China-Pakistan Economic Corridor Relations

China Pakistan Economic Corridor

Relations (CPEC)
Table of Contents
Introduction..........................................................................................................................................1
History of Pakistan-China Relationship................................................................................................2
Pak-China Friendship: All-Weather and Time-tested.......................................................................2
Chinese Aided Development Projects in Pakistan................................................................................3
One Belt, One Road (OBOR)..............................................................................................................3
Gwadar Port..........................................................................................................................................3
Economic Consequences with respect to Gwadar...........................................................................4
Geo-Strategic Consequences with respect to Gwadar.....................................................................4
Geo-Political Consequences with respect to Gwadar......................................................................5
Prospects in CPEC..................................................................................................................................5
I. Fruitful achievements in CPEC construction..................................................................................5
Improving macroeconomic conditions in Pakistan........................................................................5
Alleviating Pakistan’s energy shortage.........................................................................................6
Improving infrastructure connectivity in Pakistan.........................................................................6
Gwadar Port on the fast track......................................................................................................7
China–Pakistan Cross-Border Fiber Optic Project completed and opened....................................8
II. Promising future of CPEC construction.........................................................................................8
Steadfast determination to build CPEC........................................................................................8
Fallacy of smearing CPEC debunked.............................................................................................9
Clear priorities of CPEC cooperation.............................................................................................9
III. New Challenges to CPEC construction.......................................................................................10
IV. Impact of CPEC on Pakistan’s Economy- Factsheet...................................................................11
GDP Growth................................................................................................................................11
Energy generation.......................................................................................................................12
Job Creation................................................................................................................................12
Challenges in CPEC..............................................................................................................................12
CPEC and Balochistan Factor..........................................................................................................12
Security concerns............................................................................................................................13
CPEC and Economic Factor..............................................................................................................14
Geopolitical and security risks........................................................................................................14
The restraints of natural and geographical factors........................................................................14

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Restraints to economic growth prospects......................................................................................14

CPEC as a Game Changer....................................................................................................................15
Vision...............................................................................................................................................16
Importance of CPEC........................................................................................................................17
Projects of CPEC..............................................................................................................................17
Energy Projects...............................................................................................................................17
Projects of Transport Infrastructure...............................................................................................18
Projects Related to Gwadar............................................................................................................19
Significance of CPEC for China........................................................................................................19
Significance for Pakistan..........................................................................................................20
Benefits:......................................................................................................................................20
I. Balanced environment in South Asia..................................................................................20
II. Overcoming Energy crises...................................................................................................20
III. Infrastructure development............................................................................................21
IV. Economic Development..................................................................................................21
V. Removal of poverty.............................................................................................................21
VI. Peace and prosperity in Provinces..................................................................................21
Recommendations......................................................................................................................22
Implications of CPEC in South Asia...........................................................................................22
Conclusion...........................................................................................................................................23

Introduction
CPEC offers a ray of hope for Pakistan, which has remained in the grip of poor economic growth,
energy crisis; terrorism and deteriorating law and order situation since it joined the US led War in
Afghanistan after 9/11. The project offers avenues of unprecedented economic growth and
prosperity for Pakistan.

The China-Pakistan Economic Corridor (CPEC) is a multi-billion-dollar mega project in the Indian
Ocean Region (IOR) that would connect the city of Kashgar in China’s northwestern region of
Xinjiang to the port city of Gwadar in Pakistan’s province in Baluchistan. China-Pakistan Economic
Corridor (CPEC) is a comprehensive development deal that not only establishes economic and
strategic connectivity between Pakistan and China but also has the potential of integrating other
sub-regions of Asia and could play a key role in improving economic and strategic environment. As
CPEC is composed of roads, routes, and offshoots, it would eventually have immense impact on all
neighboring countries. No doubt, CPEC is a geo-strategic plan which can become an economic
blessing for the whole region. Yet some regional and extra-regional actors are worrisome and may
view this project as dangerous for their political and strategic interests.

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History of Pakistan-China Relationship

Pakistan and China are enjoying cordial and friendly relation since 1950. At the start of bilateral
friendship, the relations were not so close as today. The initial years of Pakistan-China relationship
were not so fruitful because both of them did not know very well each other. But with the passage
of time, the time changed and there was a shift of capitalism and communism in Pakistan. Now
China and Pakistan are all weather friends. China-Pakistan friendship is now considered very
important due to their close relations and especially due to recently launched project, China Pakistan
Economic Corridor. China Pakistan relations were strengthened after the devaluation of Indian
currency in 1949. It impacted on Pakistan’s economy. Pakistan was importing coal that time for its
emerging industry in a new born country. There was no choice except to tie relations with China. So,
an agreement was carried out with China on barter trade of coal for cotton. Further, Pakistan also
supported for the permanent seat of China in Security Council.

