CPEC and Socioeconomics

February 7, 2017
Dr. Nadeem Javaid, Chief Economist,
Government of Pakistan
One  Belt  One  Road  Ini.a.ve  -­‐  OBOR  
•  China’s   awakening   strategy   –   Counter  
measure   to   manage   US-­‐led   Trans-­‐Atlan.c  
alliance   and   balance   the   Trans-­‐Pacific  
containment  against  China.  
 
•  OBOR   is   going   to   serve   as   connec.on   of  
policy,   roads,   trade,   currency   and  
especially  of  hearts      (5  Goals  by  President  
Xi)      
 CPEC-­‐  Principal  Strategic  Component  
²   21st  Century  Mari.me  Silk-­‐road  :  An  Infrastructure  
Development  Strategy;  stretching  from  Asia  to  Europe.    

²   60  Countries    

²   900  deals  underway  
²   Asian  Infrastructure  Investment  Bank  -­‐100  Billion  $  
 

3  
 CPEC    Coopera@on  Fields  

China  Pakistan  Economic  Corridor  Long  Term  Plan  :    

Timeframe  2014  –  2030  
Components:  
I.  Energy  (Coal,  Hydel,  Wind,  Solar,  LNG  ,  Transmission)  
II.  Infrastructure  (Road,  Rail,  Avia.on,  Data  connec.vity)  
III.  Gwadar  Port  (Socio-­‐economic  development)  
IV.  Industrial  Coopera.on  (Gwadar  Free  Zone  and  other  industrial  
parks  to  be  finalized)  
Nodes:  
All  provincial  capitals  are  included  as  nodes,  the  key  corner  
stones  of  CPEC  on  which  it  will  be  constructed.  
Development Targets
1st Target（2020）: Period of market
cultivation. To develop commercial
logistics and other industries with
local resources.

2nd T a r g e t （ 2 0 2 5 ） : P e r i o d o f
e x p a n s i o n a n d d e v e l o p m e n t.
Processing and manufacturing
industries will be developed.

3rd T a r g e t （ 2 0 3 0 ） : P e r i o d o f
Maturity. Enlarge the scale and
scope of Free Zone.
 CPEC  PorHolio-­‐Projects  
PROJECTS   US$  Millions  
Energy   33,793    
Transport  and  Infrastructure  
Roads   3,500    
Rail  Network   3,690    
Gwadar  Port   622  
Others   4044  
Total   45,649    
Other  (LNG  &  Power  Transmission)   5000  
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  1|  CPEC;  Energy  
Mi@ga@ng  Energy  Constraints…  
 Improving    Fuel  Mix    
Wind   Wind  
Other   1%  
Nuclear   4%  
LNG   1%  
3%   Solar  Import  
4%  
Nuclear  
3%  
2%   2%  

Coal  
Imported  
Hydel   Hydel  
Oil   31%   20%  
38%  
26%  

Gas   LNG   Gas  

22%   Coal   13%   12%  
Oil  
Local  
14%  
4%  

Current  Fuel  Mix   Fuel  Mix  2019-­‐20  

 Genera@on  Basket  Cost  
 9.69    
 9.63    
 9.55    

 9.17      9.15    
 9.10    

2014-­‐15   2015-­‐16   2016-­‐17   2017-­‐18   2018-­‐19   2019-­‐20  

 -­‐3000  MWs     Power  Demand  and  Supply  
FO  Plants  
30803  
27094   28168  
25077  
23107   23500   22940   28788  
20213   25145   26905  
17582   17582   23434  
21068  
19690  
18402  
17285  
14174  
12140  
3250   4009  
1811   1949   2015  
1263  

JAN-­‐16   JUL-­‐16   JAN-­‐17   JUL-­‐17   JAN-­‐18   JUL-­‐18   JAN-­‐19   JUL-­‐19   JAN-­‐20   JUL-­‐20  

-­‐3408  
-­‐5442  -­‐5822  

Peak  Demand   Available  Genera.on   Gap  

2|  CPEC;  Infrastructure  
  
Western  China  to  Eastern  Europe  
EASTERN EUROPE TO WESTERN CHINA
EXISTING DISTANCE 19132 MILES

EUROPE CENTRAL ASIA

  WESTERN
CHINA
Kashgar 
19132 MILES

MIDDLE Central China 

17820 MILES Shanghai Port 
EAST
16507 MILES

AFRICA

EUROPE

11845 MILES 13845 MILES

 
Exis@ng  Distance  :  19132  Miles  
LONG DISTANCE & HIGH COST
  
EASTERN EUROPE TO WESTERN CHINA
Western  China  to  Eastern  Europe  
DISTANCE SAVED 9535 MILES

CENTRAL ASIA   WESTERN CHINA

Kazakistan

EUROPE
Kashgar
9597 MILES  Central China

10910 MILES 

MIDDLE
EAST Pak-China Economic Corridor
Intermodal Transport Network
 Karachi Port
7847 MILES

AFRICA

Distance  Saved  :    9535  Miles  

SHORT DISTANCE & LOW COST
  
EASTERN EUROPEWestern   C
TO WESTERN CHINAhina   t o   Eastern  
EASTERNEEUROPE
urope  
TO WESTERN CHINA
EXISTING DISTANCE 19132 MILES DISTANCE SAVED 9535 MILES
Time  Saved  -­‐-­‐-­‐  26  to  11  
Kazakistan

EUROPE CENTRAL ASIA   WESTERN CHINA

Kashgar
 19132 MILES Central
Pak-China Economic
9597 Corridor
MILES   China
KHUNJERAB
CHINA

