_Delhi; o ;New Delhi; New Delhi cannot ignore its spillover effects on regional governance; and concluding that ;India would be ill-advised to rely on the false comfort that profits alone will drive China’s business with Pakistan".According to China’s prime minister, HYPERLINK ;https://en.wikipedia.org/wiki/Li_Keqiang; o ;Li Keqiang; Li Keqiang, Pakistan’s development through the project might "wean the populace from HYPERLINK "https://en.wikipedia.org/wiki/Islamic_fundamentalism" o "Islamic fundamentalism" fundamentalism".
2.9 Impacts on Pakistani economy
The CPEC is a landmark project in the annals of history of Pakistan. It is the largest investment Pakistan has attracted since independence and largest by China in any foreign country. CPEC is considered economically vital to Pakistan in helping it drive economic growth. The Pakistani media and government have called CPEC investments a "game and fate changer" for the region, while both China and Pakistan intend that the massive investment plan will transform Pakistan into a regional economic hub and further boost the deepening ties between the two countries. Approximately 1 year after the announcement of CPEC, Zhang Baozhong, chairman of China Overseas Port Holding Company told HYPERLINK "https://en.wikipedia.org/wiki/The_Washington_Post" o "The Washington Post" The Washington Post that his company planned to spend an additional $4.5 billion on roads, power, hotels and other infrastructure for Gwadar’s industrial zone, which would be one of the largest ever sums of foreign direct investment into Pakistan.
Pakistan as late as early 2017 faced energy shortfalls of over 4,500MW on a regular basis with routine power cuts of up to 12 hours per day, which has shed an estimated 2–2.5% off its annual GDP. The HYPERLINK ;https://en.wikipedia.org/wiki/Financial_Times; o ;Financial Times; Financial Times noted that Pakistan’s electricity shortages are a major hindrance to foreign investment, and that Chinese investments in Pakistani infrastructure and power projects will lead to a "virtuous cycle" that will make the country more attractive for foreign investment in a variety of sectors. Poor availability of electricity is considered by the HYPERLINK "https://en.wikipedia.org/wiki/World_Bank" o "World Bank" World Bank to be a main constraint to both economic growth and investment in Pakistan.
The impact of Chinese investments in Energy sector was soon visible as in December 2017, Pakistan succeeded in producing surplus electricity. Pakistani Federal Minister for Power Division, HYPERLINK "https://en.wikipedia.org/wiki/Awais_Leghari" o "Awais Leghari"Awais Leghari announced a complete end to power cuts in 5,297 feeders out of total 8,600 and claimed that the country’s current electricity production had gone up to 16,477 Megawatts which was 2700 megawatts more than the demand.
Pakistan’s large textile industry has also been negatively affected by several-hour long power cuts, with almost 20% of textile factories in the city of HYPERLINK "https://en.wikipedia.org/wiki/Faisalabad" o "Faisalabad" Faisalabad shutting down on account of power shortages. The CPEC’s ;Early Harvest; projects are expected to resolve shortages in power generation by 2018 by increasing Pakistan’s power generation capacity by over 10,000 megawatts. As a result of improved infrastructure and energy supplies, the Pakistani government expects that economic growth rates will reach 7% by 2018.
Former Pakistan Prime Minister HYPERLINK "https://en.wikipedia.org/wiki/Shaukat_Aziz" o "Shaukat Aziz"Shaukat Aziz also stated in May 2016 that predicted economic growth from CPEC projects would result in stabilization of Pakistan’s security situation, which has also been cited by the HYPERLINK ;https://en.wikipedia.org/wiki/World_Bank; o ;World Bank; World Bank as hindrance to sustained economic growth in Pakistan.
According to Chinese Foreign Ministry Spokesperson Hua Chunying, the corridor will ;serve as a driver for connectivity between South Asia and East Asia.; Mushahid Hussain, chairman of the Pakistan-China Institute, told HYPERLINK ;https://en.wikipedia.org/wiki/China_Daily; o ;China Daily; China Daily that the economic corridor ;will play a crucial role in regional integration of the ‘Greater South Asia’, which includes China, Iran, Afghanistan, and stretches all the way to Myanmar.; When fully built, the corridor is expected to generate significant revenue from transit fees levied on Chinese goods – to the tune of several billion dollars per annum. According to HYPERLINK ;https://en.wikipedia.org/wiki/The_Guardian; o ;The Guardian; The Guardian, ;The Chinese are not just offering to build much-needed infrastructure but also make Pakistan a key partner in its grand economic and strategic ambitions.;
HYPERLINK ;https://en.wikipedia.org/wiki/Moody%27s_Investors_Service; o ;Moody’s Investors Service" Moody’s Investors Service has described the project as a ;credit positive; for Pakistan. In 2015, the agency acknowledged that much of the project’s key benefits would not materialise until 2017, but stated that it believes at least some of the benefits from the economic corridor would likely begin accruing even before then. The HYPERLINK "https://en.wikipedia.org/wiki/Asian_Development_Bank" o "Asian Development Bank" Asian Development Bank stated "CPEC will connect economic agents along a defined geography. It will provide connection between economic nodes or hubs, centered on urban landscapes, in which large amount of economic resources and actors are concentrated. They link the supply and demand sides of markets." On November 14, 2016, HYPERLINK "https://en.wikipedia.org/wiki/Hyatt_Hotels_Corporation" o "Hyatt Hotels Corporation" Hyatt Hotels Corporation announced plan’s to open four properties in Pakistan, in partnership with HYPERLINK ;https://en.wikipedia.org/wiki/Bahria_Town_Group; o ;Bahria Town Group;Bahria Town Group, citing the investment of CPEC as the reason behind the $600 million investment.
On March 12, 2017, a consortium of Pakistani broker houses reported that Pakistan will end up paying HYPERLINK ;https://en.wikipedia.org/wiki/$; o ;$; $90 billion to HYPERLINK ;https://en.wikipedia.org/wiki/China; o ;China; China over a span of 30 years with annual average repayments of $3–4 billion per year post fiscal year 2020. The report further said that CPEC-related transportation would earn $400–500 million per annum to Pakistan, and would grow Pakistani exports by 4.5% a year till fiscal year 2025.
HYPERLINK ;https://en.wikipedia.org/wiki/Council_on_Foreign_Relations; o ;Council on Foreign Relations; Council on Foreign Relations
The HYPERLINK ;https://en.wikipedia.org/wiki/China-Pakistan_Economic_Corridor; l ;Roadway_infrastructure_projects; o ;China-Pakistan Economic Corridor; CPEC Alignments will improve connectivity to restive HYPERLINK ;https://en.wikipedia.org/wiki/Xinjiang; o ;Xinjiang; Xinjiang, thereby increasing the region’s potential to attract public and private investment. CPEC is considered central to HYPERLINK "https://en.wikipedia.org/wiki/China%E2%80%93Pakistan_relations" o "China–Pakistan relations" China–Pakistan relations; its central importance is reflected by China’s inclusion of the project as part of its 13th HYPERLINK ;https://en.wikipedia.org/wiki/Five-year_plans_of_China; o ;Five-year plans of China; five-year development plan. The CPEC projects will also complement China’s HYPERLINK "https://en.wikipedia.org/wiki/China_Western_Development" o "China Western Development" Western Development plan, which includes not only Xinjiang, but also the neighboring regions of HYPERLINK "https://en.wikipedia.org/wiki/Tibet" o "Tibet" Tibet and HYPERLINK "https://en.wikipedia.org/wiki/Qinghai" o "Qinghai" Qinghai.
In addition to its significance to reduce Chinese dependence on the Sea of Malacca and South China Sea routes, CPEC will provide China an alternative and shorter route for energy imports from the Middle East, thereby reducing shipping costs and transit times. The currently available sea-route to China is roughly 12,000 kilometres long, while the distance from Gwadar Port to HYPERLINK "https://en.wikipedia.org/wiki/Xinjiang" o "Xinjiang" Xinjiang province is approximately 3,000 kilometres, with another 3,500 kilometres from Xinjiang to China’s eastern coast. As a result of CPEC, Chinese imports and exports to the Middle East, Africa, and Europe would require much shorter shipment times and distances.
Route to circumvent Afghanistan
Negotiations to provide an alternate route to the Central Asian republics by way of China predate the announcement of CPEC. The HYPERLINK ;https://en.wikipedia.org/wiki/Afghanistan%E2%80%93Pakistan_Transit_Trade_Agreement; o ;Afghanistan–Pakistan Transit Trade Agreement; Afghanistan–Pakistan Transit Trade Agreement of 2010 provided Pakistan access to Central Asia via Afghanistan; however, the full agreement has yet to be fully implemented. The ; HYPERLINK ;https://en.wikipedia.org/wiki/Quadrilateral_Agreement_on_Traffic_in_Transit; o ;Quadrilateral Agreement on Traffic in Transit; Quadrilateral Agreement on Traffic in Transit; (QATT) was first devised in 1995, and signed in 2004 by the governments of China, Pakistan, Kazakhstan, and Kyrgyzstan to facilitate transit trade between the various countries, with no inclusion of Afghanistan. Despite signing of the QATT, the agreement’s full potential was never realized, largely on account of poor infrastructure links between the four countries prior to the announcement of CPEC.
During the visit of Afghan President HYPERLINK "https://en.wikipedia.org/wiki/Ashraf_Ghani" o "Ashraf Ghani"Ashraf Ghani to India in April 2015, he stated "We will not provide equal transit access to Central Asia for Pakistani trucks" unless the Pakistani government included India as part of the 2010 HYPERLINK "https://en.wikipedia.org/wiki/Afghanistan%E2%80%93Pakistan_Transit_Trade_Agreement" o "Afghanistan–Pakistan Transit Trade Agreement" Afghanistan–Pakistan Transit Trade Agreement. The current Transit Trade Agreement provides Afghanistan access to the HYPERLINK "https://en.wikipedia.org/wiki/Port_of_Karachi" o "Port of Karachi" Port of Karachi to conduct export trade with India, and allows Afghan goods to be transited up to any border of Pakistan, but does not guarantee Afghan trucks the right to traverse the HYPERLINK "https://en.wikipedia.org/wiki/Wagah_Border" o "Wagah Border"Wagah Border, nor does the agreement permit Indian goods to be exported to Afghanistan via Pakistan. Owing to continued tensions between India and Pakistan, the Pakistani government expressed reluctance to include India in any trade negotiations with Afghanistan, and as a result, little progress was made between the Afghan and Pakistani sides.
In February 2016, the Pakistani government signaled its intention to completely bypass Afghanistan in its quest to access Central Asia by announcing its intent to revive the QATT so that Central Asian states could access Pakistani ports via Kashgar instead of Afghanistan, thereby allowing the Central Asian republics to access Pakistan’s deep water ports without having to rely on a HYPERLINK ;https://en.wikipedia.org/wiki/War_in_Afghanistan; o ;War in Afghanistan; politically unstable Afghanistan as a transit corridor. In early March 2016, the Afghan government reportedly acquiesced to Pakistani requests to use Afghanistan as a corridor to Tajikistan, after having dropped demands from reciprocal access to India via Pakistan.
Alternate route to Central Asia
The heads of various Central Asian republics have expressed their desire to connect their infrastructure networks to the CPEC project via China. During the August 2015 visit of Pakistani Prime Minister Nawaz Sharif to Kazakhstan, the Kazakh Prime Minister HYPERLINK ;https://en.wikipedia.org/wiki/Karim_Massimov; o ;Karim Massimov;Karim Massimov, conveyed Kazakhstan’s desire to link its road network to the CPEC project. During the November 2015 visit of HYPERLINK "https://en.wikipedia.org/wiki/Tajikistan" o "Tajikistan" Tajikistan President HYPERLINK "https://en.wikipedia.org/wiki/Emomali_Rahmon" o "Emomali Rahmon"Emomali Rahmon to Pakistan, the Tajik premier also expressed his government’s desire to join the Quadrilateral Agreement on Traffic in Transit to use CPEC as a conduit for imports and exports to Tajikistan by circumventing Afghanistan; the request received political backing by the Pakistani Prime Minister.