China has generously favored and supported Pakistan in technology, economy and the nuclear
program.
Pakistan made its nuclear program with special assistance of China. During the sanction imposed on
Pakistan by US, China supported Pakistan. This led both of the countries to smooth way of
relationship. As the result of this long lasting and reliable friendship, a big achievement is going to be
fulfilled in the form of China Pakistan Economic Corridor.

Pak-China Friendship: All-Weather and Time-tested

Pak-China relations are marked as “higher than the mountains, deeper than the oceans, stronger
than steel, dearer than eyesight, sweeter than honey, and so on.” (The Economist, May 12, 2011)

 In 1950, diplomatic relations between Pakistan and China were launched

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 In 1950, Pakistan was the first Muslim and third non-communist state to recognize China.
 In 1951, formal diplomatic relations between Pakistan and China were established
 In 1961, Pakistan voted for the restoration of China's legitimate rights in the UN
 in 1966, military support was started
 In 1961, both sides wished to resolve the boundary conflict.
 In 1962, Sino-Indian border war was fought.
 In 1963, a common border was agreed between the China and Pakistan.
 In 1965, China supported Pakistan’s stance against India in Indo-Pak war and supplied her
with artilleries during the war when the United States discontinued the delivery of arms,
which was key source of armaments for Pakistan.
 In 1970s, Sino-Pak ties further strengthened. China supported Pakistan diplomatically as well
as economically in war against India
 In 1972, Pakistan orchestrated U.S. president Richard Nixon’s visit to Beijing
 in 1972, a strategic coalition was shaped and
 in 1979, economic co-operation was commenced.
 Pakistan supported China in affairs of Tibet, Taiwan and Xinjiang

Since the establishment of diplomatic ties, relations between Pakistan and China have stood the test
of time.

Since January 1963, bilateral trade and commercial links between Pakistan and China were founded
and both countries got involved in the first mutual trade deal. Maintaining close ties with China is an
essential feature of Pakistan's foreign policy. Besides diplomatic relations, Pakistan served China as
an outlet to open up to the West. The decade of 60s saw the fortification of Pakistan- China ties.

Pakistan-China cooperation reached its economic high points, when on April 20th2015, Chinese
President Xi Jinping signed 51 Memorandums of Understandings (MoUs) alongside the proposal of
China- Pakistan Economic Corridor (CPEC) and the infrastructural investment projects at Gwadar.
Notably, the Pak-China ties have now grown from strength to strength that has been an eyesore for
India. According to an Indian perspective, China- Pakistan ties are still bolstered by a collective
discord with India, however, viewing that, Pakistan can perform a credible balancing role to tie down
India

Chinese Aided Development Projects in Pakistan

One Belt, One Road (OBOR)
The “One Belt One Road” concept has international strategic importance. The One Belt One Road
initiative covers countries and regions with a total population of 4.4 billion and a total economic
volume of US$ 21 trillion, 63 percent and 29 percent respectively of the World’s total. China’s One
Belt, One Road (OBOR) is a development strategy which is proposed by Chinese visionary leader Xi
Jinping that focuses on connectivity and cooperation among countries mainly between China and
the rest of Eurasia. OBOR initiative runs along two alignments; terrestrial and oceanic, i.e., the Silk
Road Economic Belt (SREB) and the 21st century Maritime Silk Road (MSR). It is also unveiled and
promoted by Premier Li Keqiang in 2013 during his state visit to Asia and Europe. “The plan involves
more than 60 countries, representing a third of the world’s total economy and more than half of
the global population”. China has launched the Asian Infrastructure Investment Bank (AIIB) and set
up a USD 40 billion for Silk Road Fund. The OBOR connects China with Central Asia, Middle East,
Africa and Europe.

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“It is envisioned that the plan would knit much of Asia, Europe, Africa, and the
Middle East closer through latest infrastructure and free trade zones.”

Both plans are founded on the common pillars of economic centrality, infrastructure development,
regional connectivity, unimpeded trade, inclusiveness and enhanced people-to-people ties. In 2013,
China has accentuated the ancient trade routes linking China, Europe and Central Asia by developing
three major corridors via northern, southern and central Xinjiang. The CPEC is China’s resolve to
enhance her trade and commercial activities with diverse regions of the world.

