OBOR Initiative

6 corridor
1. China-Mongolia-Russia Economic Corridor
Seven major areas of cooperation have been envisaged: transport infrastructure and connectivity; port
construction, and customs and border inspection and quarantine services; industrial capacity and
investment; trade; cultural and people-to-people exchanges; environmental protection and cooperation
with adjacent regions. Transport is the main focus

2. New Eurasian Land Bridge

The 10,800-kilometer-long rail link runs through Kazakhstan, Russia, Belarus, Poland and Germany, and
serves more than 30 countries and regions.Several transcontinental rail routes have already entered into
service. These include the Chongqing-Xinjiang-Europe Railway (reaching Germany’s Duisburg via
Poland), the Chengdu-Xinjiang-Europe Railway (reaching Poland), and the Yiwu-Xinjiang-Europe Railway
(reaching Madrid).

3. China-Central Asia-West Asia Economic Corridor

CCWAEC links China and the Arabian Peninsula. The corridor starts from China’s Xinjiang and traverses
Central Asia before reaching the Persian Gulf, the Mediterranean Sea and the Arabian Peninsula. It
crosses five Central Asian countries and 17 other countries and regions in West Asia (including Iran,
Saudi Arabia and Turkey).

4. China-Indochina Peninsula Economic Corridor

This land bridge links China with the Indochina Peninsula and crosses the heart of Vietnam, Laos,
Cambodia, Thailand, Myanmar and Malaysia. It is expected to boost China’s cooperation with the ASEAN
countries

5. China-Pakistan Economic Corridor

The 3,000-kilometer-long corridor starts from China’s Kashgar and ends at Pakistan’s Gwadar, and
connects the Silk Road Economic Belt in the north and the 21st Century Maritime Silk Road in the south.
It is a trade network of highways, railways, pipelines and optical cables. It is a flagship project under the
Belt and Road Initiative.

6. Bangladesh-China-India-Myanmar Economic Corridor

The proposal for the Bangladesh-China-India-Myanmar Economic Corridor (BCIMEC) was unveiled by
China and India during Premier Li Keqiang’s visit to India in May 2013, with the objective of linking the two
huge markets of China and India and enhancing regional connectivity.
History
Gwadar is located on the Gulf of Oman, close to the entrance of the Persian Gulf. Until 1958 it belonged
to Oman, which gave this land to Pakistani rulers who expected that the location would contribute to what
Kaplan calls “a new destiny.”
When President Richard Nixon visited Pakistan in SEP 1973, Zulfikar Ali Bhutto sought US help to
construct a new port at Gwadar, and reportedly offered the US Navy use of the facility. He was
unsuccessful, and Pakistan then turned to China for help. Work started in 2002, and China has invested
$200 million, dispatching 450 personnel for the first phase of the job completed in 2006 and resulting in a
deep sea port.
Understanding CPEC and OBOR:
China Pakistan Economic Corridor is a mutual economic venture between China and Pakistan on the
formula of give and take. China is investing over $50 billion in Pakistan’s infrastructure and energy
sectors in return for access to the country’s routes leading to Gwadar port. The port will ultimately enable
the Chinese goods to reach the African and Middle Eastern markets using the shortest possible way from
the Western China.
One Belt One Road, on the other hand, is a mega vision of China to connect the whole region and
beyond into a single network of transit routes using which China can carry its products to most of the
Asian and European countries. OBOR remains to be the most important step of China to be a superior
economic power replacing the United States.
CPEC as Flagship of OBOR:
Flagship means to be in leading position in a venture. As far as CPEC is concerned, it is truly the flagship
of OBOR owing to the following reasons:

● CPEC turns out to be one of the most important links in the OBOR network that will allow
China to reach the markets of Africa, Middle East and Europe
● CPEC stands out to be the first such project that has been materialized in no time and it is
almost in the starting phase of its practice
● Providing the shortest link between three continents, allowing massive trade transit and
connecting the Chinese dots of OBOR; CPEC remains a flagship of the One Belt One Road
vision.
● Stretching from Kashgar to Gwadar, the wider trajectory of OBOR will extend from Xi’an in
Central China, through Central Asia and Russia
● The country’s coastline is becoming a crucial staging post for China’s take-off as a naval
power, extending its reach from the Indian Ocean to the Persian Gulf and the Mediterranean
Sea. Pakistan’s ports overlooking some of the world’s busiest oil shipping lanes are key
building block in “string of pearls,” the term used ad nauseam in Indian and U.S. scripts.
● it is currently what goes through the Indian Ocean (including half the world’s container
traffic, one-third of bulk cargo transport, and around two thirds of the world’s maritime oil
shipments) that particularly marks its global significance
● CPEC is a junction of South Asia, West Asia and Central Asia, a way from resource efficient
countries to resource deficient countries
How CPEC is Game Changer?

