China-Pakistan Economic Corridor

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

China Pakistan Economic Corridor is journey towards economic regionalization in the globalized world. It
founded peace, development, and win-win model for all of them.

China Pakistan Economic Corridor is hope of better region of the future with peace, development and growth
of economy

CPEC Vision & Mission

To improve the lives of people of Pakistan and China by building an economic corridor promoting bilateral
connectivity, construction, explore potential bilateral investment, economic and trade, logistics and people
to people contact for regional connectivity.
It includes:
 Integrated Transport & IT systems including Road, Rail, Port, Air and Data Communication Channels
 Energy cooperation
 Spatial layout, functional zones, industries and industrial parks
 Agricultural development & poverty alleviation
 Tourism cooperation & people to people communication
 Cooperation in livelihood areas
 Financial cooperation
 Human Resource Development

CPEC Significance/Potential
China-Pakistan Economic Corridor has Significance for the development of the region
Potential areas of cooperation/development include:
 Regional Connectivity
o Transport Infrastructure
o Energy Hub/flows
o Logistic Hub/flows
o Trade & Commerce
o Peace & development of region
o Connectivity/Harmonization/Integration of civilizations
 Diverse Investment opportunities
 Industrial Cooperation
 Financial Cooperation
 Agricultural Cooperation
 Tourism
 Educational linkage
 Human resource development
 Health Care
 People to people contact
 Increase in livelihood opportunities
 Enhance Security and stability of the region
 Q. 1. Is CPEC becoming another East India Company?
• Pakistan and China are all weather and time tested friends. CPEC is a fusion of Vision 2025 and China's
One-Belt One-Road philosophy. This is not the first time we are partnering in any front. We had been tied
into strategic partnership for decades. CPEC brings forth a transformational paradigm, moving from geo-
strategic to geo- economic partnership between the two countries. China's huge investment in energy,
infrastructure and suggested industrial sectors doesn't provides any extra ordinary mileage to either of the
partnering countries rather it offers win-win situation and equal opportunities to both China and Pakistan.
Hence, no question to compare CPEC with East India Company. China is putting into lot of sincere efforts
to help Pakistan to improve socio-economic indicators in Pakistan.
• In 18th century, Indo-Pak GDP share was quite higher as compared to Britain’s share in global GDP.
This was the main attraction to capture the higher share, however at this moment China is holding the
largest share in global GDP, i.e. 18.3% (23T USD, PPP) Whereas, Pakistan is at 0.3 trillion USD GDP.
• We might be able to better understand how China operates by looking towards its involvement in other
regions, specifically Africa. While East India Company cemented its power in the sub-continent through
brutal force and with no regard to the well-being of local population, China’s approach has been to expand
its influence around the globe through economic prosperity rather than military might.