Gwadar Port
Gwadar is actually the tail of the silk belt, which will connect Kashgar through different
communication networks. Gwadar holds central place in the project of the China. Pakistan Economic
Corridor because without making the Gwadar Port fully functional, it would be difficult to see the
anticipated corridor as an energy corridor that appears as one of its main objectives behind the
construction of the CPECP. Pakistan’s Gwadar port is an important strategic marine outpost that is
cited at the Makran coast. “Being the third largest port of the world, Gwadar port is ideally located
at the doorway of Straits of Hormuz. Located on the shore of Arabian Sea at Gwadar in Baluchistan
province of Pakistan, near the mouth of the Persian Gulf and close to several important sea
routes” through which 20 percent of the global oil shipments pass. It is approximately 533 km from
Pakistan's largest city, Karachi and 120 km from the Iranian border and 380 km northeast of Oman
across the Arabian Sea.

Economic Consequences with respect to Gwadar

As a chunk of CPEC, Gwadar is considered to be an essential link between China’s “One Belt, One
Road” (OBOR) and “Maritime Silk Road” (MSR) projects aiming to link northern Pakistan and
western China to set up a special economic zone (SEZ) spread over 152 hectares in the strategic
deep-water seaport. China is proposing around 80% of the outlay in the form of soft loans and
grants to construct and develop the port and adjacent sites. Under CPEC project, Gwadar will at the
outset be upgraded and expanded to allow for docking of heavy ships with deadweight capacity
equivalent to70, 000.

There are three routes that have been expounded will mutually connect Gwadar and Khunjerab.

1. The western route commences from Gwadar will pass through Turbat, Panjgur,
Qalat, Quetta, Qilla Saifullah and Zhob and reach Dera Ismail Khan, Islamabad and
then lead to Khunjrab. Several roads between Gwadar and Quetta are presently at
developing phase of construction
2. The central route originates from Gwadar and reaches Dera Ismail Khan via
Basima, Sukkur, Muzaffargarh and then leads to Khunjrab.
3. The eastern route starts from Gwadar, Khuzdar, Sukkur, Rahimyar Khan,
Bahawalpur, Multan and Lahore/Faisalabad, Islamabad and then reaches to
Khunjrab

For the economic uplift and development of China’s hitherto comparatively underdeveloped Xinjiang
province, China has adopted the strategy of ‘Go west’ and set Gwadar as its integral part. The
construction of the port will jack up trade and investment in Pakistan by making it a regional hub for
commercial traffic. It will boost economic development in China especially the restive south western
Xinjiang Province. With the initiation of international trade through Gwadar will create new patrons

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in Afghanistan, this, in turn, can normalize situation in Afghanistan and can harmonize Pakistan's
relations with her neighbors by becoming beneficiaries of the transit trade to Central Asia.

Geo-Strategic Consequences with respect to Gwadar

Due to its geo-strategic location, it can serve as trade transit connectivity to Middle East, Afghanistan
and Central Asia. Former President Gen. Pervez Musharraf in the groundbreaking ceremony in 2002
stated about its geo-strategic significance, “If we see this whole region, it is like a funnel. The top of
the funnel is this wide area of Central Asia and also China's western region. And this funnel gets
narrowed on through Afghanistan and Pakistan and the end of this funnel is Gwadar port. So, this
funnel, futuristically, is the economic funnel of this whole region”.

Gwadar port can be strategically used to watch eastern rival India’s nautical occupations in the
region. The port will enable China to have a strategic footing on Indian Ocean and Arabian Sea.
Moreover, Chinese engagement in proximate ports e.g., Chittagong in Bangladesh, Hambantota in
Sri Lanka and Sittwe in Myanmar is viewed by some Indian political analysts as reflective of a wider
encirclement policy on part of Chinese.

The Gwadar port will provide Pakistan an alternate maritime base remote from Indian frontiers that
is crucial for the very existence of the country. “It’s geo- strategic location in the Arabian Sea could
facilitate electronic surveillance to monitor naval activities in the entire Arabian Sea and Indian
Ocean

Geo-Political Consequences with respect to Gwadar

For Beijing, Gwadar is essential to consider certain geopolitical aspects. Security in the Strait of
Malacca, stretching between the shores of Malaysia and Indonesia, is carried out by the US navy.
This can turn into a factor of political pressure in case of future conflict of interests between
Washington and Beijing. The high dependence of China on deliveries of oil by sea, through the
troubled water lanes of the northern portion of the Indian Ocean was one the major reasons behind
Beijing's attempts to diversify the routes of oil transportation.

