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Essay on CPEC as a Geopolitical opportunity of

Pakistan
Outline:
1. Introduction (highlighting the dynamics of economic cooperation)
2. The geography of the economic corridor
3. The underlying geopolitical and economic reasons for the project
4. The Chinese exportable surplus
5. The reason for the investment appetite
6. Utilization of the accumulated Foreign reserves
7. Making use of the skilled human resource and technology
8. Finding shortest routes both for exports and imports
9. CPEC as part of BRI
10. Collaborative adventures- win-win projects
11. Overcoming the apprehensions
12. The project as a geopolitical opportunity
13. Conclusion
To boost the economy of any country particularly of the developing world, the only role
model which happened to be the success story is attracting the foreign investment. Foreign
investment not only becomes the immediately the vital source of job creation but the cause of
running of many other industries attached to the building of the physical infrastructure in the
country. Since the governments are unable to create the desired number of jobs in the country,
therefore investment whether local or foreign has been established as the primary source giving a
kick-start of the economy of any state.
As regards Pakistan there is no blinking the fact that it is confronted mainly with the following
problems:
1. Joblessness
2. Terrorism from across the border
3. Lack of both foreign and local investment
4. Energy crisis
5. Violence and crime in some parts of the country linked with poverty
6. Security threats
Under the existing circumstances, there appears no other country which has shown any
interest in investing in Pakistan. It was China which came out with a considerable investment
around worth $ 46 billion though in the form of a loan relating to CPEC. It was in April 2015,
China signed a package of deals worth $46 billion to develop China Pakistan Economic Corridor
(CPEC) an economic corridor connecting China's northwestern region of Xinjiang and Pakistan's
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Gwadar Port on the Arabian Sea just 600 kilometers from the Strait of Hurmuz (The gateway to
the Persian Gulf through which 40% of world oil passes). Its economic dividends to China are
apparent, but the building of the necessary substantial physical infrastructure appears to be an
immediate remedy and impetus for the stagnated economy of Pakistan by way of creation of jobs
to Pakistanis. It also inherits trading benefits to the countries like Russia, Kazakhstan, Kirghizstan,
Uzbekistan, and Tajikistan. This port will allow Chinese oil tankers from the Persian Gulf to port
and ship oil and gas to China's Xinjiang-Shanghai oil pipeline directly. Also, Chinese products
could also be shipped via land to Gwadar and then re-shipped to the Middle East and Africa once
the road and rail links are completed. Chinese, Pakistani and other international companies will be
involved in communications infrastructure and power generation projects.
Overall CPEC is a $62 billion project mainly of energy collection and its transportation,
partially in the form of a loan and somewhat investment will be invested to build the requisite
physical infrastructure. China is developing its comparatively less developed Western region of
Xinjiang adjacent to Pakistan and is also planning to manufacture the products to be exported to
Gulf and beyond in and around Gwadar.
It is not difficult to understand why China is interested in advancing such colossal loan to
Pakistan whose economic condition is not that much sound. The reality is that China is developing
its comparatively less developed Western region of Xinjiang adjacent to Pakistan. It is also
planning to manufacture the products in that region to be exported through Pakistan via Gwadar
to the Gulf region, North Africa, and even Europe through the Suez Canal, and import oil from the
Gulf and certain minerals from Africa through the same route. China also wants to establish
exportable items manufacturing units in Gwadar and other parts of Pakistan to be exported to the
nearby countries.
At the moment most of the Chinese trade is going on by using the Sea route that is through
the South China Sea, Strait of Malacca, and the Indian Ocean for the above destinations. This route
is not feasible as it is too long and is also not considered safe from the strategic point of view. Big
powers can easily block this Sea lane if any confrontation develops in the region in future mainly
due to the ongoing disputes regarding certain islands in the South China Sea like Senkaku, and
coral reefs between China, and countries like Vietnam, Taiwan, and Japan, etc.
Under the circumstances, the CPEC is the most convenient/appropriate/feasible/shortest and
secure trade route for China to all the above destinations.
The investment abroad in the form of BRI and CPEC, in a way, is also an answer to the
Chinese existing slowed down GDP growth rate. Therefore, BRI and CPEC project prima facie
are Chinese next phase of boosting its economy via internationalization and disposal of its
exportable and human surplus. Since it is based on extending loans from its banking system instead
of the IMF and World Bank, therefore it is a point of concern for its competitors like India and
USA. There exist some political issues between them like Taiwan where American interests are
involved, and territorial disputes with India on its Northwest and Northeastern borders shared with
China. Concerns seem genuine as political associations and influences mostly follow such
economic collaborations.
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While looking deep into the reasons of China’s these large projects we see that the
Economic recession of 2007-8 also had an adverse impact on China. As the purchasing power of
the European nations and even Americans went down affecting Chinese exports. During the
recession period and afterward, the Chinese GDP growth rate came down to around 7% from the
previous 9%. This forced China to universalize its economy differently. It called the conference of
28 heads of states in May 2017 to initiate the project of One Belt One Road (OBOR) generally
called Belt and Road Initiative (BRI). The word ‘Road’ here refers to Sea lanes and ‘Belt”, roads
and railways network on land. This involves a series of infrastructure development projects across
Asia, Europe, and Africa to boost mutual trade. The required loans are to be released from the
Chinese banking system.