The Chinese government has already upgraded the road linking Kashgar to HYPERLINK ;https://en.wikipedia.org/wiki/Osh; o ;Osh; Osh in Kyrgyzstan via the Kyrgyz town of HYPERLINK ;https://en.wikipedia.org/wiki/Erkeshtam; o ;Erkeshtam;Erkeshtam while a railway between HYPERLINK ;https://en.wikipedia.org/wiki/Urumqi; o ;Urumqi; Urumqi, China and HYPERLINK ;https://en.wikipedia.org/wiki/Almaty; o ;Almaty;Almaty, Kazakhstan has also been completed as part of China’s HYPERLINK "https://en.wikipedia.org/wiki/One_Belt_One_Road" o "One Belt One Road" One Belt One Road initiative. Numerous land crossings already exist between Kazakhstan and China as well. Additionally, the Chinese government has announced plans to lay railway track from HYPERLINK "https://en.wikipedia.org/wiki/Tashkent" o "Tashkent" Tashkent, Uzbekistan, towards Kyrgyzstan with onwards connections to China and Pakistan. Further, the HYPERLINK "https://en.wikipedia.org/wiki/Pamir_Highway" o "Pamir Highway" Pamir Highway already provides Tajikistan access to Kashgar via the HYPERLINK "https://en.wikipedia.org/wiki/Kulma_Pass" o "Kulma Pass"Kulma Pass. These crossings complement the CPEC project to provide Central Asian states access to Pakistan’s deepwater ports by completely bypassing Afghanistan – a country which has been HYPERLINK ;https://en.wikipedia.org/wiki/War_in_Afghanistan; o ;War in Afghanistan; ravaged by civil war and political instability since the late 1970s.
2.10 What is CPEC?
The China Pakistan economic corridor (CPEC) is being established as integral part of strategic partnership between Pakistan and China. CPEC was announced during the visit of Pakistani premier to China in July 2013. China Pakistan economic (CPEC) corridor is a long term plan with a time frame of 2014 – 2030. There are five main components of CPEC.
Gwadar (including port. city and Gwadar region socio-economic development)Energy (Coal, Hydel, Wind, Solar, LNG, Transmission)
Transport Infrastructure (Road, Rail, Aviation)
Investment ; Industrial Cooperation (Gwadar Free Zone and other industrial parks to be finalized)
Any other area of interest mutually agreed
CPEC is a package of diverse projects that overcome the energy and other necessity of Pakistan. China’s total investment is about $ 46 billion. The division of CPEC projects portfolio investment is given in following table.
Table2-2 Investment table
Table2-2 CPEC portfolio of investment (BOI Pakistan, 2015)
PROJECTS US$ MILLIONS
Transport and Infrastructure Roads 6,100
Rail network 3,690
Mass transit in Lahore 1,600
Gwadar Port 786
Routes of CPEC
Total length of the route from Gwadar to Khunjerab is 2688 Kms. This length includes the area of mountain. For the CPEC, 2 to 6 lanes have been proposed and each lane is 3.65 meter wide. Projected speed for the CPEC route is about from 70 kph to 120 kph. CPEC consists of three routes.
1.The western route starts from Gwadar and will pass through different cities of Baluchistan includes, Turbat, Panjgur, Nag, Basima, Sorab, Qalat, Quetta, QillaSaifullah and Zhob and reach Dera Ismail Khan before leading to Islamabad. A couple of sections of the road between Gwadar and Quetta are currently at an advanced stage of construction.
2.The central route will also originate from Gwadar and also reach Dera Ismail Khan via different cities of Baluchistan, Sindh and Punjab Province. Cities in-cludes, Basima, Khuzdar, Sukkur, Rajanpur, Layyah, Muzaffargarh and Bhak-kar.
3.The third route will include Gawadar, Basima, Khuzdar, Sukkur, Rahimyar Khan, Bahawalpur, Multan and Lahore/Faisalabad and then reach Islamabad.
The Historic Perspective of CPEC
The history of relations between Pakistan and China has been since 1950. China and Pakistan have shared their relations in a very productive and articulated way. The long history of relations between the two countries is based on mutual trust, sovereign equality, brotherhood, and cooperation. Leaders as well as the public in both countries describe the friendship as “higher than the Himalayas, sweeter than honey, and deeper than the sea. (China-Pakistan Economic Corridor 2010)
To be sure, the current multifaceted bond was not established overnight; rather it has evolved through various challenges. Despite the confusion of some problems, especially in the middle of the 50s and 70s of the last century, authority relationship, however, both parties did not let it lose.
Pakistan helped China to connect to the world by operating the first international flight to Beijing, facilitated President Nixon’s visit to china, thus helping in normalizing U.S.-China relations, and supported China’s sovereignty claim over Taiwan and Tibet. Similarly, China has helped Pakistan in developing its military and heavy industrial capacity as well as its communication infrastructure.
On the contrary, China unites Pakistan in unpredictability and helped Pakistan to establish military forces and economic opportunities, especially significant complex mechanics, Taxila in 1968.
During the mandatory sanctions of the United States in the decade of the eighties, nineties and nineties, China helped Pakistan in all areas. USA, all together left Pakistan when the war in Afghanistan and Pakistan had to face several questions of the economic purpose of reading. Then China joined Pakistan. In the nineties, mandatory United States sanctions in Pakistan and China after the agreement on nuclear and missile programs. China has withstood this pressure and has continued to help Pakistan. St. Andrew Mal (2015) is of the opinion that most transactions and cooperation are ongoing secrets in an attempt to avoid criticism. He formulates the term "Shadow Collaboration" to explain the link.
Over the years, the two countries have developed strong relationships of trust. On the idea of ??the past, China’s policy pays special attention to Pakistan’s future efforts in China. The Chinese economic passage in Pakistan is one of the most significant examples in this regard. The two governments have been implementing this idea for a long time (almost two decades). Each country tried to maneuver a little and mitigate the method to finish the end. Joint deceleration in 2003, when President Musharraf’s visit is the first document describes the long-term plans for cooperation on both sides. Later, a trade agreement was signed in 2006, which helped boost trade.
The expansion and development of Chinese property in the last four decades has given the country a special position in the global economy. The currency crisis of 2007 has not only strengthened the Chinese economy, but has also greatly strengthened its role and its aforementioned role in international governance.
2.11 The Economic Perspective of CPEC: In line with the 2014-15 Pakistani economic survey, trade between Pakistan and China is up to $16 Billion. This bilateral relationship is the language of the Memorandum of Understanding on the development of the Chinese-Pakistani Economic Corridor (CPEC). CPEC can be a route of three, 218 clicks long, which will be built in the next few years and can cover roads, railways and pipelines. The estimated real costs of the project for $ 75 billion of these additional forty-five billion dollars can ensure that the passage will be operational by 2020. The remaining investment will be used for energy production and infrastructure development.
In November 2003 by concluding the bilateral Preferential Trade Agreement Substantive economic engagements between both countries commenced. Later, a Joint Feasibility Study to frame a bilateral Free Trade Agreement (FTA).(Javaid and Jahangir, 2015).Under the FTA Bilateral trade between both countries significantly increased, from $5.2 billion in 2006 to $16 billion in 2014 with an annual growth of 12.57 percent. Also, it was targeted to raise bilateral trade to $20 billion by the end of 2017.
Table3-3 Pre-FTA Bilateral Trade between Pakistan and China (US$ Millions)
Years Exports US $ Million Imports US $Million
1999 180.72 446.76
2000 244.64 550.11
2001 289.38 487.02
2002 236.37 698.54
2003 259.64 957.33
2004 300.58 1,488.77
2005 435.68 2,349.39
2006 2007 2008 2009 2010 2011 2012
Imports from China 2,915 4,164 4,738 3,780 5,248 6,471 6,688
% of total imports from world 10% 13% 11% 12% 14% 15% 16%
Exports to China 507 614 727 998 1,436 1,679 2,620
% of total exports to world 3% 3% 4% 6% 7% 7% 11%
Table3-4 Post-FTA Bilateral Trade between Pakistan and China (US$ Millions
3. Social impact of CPEC3.1 Benefits CPEC can open its doors to a large amount of money and product opportunities not only for Pakistan but can also physically create a Chinese Association in its markets in Asia, Europe and beyond. Almost XVIII from large plates and cups of oil is currently transported from the Malacca Strait to Shanghai (distance is almost 16,000 clicks and takes three months) and Gawadar becomes able to work, the space will be changed to an alternative way not 5 000 km If all goes well on the list with the details of the twenty agreements for energy over a period of time with gas, coal and solar energy at the same time will be able to leave 10,400 MWs of energy at a time until March 2018 with harmonized China Newspaper, they come to leave sixteen, 400 MW of power for a certain period of time.
As part of the basic structure comes with a price of $11 billion and will create interurban and metropolitan road of 1100 km for vehicles, while the Karakoram route between Rawalpindi and therefore the Chinese end will be completely redesigned and left. central train of the metropolis urban center can also be configured to travel by train to 160 Km/h of December 2019, the railway network of Pakistan will also be expanded to create a link with the southern province of China in Kashgar to the network Piping to move liquid fossil fuels and oil was also left as part of the efforts along with the $ 2.5 billion pipeline between Gwadar and Nawabshah to move the gas from the Asian country.
Middle East oil can be unloaded at Gwadar and shipped to China using the long, thin method inside a building, reducing the current trip to 12,000 clicks per pair; 395 km. t will act as a channel for the new Maritime Silk Route that foresees connecting 3 billion people in Asia, Africa and Europe, part of a trans-Eurasian project. Gwadar can provide further Pakistani position and product development in Pakistan and become the way in which some Central Asian countries with Afghanistan and Uzbekistan linking the Democratic Socialist Republic of Sri Lanka, Asia and Sinhenhagen take the shipment.
Private consortia with cost of over $33 billion will be construct energy infrastructure which will help improve Pakistan’s lingering energy shortages, which regularly amount to over 4,500MW, and have shed an projected 2-2.5% of Pakistan’s annual GDP. With around $ 33 billion analyzed the accumulation of energy during a certain time, half of the companies; a vital stage is certain is a very important half of the CPEC effort. More than 10 400 MW of power over a period of time will achieve output growth between 2018 and 2020 as part of the long and thin method in building construction with forms that come ;early annual production; road lines. / Total investment $46 billion way China is doing a great job in Pakistan CPEC can be a group of the underlying structure that is currently under the building in Pakistan. The first (thought), estimated at $ 46 billion, the CPEC price is now $ 62 billion.
CPEC suggests that the new roads and systems of Pakistan and have added their interests, money, product of the development of the transport networks, a variety of options for a certain time cash and special products thirteen Gregorian gang calendar month 2016, became part CPEC able to work after Chinese product was sent to the port of Gwadar near the sea transport of Africa and Western Asia. A small network of roads and railways should be established under the sponsorships of the EUSR, which will approve the live final to complete and measure Pakistan. The inefficiency resulting from the violation of the main square meter in Pakistan causes the price on the part of the government to cause a loss of 3.5 percent of the per capita gross annual gross product of the country. The modern transport networks set out below can connect cities with the oceanic port of Gawadar and the metropolis with northern Pakistan, even as points north in the westernmost part of China and Central Asia. The long journey of 1100 km for the vehicles will be created between the cities of Metropolis and as part of KPK while the Karakoram route between Rawalpindi and therefore the Chinese end will be completely redesigned and renovated. Metropolitan central city main railway line can also be set up to travel by train to one hundred and sixty clicks per hour by December 2019 Pakistan’s railway network will also be expanded to create a link with Southern China CITATION How15 l 1033 (How will CPEC boost Pakistan economy?, 2015)• China already exceeds ambitious trade. For ten years, country A of North America plans to move 250 million people to the total population of Indonesia in the US.The fleet of its growing megacities.