As 60 percent of the oil reaches China from Persian Gulf by ships traversing more than16,000 km,
however, Gwadar will cut the distance to merely5000 km. For the very reason Pakistan has been
used as a transit route between China and rest of the world through expanding and improving
connectivity to fidgety Xinjiang. The Chinese naval activities at Gwadar are a matter of grave concern
for India. Countering the impact of Gwadar, India has been working to develop Chahbahar port in
Iran.

Prospects in CPEC
I. Fruitful achievements in CPEC construction

CPEC has played a flagship leading and demonstration role in the “Belt and Road” construction. It
has become a platform for all-round pragmatic cooperation between China and Pakistan.

Improving macroeconomic conditions in Pakistan

CPEC has driven the development of Pakistan. The two-gap model proposed by economist Hollis B.
Chenery posits that developing countries must introduce foreign investments and stimulate exports
to boost growth for their national economy. CPEC has solved the problem of limited investment

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capacity caused by insufficient savings and shortage of foreign exchange in Pakistan and provided a
high-quality source of impetus for Pakistan’s economic development. As of January 2019, CPEC
included 9 completed early harvest projects and 13 projects under construction, with a total
investment of US$19 billion. It drove Pakistan’s economic growth by one to two percentage points
every year and created 70,000 jobs in Pakistan. The Chinese government provided US$5.874 billion
in concessional loans to Pakistan, with a consolidated interest rate of only 2%, far lower than the
average interest rate. The Chinese government also provided US$143 million in interest-free loans
for the Gwadar East-Bay Expressway project and free assistance for some livelihood projects in
Pakistan.

Thanks to favorable factors such as the CPEC construction, Pakistan’s macroeconomic conditions
have been improved and its economy has maintained a momentum of rapid growth. Over the past
five years, Pakistan’s GDP grew by an average of 4.77%, especially in the 2017-2018 fiscal year when
Pakistan’s GDP grew by 5.8%, being the highest growth rate in the recent 13 years. Pakistan’s annual
foreign direct investment grew from US$650 million to US$2.2 billion, and the per capita annual
income rose from US$1,334 to US$1,641.

Alleviating Pakistan’s energy shortage

Energy shortage is a hard nut to crack which restricts the economic development of Pakistan. It is a
problem that previous Pakistani governments attached great importance to and desperate to solve.
The electricity gap cost Pakistan an annual average loss of US$13.5 billion in GDP, according to a
study by PwC in 2012. Power shortage left Pakistan in the dark for a long time, with rolling blackouts
across the country lasting about 10 hours a day in major cities and up to 22 hours in rural areas.

CPEC has regarded the alleviation of energy shortage in Pakistan as one of the important areas of
construction since its launch. Currently, 12 projects with a total installed capacity of 7,240 MW have
been commenced or put into operation. Through five years of construction, energy projects under
the CPEC framework added 3,340 MW of electricity to Pakistan by early April 2019, accounting for
11% of the country’s total installed electricity capacity, thus greatly alleviating the power shortage in
Pakistan.

In addition to power generation projects, China built the Matiari–Lahore ±660kV HVDC Transmission
Line Project in Pakistan- the second HVDC transmission line in the world- to address the aging of
Pakistan’s power grid.

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Improving infrastructure connectivity in Pakistan

The China–Pakistan cross-border economic belt, linked by the China–Pakistan Karakoram Highway,
has taken shape under CPEC. Through international logistics nodes such as Gwadar Port, Karachi and
Peshawar, Pakistan serves to transport products from western China to countries in the Middle East
and the Indian Ocean via transit transport. Therefore, infrastructure connectivity is also one of the
important areas in the early harvest projects of CPEC.

The Karakoram Highway Phase 2 (Havelian–Thakot section) is 118.124 km long, including 39.305 km
of expressway and 78.819 km of secondary highway. The project officially started on September 1,
2016. Currently, more than half of the project has been completed.

The section from Sukkur, Sindh in the south to Multan, Punjab in the north, of the Karachi–Peshawar
Expressway, is 392 km long, with a total investment of US$2.89 billion. The construction was
undertaken by China State Construction Engineering Corporation. The project officially started in
August 2016. The 33-km section from Multan to Shujabad was opened to traffic 15 months ahead of
schedule on May 26, 2018. The entire Sukkur–Multan section is expected to be open to traffic in
August 2019. The Karachi–Peshawar Expressway is designed with 6 lanes in two directions and a
speed of 120 km/h. It will greatly improve the traffic in the two cities upon completion.