Q. 2. Are we expecting some industries to relocate from China to Pakistan in coming years?
 85 million job’s worth of work has been saturated in light engineering sector and is expected to be
relocated in the regions where they can enjoy low CAPEX and OPEX. So, light engineering sector’s
industries may be relocated from eastern/central China towards western China, Pakistan and other regional
countries.
 No obsolete and end of life plants would be allowed for relocation as per BOI package for priority SEZ’s
2017.
Q. 3. What will be estimated annual growth and revenue to be accrued to Pakistan through
various agreements made under the CPEC with project wise breakup?
 Under CPEC, Pak and China have initiated projects of 17,045 MW of electricity, national level
modernization of roads and rail infrastructure, new optical fiber connect with China, development and
commercialization of Gwadar port and smart port city, 4 urban mass transit projects in major cities and 9
SEZs. Due to development initiatives of the government, economic growth rate 5.3% a decade high was
achieved in 2017.
 Concerning the real returns on CPEC we also need to look at other additional benefits, such as, a p
 Positive impact on GDP growth rate which is expected to rise to 7% by 2020 from 5.2% in 2017; industry
relocation from other regions as well as the rapid growth in service industry catering to transit trade etc.
 The annual revenue from toll collection is projected at around $5bn by 2022, which would counter the
balance of payment issues in future (CE, PD&R).
 9% gross revenue of Gwadar port and 15% gross revenue of Free trade zone of Gwadar.
 SEZs would be a major contributor to growth and revenue.
Q. 4. Why do we need to develop SEZs?
 Yes, there is dire need to develop new SEZs to attract the FDI and local investments.
 Successful SEZs usually develop on Ease of doing business (EODB) indicators e.g. one window operation,
undisrupted cheap power, waste management plants, endowment based clusters etc. which are mandatory
for any investor to do investment.
 Pakistan has abundance of endowments but lack; investment, technology, enterprising and global orders,
which could be addressed by attracting export focused global enterprises in the SEZs.
Q. 5. China is dictating terms to Pakistan and the federal government is not consulting the
provinces, is this correct?
 No the given notion is not true.
 China and Pakistan work jointly in cordial environment making an overall planning for a unified
development of CPEC projects. In this regard, the Joint Cooperation Committee (JCC), 5 Joint Working
 Group (JWGs), Long Term Plan, Transport Monographic Study and respective MoUs are few examples of
collective working.
 All provinces have been consulted and invited to all meetings within Pakistan and abroad and the CMs
participated in the JCCs for their recommendations and review of CPEC projects.
 Even president FPCCI was part of 7th JCC.
Q. 6. What is the anticipated time for completion of each SEZ?
 Feasibility studies of all 9 SEZs are completed and handed over to Chinese side.
 Few of the 9 SEZs are already under development and development on remaining SEZs would also
commence very soon.
Q. 7. Why don’t the government extend equal incentives and facilities to existing industrial
zones so as to keep them at par with the global competition?
 Enterprises in these zones would have the edge of access to international markets as Government is mainly
looking to relocate the international industries in proposed priority 9 SEZs. Government is also trying to
encourage the international enterprises for forming joint ventures with local industries to support the
existing industries. Now existing industries have to do their homework to identify their positioning in
supply chain so as to take the advantage of being the first to develop the forward and backward linkages
with the enterprises of 9 SEZs.
 The industries in SEZs have the competitive advantage in terms of improved infrastructure and facilitation
services but the spillover effect and the positive externalities will affect the existing industries positively in
long run.
Q. 8. Why CPEC energy projects mostly include coal power plant and what measures are
taken to avoid pollution arising from these projects?
 Pakistan was facing worst electricity shortage in 2013.
 Coal is the quickest and relatively cheaper source and by now 40% of global electricity is generated
through coal. Ours was 0% share and would be around 20% by next few years.
 Use of Supper critical technology and other environmental safe guards are under adoption.
Q. 9 Is Environmental Aspect Assessment conducted prior to development of each project
under the banner of CPEC?
 Each project has to pass through Environmental Impact Assessment.
Q. 10 What is the financial obligations and terms of repayment?
 It’s a mix grant, long term government concessional loans, zero interest loans and simple partnership or
investment mode.
Q. 11 What tax concessions are being offered?
 To attract the investors especially in SEZs tax concessions are offered to the developers and enterprises in
order to improve the industrial sector growth, exports and generate new employment which is munch
needed.
Q. 12. Pakistan has long relation with China, when was CPEC formalized?
 Initially KKH was completed in 1974.
 National Trade corridor concept has been under discussion for research since last ten years.
 CPEC concept was first evolved during Chinese Premier visit to Pakistan during May 2013.
 MoU on CEPC Long Term Plan and Action Plan was signed on 5th July 2013 during Prime Minister
Nawaz Sharif’s visit to China.
Q. 13. Historically CPEC routes have been finalized earlier?
Various routes may have been under discussion prior to signing of MOU in July 2013, but the routes were
formalized following various discussions after formalization of MOU and it was agreed in November,2015
in the form of monographic study on Transport Planning, which specifies highways/railways network,
benefiting all region of Pakistan.

Q. 14. CPEC is mainly related to cooperation in transport, energy & industrial parks?
As the name suggests, CPEC in totality relates to evolvement of Economic activities. Presently, CPEC
mainly relates to cooperation in energy, transport infrastructure (road, railways, airports), Gwadar port &
city projects and Industrial parks, which are building blocks to an economy. In long term there are other
field of cooperation including, agriculture, industries, tourism, Human resource development and financial
cooperation etc.

Q. 15. Lack of transparent planning on part of PC viz-a-viz CPEC?

There is no final plan. Planning Commission can only highlight those plan segments which are finalized by
mutual agreement.

Q. 16. Western route was finalized historically and no other route was mentioned?
Various routes may have been under discussion prior to signing of MOU in July 2013, but the routes were
formalized following various discussions after formalization of MOU

Q. 17. Installation of Power projects under CPEC is not balanced through out provinces ?
The energy projects are recommended keeping in view the source, load centers and the investors proposal
considerations. Regardless of the location, power generated from these projects is added to national grid
for nation-wide distribution

Q. 18. How will less developed provinces will benefit from economic zones?
Joint Working Group on industrial cooperation between China and Pakistan under CPEC framework
formation is in process, which shall finalize new industrial zones under CPEC. BOI, in consultation with
provincial governments is in process of finalizing the zones. These industrial zones will uplift
underdeveloped areas.