• To adapt to this great migration, EE. UU He has invested billions of dollars in a huge infrastructure. Several have already been completed, while other squares measure the same within the works.
Strategic and Economic Gains
The Corridor is the prosperity for the peoples of Pakistan. CPEC is a classic indicator of junction of geo strategic and geo economic interests of the two countries with socio-economic and diplomatic relations nurtured through deviations of time. While complementarily of the economies would assist the economic interests of the two states, development of equally valuable infrastructure will further blend the efforts to counter common challenges? Predicted advantages and gains for Pakistan are as under:
CPEC imitates to Pakistan’s security model and will serve towards persistence of strategic partnership.
It will expand the Pakistan’s foreign relations with the neighboring countries.
Fully functional Gawadar Port Located at the junction of massive supplying and communicating market scan play a vital role in economic revival of Pakistan as it linked with China and Central Asia.
It also affords great opportunity for socio-economic development of Gilgit Baltistan and Baluchistan Province.
Pakistan would benefit through investment from China for development of essential infrastructure and to overcome energy shortfall. CPEC projects have been divided into three phases: the Short-term project to be completed till 2017; a Mid-term project by 2025; Long term project 2030.
CPEC will help Pakistan to become a regional trade hub and energy corridor thus bringing huge transit revenues and employment opportunities to the country.
Even the traditional estimates show projected revenues of over $100 Billion of transit revenue per annum in long term besides generating employment opportunities.
Pakistan’s economy heavily dependent on sea trade as 95% of trade is through sea and, development of Gawadar Port and its connectivity is of huge significance to reduce load on Karachi and Bin Qasim ports.
Social Impact of CPEC on Province (District Level)
CPEC’s net social welfare impact across four provinces can be analyze in its respective districts, a social welfare index, similar to UNDP human development index (1990) is built with its three dimensions; education, health and housing. CPEC would have great significance in improving bilateral connectivity, improving people’s living and development realistic economic and trade cooperation. It works on the principle of “one corridor with multiple passages” which benefits the socio-economic development of Pakistan and providing significant importance to Gawadar port. CPEC projects are listed as; Punjab 12, Sindh 13, KPK 8 and Baluchistan 16.
Punjab is the most populous of the four provinces of Pakistan with 55 percent of population share, 25.8 percent landmass and 21 percent poor population. Given the provincial profile, it is expected that the current CPEC projects have significant impact on quality of life at all level.
Net Impact of CPEC on Social Welfare Indices in Districts of Punjab up till 2020 (%).
Table 4 Source: Estimates are based on ‘The Pakistan Social and Living Standards Measurement Survey 2014-15’ *Districts located on three routes of CPEC.
Index Composite Index of Social Welfare
Attock 2.28 1.86 3.35 2.42
Bahawalnagar 3.64 2.23 6.50 3.75
Bahawalpur 4.32 2.56 5.73 3.98
Bhakar 3.22 2.22 10.45 4.21
Chakwal 2.19 1.78 3.75 2.44
Chiniot 3.18 2.14 5.68 3.38
D.G.Khan* 5.01 4.23 11.31 6.20
Faisalabad* 3.52 3.46 6.61 4.31
Gujranwala 2.63 1.92 2.94 2.45
Gujrat 2.30 1.69 2.99 2.27
Hafizabad 2.90 2.20 4.71 3.11
Jehlum 2.32 1.65 3.28 2.32
Jhang 3.14 2.77 6.99 3.93
Kasur 3.00 1.94 6.98 3.43
Khanewal 3.10 2.37 4.55 3.22
Khushab 3.02 2.19 6.30 3.46
Lahore* 3.43 2.72 3.69 3.25
Layya 2.39 2.11 8.37 3.48
Lodharan 3.51 2.55 4.87 3.51
MandiBahauddin* 3.47 2.87 8.16 4.33
Mianwali 2.91 2.09 7.39 3.55
Multan* 4.53 3.28 5.56 4.35
MuzafarGarh 3.83 2.69 11.96 4.97
Nankana Sahib 2.68 1.71 5.18 2.87
Narowal 2.36 2.12 4.66 2.85
Okara 2.72 2.12 3.77 2.79
Pakpattan 3.09 2.24 4.17 3.07
Rahim Yar Khan 4.51 2.87 9.45 4.96
RajanPur* 5.39 3.30 15.28 6.30
Rawalpindi* 3.15 2.64 4.36 3.31
Sahiwaal 2.97 1.83 4.19 2.83
Sargodha 2.81 2.08 6.44 3.35
Sheikhupura 2.77 1.94 3.35 2.62
Sialkot 2.34 1.80 3.02 2.33
Toba Tek Singh 2.57 2.07 4.60 2.90
Vehari 3.14 2.11 4.43 3.08
Average 3.18 2.34 5.90 3.50
The province of Sindh is the second in terms of population with 24.3 percent share and 44.65 percent poverty rates. Sindh contains two commercial seaports – Port Bin Qasim and the Port of Karachi.The impact of these multimillion projects would have significant impact on quality of life in the respective districts of Sindh which can be showed in following Table.
Net Impact of CPEC on Social Welfare in Districts of Sindh up till 2020 (%).
Table–5 Source: Estimates are based on ‘The Pakistan Social and Living Standards Measurement Survey 2014-15.
Districts Education Health Index Housing Composite Index of
Index Index Social Welfare
Badin 4.42 4.42 15.17 6.65
Dadu 2.27 3.35 6.33 3.63
Ghotki 3.61 9.24 12.24 7.41
Haiderabad 2.80 3.36 3.73 3.27
Jacobabad 3.77 8.64 20.75 8.75
Jamshoro 3.08 3.86 6.42 4.24
Karachi* 3.48 4.26 3.62 3.77
Kashmor* 6.56 13.38 23.75 12.74
Khairpur 2.74 6.37 13.78 6.21
Larkana* 4.15 6.08 9.33 6.16
Matiari 3.63 3.72 10.12 5.14
MirpurKhaas 3.59 4.43 10.87 5.56
NaushehroFeroz 2.76 3.89 9.39 4.65
S. Benazirabad 4.66 4.79 23.97 8.10
Sajwal 2.70 4.50 5.27 4.00
Sakhur 3.67 5.60 11.34 6.14
Sanghar 3.45 4.92 15.09 6.34
Shahdatkot 2.97 5.36 10.47 5.50
Shikarpur 3.62 6.47 12.36 6.60
TaduAlayaar 3.99 4.32 8.65 5.29
TandoM. Khan 5.77 4.87 17.03 7.81
Tharparkar 3.82 7.23 25.14 8.89
Thatta 6.10 5.07 12.74 7.32
Umerkot 3.77 4.24 24.62 7.32
Average 3.81 5.52 13.0 6.31
Khyber Pakhtunkhwa (KPK) with 11.9 percent share in total population of Pakistan. KPK had 36.9 percent poor population and 23.8 percent unemployed youth.The composite index of social welfare revealed a 5.19 percent growth while its three dimension education, health and housing had growth of 3.79 percent, 5.94 percent and 7.03 percent, respectively. The quality of life in terms of housing had highest impact of welfare, then comes health and education at all districts level. The districts located on CPEC routes such as Peshawar, Bannu, D.I.Khan and Kohat had substantial impact of social welfare.
Net Impact of CPEC on Social Welfare in Districts of KPK up till 2020 (%).
Table–6 Source: Estimates are based on ‘The Pakistan Social and Living Standards Measurement Survey 2014-15’Districts located on three routes of CPEC.
Districts Education Health Index Housing Composite Index of
Index Index Social Welfare
Abbotabad 2.74 3.12 3.90 3.21
Bannu* 4.11 10.64 7.46 6.87
Batagram 4.23 5.67 5.56 5.10
Buner 3.03 4.13 5.53 4.10
Charsadda 3.00 3.68 5.01 3.80
Chitral 2.75 3.69 6.06 3.94
D.I Khan** 6.55 7.42 15.74 9.12
Haripur 2.57 3.30 4.02 3.24
Hungo 3.29 4.06 5.05 4.07
Karak 3.57 6.16 7.25 5.41
Kohat* 4.41 5.53 8.55 5.92
Kohistan 7.47 10.18 15.34 10.46
LakkiMarwat 3.15 8.66 7.19 5.80
Lower Dir 3.07 3.20 5.90 3.86
Malakand PA 2.59 3.75 5.20 3.69
Mansehra 2.96 4.09 5.93 4.15
Mardan 2.61 3.32 4.50 3.39
Noshehra 2.67 3.46 4.44 3.45
Peshawar* 4.32 4.79 5.59 4.87
Shangla 5.45 6.58 8.88 6.82
Swabi 2.64 3.90 4.38 3.55
Swat 2.98 3.56 4.88 3.72
Tank 4.58 5.61 6.76 5.57
Tor Ghar 5.65 13.15 6.23 7.60
Upper Dir 4.32 4.90 11.53 6.23
Average 3.79 5.94 7.03 5.19
Now Baluchistan is the one of the fourth province of Pakistan and largest in size (44% of land area) and the smallest share in (5%) population with 44 percent of poor population. The economy of the province is largely built upon livestock, agriculture, fisheries and production of natural gas, coal, and minerals but still far behind other parts of Pakistan. Though rich in mineral resources, but its share is lowest as compare to other provinces. In this situation, the projects of CPEC have incredibly important for socio economic development of this helpless region.
Net Impact of CPEC on Social Welfare in Districts of Balochistan up till 2020(%).
Table-7 Source: Estimates are based on ‘The Pakistan Social and Living Standards Measurement Survey 2014-15’
Districts located on three routes of CPEC.
Education Health Index Housing Index Composite Index of
Districts Index (%) (%) (%) Social Welfare (%)
Awaran 3.89 4.05 9.71 5.34
Barkhan 4.00 3.86 14.65 6.08
Chagai 5.43 6.46 14.17 7.91
DeraBugti 7.26 16.72 9.39 10.42
Gawadar** 4.05 5.72 7.82 5.65
Harnai 6.89 6.03 8.68 7.11
Jaffar Abad 4.50 6.59 10.34 6.73
JhalMagssi 4.32 5.37 11.78 6.47
Kachi (Bolan) 4.92 5.05 8.93 6.04
Kalat** 5.18 6.24 6.64 5.98
Ketch* 4.58 7.82 10.40 7.18
Kharan 3.90 4.31 6.19 4.70
Khuzdar** 5.19 9.37 9.64 7.75
Kila Abdullah 6.24 8.45 9.58 7.95
KillaSaifUllah 4.19 5.17 4.30 4.52
Kohlu 4.86 6.20 10.55 6.81
Lasbela 4.68 3.83 8.13 5.25
Loralai 3.28 7.73 9.14 6.13
Mastung 2.78 4.75 4.12 3.79
Musa Khel 4.13 6.28 11.23 6.61
Nasirabad 5.58 7.38 16.00 8.68
Noshki 3.78 5.69 4.13 4.45
Pishin 5.08 5.38 4.67 5.03
Punjgur* 4.92 7.52 12.88 7.79
Quetta** 4.54 4.92 5.84 5.06
Sheerani 5.19 5.13 10.59 6.54
Sibbi 4.47 3.73 5.44 4.48
Washuk 3.98 8.72 12.46 7.55
Zhob** 6.57 6.04 16.37 8.64
Ziarat 3.84 5.31 10.63 5.99
Average 4.74 6.33 9.48 6.42
Pakistan 3.85 4.74 8.60 5.21
4. Discussion and Analysis
Strategic location of Pakistan gives a gigantic status in the region and it will be greater after completion of the CPEC which manifold in the field of the economic, commercial and geostrategic. CPEC benefits Pakistan in overcoming the basics problems which includes poverty, unemployment, and inequities of the under developed province. This mega project is viewed as the game changer of the region and a win-win situation by engendering massive trade and economic activity and will open new landscapes of progress and prosperity for the peoples of both countries.(Syed BS (2013)
According to the Ambassador of China in Pakistan Sun Weidong, while talking about the CPEC, the CPEC includes the energy, transport, infrastructure and industrial projects and it will be beneficial all the provinces of Pakistan. He further stated that CPEC will connect with numbers of motorways and infrastructure projects included Gwadar port, the 2nd phase of the upgrading project of Karakoram highway, motorway project between Lahore and Karachi, Thakot-Havelian motorway, Gwadar port expressway, overcome energy crises, finance, commerce, banking, industry, and education.Infrastructure development (Roads, Railway, Ports Connectivity, Airports): The work on the infrastructure development projects under the China Pakistan Economic Corridor (CPEC) is in full swing, which includes roads, ports, and highways. The $11 billion investment of the $46 billion total will benefits both Pakistan and China from an improved transportation infrastructure with Pakistan. After completion of these projects it will improve Pakistan’s infrastructure and its connection with all other regions of Asia, between Europe Asia and Africa gradually. It will finish all investment and trade barricades for the construction of a business environment within the region and related countries. After the completion of these projects, Pakistan will become modernized and will spread out to the international markets. The economic and employment growth rate will increase automatically.