The Lahore Orange Line rail transit project was put into trial operation on October 8, 2017. The line
is 25.58 km long and is organized into five carriages, each carrying 200 passengers. The train starts
from Ali Town and terminates at Dera Gujran. The total distance can be covered in 45 minutes with
stops on 14 stations, compared with 2.5 hours of road travel between the two places. According to
the design plan, the Orange Line will have a capacity of 250,000 passengers per day at the beginning
of operation, which will be further increased to 500,000 passengers per day by 2025.

Over the past five years, 51,000 direct jobs were created in the road infrastructure sector under
CPEC projects, of which 48,000 were created specifically for local Pakistanis. Further, infrastructure
projects are expected to spur the development of Pakistan’s building-related industries and attract
more foreign investment.

Gwadar Port on the fast track

Gwadar Port has taken on a new look in the past five years. The port roads, storage yards, loading
and unloading equipment, seawater desalination, oil supply and port monitoring facilities have been
further improved. Five new container bridge cranes; 100,000-m2 storage yards; container scanning
equipment; the 220,000-gal desalination plant; two sewage treatment systems; 80,000-m2 new
green space; and the new LPG receiving station have made the port capable of handling bulk cargo,

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containers, roll-on roll-off cargo and LPG. The container liner service was officially launched at
Gwadar Port on March 7, 2018. The Gwadar–Middle East Express was opened, connecting Gwadar
with other major ports in the world.

The Gwadar Port Free Trade Zone covers an area of 923 hectares and is constructed in four phases in
two zones, one in north and one in south. On January 28, 2018, the Gwadar Free Zone Phase 1 was
formally completed and put into operation, and the investment financing was also completed
simultaneously. More than 30 Chinese and Pakistani enterprises, including hospitality, banking,
insurance, financial leasing, logistics, overseas warehousing, grain and oil processing, fishery
processing and home appliance assembly, started working at the free zone. The direct investment
exceeded RMB3 billion. These enterprises will accomplish an annual output value of over RMB5
billion and create more than 5,000 jobs after all being put into operation. The Gwadar Faqeer
Primary School, which was completed in September 2016, has developed rapidly, with a planned
enrollment of 150 students and an actual enrollment of 500 students. The school achieved a pass
rate of over 95% in the spring student examination in 2019, making it the best school in Baluchistan
in terms of teaching quality. In May 2017, the China–Pakistan Fraternity Emergency Care Center
assisted by the Red Cross Society of China was completed in Gwadar Port. The Chinese Red Cross
Foundation sent three medical teams to work in the region. By the end of 2018, the center received
2,302 Chinese and Pakistani patients. The desalination plant for the Gwadar Free Zone was
completed and put into operation in 2018, with a daily production capacity of 1,000 tons of drinking
water. It is noted that Gwadar’s population grew from 60,000 to 130,000 in just five years.

China–Pakistan Cross-Border Fiber Optic Project completed and opened

The 820-km China–Pakistan Cross-Border Fiber Optic Project, which is laid between the city of
Rawalpindi, Pakistan in the south and the Khunjerab Pass, China in the north, was completed and
opened on July 13, 2018.

II. Promising future of CPEC construction

2018 is an election year for Pakistan, when there was a concern at home and abroad about whether
Pakistan’s attitude towards CPEC would change due to the change of government. Around the same
time, there were some international opinions questioning CPEC, saying that a large amount of
Chinese loans might plunge Pakistan into debt crisis. However, facts over the past years have proved
that the determination to build CPEC has not been shaken by the change of government in Pakistan
and the debt crisis theory has been in tatters. In promoting the CPEC construction, China has always
followed the principles of consultation, contribution and shared benefits, and given top priority to
Pakistan’s economic development and the vital interests of the Pakistanis. Based on Pakistan’s
future economic and social development priorities and people’s needs, the future development path

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and cooperation direction of CPEC will be determined through consultation, with priority given to
accelerating cooperation in industries, parks and agriculture, creating jobs, and improving people’s
living standards.

Steadfast determination to build CPEC

At the very beginning of the new Pakistani government, Foreign Minister Shah Mehmood Qureshi
said, “The new Pakistani government is advancing an ambitious reform agenda, and is willing to
learn from China’s experience in economic development, poverty alleviation, disaster reduction,
anti-corruption, and environmental protection. Advancing the China–Pakistan Economic Corridor is
our top priority.”