CPEC is game changer in the region owing to following reasons:

● It is ensuring unprecedented ties between China and Pakistan on the economic grounds
● It has brought Russia, U.K, Iran and Central Asian Republics to revive their attention
towards Pakistan and the South Asian region
● It is building the economic connectivity between Africa, Middle East and Asia along with
seeking access to the European markets
● It is altering the regional strategic balance by marking a shift in alliances
● New political and economic blocs are surfacing with new visions owing to the CPEC
● It is altering the regional approach from protectionism towards liberalism of trade and shared
prosperity.

IV. CPEC PORTFOLIO

This portfolio has four parts; 1) Energy, 2) Infrastructure, 3) Gwadar Port, 4) Industrial Cooperation. Its
estimated cost up till now is 59 billion US dollars
V. KEY CHALLENGES & SOLUTIONS IN BUILDING CPEC
Mismatches of Infrastructure
In global comparison, China is at 46th position but Pakistan is at 110th position in their respective. .
According to figure 2, the complete portfolio of CPEC is for infrastructural improvement of Pakistan
including energy, road, rail, sea ports, dry ports, air ports and internet

Exclusive economic growth

Similarly, there is vast gap in annual per capita income of China and Pakistan which is 8,113.3 US dollars
and 1,468 US dollars respectively. Pakistan has to adopt the same model for inclusive growth as China
has adopted in last four decades.

Sustainable Development of SEZ’s

Pakistan’s labor cost is three times less than China. China has three strengths; 1) Deep pockets 2)
Advance technology 3) Experienced management and Pakistan has one unique strength which is the
cheapest labor in the region. This point of calibration between Chinese industries and Pakistani
manpower can help these SEZ’s for their sustainable habilitation without wastage of time and capital.

Both currencies conversion into US dollars

CPEC agreement was signed in US dollars from both sides bilaterally but both have their own currencies
RMBs and rupees respectively. But both are dealing in US dollars and further strengthening the third
currency. Why? Under little bit deep analysis, it is also very difficult exercise to convert three currencies
into each other again and again. E.g. One CPEC’s power plant is being installed by Chinese investor then
he has to do the currency conversion exercise frequently

Implementation of China-Pakistan Free Trade Agreement

(CPFTA)
In 2013, before the inception of CPEC and CPFTA, Pakistan’s trade deficit was 23 billion US dollars but
now in 2017, it has been increased up to 33 billion US dollars and continuously increasing.

Gaps in Institutional Capacity in terms of governance,

transparency, policies, awareness, taxes etc.
CPEC’s IMPACTS ON PAKISTAN’S ECONOMY
1-Opportunities and Potential gains for MNC’s and local companies
2-Pakistan has secured stable improvement in economic growth by 5.3 percent in FY2017 (Economic
Survey of Pakistan, 2017).
3-The improved law and order situation, successful 11th IMF review(Express Tribune)
4-Declining inflation trends to 3.7% in FY2016(Express Tribune)
5-Prospect energy surplus with addition of 16,070 MW of energy under CPEC by 2018(CoE-CPEC)
5-Political stability
6-Infrastructural development projects under CPEC
7-Decreasing cost of doing business with government’s pro-business policies including 30-40 years tax
holidays in Gwadar Industrial Zone for MNC’s are decreasing Industrial operating expenditure(OPEX)
exponentially and strengthening the confidence of foreign investor
8-multiple multinational companies and foreign governments have showed the keen interest to establish
new business ventures in Pakistan such as the 430 million US dollars merger of Engro Foods with a
Dutch Company, American company General EC) for coal power plant machinery purchase
9-free trade agreement(FTA) signed with Turkey and Thailand, Australian High Commission also
endorsed the boosting effect on regional trade under CPEC, Chinese consortium’s won the bid win for
40% stake of Pakistan Stock Exchange(PSX), December 22, 2016 and KSE100 index crossing 495xx
points with beating Chinese and Indian stocks market by a wide margin(Express Tribune).