The construction period of CPEC (2014 to 2030) have cohesive relationship with the Chinese One Belt One Road. It is also an extension of proposed 21st century Silk Road initiative by China. CPEC projects also includes motorway between Karachi and Lahore which will be 1100 Kms long. It is said that Rs 36 billion would be spent on the section of Karachi-Hyderabad and Rs 259 billion would be spent on Sukkur-Multan section. Karakoram Highway between Rawalpindi and Chinese border would be reconstructed and renovated. Pipelines of oil and gas would also be laid. A pipeline worth $ 2.5 billion would be laid between Gwadar and Nawabshah which would get gas from Iran.
Pakistan Railways is ready to become beneficial from CPEC and invite up to $5 billion investment. This investment will be utilized for upgrading and construction of new railways infrastructure across the country. Main railway line of Karachi-Peshawar would also be upgraded which would make sure trains could travel on one hundred and sixty kilometers. Under CPEC railway track of 1,872 kilometers from Karachi to Peshawar will be upgraded to improve transportation and connectivity services. Other projects relating to infrastructure development of railway include 1,254 km of railway track from Kotri to Attock.
New Gwadar Airport is another mutual project of China Pakistan Economic Corridor (CPEC) with the cost of $230 million. This project will be financed by Chinese Government and administrated under Civil Aviation Authority (CAA). Gwadar city will see huge development in future due to evolving port in the zone. Furthermore, a number of CPEC projects are shortly starting which will remodel the entire region. Real Estate market will also emerge as new opportunities for investors with projects like Green Palms and Gwadar Central. Such projects in the region will attract the investors and for such purpose, the New Gwadar International Airport is becoming the integral part in developing the region. It will also overcome burden of the existing airport in the region when the Gwadar city will be developed completely. (ourupn.com)
Development and offering over the management of Gwadar Port to China besides the announcement of the China-Pakistan Economic Corridor (CPEC) are the momentous consideration of bilateral economic bonds between China and Pakistan. Gwadar Port and the China-Pakistan Economic Corridor launch the strategic platform for mutual cooperation among both countries. Gwadar is the tail end of the Silk Belt which will linkKashgar through different communication networks. It appears as one of its main objective behind the construction of CPEC. It would be hard to the foreseen corridor as an energy corridor without Gwadar port fully functional. Located near the Passage of Hormuz, which straits about one-third of the world’s oil trade, Gwadar could play a significant role in safeguarding China’s energy security as it offers a much shorter route than the current which is 12,900 km from the Persian Gulf through the Strait of Malacca to China’s eastern seaboard. The Gwadar port will also put China and Pakistan in a strategically beneficial position along with the Arabia Sea which is the present Indian concerns that stem from “China’s involvement in nearby ports such as Hambantota in Srilanka, Sittwe in Myanmar and Chittagong in Bangladesh Roy CD (2013).
The Gwadar port is also a storage and trans-shipment core for the oil and gas suppliers of Middle East and Central Asia through a well-constructed corridor passing Pakistan. The Gawadar port is strategically important for China as it magnifies its influence across the region and it will enable China’s access to the Indian Ocean. Gawadar port will be connected with China’s western province of Xinjiang through rail and road links; it is will reduce the distance to eastern seaboards are 3,500 km away from Kashgar in western China however the distance for Kashgar to Gwadar port is only 1500 km.Roy CD (2013).
Table 4-1CPEC Transport infrastructure sector projects (BOI Pakistan, 2015)
S.NO PROJECTS US$M
1 KKH Phase II (Raikot – Islamabad Section) 3,500
2 Peshawar-Karachi Motorway (Multan-Sukkur Section) 2,600
Rail Sector Projects
3 Expansion and reconstruction of existing Line ML-1 3,650
4 Havelian Dry port (450 M. Twenty-Foot Equivalent Units) 40
Table 4-2 CPEC Gwadar port related projects (BOI Pakistan, 2015)
S.NO PROJECTS US$ M
1 Eastbay Expressway 140
2 Gwadar International Airport 230
3 Construction of Breakwaters 130
4 Dredging of berthing areas & channels 27
5 Infrastructure for Free Zone & EPZs port related industries 35
6 Facilities of Fresh Water Treatment and Supply 114
7 Hospital at Gwadar 100
8 Technical and Vocational Institute at Gwadar 10
TOTAL GWADAR PORTS PROJECTS 786
TableB Table 4-3 (BOI Pakistan, 2015 2015) S.NO PROJECTS US$ MILLIONS
1 Mass transit Lahore 1,600
2 Cross Border Optical Fiber Cable 44
4.1 Power Sector Development and Impact on GDP
CPEC will help Pakistan in mitigating the chronic energy crisis which has created negative impression on the economy of the country. There are total 21 energy projects with estimated cost of $ 33,793 million. The energy crises hindered the industrial production in the country and this the reason due to which the business is closing down and shifting out of the country. For smooth economic growth industry needs a continuous energy supply. For this CPEC is the ideal project which will help to overcome the energy crises. Chief Minister of Punjab (Pakistan) Mr, Shahbaz Sharif stated that China is extending the countless economic cooperation to Pakistan for resolving the energy crises, and some projects with Chinese support would start producing electricity.
Chinese government planned to investment around $33.45 Billion in Pakistan’s energy sector which includes total 20 power generation projects covering all provinces of Pakistan and AJK. National grid will be reinforced with 16,700MW of electricity. Pakistan has fronting more than 40 percent gap in electricity demand and generation and demand in peak summer season is 24,000MW against the power generation of less than 1600MW. Keeping these figures in account Pakistan government, has divided the project into two categories, one of them is CPEC- Energy priority projects (10,000MW)which is near to complete, the other CPEC energy projects dynamically promoted of 6,700MW which will be completed in 2019-20. In Punjab five energy generation projects at different locations includes Sahiwal Coal- fired power plant is constructed with as cost of $1.6 billion and it will generates 1320MW. The first unit of this project is operational in June 2017. Two CPEC Energy Projects in Rahim Yar Khan and Muzaffargarh with each capacity of 1320MW and total cost of $3.2 billion.The Balloki Power Plant of 1,223 MW of natural gas power plant presently under construction neighboring Pattoki, in Punjab.Karot Hydropower station of 720MW will be built on river Jehlum with cost of $1.4 billion. Chashma Nuclear Power Plant-4with the capacity of 340 MW is operational since by May 2017.This nuclear plant will be able to provide much power for commercial and industrial use of power in futurehttp://cpecvela.com
In addition to these projects, Chinese government has approved to construct gas power plant of 525MW in Pakistan with cost of $550 million. Location for this plant has yet not decided. Reinforcing the country’s electricity system and improving transmission system with $3 billion cost includes the construction of Matiari to Lahore transmission line and Matiari to Faisalabad transmission line. Pipelines of oil and gas would also be laid. A pipeline worth $ 2.5 billion would be laid between Gwadar and Nawabshah which would get gas from Iran. After completion of this all projects Pakistan expectations that there Energy crises could be overcome and CPEC will bring prosperity. http://cpecvela.com
Energy consumption i.e. oil, electricity, coal and gas is the integral part of GDP growth in Pakistan. Country’s energy infrastructure is poorly managed and not well developed. No serious efforts have been made during the past decade, to increase power generation capacity, due to which average shortfall in the power sector is 4,500 megawatts, and approximately2 billion cubic feet per day in the natural gas sector. Resultantly, it cost the Pakistan economy PKR 1,439 Billion which is 7 % of GDP in 2015. The energy shortage is responsible for the loss of about 2 percent of GDP annually Major industries have seen a downward slump in business because of being curtailed by energy shortages. (The diplomat)
Furthermore, hasty demand growths, transmission losses due to out-of-date infrastructure, power theft and seasonal reductions in the availability of hydropower have deteriorated the situation. Subsequently, the demand exceeds than the supply and hence load shedding or energy crisis is common. Pakistan faced severe energy crises between ‘2009 to 2015’ due to which industries are highly affected resulting GDP growth rate in these years are at lower side. Due to energy crises all sectors of economy are being adversely affected. For example, the economic progress is hindered by decline in agricultural productivity as well as by break in operations of industries. Lower GDP growth and high inflation in recent years has also been endorsed the shortfall in energy supply. As a result of decline in energy supply, new industrial units cannot be opened, rather the existing industrial units are gradually being closed performance of textile, cement, and engineering industries has also declined during 2007-2009 crises which prove that industries are badly affected by energy. Government of Pakistan needs to provide energy required and at affordable prices for economic growth. (KHALIDA PERVEEN 2016)
?4-4 BOI 4.2 CPEC?????BOI?????2015?