From November 2 to 5, 2018, Pakistan’s Prime Minister Imran Khan made his first official visit to
China and attended the first China International Import Expo in Shanghai. During his visit, the two
countries reached important consensus and signed a joint statement on further strengthening the
China–Pakistan all-weather strategic cooperative partnership and building a closer China–Pakistan
community of shared future in the new era. Prime Minister Imran Khan made it clear that the
completed projects of CPEC are in the interest of Pakistan and will bring enormous social and
economic development opportunities to the Pakistani people. Since China has lifted more than 700
million people out of poverty in the past decades, Pakistan is willing to learn from the Chinese
government’s poverty alleviation measures. Pakistan also hopes to strengthen cooperation in
industry and agriculture to help unleash its greater development potential.

On March 20, 2019, China and Pakistan held the first strategic dialogue between foreign ministers
and reached broad consensus. Foreign Minister Shah Mehmood Qureshi noted that the Pakistani
people are committed to promoting the CPEC construction and expanding bilateral cooperation in
various fields. State Councilor Wang Yi said that the CPEC project is expected to be expanded to a
larger scope, including the western region, in Pakistan, according to the vision plan of CPEC
construction agreed by both sides.

Fallacy of smearing CPEC debunked

Since the beginning of CPEC construction, rumors of discrediting CPEC have been rampant. Some
with ulterior motives accused the CPEC construction of exacerbating Pakistan’s economic risks and
claimed that the country is falling into a “debt trap.” However, the proportion of CPEC is very low in
the foreign debt structure data released by the Pakistani government, which is not the cause of the
debt problem of Pakistan at all. More than 80% of the CPEC projects are funded by Chinese direct
investment or use Chinese free assistance, while less than 20% use Chinese loans. “Instead of
burdening Pakistan, CPEC has helped to boost its economy.” In the next stage of CPEC development,

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development cooperation will be strengthened with the focus on people’s living standards. China
will provide more assistance to Pakistan in such areas as agriculture, education, medical care and
drinking water. As the Pakistani people continue to reap tangible benefits from the achievements in
CPEC construction and witness positive changes in their daily lives, the above rumors are debunked.

Clear priorities of CPEC cooperation

As the CPEC construction is advancing, Pakistan’s energy problem has been lessened significantly,
and the improvement in transportation infrastructure has laid a foundation for the industrial
upgrading of Pakistan. Industrial cooperation will be the focus of the CPEC construction and
development in the next stage, which will inject new impetus into the sustainable development of
CPEC.

Imran Khan noted that CPEC offers a “golden opportunity” for Pakistan to revitalize its economy and
achieve development. The fundamental reason is that CPEC can significantly enhance the overall
competitiveness of Pakistan. In terms of China–Pakistan industrial cooperation, China should, on the
one hand, focus on China–Pakistan industrial parks to enhance their industrial capacity and
economic strength. On the other hand, China should encourage Chinese enterprises to take an active
part in Pakistan’s existing and mature industrial parks and mobilize Pakistan’s national capital. With
“Made in Pakistan” as a breakthrough point, China will help accelerate the development of
Pakistan’s local industries, and promote the export and import substitution of high value-added
products, so as to make Pakistan’s existing parks to grow stronger.

Cooperation in agriculture will be deepened. Seventy percent of Pakistan’s population lives in rural
areas, dependent on land. China’s advanced agricultural technology and farming equipment will
improve the agricultural production efficiency of Pakistan and increase the added value of
agricultural products, so as to lift the farmers out of poverty. Given the dilemma of high inflation,
currency devaluation and insufficient foreign exchange reserves in Pakistan in recent years, the
development of agriculture will also help Pakistan to increase foreign exchange income and realize
international balance of payment.

The second Textile Expo was held in Lahore, Pakistan from April 11 to 14, 2019. Pakistan’s textile
industry accounts for 60% of the country’s total exports, and Pakistan is one of the few countries in
the world with a complete textile industry chain. The expo means a good opportunity for the
development of Pakistani textile enterprises. Additionally, the second Gwadar Expo was successfully
held on March 28 and 29, 2019. It attracted more than 200 exhibitors from China and Pakistan, and
cooperation agreements were signed in shipping logistics, agriculture, animal husbandry, Muslim
food processing and so on.

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The new Pakistani government attaches great importance to the development of people’s livelihood
and aims to shape Pakistan into a welfare state. CPEC, consistent with the local situation, has
particularly given priority to benefiting the people. Energy projects have been completed to meet
the needs of approximately 8.6 million households. The primary schools and China–Pakistan medical
centers near Gwadar have improved the education and medical conditions of the local people. In the
future, the two countries are expected to sign a series of agreements covering areas related to
people’s living standards, including education, health, agriculture, water for irrigation, poverty
alleviation and human resources development. Hospitals have been set up in Khyber Pakhtunkhwa
and Baluchistan, and vocational and technical training colleges have been established throughout
Pakistan.