1 Highways & Motorways

Gwadar – Kunjrab
Total Length: 2,688 kmPak-China Economic Corridor
 17820 MILES
GILGIT

10910 MILES  Raikot

Pak-China
Economic
Intermodal Transport Network
Corridor


PESHAWAR Indian
MIDDLE AFGHANISTAN ISLAMABAD Occupied
Kashmir Shanghai Port
EAST 16507
KKH MILES
(335 Km)


DI KHAN KKH (437 Km)
Karachi Port LAHORE
FAISALABAD
7847 MILES M-2 (250 Km)
QUETTA DG KHAN MULTAN
M-3 (53 Km)
AFRICA JACOBABAD
M-4 (241 Km)
KHUZDAR KLM (387 Km)
IRAN
EUROPE
Dera Allah
Yar
SUKKUR
N-65 (100 Km)
INDIA
N-85 (835 Km)
GWADAR HYDERABAD
KLM (296 Km)
KARACHI
11845 MILES 13845 MILES
ARABIAN SEA KLM (136 Km)
 China’s  Dependence  !!!  
•  Its  dependence  on  foreign  oil  is  around  60%.  
 
•  China   imports   from;   KSA,   Iran,   Russia,   Oman,  
Iraq,  Sudan,  Kazakhstan  and  Kuwait.    

•  China’s   merchandise   exports   account   for   12.6%  

of   the   world’s   trade   merchandise   exports   and  
10.4%  Imports.      
       (i.e.  total  Trade  Volume=  US$4,477  Billion)  
 8%  of  the  Global  Trade    

•  Total  Vessels:  17,483  

•  998.65  Billion  Tons    

•  Total  Revenue  2015  :  $  5.176  Billion  (5.3%  

Less  then  2014)  
 
 
Source:  Suez  Canal  Traffic  Sta1s1cs  (2015)  
  3|  CPEC;  Gwadar  Port  
Pakistan: Asia’s Emerging Energy Hub
Proposed  Energy  Pipelines  
 
Gwadar Port City
as the Asian
Energy Hub for
receipt, storage,
processing and
trans-shipment to
S.E. Asia, Far East

Legend  
Energy  Hub  
Refinery  /  Gas  Processing  
Exis@ng  Pipeline  
Oil  
Gas  
Proposed  Pipelines  
Kazakhstan-­‐Turkmenistan-­‐Uzbekistan-­‐  
Source: Ministry of Petroleum and Natural Resources Tajikistan-­‐China-­‐Pakistan  Oil  Pipeline  
Kazakhstan-­‐Uzbekistan-­‐Turkmenistan  
Tajikistan-­‐China-­‐Pakistan  Oil  Pipeline  
Uzbekistan-­‐Turkmenistan-­‐Afghanistan-­‐  
Pakistan-­‐India  Gas  Pipeline  
Iran-­‐Pakistan  Gas  Pipeline    with  china  
Qatar-­‐Pakistan-­‐India  gas  Pipeline  
Pakistan-­‐China  Oil  Pipeline  
 Free  Zone  -­‐  Incen@ves  
Long Term Lease for the investor  

99 years Lease for Sub-lease / Investors

20 years complete tax holiday from all Federal, Provincial & Local taxes

Exemption from import duties on materials and equipment.*

Exemption from import / export duties on bunker oils.**

Complete suspension of trade union activities.

Opportuni.es   Packaging Businesses

Distribution Centers

Container Freight Stations / Yards

Warehousing & Cold Chains

Manufacturing / Oil Refineries

Tourism / Old Age Care Institutions

4|  CPEC;  Industrial  Coopera@on  
 Industrial  Parks    

Punjab  (7)   KPK  (8)  

ICT  &  GB  (2)  

Sindh  (3)   Baluchistan  (7)  

 Industrial  Coopera@on  
Province/    
Loca@on  for  Industrial  Zone  
Federa@ng  Unit  
KPK   Rashakai  Economic  Zone  :  Hakar  Phase  VII  Industrial  Zone  

Sindh   Dhabeji  :  Ke@  Bunder  

Balochistan   Bostan  Industrial  Zone  :  Khuzdar  Industrial  Zone  

Punjab   M-­‐2  Sheikhupura  :  M-­‐3  Faisalabad  

North  Area   Moqpondass,  Gilgit  SEZ  ,  Bhimber  Zone  or  Barakot  SEZ  

Federal  Area   ICT  Model  Industrial  Zone,  Islamabad  &  PSM-­‐Port  Qasim  

FATA   Mohmand  Marble  City  

 Pakistan  -­‐  China  FTA  
•  China   managed   to   export   along   57%   of   the  
lines   in   which   it   had   a   preference   under   the  
FTA.    
•  Pakistan’s   u.liza.on   was   merely   5%   along  
lines   in   which   Pakistan   had   managed   to  
“nego.ate  concessions”.    
 
•  Looming  Risk  of  Deindustrializa.on  !!!    
 Employment  Projec@on    

Unemployed  (Million)   3.77   4.44   4.93   5.25   5.39  

Unemployment  rate   6.25   7.14   7.69   7.95   7.93  

 Way  forward  !!!    
•  Sufficient  Condi.ons    
a)  CPEC  Investments  
b)  Infrastructure  
•  Necessary  Condi.ons  for  tangible  dividends  ?  
a)  Absorp.ve  Capacity  (HRD)  
b)  Trickle  down  mechanism    
 
²   Designing  high-­‐poten.al,  cost-­‐effec.ve  and  
feasible  Policy  Solu.ons  
Thank  You    
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