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Table of Contents
1. Introduction to CPEC:..................................................................................................................................... 2
2. History: ........................................................................................................................................................... 3
Historical background of Gwadar ....................................................................................................................... 3
History of CPEC ................................................................................................................................................... 4
Announcement of CPEC ..................................................................................................................................... 4
BENEFITS ............................................................................................................................................................ 4
3. Importance: ................................................................................................................................................... 5
Importance for China ......................................................................................................................................... 5
Importance for Pakistan: .................................................................................................................................... 5
Major Projects of CPEC ....................................................................................................................................... 6
Energy Sector Projects ....................................................................................................................................... 7
Renewable-Energy Projects................................................................................................................................ 8
Coal..................................................................................................................................................................... 8
List of Energy Projects ...................................................................................................................................... 10
Future Projects ................................................................................................................................................. 10
Upcoming projects ........................................................................................................................................... 10
Economic Relations .......................................................................................................................................... 10
4. Literature Review: ........................................................................................................................................ 11
Dr. Ishrat Hussian ............................................................................................................................................. 11
5. Effects: ......................................................................................................................................................... 12
A stimulus for economic growth in Pakistan .................................................................................................... 12
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Effects on Pakistan’s economy ......................................................................................................................... 12

Impact of the CPEC: Optimistic Estimates ........................................................................................................ 13
Project financing Loans to the Pakistani Government ..................................................................................... 13
Disadvantages .................................................................................................................................................. 13
6. Recommendations: ...................................................................................................................................... 14
Regional Challenges ......................................................................................................................................... 14
Security Challenges .......................................................................................................................................... 14
Political Challenges ........................................................................................................................................... 14
Administrative and Legal Challenges ............................................................................................................... 14
Capacity Building Challenges ............................................................................................................................ 14
Financial Burden/ Viability Challenges ............................................................................................................. 15
7. Conclusion .................................................................................................................................................... 15
8. References: .................................................................................................................................................. 16

China Pakistan Economic Corridor (CPEC)

1. Introduction to CPEC:
The China–Pakistan Economic Corridor (Chinese: 中国-巴基斯坦经济走廊
; Urdu: ‫چین اقتصادی راہداری‬-‫ ;پاكستان‬also known by the acronym CPEC) is an
ongoing development megaproject which aims to connect Gwadar port in
southwestern Pakistan to China’s northwestern region of Xinjiang, via a
network of highways, railways and Pipeline to transport oil and gas.

Pakistan serves as an International Interchange enabling us a great strategic

advantage to be the hub for international trade and integration of economies
of Asia, Africa and Europe. This geo strategic advantage needs to be harnessed
on the basis of mutuality of interests to translate into geo-economic gains

The project that had initially started off with a $46bn budget may now witness
an increase which might take it to $75bn.

It connects China's Xinjiang region with Pakistan’s Gilgit–Baltistan and Khyber

Pakhtunkhwa regions

China Pakistan Economic Corridor is a collection of projects.

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Link the Pakistani city of Gwadar Port in southwestern to China’s northwestern

autonomous region of Xinjiang

Length1300 km (Pakistan 887km) China 413 km

It is a collection of projects.

•Gwadar

•Energy Production

•Infrastructure

•Establishment of Railways

•Special Economic Zones.

2. History:

Historical background of Gwadar

Port city is the southwestern coast of Pakistan's Balochistan province.
Pakistan purchased it from Oman.
Gwadar Port is a strategic warm-water deep-sea port.
Officially opened on 20 March 2007
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History of CPEC
 Formal construction commenced under Pakistan’s President Pervez
Musharraf in 2003, with economic and technical assistance from China.
 The Pakistani military felt that existing ports were not sufficient for
defensive purposes, and was seeking a second option.
 Asif Ali Zardari paid several visits to translate this idea into reality.
 Later on it was formally commenced when Chinese president paid
official visit to Pakistan.
 Today, CPEC is an essential component of One Belt, One Road project.
 CPEC is not only the pivot of China-Pakistan politico-economic relations,
but holds similar promise for the region and beyond.
 CPEC has the capability to connect the overland Silk Road Economic Belt
with the Maritime Silk Road.
 The strategic partnership between China and Pakistan for infrastructure
construction was announced during Premier Li Keqiang’s visit to Pakistan
in 2013.
 Following the visit of Xi Jinping in 2015 a total of 51 agreements were
signed mutually by China and Pakistan with a total worth of $46 billion.
 Now, the original investment of China for CPEC has been expanded to
$62 billion dollars.

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

The project that had initially started off with a $46bn budget may now witness
an increase which might take it to $75bn.