Table 4-4 BOI 4.2 CPEC energy Projects (BOI Pakistan, 2015)
Ser Projects MW US$ MILLIONS
1 Port Qasim Electric Company Coal Fired, 2X660, Sindh 1320 1,980
2 Sahiwal 2x660MW Coal-fired Power Plant, Punjab 1320 1,600
3 Engrothar 2x330MW Coal-fired, Thar, Sindh 660 1,000
4 Gwadar Coal Power Project, Gwadar 300 360
5 Muzaffargarh Coal Power Project, Punjab 1320 1,600
6 Rahimyar Khan Coal Power Project, Punjab 1320 1,600
7 SSRL Thar Coal Block 6.5mpta &CPIH Mine Mouth 1320 1,300
8 Quaid-e-Azam Solar Park, Bahawalpur, Punjab 1000 1,350
9 Dawood 50MW wind Farm, Bhambore, Sindh 50 125
10 UEP 100MW wind Farm, Jhimpir, Sindh 100 250
11 Sachal 50MW Wind Farm, Jhimpir, Sindh 50 134
12 Sunnec 50MW wind Farm, Jhimpir, Sindh 50 125
13 SukiKinari Hydropower Station, KPK 870 1,802
14 Karot Hydropower Station, AJK & Punjab 720 1,420
15 Gaddani Power Park Project
A 4×660MW 2640 7,920
B Jetty + Infrastructure 1,200
C Transmission Line to Lahore and Faisalabad 3,000
16 HUBCO coal power plant, Hub Baluchistan 660 970
17 ChichokiMallian Combined-cycle Power Plant, Punjab 525 550
18 Salt Range Mine Mouth Power Project, mining, Punjab 300 800
19 KohalaHydel Project, AJK 1100 2,397
20 Pakistan Wind Farm II (Jhampir, Thatta, Sindh) 100 150
21 Thar mine mouth oracle, Thar Sindh 1320 1,300
TOTAL ENERGY PROJECTS 17045 33,793
4.3 Industrial Development Opportunity
CPEC will play a vital role in economic development of Pakistan. It will expand the Pakistan’s foreign relations with the neighboring countries. One of the main segments of CPEC is building of Special Economic Zones (SEZs). These SEZs will play the ‘game changer’ role in thinning the trade deficit. There will be 26 SEZs throughout the country and each SEZ will target specific goods and services depending on the availability of labor force and raw material locally. This module of CPEC will boost the economy of the country and due to efficient production it will increase our exports because. It will reinforce local industry and discourages imports. Currently imports are Rs 470,038 million and Rs. 180,899 million exports in contrast. ( HYPERLINK "http://voiceofbalochistan.pk" http://voiceofbalochistan.pk)
Pakistan needs to offer incentives to make SEZs a big success, however, on the other hand these incentives must be assessed before their execution because the objective is not just to populate the SEZs but also to develop successful SEZs. The main focus for sustainable economic growth is export and value addition. As China is the being the second largest buyer / importer whichis the big market to capture forinvestors to establish businesses in these prioritized SEZs in Pakistan. Low cost due to transportation through roads and one window operation for documents related procedures another facilitation services are also key to success for SEZs. Being a developing country, Pakistan should start those industries in which they have hidden advantage and rich human skills. In this way Pakistan will capitalized up to their maximum potential in initial phase of economic development. For example Pakistan has rich in natural resources and qualified human skill in sectors such as leather, textile, and food processing and marble. Another step towards success in SEZs is to train our labor force with required skills as KP government signed MoUs with China to establish vocational centers in SEZ surrounding. Furthermore educational institutions and industries also need to formulate policies and framework to produce the workforce with required skills. Structural reforms are also required to encourage the joint ventures with private investment and regionalization of authority. As such steps fails in India but in Pakistan needs to design a policy which suits with our business environment. The success of the SEZs heavily depends upon non-stop supply of power and the nearness to road, rail, sea and air port which linking the SEZs with national and international supply chain to achieve the comprehensive growth.(pakobserver.net)
As CPEC is the game changer project which eliminates the poverty in the entire region. CPEC will inoculate about 2,320,000 jobs into the market by the end of 2018, which will stop the brain drain and the quality knowledge will be employed within the country. CPEC project is centered on construction of SEZs, dams and installation of nuclear reactors and creating a network of roads, railway line which will automatically eliminate unemployment, subsequently overcome the poverty rate. The project will also facilitate the education side, technical side, vocational training institutes. It will improve water supply and distribution in embryonic areas of Pakistan consequently; improve the quality life of peoples.
CPEC has the ability to renovate Pakistan industry and it is the time to formulate a rational industrial policy. After rational industrial policy the question raises that, what will be structure? The answer is to provide a suitable business environment that includes anon-stop energy supply, rationalizing taxes, regulations and investor friendly policies. Also, well capable local stakeholders are required for CPEC related industrial activities. Now, some rational decisions need to be taken by policymakers regarding to which sectors to focus on. For instance sensible people realize that, in Pakistan, the domestic production of textiles is more important than that of supercomputers. So policymakers need to pinpoint which industry is suitable in the framework of CPEC. In next step policymakers need to decide what level of industrial technology and superiority of goods is most suitable? For instance if textile industry is selected then it is needed to be decided that should Pakistan produce high-value-added textiles? Should Pakistan produce low-end or high-end sports goods? Does focusing on continuing to produce low-value-added items that bring low prices and, in many cases, carry foreign brand names? The end result is that policymakers must make a sensible decision to move up the technological standings. In this scenario government should play their role by creating incentives affirm level for investment in advanced machinery that should base on the technological sophistication of production. Also, Pakistan needs to upgrade its technology. Simply, Pakistan should produce the same goods as now, but on a higher scale. Finally, CPEC gives both Pakistan and China an opportunity to be at the forefront of a sustainable industrial policy. (dawan.com 2017)
4.4 Foreign Direct Investment (FDI) of Pakistan FDI is that the most compulsory economic factor for Pakistan economy. China is in the top slot replacing the United States and the UK in terms of FDI contribution to Pakistan. In FY 2015-16, Pakistan received USD 1016.3 million compared to 963.8 million that showed 167% increase. It’s probable that CPEC can prompt the FDI up to $ 150 billion and with CPEC Pakistan is refreshing the conditions to pull FDI i.e. regional property, law and demand and economics designators stability. The USD 11.83 billion is to be spent on the communication infrastructure to boost regional property. Pakistan has visually perceived a positive signal in maintaining law and order situation and with authority mandate scenario because the terrorist act index showed the defragmentation to eight.61 from 9.07 in distinction. The verbally expressed factors can play the role of catalyst to fascinate FDI.
Figure4-1 FDI of Pakistan
FDI in Pakistan amplified by $ 2761.10 million in 2016 and average FDI in Pakistan is $ 2651.26 million from 2010 until 2016, reaching at highest of $ 3184.30 million in 2010 and a record lowest of $ 2099.10 million in 2012.
The foremost requirement to fastener FDI is that the development of free port at Gwadar. This free port includes a pair of, 280 acres of Gwadar port free port whereas Industrial zone occupies 3,000 acres that is getting ready to inspire the FDI by a considerable quantity.
FDI inflows into Pakistan faces steady decline from a $5.2billion which is the highest in 2007-08 and there are several reasons, but the primary reason is adverse security and law & order situation in the country. Also, political instability and governance challenges were the causes. The State Bank of Pakistan reported FDI for first quarter of FY 2016 at $249.4million; however, it was $403.3million of same period in FY 2015 which shows decline of about 38 % After regulating the portfolio of inflows and out flows in the first quarter of FY 2016, the total FDI was reported at $368.1 million, however, it was $793.2million of same period in FY 2015, showing an additional decline of 53.6, which amazed many who expected a boost because of the commencement of the CPEC. This should be a cause of concern for all because FDI is not only a source of foreign capital but also a prompt to technology transfer, improvement in managerial skills and market access which are critically important for a higher growth trajectory.
Political uncertainty in the country ascending out of repeated attempts to derail the government, volatile cities, energy crises over a longer period, terrorism and subsequently adverse travel advisories for investors from western governments all have a contribution to the overall investment environment. Because of these factors Pakistan ranked down two points to the 138th from 136th position among 189 in the World Bank Doing Business Ranking in 2016. According to the IMF “Pakistan’s weak business climate continues to constrain private investment and economic growth” as its ranking in starting a business, getting credit, and trading across borders degraded. IMF observed that in Pakistan there is complex and lengthy procedures, high cost for inaugural a new business, paying taxes, inadequate access to credit especially for SMEs, complex border trading requirements, limitations in accessing electricity, and weak contract enforcement continue to weigh on the country’s business climate. While the government is currently working on reducing procedures for opening new businesses and energy shortages have started to reduce, it is hopeful the low FDI trend would reverse soon. Mr. Miftah Ismail, the chairman Board of Investment (BOI) is equally confused over the FDI numbers but believes the depression was temporary which will boost after CPEC related projects take off. In 2016 Mr. Miftah Ismail called a meeting with the SBP and the ministries of finance and commerce to check out the methodology of FDI recording. Mr. Chairman suspected that the concerned institutions were only recording the flows in cash and not machinery and equipment, as in case of Chinese projects. Though, after checking the methodology the BOI Chairman was convinced that there was no problem. However, he said that some projects like Chashma Nuclear Power Plant were set up through loans from China therefore; it is accounted for as foreign debt instead of FDI. So, FDI data based on 2 to 3 months does not represent the true picture because a significant investment in a given month, or lack of it, could swing the figures either way. (Dawn.com)
4.5 Entrepreneur Development Small business development Opportunity
Small business will get enormous opportunities under CPEC to flourish. The small and medium enterprises (SMEs) sector has significant contribution in economic growth of Pakistan. SME sector reduce unemployment, supporting large industries and emerging technological innovation, resultantly reduce the poverty level. CPEC brought 50 mega projects into Pakistan which will provide numerous business opportunities for small business and entrepreneurs thus creating thousands of new jobs. Among these 50 mega projects, 12 infrastructure projects, 8 projects to transportation and 21 to the power generation whereas, the rest of 9 are being set up as Special Economic Zones. SMEDA has started his campaign to make the business community aware of these opportunities. (Salim Ahmed, pakobserver.net)
On the other hand, this sector is facing critical challenges which need to be addressed. In Pakistan the main challenge is the cost of doing business which has increased due to the plenty of taxes and regulatory burdens. According to(World Bank’s Doing Business ranking of 2016) Pakistan ranked 141 out of 190 countries in terms of starting a business. This validates that the regulatory process needs to be simplified for new businesses. Besides these some structural problems need to be solved, which includes outdated technology and a lack of access to credit which makes SMEs uncompetitive at the international level. According to International Trade Centre, Pakistan’s export growth to China is less than the imports’ growth of China from the rest of the world, which means that there are vast opportunities for Pakistan needs to utilize under CPEC. Top service exports of Pakistan are transport, telecommunications, and travel and financial which needs to be focus on and paying attentions to SME sector, Pakistan can earn export revenue in these sectors which will also solve the balance-of-payments problem of the country.(tribune.com.pk)
Entrepreneurship has assisted in booming the SME sector. Higher Education Commission of Pakistan took the initiative to establish incubation centers in public universities. But, these centers must be backed with updated curriculum and resources. Universities can play avital role by providing realistic environment to students through mentorship and effective syllabus. Pakistan can acquire from the experiences of Japan where large corporations like Toyota and Honda started as small factories, which were backed by effective government policies, resultantly, these companies grow into giant corporations. Factors that can play indispensable role in the development of this sector are SMEs support centers, local policy on SMEs, credit guarantees and SMEs universities. Also, policies inducting new graduates as internee in this sector and assisting SMEs in finding new workers can also be helpful. Joint ventures with Chinese companies are another significant key in developing SMEs through endowment of technology. Business like supply chain management, agriculture and livestock, minerals, food processing, surgical instruments, construction, ICT, are highly supportive for local SMEs in the environment of CPEC. Besides, technical training for workers is also necessary to improve skills in increasing productivity and make them well-matched with the developing opportunities from CPEC. Government needs to play their role in regulating and infrastructure issues so that the SME sector can flourish at a rapidly. This sector is influential to provide employment to millions of peoples, consequently, reducing the unemployment rate.