III. New Challenges to CPEC construction

Currently, the CPEC construction has gradually shifted from energy and transportation infrastructure
cooperation to industrial cooperation and industrial park construction. Imran Khan has given
prominence to promoting industrialization and employment in Pakistan, and laid greater emphasis
on the western route of CPEC. Meanwhile, the international situation has also changed. Given the
overall situation, we should be clear that old challenges have not yet subsided and new ones are
emerging in the CPEC construction.

1. First, the complex international political situation, especially the interference of external
factors on CPEC, cannot be ignored.

2. Second, Pakistan has a serious fiscal deficit, a huge foreign debt and a heavy debt service
burden. The capacity to provide supporting funds for the CPEC construction has declined
sharply and it is no longer feasible to expand infrastructure construction. Pakistan’s new
government wants to rein in huge capital spending, especially on projects that require large
amounts of foreign exchange.

3. Third, the overall security situation in Pakistan has improved year by year, but terrorist
attacks still occur frequently. Over the past year, violent and terrorist attacks launched by
Baluchistan separatists occurred frequently, with changes in form, geographical expansion
and new features, and the threat to Gwadar Port and CPEC has increased.

Despite many challenges to the CPEC construction, it is the internal factors that are the root causes
affecting the CPEC construction. When we realize and successfully eliminate the internal negative
factors, external factors will not be able to really affect the process of CPEC construction.  

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IV. Impact of CPEC on Pakistan’s Economy- Factsheet

GDP Growth

 $62 billion to be added to the economy, 20% of the total GDP of Pakistan.

 Pakistan’s GDP growth rate increased from 4.7% in 2015 to 5.4% in 2016 (World Bank)
 Pakistan total GDP has increased from $244 billion in 2014 to more than $ 300 billion in
2017(World Bank)
  $13 billion will be added to Pakistan’s GDP by 2025 (IMF)
 2 to 2.5% annual economic growth rate expected till 2030.  (Applied Economics Research
Centre)

Energy generation

 Access to electricity for the rural population increased from 90.3% in 2015 to 98.8% in 2016
(World Bank)
 Transmission and Distribution Losses went down to 16.5% in 2017 from 19% in 2015
(Ministry of Finance)
 Bill recoveries increased from 16% in 2015 to 19% in 2017 (Ministry of Finance)
 Installed capacity of electricity is 29,573 MW in 2018, which was 22,812 MW in
2013 (Pakistan Economic Survey)
 Electricity generation increased from 96,496 GW/h to 117,326 GW/h (Ministry of Finance)
 A total of $ 33.8 billion in energy project have added 12,230 Megawatts of energy (Pakistan
Economic Survey)

Job Creation

 Early harvest projects of CPEC have created 30,000 direct jobs for Pakistanis (ACCA Global
and PCI)
 800,000 direct jobs estimated in the next 15 years. (Ministry of Planning and Development)
 Construction of ML-1 projects will further create 10,000 to 15,000 direct jobs this year
(Ministry of Planning and Development)
 CPEC will reduce unemployment by 2.32 million by end of 2018 (Global Times)
 75% of the total employees working in CPEC projects are Pakistanis, contrary to the belief
that the Chinese have a higher representation (Ministry of Planning and Development

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Challenges in CPEC
Pakistan faces several challenges in the implementation of the China Pakistan Economic Corridor
(CPEC) project. These challenges can be identified as external and internal. The construction of the
corridor has been defined by many as a strategic moment such that Pakistan has assumed the
position of economic pivot for the whole region. This paradigm shift in circumstances is a cause of
great worry for the enemies of Pakistan both within and outside. India, Israel and the US are
unhappy. For India, CPEC is a thorn in its paw. They have put their heads together to work out new
strategies to block the project forward march. RAW has opened a special office in Delhi and has been
allotted $300 million to disrupt CPEC. Already one can notice sudden upsurge in the acts of terror in
the three restive regions and activation of certain NGOs and think tanks all trying to air misgivings
and create fear psychosis.

In Pakistan, some political parties like ANP, Baloch nationalists, PkMAP raised serious objections to
the CPEC project.