BENEFITS
i. Efficient and shortest access to Global Markets
ii. Socio-Economic Growth
iii. Peace and Stability
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3. Importance:
Importance for China
 The 3,218 kilometer route will connect Kashgar in China’s western
Xinjiang region to the port of Gwadar. Currently, nearly 80 per cent of
China’s oil is transported by ship from the Strait of Malacca to Shanghai,
a distance of more than 16,000 km, with the journey taking between
two to three months. But once Gwadar begins operating, the distance
would be reduced to less than 5,000 km.
 Besides reduction of mileage, the time required to transport the goods
from the current route to the CPEC route would reduce by 50 percent
from 50 days to 25 days
 Chinese industries are facing problems to compete in global market due
to high transportation cost and delivery time.
 China is using a longest way due to which transportation cost and time
increases, which gives a competitive edge to competitors e.g. Japan,
USA
 It would decrease the travel distance and cost greatly from China to
Gulf.
 Even if China uses PCEC for 50% of its Oil supplies then it will save $6
Million every day, almost $2 billion every year.
 Independent path from India and USA’s interference.
 New business market in another country.

Importance for Pakistan:

 Strategic and Economic
 Trade Route
 Development of Infrastructure
 Connect all Province
 Development of Fata, KP and Baluchistan
 Jobs opportunity
 Equalization among Provinces
 CPEC from all counts will prove a game changer
 Investments by China will boost Pakistan’s $274 billion GDP by over 15 %
 Given the solid foundations of friendship
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Major Projects of CPEC

As part of infrastructure projects worth approximately $11 billion and 1,100
kilometers long motorway will be constructed between the cities of Karachi
and Lahore

While the Karakoram Highway between Rawalpindi and the Chinese border
will be completely reconstructed and overhauled.

The Karachi–Peshawar main railway line will also be upgraded to allow for train
travel at up to 160 kilometers per hour by December 2019.

Pakistan's railway network will also be extended to eventually connect to

China’s Southern Xinjiang Railway in Kashgar.

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
Nawabshah to eventually transport gas from Iran

Over $33 billion worth of energy infrastructure will 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 GDP.

With approximately $33 billion expected to be invested in energy sector

projects, power generation assumes an important role in the CPEC project.

Over 10,400MW of energy generating capacity is to be developed between

2018 and 2020 as part of the corridor's fast-tracked "Early Harvest" projects in
conjunction with four projects under construction prior to the announcement
of CPEC
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List of Infrastructure Projects

I. Gwadar Port up gradation

II. Lahore Karachi Motorway
III. Peshawar Karachi Motorway
IV. Havelian-Khujerab Railway
V. Hazara Motorway
VI. Gwadar Ratodero Motorway
VII. Gwadar International Airport
VIII. Lahore Orange Lane Metro Train

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.
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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.

Renewable-Energy Projects
China's Zonergy company will complete construction on the world's
largest solar power plant – the 6,500 acre Quaid-e-Azam Solar Park near the
city of 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 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, 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.

SK Hydro Consortium is constructing the 870 MW Suki Kinari Hydropower

Project in the is to be financed separately by China's Silk Road Fund.

Kaghan Valley of Pakistan's 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 Karot Dam which is under construction is part of the
CPEC plan

Coal
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
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—
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List of Energy Projects

I. Dawood Wind Power Project
II. Hubco Coal-fired Power Plant Project
III. Neelam Jehlam Hydro Project
IV. Kanupp-II, Kanupp-III
V. Coal Power Plant Project near Jhang

Future Projects
I. New Gawadar International Airport.
II. Havelian Dry Port
III. Chitral CPEC Link Road from Gilgit to Chakdara.

Upcoming projects
I. Thar coal power plant
II. Lahore orange line metro train project
III. Dawood wind power project at Sindh.
IV. Road network corridor from Kashger to Gwader
V. QUAID-E-AZAM solar power, Bahawalpur
VI. Coal fired power plant, Sahiwal.
VII. Coal fired power plant, Jhelum.