4.6 Agricultural Development, Water and Power Management Improvement
Pakistan’s 70% of the total population is dependent directly or indirectly on agriculture. This sector is contributing about 23% in the annual GDP. Pakistan’s agriculture sector is still in developing stage which has lower level of processing ability, value addition and entrepreneurial activity. Agriculture is a priority area in CPEC which contains two contracts for establishing cotton and marine research institutes. In CPEC agricultural development is one of the seven areas of collaboration under which China is specifically concerned in areas i.e. cotton productivity, efficient irrigation and post-harvest set-up along the CPEC route. On the other hand for CPEC Pakistan prioritiesregarding agriculture sector are uncertain. The sector will be the beneficiary of CPEC through development in backward and forward linkages. Agriculture sector has been the backbone of low-income economies because it is the main source of income and employment in countryside areas. Pakistan’s agriculture sector of has continuously been facing downfall for the last one decade due to energy (M.Ziauddin 2017) CPEC brings Pakistan a chance to uplift its agriculture exports to China as this is the world’s largest importer of agricultural products. China imported $160 billion of agricultural products in 2015. But Pakistan has a low portion in these exports despite the fact that Pakistan has an agriculture base and road links with China. Population of 1.3 billion China consuming almost $1 trillion worth of food yearly, but this consumption patterns are also changing due to increased urbanization and rising incomes. Resultantly, demand for high quality imported food items is also on the rise which indicates that this consumption is predictably to grow by another $500 billion in the next 10 years. Bloomberg estimated that to feed an average US consumer it takes about one acre of arable land. Keeping in mind, the present population of China, this has only about 0.2 acre per citizen and will be decreasing in future. Therefore the world is deeplyconcentrating on China and international corporations aremaking long-term China plans as theyguessa huge growth driver in future. This the reason that in the last decade US, Brazil and Australia increased their agriculture exports to China 3 times,following by other countries. ( HYPERLINK "https://tribune.com.pk/author/6754/hasaan-khawar/" o "Posts by Hasaan Khawar" HasaanKhawar 2017)
Being world’s largest importer China gets 50 % of his total vegetables imports from US and Brazil. Now in the world of international trade, shorter distances have strategic advantage due to lower transportation costs. For unpreserved items like food, shorter distance is another huge advantage as in transportation over long distances these food items face higher risk of spoilage and contamination. Resultantly, it increases the cost in terms preservation and packaging and also for extra pesticides. Now Pakistan can enjoy a unique advantage under CPEC to capitalize this opportunity and for this determined effort is required by the government and private sector. In this regards first step of government be to eliminate tariff and non-tariff barriers for agricultural trade with China. Furthermore, private sector and agri-entrepreneurs should initiative and start search for feasible market opportunities in the Chinese market and build partnerships with international firms to get a grip. Government and private sector need to invest jointly in research and development and post-harvest technology for better product variety and quality. The trade balance Pakistan has on fall hence, Pakistan need to work on improving our exports rather than waiting for FDI to pay off for our trade deficit and agriculture sector can be the key for the purpose.( HYPERLINK ;https://tribune.com.pk/author/6754/hasaan-khawar/; o ;Posts by Hasaan Khawar; Tribune.pk)
Pakistan was at 17th position among the countries which were facing water shortage. International standard per capita water is 1,500 per cubic meter whereas in Pakistan per capita water availability was recorded as 900 cubic meters and likely water shortage would reach to 31 million acre feet by 2025, which is a real threat for national economy. Pakistan depends on single river basin like Indus River while other countries are having a diversity of river basins and water resources. China is the real deal to water security of Pakistan by capitalizing the potential of Indus basin for water storage and hydropower generation. As stated above Pakistan’s per capita water availability is decreasing every day which increases risk for food security. In 1951 Pakistan per capita water availability is 5,260 cubic meters and in 2010 it was recorded as1,038 cubic meters which decrease of 406 % and it was slightly above the global criteria of 1,000 cubic meters. According to Wapda’s water report, if it goes at the same pace, then by 2020, the water availability in Pakistan will further dropped to the level of 877 cubic meters per annum and by 2050 it will further plunged to an alarming level of 575 cubic feet. The above figures of the report highlighted that Pakistan’s water storage capacity is only for 30 days; however India can store water for 120-220 days. The agriculture productivity also disturbingly toppled in Pakistan with the storage capacity of just30 days, resultantly, contribution towards gross domestic product (GDP) has dropped to 21.8 % of GDP.
China and Pakistan are in touch with each other to ensure water security projects as part of CPEC. In this regards Chinese experts are in touch with Wapda’sofficialsand visiting the various sides of Indus basin. Besides after studying and analyzing Wapda’s 2025 Vision, Chinese expert will planned the potential opportunities of increasing the water storage capacity and hydro generation of the of Pakistan. The decision was taken during the sixth meeting of the Joint Cooperation Committee (JCC) of the CPEC and it is being taken as dynamic and strategic one in the scenario of Pak-India deteriorating ties primarily because of legal battle on hydropower projects. As World Bank is the negotiator of Waters Treaty between India and Pakistan, India is trying to build pressure on World Bank to reject the demand of formation of court of arbitration by Pakistan under 1960 Indus Waters Treaty. Pakistan desired to build Diamer-Basha dam for enhancing water storage capacity and also for hydrogenation, however, World Bank will provide funds for the project if Pakistan manages No Objection Certificate from India as the project is disputed. Asian Development Bank also agreed to the stand with World Bank for not providing the funds for this mega project. Resultantly, the cost of the project has increased up to $ 14 billion.4.7 Tourism Development Opportunity
CPEC is also worthwhile for tourism industry in Pakistan and its cost will be Rs. 22 billion. More over strengthened roads, infrastructure and railways track will make accessible the unidentified tourist spots accessible. There will be a consider able growth in the visitor to explore these spectacular landscapes and mountains like Himalayan peaks, including K-2 and various magnificent valleys like Swat, Naran, Kaghan, Murree, Deosai etc. Also, it has beautiful Arabian Sea, deserts, Indus valley, ancient Buddha’s civilization and historic forts. Due to these Pakistan can be the world’s greatest tourist destinations. In this regards Government of Azad Jammu and Kashmir took the initiative and declared to make a tourism corridor in the valley. CPEC will develop the infrastructure railways and roads which will not only boost the trade but also other things such as employment, tourism, development of rural areas and connection of rural areas to urban parts. In Pakistan GilgitBaltistan is the core of tourism industry which has the potential to attract millions of local and foreign tourist. Including K2, Pakistan has the range of some of the highest mountain with five peaks above 8,000 meter sand 50 other mountains over 7,000 meters which attracts international mountaineers to Pakistan as soon as CPEC is operational. Tourism industry Pakistan has observed a sharp increase in last one year and it is because of internet which has a positive impact on the development and growth of this industry. Jovagoa top hotel booking and e-commerce site in Pakistan stated that there has been a huge increase in the annual tourism rate and business traveling in Pakistan. This sector contribution to total GDP is 7%. Tourism industry generates $1 billion rupees in 2015 and attracted 1.04 million foreign tourists. Furthermore in terms of employment statistics this sector contributed a total of 6.2% with 1,429,500 jobs created by the tourism industry all over the country. The hotels tenancy rate has increased from 35% to 80% which is a gigantic rise. Due to CPEC Gwadar airport received the highest number of passengers equated to other airports of the country and this rise is 73 %, resultantly, due to this rise Gwadar authorities to start building new hotels and forecast is that 10 major hotel chains will investing in Pakistan in near future. Because of CPEC that projected that Pakistan’s Hospitality, Travel ; Tourism industry has a positive future which will help in creating many job opportunities resultantly contribute more to the GDP4.8 Skilled Labor development
China Pakistan Economic Corridor has already started the development of multiple projects under his belt across the country. Because of these projects country has not received such an enormous inflow of investment earlier which made its labor market short of qualified workers for CPEC projects. Resultantly shortage of trained and expert local labor force has amplified the labor costs which hindered the projects. As human resources are crucial for economic growth of a country and apparently labor power is fuel for production. The big challenge throughout the development phase of CPEC is skilled labor force that can maintain quality and efficient completion of the projects. For the purpose quality of labor force is very critical which rest on their training, education, physique, health and safety. Keeping in view these requirements Pakistan is deficient of qualified labor force consequently local labor is not well-suited to handle technical machinery operating in CPEC. To overcome the problem, government will have to allow Chinese skilled labor to work-on instead of local labor or Chinese companies which are operating in the country need to train Pakistani graduates in China before bringing them work on their projects in Pakistan.
In Pakistan industrial policy is concerned exclusively with the welfare of the elite class. There are relay on the policy that lower labor costs will result in lower production costs which supporting firms to compete internationally. But disadvantage of this policy must never be ignored low-skilled and low paid labor force will lead the firms to production of low-value-added goods. It became the primary objective of policymakers and industrialists that instantly investing in labor make them able adopt new technologies for growth. Furthermore Pakistan’s industrial policy model must empower the modification of industry to from low-skilled to high-skilled labor. For CPEC related projects and investment, policymakers should make policy keeping in view, stipulate a minimum level of domestic labor force for all joint industrial enterprise, improves working conditions and workers’ productivity, guarantee that all industrial zones must include training facilities and must lay down rules that industrial zones and joint projects will provide insurance benefits to their workers with. By making these policies CPEC might modernize a new model of labor in Pakistan.
In Baluchistan one of the main contributors of bitterness against the state is the absence of economic opportunities for the locals. As part of CPEC, along with Gwadar Port and transportation links, industrial zones and energy plants are also being established in Baluchistan, which will create plenteously of job openings in the province however the main cause of worry is the ability of local population to secure honorable positions among others. Therefore, developing educational institutes is an urgent requirement which can support progress of the province and people. Pakistan’s majority of population falls in youth category which provides incredible opportunity to grow an active workforce for development purposes. Human Capital Report released by the World Economic Forum in 2016 grades Pakistan at 118 out of 130 countries in terms of human capital capabilities. Economic success can only be attained if youth of Pakistan is made well educated / trained with modern expertise.
In China in the past few decades, millions of people have fled poverty with the help of Education. As per UNICEF’s data, China’s adult literacy rate is 95.1% whereas Pakistan’s adult literacy rate is 54.9% and youth literacy rate, is about 100% in China for both male and female. While in Pakistan’s male youth literacy rate is 79.1% while female youth literacy rate is 61.5%. Now by analyzing these figures of China success, the key of the success is education across both genders is top priority of the China. If Pakistan wants to follow the footsteps of China then government needs to take initiative to make sureto educate both genders on advance level which helps in generation of skilled workforce. For ensuring the success of CPEC is to complete the projects timely and efficient which can be done if skilled workforce is readily available. Now to overcome this issue local education / training institutes and universities must not only introduce new specific CPEC need-based programs but also advance the standard of the existing courses. Also, these institutions must work on emerging practical skills of students so that they can match the requirements of employers. Local institution must team up with Chinese which will be helpful to developing skilled workforce and fill the gap. Pakistan’s Technical Education and Vocational Training Authority (TEVTA) may provide opportunity to overcome this challenge. In this regards language will be barrier which will required attention, for this Chinese language courses are being taught across Pakistan. Now by saying institution, this includes universities, related ministries and government departments, International Governmental Organizations and Non-Governmental Organizations. In this regards government role is to develop collaboration between these institutions.
4.9 Banking Sector Development In China Pakistan Economic Corridor (CPEC) banking sector of Pakistan are expected to have their potential share which will create a new ways of revenues in near future. Banking sector are already contributing dynamically in the development of economy showing the uninterrupted growth in the credit to private sector. Under CPEC a general impression is that major portion of investment and financing are expected to be enter from Chinese banks but some projects will be financed by Pakistani banks and will share their profit margins in future.