Q. 19. Why cheap hydropower sources are being ignored in CPEC by focusing on costly fuel
for generation of electricity?
Various Hydel projects totaling more than 9000 MW are being planned (CPEC and other than CPEC).
All energy projects are in IPP mode. Federal Government welcomes the initiation of energy projects as per
energy policy, which is open to all Provinces/ investors

Q. 20. Fiber optic cable is a very crucial component of CPEC. What is the exact route where
this cable will be installed?
It covers GilgitBaltistan, Khyber Pakhtunkhwa and Islamabad-Rawalpindi (SCO Headquarter). It will
provide alternate connectivity and redundancy for Pakistan and will open up huge telecom, data
connectivity and other related opportunities

Q. 21. Lack of environment assessment studies regarding CPEC projects ?

All the projects have been approved after ESIA (Environment and Social Impact Studies).

Q. 22. PC maps depict that there is no western route. It is simply single old road connected
with central route. Eastern route is the corridor?
Latest Maps are available on www.cpec.gov.pk/maps

Q. 23. We are now in early harvest phase of CPEC, which is around US$ 46 Billion. What are
the details about the allocation of this budget and the share of federating units of the
country in this phase, since taxpayers will eventually pay for such project financing?
CPEC is at least 15 year long term project to be completed in phases. Our development goal is to have
balance regional development in phases. The US $ 46 Billion is a broad commitment of investment and
concessional loans have been principally committed by China in the early harvest phase.

Q. 24. Liquefied natural gas (LNG) pipelines are being planned for installation on the Corridor.
What are the details about the budget of LNG, location of the pipelines and the ultimate
beneficiaries of this crucial system of energy?
There is no LNG project in the approved list of CPEC project portfolio. However efforts are being made to
include an LNG pipeline and terminal project.
Q. 25. We all know that Pakistan will have a corridor for the first time. Since no institute of
the country has expertise in the matters pertaining to establishment of corridor, so a
representative and competent authority Is needed to make this dream a reality. Which
authority/body is dealing with this gigantic project, and what is there expertise in the
concerned subjects?
According to the MOU signed between Pakistan and China, Ministry of Planning, Development and
Reform is the focal point and lead agency on CPEC from Pakistani side and National Development and
Reform Commission is the lead agency from Chinese side. CPEC Secretariat have been established on
either side. The capacity of Pakistan Secretariat has been continuously enhanced to meet the requirement.

Q. 26. The transmission system of electricity in Pakistan is obsolete and responsible for huge
line losses annually. In CPEC US $ 3000 Million has been earmarked to upgrade this system.
What are the details of utilization of this amount? In which area, route of CPEC this budget
will be utilized?
Transmission line was included in the actively promoted energy projects list. It was included in prioritized
projects for the transmission line from Mitiari to Lahore and Matiari to Faisalabad for evacuation of power
more efficiently and more reliability and redundancy through HVDC lines. This is in ITC (Independent
Transmission Company) mode. Government of Pakistan is not liable to pay back loans and its business
model is like IPP mode power plants.

Q. 27. The orders of priority in which each of the said routes is planned to be executed
indicating also the names of the routes on which work has already been commenced?
Work on priority base has been started on Western route

Q. 28. How Thar is part of CPEC lying so much away from the road network?
Thar having indigenous coal supply is chosen for power project. Its evacuated energy will be part of
national grid.

Q. 29. What will be the Terms and Conditions / Pre¬requisites for establishment of industrial
parks and trade zones along the corridor?
The terms and conditions/ pre-requisites will be finalized by the Joint Working Group which is yet to be
set up. However, in 5th JCC Ministry of Planning, Development and Reform shared with Chinese side 27
potential sites identified by provincial Governments.

Q. 30. What are the details about the criteria, allocation, and installations of energy projects
along the route of CPEC. Which constitutional body decided these projects?
All energy projects are in IPP mode. These projects are not located along any corridor passage. These are
located either close to source or to load centre. Needless to add, regardless of location all power goes to
national grid.

Q. 31. Railway is integral part of CPEC. What will be the route of the railways of CPEC and by
whom and when this decision was done?
Expansion and up gradation of ML-I line from Peshawar to Karachi is being undertaken which is expected
to be completed by 2018. This decision was done by JCC after approval by Joint Working Group of
experts from both countries