Economic Relations
 Economic trade between Pakistan and China is increased in recent years.
 China greatly increases its investments in Pakistan.
 A trade free agreement has been signed recently.
 China is helping to develop Pakistan’s infrastructure through the
construction of power plants, roads and communication nodes.
 Pakistan exports cotton and jute to china.
 Zong (1st 3G and 4G mobile network operator in Pakistan) is the first
overseas setup and it relates to china.
 China sponsored a wide variety of projects in Pakistan.
 Gwadar Deep Sea Port.
 Larkana sugar mill.
 Saindak Copper project in Baluchistan.
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4. Literature Review:
Dr. Ishrat Hussian
(Former dean and director of IBA and former Governor, state of bank of
Pakistan)
“CPEC provides a chance to improve our institutions of governance.”
Published in Dawn, April 25th, 2017
There are several but at least six areas need careful design and execution.
 Energy Policy
 Industrial Policy:
 Trade Policy:
 Foreign Exchange Regime:
 Financial Policy:
 Skill Development Policy:
Published in Dawn, April 10th, 2017
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5. Effects:
Positive effects on the following countries:

1. Pakistan, China, Afghanistan, C. Asian Countries. While by Developing

Gwadar we will beat
2. India (Port Mumbai) Iran (Port Abbas)
3. Oman (Preparing to construct a new port) U A E (value will decrease)
4. Pakistan currently faces 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.
5. 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.
6. As a result of improved infrastructure and energy supplies, the Pakistani
government expects that economic growth rates will reach 7% by 2018.

A stimulus for economic growth in Pakistan

“[CPEC] will be a strategic game changer in the region, which would go a long
way in making Pakistan a richer and stronger entity than ever before.”
Firstpost (India) April 22, 2015

Effects on Pakistan’s economy

 The CPEC will engender inter-sectoral and intra-sectoral dynamism in
Pakistan’s economy
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 The CPEC-stimulated socioeconomic activities may lift Pakistan’s current

annual GDP growth rate of 4.2% well above 6%
 Even at the IMF’s (quite conservative) GDP growth estimates of 5.5%,
the country’s economy will double by 2028

Impact of the CPEC: Optimistic Estimates

I. It would not be out of place to factor in other important variables in our
GDP growth estimation
II. The optimistic CPEC-related direct growth estimates => 6.1%
III. Additional CPEC-related indirect/ spin-off benefits => plus 1%
IV. Topped up by other development and reform programs Pakistan is
supposed to initiate => plus 1%
V. In another scenario based on the more optimistic CPEC- related direct
growth estimates of 6.1%, the country’s economy will double in 2026

The country may hit an average growth rate of 8% and beyond Pakistan’s
economy may grow 300% by 2030

Project financing Loans to the Pakistani Government

Approximately $11 billion worth of infrastructure projects being
developed by the Pakistani government will be financed by concessionary
loans, with composite interest rates of 1.6%, after Pakistan successfully lobbied
the Chinese government to reduce interest rates from an initial 3%.

The loans are subsidized by the government of China, and are to be dispersed
by the Exim Bank of China and the China Development Bank.

For comparison, loans for previous Pakistani infrastructure projects financed

by the World Bank carried an interest rate between 5% and 8.5%, while
interest rates on market loans approach 12%.

Disadvantages
I. FTA leads to threat for local markets and local manufacturers
II. Disturb of local industries
III. Difficult to compete chine’s product in market
IV. Dependent to China
V. Threat for local markets and local manufacturers
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6. Recommendations:
Regional Challenges
 For better coordination with Government of China - MoPD&R Wing may
be established at Embassy of Pakistan, Beijing
 India may be sensitized through Foreign office regarding the nature and
scope of CPEC
 Pakistan should create an impression of its commitment towards
Regional development especially Afghanistan and India e.g. TAPI & IPI
Pipeline

Security Challenges
 Four layer security is proposed for safety and security of CPEC
 Special Security Division (SSD) comprising 32000 personnel have been
established.

Political Challenges
 The high powered steering committee under Prime Minister of Pakistan
should meet on regular basis.
 ‘Prime Minister’s Delivery Unit’ to generate & monitor real time data
 Efforts may be continued at national level to forge consensus on political
issues that would arise on the implementation of CPEC.

Administrative and Legal Challenges

 All Administrative procedures/ rules at all tiers of government may be
simplified and streamlined by Task Force in consultations with all
stakeholders.
 For real time monitoring and evaluation of CPEC projects a mobile
application is proposed.

Capacity Building Challenges

 All Federal and Provincial departments/executing agencies capacity may
be strengthened.
 The Government has to rationalize its priorities for PSDP to achieve the
objectives of CPEC.
 15

Financial Burden/ Viability Challenges

 The Finance Division should devise strategy to address challenges in
servicing USD denominated debt in long term for CPEC.
 The industrial Parks/clusters may be established on motorways to take
maximum economic benefits out of our investments made in
infrastructure under the CPEC.
1. To make positive balance of trade Pakistan should increase trade.
2. Government should ensure that after completion of CPEC our labors
and people get jobs.
3. Government should ensure that China not influence internal matter
of Pakistan.
4. Climate Change and environmental assessment in the form of some
SEA (Strategic Environment Analysis) for all 9 Special Economic Zones
(SEZs) should be carried out.
5. There is need to ensure that the infrastructure developed under CPEC
projects is climate resilient.