The Banking Sector is the pillar of modern business as it is the key source of finance to the industries. The importance of this sector across the world has increased because of globalization and regional connectivity. Pakistan’s financial system is dominated by the commercial banks which is the focal point of economic activities. Pakistan financial sector’s comprises of banking sector because firms and households do not have feasible options to accommodate their financial needs. For these firms, other forms of financing are either not available or more costly, thus limiting firm’s choices in raising their financing. Therefore, they become "bank dependent" as their economic and business activities are directly related to the availability of bank loans”. Pakistan financial system consists of financial intermediaries and financial markets that collect funds from peoples who have savings and provides to those who have more fecund uses for them. Recent studies reveal that banks performance depends on a number of factors of which comprise bank’s specific and external factors. Bank specific factors include bank size, their loan portfolio, bank deposit base and bank capitalization and external factors includes macroeconomic variables like, inflation, GDP, exchange rate, bank market capitalization and FDI along with other factors like political situation as well as law and order situation of the country. CPEC is a massive economic activity which will help in reduction in unemployment. As per recent studies, one unit increase in GDP requires of 3.6 units rise in investment. CPEC will bring 1.5 % yearly growth in GDP in Pakistan for next three years beside the additional effect of private investment which further enhances 0.5 % growth in our GDP. As per economic and financial theories there is a positive relationship between GDP of a country and banks performance which is if there is increasing in GDP it will grow the profitability of the banks. Investors are attracted by higher economic growth to invest more by obtaining loans from the banks in order to make the most of their profit. Keeping in view, CPEC will create many opportunities for local and foreign investors to enrich their business, resultantly it will increase the demand for bank loaning and profit of banking industry of Pakistan. Factors like free trade, advancement in technology and regional connectivity result in low rate of inflation but according to some economist, in upcoming years Pakistan may notice a slightly increase in rate of inflation because of increase in aggregate demand for available goods. Consequently, this slight increase in inflation encourage bank to take more risk on loan portfolio as banks underestimate the allied risk with their borrowers and extend loan to risky borrowers on high risk premium. Thus, increase in inflation will increase in loan portfolio of the banks beside increase in return on asset and return on equity. CPEC will increase FDI of Pakistan which creates employment and business opportunities in the country. It permits banks to disburse their clientage, extend new loans and engage in new business activities. Certainly, CPEC will increase FDI which will result in higher profits by the banks. Under CPEC Pakistan intended to develop industrial parks and identified several areas for establishing Special Economic Zones alongside the corridor. Consequently, it will not only help to generate employment and economic stability but also provide plentiful opportunity to Pakistan’s Banking sector. In this ideal situation banks can increase their business by opening new branches alongside the corridor and also banks can boost their market capitalization, by enhancing their customer’s base. Under CPEC, China will invest $34 billion in power and energy sector which will generate more than 10400 MW of energy from 2018 to 2020 along with gas pipeline project with Iran which will overcome Pakistan’s energy crises which helps industries will work at their best and also it helps to attract investment. Consequently, banking sector will get a chance to increase his profit by extending essential finances to new and established businesses. Pakistan’s local banks will get an opportunity to open new branches in China with the approvals from State Bank of Pakistan, resultantly; it will further enhance the profitability of banks. Banks operating in Pakistan must finance supporting industries of CPEC which will be major contributor to the country’s economy like investments in cement, steel, contracting etc as these sectors will be highly productive because these industries will make CPEC’s implementation possible.4.10 Environmental Impacts and Green Energy Solutions
The China Pakistan Economic Corridor has been underway for almost two years but the political leadership of Pakistan has yet to take into consideration on its environmental impact. Although the infrastructure and energy projects under the CPEC yet to be completed which will enhance economic activity but they will ruin the environment. For instance the narrow route of Karakoram Highway only supported a few of trucks to move goods between Pakistan and China. But when the corridor became fully operational, this highway is probable to carry up to 100 trucks per day. The horrible dark fumes released by these diesel trucks not only stand out in unusual contrast to the unspoiled and lush green landscape alongside the highway but also sooner or later it will settle down on glaciers which will cause them to melt and form lakes. This problem can be fixed by installing catalytic converters in the trucks that use the highway. More like these environmental impacts of CPEC-related projects which can create problems needs to be engaged at early phase. A wide-ranging assessment is required to be done for possible damage to the environment and corrective measures for some of the projects will be essential.Environmental sustainability is the major concern of CPEC that needs to be addressed. In the energy sector majority of the investment has been owed to coal projects which is very damaging for the environment and health of people. During the process it creates many harmful discharges which would damage the quality of air and cause many different diseases like respiratory problems, premature deaths and cancer. Coal mining also creates a lot of different kinds of pollution like noise and visual pollution for the people who reside nearby. The coal contains a lot of impurities and here after releases a greater amount of greenhouse gases in the environment which are one of the main reasons for global warming and climate change in the world. Pakistan needs to generate power from coal but with the help of China the process should be more environmentally viable by reducing the carbon content in discharges. Likewise, deforestation and dislocation of local people for construction of road and railway is also a point of concern. Pakistan is already fronting a loss in its forests and with these huge amount constructions it will cost even more trees and forests. With more roads means more vehicles on the roads which will further contribute to damaging air and trees as remedy won’t be enough. Wildlife of the region will also affect with changes in natural landscapes. There is a lot of construction in CPEC which will also bring many dilemmas to their population where growing amount of vehicle discharges can create health problems. In order to make CPEC more viable for the country these important environmental issues needs to be addressed because economic development should not come at the cost of our environment and health. As our natural resources are inadequate for the survival of future generations it is significant to take such measures which protect and preserve the natural environment. CPEC needs to emphasis mainly on renewable sources of energy such as hydroelectric power for which Pakistan has a huge potential. Projects regarding production of solar and wind energies should also be on the vanguard because they will produce cheap electricity and also it is environment friendly and are more bearable in the long term. In this regards Quaid-e-Azam Solar Park is completed in December 2016 Bahawalpur, which is world’s largest solar power plant with the 6,500 acre and estimated capacity of 1000MW.Through CPEC Jhimpir Wind Power Plant of 56.4 MW of electricity has been already started. Dawood wind power project is also operational with cost of $115 million, with capacity of 50 MW of electricity. With the capacity of 870 MW, SukiKinari Hydropower Project in the Kaghan Valley of KPK with the cost of $1.8 billion is another example of these renewable energy projects. The $1.6 billion 720 MW Karot Dam,4,500MW with $14 billion Diamer-Bhasha Dam and $2.4 billion, 1,100 MW Kohala Hydropower Project are also parts of the CPEC plan5. SWOT analysis of CPEC5.1 Strengths
Geo-Strategic Importance of Pakistan
Pakistan has significant geographical position in the region and it is further enhanced in the region due alliance with China and CPEC. Chinese economy with $14 trillion and $1.7 trillion economy of Russian which are located in the north. ECO countries in the west with $2 trillion economy, the $1.5 trillion economy of the GCC in the south and the $2 trillion Indian economy to the east make our neighborhood a very gigantic regional economy of over $20 trillion and Pakistan positioned like heart. As Central Asia is the huge buyer of oil and gas hub from Middle East and Pakistan is located near the opening of the oil rich Middle Eastern countries which starts from Iran and stretched out to the southern tip of Arabian Cape with Saudi Arabia which itself a huge exporter of the oil across the globe. Pakistan is located in the heart of energy rich countries like Afghanistan and Iran where china and India is major supplier of energy resources. As China being the superior shipper of oil and it requires a shielded and thorough way other than Strait of Malacca and Hormuz to the oil rich nations of Middle East and Central Asian Republics. This objective and because of good and welcoming bonds with Pakistan leads both states to China-Pakistan Economic Corridor. Basically, it is an improvement endeavor which expects to links Gwadar port located in southwestern Pakistan with China’s northwestern district of Xinjiang, through a system of expressways, railway lines and pipelines to transport oil and gas.
Gwadar port the key of CPEC which is situated on the brink of the Indian Ocean. The port with its key geo strategic importance grasps basic status in the maritime uniformity of force in the South Asian area. Gwadar is the tail of the Silk Belt which took the leading place in CPEC. Gwadar port is the third remote ocean port in Pakistan and will give vast financial and key advantages to the nation. Also, China has the only shortest possible way to Indian Ocean and Arabian Sea is this corridor where its meets with Gwadar port which has its own geographical significance which attracts China, Central Asian Regions and South East Asian countries for trade. CPEC will change the geo-political and strategic landscape of Pakistan as it has potential to restructure the economic position of the country and whole region. In a world of connectivity Pakistan will play a dominant role in linking and benefiting from this enormous regional economy. Other than location Pakistan’s natural benefaction of land, people, water, sun and mineral resources can be considered as a significant potential and strength for generating viable economic growth. The up gradation of Gwadar port helps Pakistan watch over India and its activities in the Indian Ocean. India is worried that Gwadar can posture issues for India’s ocean lines of correspondence, it could worsen on the off chance that US scales down its existence in Bahrain because of financial limitations. Gwadar port will provide Pakistan a substitute maritime base distant from Indian frontiers that is critical for the survival of the country. Due to its geostrategic location in the Arabian Sea it couldassist electronic surveillance to monitor naval activities in the Arabian Sea and Indian Ocean.
The strategic ties between Pakistan and China
Which has been further strengthened after the commencement of China Pakistan Economic Corridor Project. CPEC is an uprising in the field of economics, under which China investing $46 billion in Pakistan for the development of infrastructure and energy. CPEC is a revolutionary economic dimension of Pakistan in the 21st century. This multi-dimensional project has opened Pakistan’s rebalancing options from geopolitics to geo-economics. Pakistan and China have complete identical views on all major regional and international issues and it is nearly impossible to highlight any example when the two were not on the same side with each other on major issues. The bilateral relations reverberate in the hearts of the people of both countries. China has constantly provided economic assistance to Pakistan and has already signed a free trade agreement (FTA) with Pakistan. It has not only provides loans but also technical assistance for building of water dams, and nuclear reactors for energy purpose.
Energy is labeled as backbone of the economy. Because of the increase in population and industrial demand, there have been severe energy crises in Pakistan. CPEC will help to overcome prolonged energy crisis which badly affect the economy of Pakistan. CPEC is the ideal project which will help rid country of the energy crises. Energy availability in country will revive existing industries.
Like road, ports, and highways is another great success of CPEC which will improve the infrastructure of Pakistan and its linking with all sub-regions in Asia, between Europe Asia and Africa. Resultantly, it will end the barriers of all investment and trade thus, making a sound business environment in the region. Pakistan economy will be restructured after the completion of the project and will spread out to international markets for the manufactured product. Consequently, the economic and employment growth rate will automatically grow.
Concerns of KPK and Baluchistan Can upset the implementation of the CPEC. Nevertheless consensus of major political parties of the country is present on the paybacks of CPEC, however, there is still a political controversy is circulating among several parties which primarily on the route selection and funds allocation of the CPEC project. Under developed KPK and Baluchistan are the two main heads of the CPEC accused federal government of altering the original route on the excuse of security, in such case it will only benefit Punjab which is more developed than these two. Still the federal government has denied any conversion in the scheduled route but financial distributions for the projects indicates the government’s inclination towards eastern route instead of western route. This lack of provincial disagreement can have a damaging effect on the execution of CPEC. Mean while Pakistan’s entrenched history of political immaturity where, lack of vision in political leadership has affected the major development projects. Political gains take superiority over national interest which politicized issues like distribution of resources. It is necessary to ensure that country benefits from the CPEC do not land in local dissatisfaction.
Within Pakistan is also the key weak point for execution of CPEC. The history of Pakistan is full of political instability and chaos, which is the main hurdle in development and have key role in weakened the economy. For success of CPEC long-term political stability will be required in Pakistan. In the past Pakistan has faced many phases of political unrest that weakened the country’s development. The encouraging part in the history of political scenario was that a democratically elected government completed its five year from 2008-2005 and after that a peaceful changeover of power happened in results of 2013 elections. However, presently country is again faces a political instability after just 14 months of2013 elections. This political instability leads by two political parties known as Pakistan Tehreek-e-Insaf (PTI) which led by Imran Khan, and Pakistan AwamiTehreek (PAT) led by a Dr.Tahirul Qadri which started their demonstrations and sit-ins in Islamabad in August 14 with the demands for resignation of the prime minister. These sit-ins in 2014 delayed the visit of Chinese President due to law and order situation in capital of Pakistan. This instability continues after Panama Leaks which results in the disqualification of Prime Minister by the Supreme Court. Now this ongoing political instability has not only damaged the economy but also diverting political leadership from other governance matters of vital importance related and policymaking and operation.
Tax and power tariff issues Are the unpleasant concerns or foreign investors. The issue of tax, power tariff in Pakistan can also hindered the implementation process of CPEC. China has communicated serious uncertainties over these obstacles and delaying tactics allegedly being engaged by the Federal Board of Revenue. As per the agreement under the CPEC, the imported equipment and machinery would be exempted from sales and withholding tax but time-taking sanction procedure from FBR has negative impact on the construction project, resultantly, delaying in the completion of projects. Chinese authorities also argued that the decrease in tariff for renewable energy will have negative impact of CPEC projects.