China’s BRI announced in 2013 is being implemented under China’s 13th Five-year plan
(2016-20). It has two components one Silk Road Economic Belt originating from China’s Eastern
coasts stretching towards Northwest China, and from there through Central Asia into Europe, and
the Maritime Silk Road from Eastern coasts to Southeast Asia through the South China Sea, Strait
of Malacca to North Africa. The BRI and CPEC initiative aims at encouraging and utilizing
Chinese firms enhanced capacity to invest internationally particularly in the emerging economies.
This is to help China’s massive foreign exchange reserve to be used in FDI abroad. Additionally,
it is to enable China to transfer its technology and development know-how to the less developed
economies of Asia and Africa. The infrastructure development associated with BRI and CPEC will
not only promote the economic development of the host countries but will help Chinese exportable
surplus (products/services/skilled human workforce) to be adjusted world around. The BRI and
CPEC are not only China dependent projects but are collaborative ones with the host countries as
well as associating other TNCs from Europe and America though mainly contributed by Chinese
companies.
The CPEC is a mutually beneficial, joint responsibility and a shared destiny. However, there
is an apprehension in the developed world that in the long run, China’s these projects will open up
new markets for Chinese companies in areas which are currently dominated by Western
companies, ranging from engineering and telecoms to shipping and e-commerce. Therefore they
sometimes show their reservations and resentments against it. In the case of Pakistan, India has
also demonstrated such reservation. That reservation is both political and economic, and strategic
as well. India believes that CPEC provides an opportunity to Pakistan to share its security with
China hence it will go a long way in relieving Pakistan of Indian regional hegemonic pressure.
Additionally, India objects that the route is passing through the disputed territory of Kashmir.
It is also pointed out by anti-CPEC countries particularly India that Pakistan may face Sri
Lanka like situation. Because on account of the inability of Sri Lankan government to pay back
the loans to China for building its Seaport Sri Lanka had to hand over the port to China on the
lease. As a matter of fact, all the loans taken have to be paid back. I believe even leasing out
Seaport by Sri Lanka is not against its interests. As this deal has already brought so many dividends
to Sri Lanka in many forms. During its building process, it created so many jobs in Sri Lanka.
China helped Sri Lanka in suppressing the independence movement going on in the Jaffna
Peninsula by the Tamil Tigers, and the terrorist activates carried out by them against the Majority
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Sinhalese all over Sri Lanka. This was the most disturbing issue of Sri Lanka’s history which kept
it from moving forward for decades.
It is not only Pakistan which is entering into economic cooperation with China. There are
more than 60 countries around the world spreading in the four continents of the world viz: Asia,
Africa, Europe, and Latin America via BRI. As an emerging power, China has cultivated a
cooperative relationship worldwide particularly with Central Asia, Africa, Latin America, the
Caribbean, and members of the Association of Southeast Asian Nations (ASEAN). During a visit
to Brazil, Argentina, Chile, and Cuba in November 2004, Chinese President Hu Jintao announced
the U.S. $100 billion worth of investment over the next decade. Though China has long been a
close ally of North Korea, it has developed a valuable trading relationship with South Korea as
well. Chinese trade between African countries along with infrastructure development projects has
surpassed $200 billion. The Sino-Arab Cooperation Forum had formally been established in
January 2004. Its current trade volume with South Asian nations is over the U.S. $20 billion a year.
India, though considered China’s adversary, is China’s principal trading partner. As regards
Europe, China is now the EU's second-biggest trading partner behind the United States.
China in May 2017 invited 28 heads of state to Beijing mainly from the developing world.
They all reaffirmed their commitment to build an open economy and ensure free and inclusive
trade, under the ambitious Belt and Road initiative led by Beijing agreeing upon to promote a
rules-based, non-discriminatory trading system with the World Trade Organization at its core and
to oppose protectionism. Many more countries the world over are willing to join the One belt One
road initiative of China, testifying to China’s collaborative approach and not the confrontational
or coercive one. Even the USA has the highest bilateral trade with China with no direct hot issue
with China
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The economic dividends of this project to China are apparent, but the building of the
necessary substantial physical infrastructure appears to be an immediate remedy and impetus for
the stagnated economy of Pakistan not to talk about the hidden job opportunities it could bring to
the jobless youth of Pakistan. No doubt it is a win-win situation for the partners, and all those who
want to benefit from this like Russia, Kazakhstan, Kirghizstan, Uzbekistan, and Tajikistan as
passing through unstable Afghanistan is not being considered a better option by them at least for
the time being. India, subject to the normalization of relations with Pakistan in the future could
also benefit from this route via Wahga border.
Additionally, the security of the CPEC route and the areas through which it will pass is going
to be shared by China as well, another benefit for Pakistan. This will also go a long way in
stabilizing the region particularly Baluchistan which is going to benefit from the economic
dividends of this trade route to the maximum. Chinese presence in the Gwadar port militarily will
also add to the security of Pakistan particularly in the face of the unwarranted offensives launched
(including engineering the terrorist attacks) by its both Eastern and Western neighbors against
Pakistan which as a matter of fact has kept the foreign investment and tourism from Pakistan.
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India has helped Iran to develop its Chahbahar port (not far away from Gwadar), but that is
not that much deep sea port as Gwadar. It is not feasible for China to use it as a substitute of
Gwadar for the reason that there comes politically unstable Afghanistan in between China and Iran
in addition to its extended length.
This all shows that the opportunity of CPEC granted to Pakistan was primarily on account of
its geographical positioning. The historic friendly relations between the two countries also
happened to be instrumental in cultivating the requisite trust to move forward on this great
economic adventure.
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