7. Conclusion
 Natural Gateway for China
 Positive response by both countries through mutual cooperation
 Both countries are keen to enhance trade activities
 Infrastructural improvement and Development of Dams
 Stability of economy by investment in different sectors

Neither the China is mad country nor the Pakistan but they are supporting
each other to support themselves…!!!!
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8. References:
 https://www.slideshare.net/shahroze11/china-pakistan-economic-corridor-
58390275?from_action=save
 https://www.slideshare.net/abdulhaseeb95/pak-china-economic-corridor-
53333853
 https://www.slideshare.net/Tanweersudhan/tanweer-31509945
 https://www.slideshare.net/syedadnanmashokhel/pakistan-china-economic-
corridor
 https://www.slideshare.net/EASYBIOLOGY/cpec-china-pakistan-economic-
corridor-131488290?qid=b3e7193b-781f-464e-bd8b-
9f0c445ac0a7&v=&b=&from_search=1
 https://www.slideshare.net/ShahNawazmangi2/cpec-
131506573?qid=b3e7193b-781f-464e-bd8b-
9f0c445ac0a7&v=&b=&from_search=6
 https://www.slideshare.net/sajjobutt1/chinapakistan-economic-
corridor?qid=b3e7193b-781f-464e-bd8b-
9f0c445ac0a7&v=&b=&from_search=9
 https://www.slideshare.net/MubshirHussain/china-pakistan-economic-
corridor-97312365?qid=b3e7193b-781f-464e-bd8b-
9f0c445ac0a7&v=&b=&from_search=8
 https://www.slideshare.net/MWaqasAkbar3/the-chinapakistan-economic-
corridor-cpec-opportunities-and-challenges?qid=b3e7193b-781f-464e-bd8b-
9f0c445ac0a7&v=&b=&from_search=7
 https://www.slideshare.net/anwaarazad/china-pakistan-economic-corridor-
project-61803915?qid=b3e7193b-781f-464e-bd8b-
9f0c445ac0a7&v=&b=&from_search=10
 https://www.slideshare.net/MalikYounis4/china-pakistan-economic-corridor-
88178334?qid=b3e7193b-781f-464e-bd8b-
9f0c445ac0a7&v=&b=&from_search=12
 https://www.slideshare.net/KhesrauHayat/chinapakistan-economic-corridor-
125607258?qid=b3e7193b-781f-464e-bd8b-
9f0c445ac0a7&v=&b=&from_search=11
 https://www.slideshare.net/AwaisKhan207/china-pakistan-economic-
corridor-cpec-by-awais-khan-marwat?qid=b3e7193b-781f-464e-bd8b-
9f0c445ac0a7&v=&b=&from_search=13
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 https://www.slideshare.net/AsadAfridi5/china-pakistan-economic-corridor-
cpec-85793094?qid=b3e7193b-781f-464e-bd8b-
9f0c445ac0a7&v=&b=&from_search=14
 https://www.slideshare.net/AbdulBasitAnwar1/cpec-china-pakistan-
economic-corridor-89178693?qid=b3e7193b-781f-464e-bd8b-
9f0c445ac0a7&v=&b=&from_search=15
 https://www.slideshare.net/FaHadHassanNooR/china-pakistan-economic-
corridor-cpec-2017
 http://cpec.gov.pk/introduction/1
 http://cpec.gov.pk/vision-mission/3
 http://cpec.gov.pk/significance-potential/4
 http://cpec.gov.pk/official-messages
 http://cpec.gov.pk/progress-update
 https://cpec-centre.pk/cpec-pakistani-economy-an-appraisal-by-dr-ishrat-
husain-dr-shahid-rashid-mr-yasir-arrfat/
 https://cpec-centre.pk/cpec-pakistans-economy-a-way-forward/
 https://cpec-centre.pk/prospects-of-business-information-modeling-bim-in-
support-to-cpec/
 https://www.hindustantimes.com/world-news/pakistan-to-repay-china-40-
billion-for-cpec-projects-says-report/story-2NquR90EzRtyTj2DZ0l7GP.html
 http://www.cpecinfo.com/cpec-facts-vs-fiction
 https://www.dawn.com/news/1432099
 https://www.dawn.com/news/1333101
 https://www.britannica.com/topic/China-Pakistan-Economic-Corridor
 https://en.wikipedia.org/wiki/China%E2%80%93Pakistan_Economic_Corridor
 http://cpec.gov.pk
 https://www.dawn.com/news/1236159
 https://www.thenews.com.pk/print/183809-CPEC-to-benefit-Pakistan-in-
both-short-and-long-term