Lack of quality of labor force
Labor can also confront to sustain a high degree of excellence and timely completion of the CPEC related projects. The quality of labor force depends on education, training, physique, and health. Pakistan is the 10th largest country labor force but still it lacks the proper development of their labor force. Pakistan has not that much of professional training institutes which are the basic need for CPEC. Hence lack of trained work force will delayed the projects and also quality will be compromised. In this scenario foreign companies will bring their own workforce which is not in favor of Pakistan. Developed countries like United States of America, Japan, France, Germany, are significantly investing in training of workers. Good education and skilled labor force are given recognition for much of the growth in per-capita income and economic productivity. Thus, skilled labor force will raise the guaranty quality for the corridor.
CPEC will provide several opportunities for the people of the region as it has ability to boost the economic activities, increase regional trade, extend technical cooperation and generate new financial opportunities. Opportunities like construction of connectivity infrastructure and development of regional economic structures will be critical and these opportunities will help to get enter into the regional economies. This would need active CPEC execution, adapting the Pakistan-China free trade agreement to open up the Chinese economy to Pakistan based enterprises. CPEC will boost the trade between China and Pakistan which is currently around $12 billion per year and would be expected to reach $15 billion.
CPEC project will help in developing infrastructure which includes construction of textile garment, industrial park projects, dams, the installation of nuclear reactors and creating networks of road, railway line. Resultantly, these projects will generate employment opportunities and ultimately people will take ownership of these projects. As per the international labor organization, CPEC would bring 400,000 jobs whereas the Applied Economic Research Centre has projected that the mega initiative would provide around 700,000 direct jobs till 2030. The Planning Commission’s data shows even more favorable results, with CPEC creating around 800,000 jobs in the following 15 years. Pakistan is about to gain a lot from these opportunities as there would also be a remarkable growth in the annual economic growth of the country. Unemployment is the main issue of Pakistan and by starting these multibillion project will require labor force which ultimately filled by locals. After the completion of CPEC more investment and by establishing Special Economic Zones generate huge opportunities of employment helping Pakistan to overcome this crises.
Under CPEC Chinese investment of billions of dollars will boost the Foreign Direct Investment (FDI) in Pakistan. As a result, the Pakistan economy will flourish. The CPEC money would be used to construct power projects. After completion of CPEC other countries will also invest in Pakistan resultantly increase in FDI. According to World Bank report, investment in Pakistan is rise up to 15.4 % of GDP in 2017 as a consequence of CPEC projects. Because of Pakistan government which leads by businessperson group, has increase its efforts to invite maximum foreign direct investment after CPPEC projects. Many countries like European Union, Canada, the United States and Australia have revealed their interest in investing in Pakistan’s economy.
Pakistan’s tourism industry has a hug opportunity to grow after infrastructure development under CPEC project. After completion of infrastructure projects like railways and road building will improve travelling which results in attraction of foreign and domestic tourists to explore the beauty of Pakistan. The superb beauty offer flung areas of Gilgit, Chitral, Kaghanand Deosaietc will be easily explored by tourist especially foreigners which results in significant growth in tourism share in GDP. Because of CPEC projects Pakistan can be the world’s ultimate tourist destinations.
Opportunities for agriculture sector of Pakistan in CPEC will be unparalleled where transportation infrastructure will reduce their cost and time. Also, collaboration in the agriculture sector will get benefits in relocating of technology relating to agro-chemicals, pesticides, seeds and fertilizers, which help in increasing the agricultural production in Pakistan. As China is the biggest importer of vegetables in the world and it brings a huge opportunity for Pakistan to increase their exports to China with low transportation cost. Being an agricultural country, effective execution of CPEC projects will able to modify the economic conditions of the people especially of those of Baluchistan and KP. Furthermore, under CPEC Chinese expert also assists WAPDA and Agricultural officials for various water security and management projects. Internationally, Pakistan has the opportunity to fight his case in World Bank for Diamir-Basha dam. By availing these opportunities Agriculture sector will flourish resulting prosperity in Pakistan
CPEC brings vast opportunities for banking industry to grow. As result of CPEC there will be huge investment in the country in the shapes of different projects and establishment of SEZs. Under CPEC most of the projects will be financed by Chinese banks, however, some projects will be locally financed by Pakistani Banks, which will increase their profits by extending loans to these projects. Also, due to CPEC more business like SMEs will and other local firms which will heavily dependent on banks loans, which provides the opportunities for banking sector to grow. To avail these opportunities banks need to design the operational structure along with corridor and near SEZs.
Pakistan’s SME sector and intrepreneurer Pakistan will get an opportunity as these both have substantial influence in economic growth of Pakistan. SME sector helps in overcome unemployment crises, resultantly, reduce the poverty level SME sector also backup large industries and emerging technological innovation.With SEZs this sector will grow as more investment will generate business for this sector. SME sector can exploit these opportunities by targeting in right direction and invest in growing business like supply chain management, agriculture and livestock, minerals, food processing, surgical instruments, construction, ICT under CPEC and joint ventures with Chinese companies are another substantial opportunity in developing SMEs.5.4 Threats
India is against the CPEC from beginning as Indian government trying hard to fail the project in different ways. India is concerned is not only the vast investment of China in Pakistan under CPEC but also Chinese military. India predicts that CPEC and Gawadar Port will made Pakistan economic and trade center of the region. India being the greatest enemy of cannot accept Pakistan to become the economic champion of the region and thinks this strategic partnership among the China and Pakistan is the biggest threat to India sovereignty. India also shows its concerns over the developing and handing of Gwadar port to China. Due to these reasons India financed the terrorists group to carry out terrorist activities in Baluchistan.Another concern for Indian government is China naval existence in Gawadar.India also brings the idea to develop the Chabahar port of Iran and intends to invest about $85 million. Chabahar portis few miles away from Gwadar and a gateway tononcoastal Afghanistan and Central Asia while sidestepping Pakistan. India in the shape of Chabaharport try to emerge a competitor in the region which will bring down the Gwadar success resultantly, CPEC. Whereas Chabahar project is yet to be started because of the current talks on the Iranian nuclear issue and Gwadar port has become practical. Additionally, there are reliable indications that RAW (Indian Intelligence Agency)is operating a special cell set up to damage CPEC in Pakistan.
Security laps is a very severe concern that Pakistan is confronting for last seven decades which is still badly hurting the nation and its economy. Pakistan has wide-ranging of terrorist groups, like Tehreek-e-Taliban Pakistan (TTP), Baluchistan Liberation Army (BLA), Lashkar-e-Jhangvi (LeJ), Baluchistan Liberation Front (BLF) and ISIS etc. All these groups are operating inside Pakistan which affects internal security and stability of the country. Talibanzsation is most advanced element militancy in Pakistan, particularly in the FATA and western parts of the country. Pakistan faces potential security threats in whole country. Some challenges are due to religious extremism and terrorism. The militancy groups and insecurity will become serious threats for the construction of China-Pakistan Economic Corridor (CPEC).
Baluchistan insurgency put sever challenges to successful completion of CPEC. Balochistan’s failing law and order situation is main threat to projects related to Gwadar port. As Gawadar port is critical part of CPEC so Baluchistan is the main target of terrorists. This province has been confronting threats like the Baloch separatist insurgency, security issues evolving from Afghan and Iran, also, the increase in sectarian and Islamist militancy. India also financing militants groups for destabilizing Baluchistan which will results in delay and gradually fails the CPEC. Terrorists also attacked the workers and Chinese engineers in the area. Another aspect related to this issue is the tension between the federal and Baloch government for social, political and economic rights, because locals always feel sidelined and depressed of their rights. Locals of Baluchistan have no access to basic facilities like clean drinking water, health and education facilities regardless of being rich in resources. These are the basic reasons that locals oppose the CPEC and Gawader Port projects. After CPEC inauguration they feel more sideline and they consider the CPEC as to take control on the resources of Baluchistan, therefore majority of locals of the province not taking part in CPEC projects. Still, the accomplishment of the CPEC primarily depends on the support of the local people.
Currently the nation is looking forward for the fruitful results of CPEC project; however, we are rather unaware in exactly evaluating the negative environmental impact of this mega project. The prime object is to assist China and utilize the same in international trade by providing inexpensive transit route through Pakistan. Consequently, thousands of heavy trucks travelling round the clock between the Gwadar Port and Khunjerab Pass, carrying Chinese good. These widespread transportation activities will affect the environment. Likewise, energy related projects and planned Special Economic Zones under CPEC will also costing country’s environment. Energy projects under CPEC are mostly based on coal plants which measured as the main donor to greenhouse gases and consequently, cause global warming. Furthermore, the CPEC is also expected to disturb the environmental balance generally in the country and specifically in the Northern Areas.
6.Summary and Conclusion
China-Pakistan Economic Corridor (CPEC), a $46 billion investment in energy and transportation sectors of Pakistan. Being a part of China’s One Belt, One Road (OBOR) initiative, CPEC is planned to promote regional connectivity among Pakistan, China, and Eurasia. CPEC is bound to have geopolitical implications for Pakistan and the broader region. The strategic ties between Pakistan and China have been on an upward trajectory with a noticeable thrust on economic collaboration after the commencement of China Pakistan Economic Corridor. CPEC is a revolution in the field of economics. China incorporates an outstanding amount of escalating, moving from a centrally planned economy to a market one. Consistent with the Pakistan Economic Survey 2014-15, trade between Pakistan and China has a grownup to $ 16 billion. China’s exports to Pakistan inflated by one-tenth throughout the five-year amount from 2010 to 2014. As a result, China’s share of Pakistan’s total exports has step by step inflated from 4% in 2009 to 10 % within the financial year 2014.
For Pakistan, this corridor is observed as a symbol of the invincible relationship with China. CPEC could improve Pakistan’s energy starving economy and the internal stability of the country if the projects emerge as projected. Yet, at the same time, Pakistan’s geographical immediacy to Afghanistan and relentless conflicts with India require a geopolitical assessment, which can be CPEC’s probable consequences for Pakistan and the rest of South Asia. This investment also takes place at a time when the Indo-Pakistan relationship is flawed with several incidents such as cross-border conflicts, allegations of cross-border terrorism, and the Kashmir dispute symbolizing the relationship.
China-Pakistan Economic Corridor is a win-win strategy. This is a long term project and the impacts will stay for a long period. The investment and construction of energy and infrastructure projects under CPEC will both affect Pakistan and China in social, economic, culture and others.
CPEC is benefits not only for Pakistan and china but also for other countries as it is a game changer project. Because companies of other countries that export Chinese products would like to use the proposed route due to less shipping cost and transit time. Central Asian counties would like to use shortest way to sea port of Gwadar as compared to Iran and turkey.so we concluded that CPEC is not only benefits Pakistan china but also European countries, middle eastern countries and Asian countries. CPEC is facilitator for property, development, transformation, connection and above all economically empowering 3 billion people. project grips the construction of textile garment, industrial park projects, construction of dams, the installation of nuclear reactors and creating networks of road, railway line which will generate employment opportunities and eventually people will also take ownership of these projects. Fully equipped hospitals, technical and vocational training institutes, water supply and distribution in undeveloped areas will also improve the quality of life of people. The project long term benefits are not just limited to Energy and Military sector, but if executed as proposed, it will have big impact on three of Pakistan’s least discussed sectors(.Information and Communication, Agriculture ; Aquaculture ,Manufacturing the people who think that Pakistan has nothing to gain from CPEC are living in the fool’s paradise. Of course, in the short term (10–15 years) China will gain more than Pakistan from this project. But, in the long term, Pakistan is going to reap quantum benefits in an incremental fashion.
The CPEC is a win-win situation for both Pakistan and China .The megaproject will alleviate the growth rate by 2.2%. We are almost done with the energy shortfall and we are about to meet the prerequisites of FDI. And the most important development is the takeoff of Baluchistan’s groundwork. The SEZs will take off our Industry, so looking with a bird eye; we can conclude that when the wheel will start moving on CPEC, growth and prosperity will follow.
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