CPEC and Balochistan Factor

Balochistan is one of the most important areas of Pakistan; a surprising location for what officials’
hope will become one of the world’s great trade routes, linking the deep-water port of Gwadar with
the city of Kashgar. This province has been dogged for over a decade by a bloody separatist
insurgency. Baloch insurgents, who oppose Balochistan specially Gwadar’s development have blown
up numerous gas pipelines and trains and have attacked Chinese engineers.

They do not want to see Balochistan to develop as an economic and trade hub unless it becomes
independent. They fear that if Balochistan develops and Gwadar port becomes a thriving port, then
outsiders would move in. That could weigh the province’s demographic balance even further against
the Balochs.

Ethno-sectarian is another important cause of insurgency in Balochistan as if this was not enough for
keeping Balochistan tense, controversy over China Pakistan Economic Corridor project (CPEC) has
added more fuel to the blaze. Going by the history of the earlier Balochistan related mega projects,
the CPEC is likely to become increasingly contentious.

Muhammad Ali Talpur in an article under the caption ‘A few questions answered’ wrote:

“The China Pakistan Economic Corridor is the center of interest for China,
Pakistan and, naturally the world, as all perceive it according to the strategic
and economic advantages and disadvantages it holds for them, whatever
importance it may hold for others, it is extremely important for the Baloch
whose lives it will destroy in the name of development.”

Various separatist leaders of the Balochistan province are opposing the China-Pakistan Economic
Corridor (CPEC). In this respect, Brahamdagh Bugti, the leader of the outlawed Baloch Republican
Party (BRP), criticized the CPEC and Gwadar port projects and called for an UN-sponsored
referendum in Balochistan to decide its future. He alleged the military equipment and funds
obtained by Pakistan from the US and other western countries for combating terrorists and
extremist groups were also being used against the democratic and political struggle of the Baloch
people.

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There have been occasional kidnappings and killings of Chinese workers in Balochistan. Baloch
separatists attacked tankers carrying fuel to a Chinese company working on a mining project.
Gwadar port, which was recently put under the management of a Chinese state-owned company, is
a particular target. Militants do not want to see it developed.

Siddiq Baloch, editor of the Balochistan Express newspaper, said the rebels want to scare off
investors and developers who are working with the Pakistani government — such as the Chinese. He
further said that there is the thinking that by doing this, they want to disrupt the working of the
economy, disrupt the administration and challenge the administration in the area. It is high time that
concerns of Balochistan are addressed prudently. For a project as big as the CPEC, which is
potentially a game-changer for the economy of all the provinces, the nation cannot afford to fall in
the trap of spoilers.

Security concerns
Security concerns have been the most critical challenge to the CPEC and both Pakistan and China
have been trying to meet these. An arc of militancy stretches from Xinjiang to Gwadar consisting of
groups like the East Turkestan Islamic Movement (ETIM), Tehreek-e-Taliban Pakistan (TTP), Lashkar-
e-Jhangvi (LeJ), Daesh (ISIS), Balochistan Liberation Army (BLA), Balochistan Liberation Front (BLF)
and the militant wings of some political parties. Most of these groups may not have an enmity with
China itself but rather intend to attacks the Chinese interests like the CPEC as a means to deal with
the Pakistani state.

The support of American CIA, Israeli Mossad and Indian RAW has continuously been assisting the
militant groups and Sub-Nationalists in all the provinces to conduct subversive acts-and using
terrorist elements in the whole country to threaten the Pak-Chinese plans of developing the CPEC. In
the past few years, they kidnapped and killed many Chinese nationals in Pakistan despite Pakistan’s
efforts to provide best possible security.

The army has announced the creation of 10,000-man special force for protecting the development
projects. The new force, named the Special Security Division, will comprise nine army battalion and
six wings of paramilitary forces, the Rangers and the Frontier Corps. There are major concerns
about the Kunar and Nuristan provinces of Afghanistan, where multiple terrorist groups including Al
Qaeda, the self-styled Islamic State, the Tehreek-i-Taliban Pakistan, the Movement of Islamic
Uzbekistan and the Turkmenistan Islamic Party, etc. are concentrated. These groups can pose a
direct threat to the CPEC in Pakistan’s northern region. A better understanding between Islamabad
and Kabul is imperative to achieve border security.

CPEC and Economic Factor

As an economic enterprise, for the CPEC, the greatest challenge comes from competitors. The most
significant is the Iranian port of Chabahar. India intends to invest significantly ($85 million) in the
development of Chabahar, which lies a few miles away from Gwadar and is part of its efforts for
access to landlocked Afghanistan and Central Asia while bypassing rival Pakistan. Chabahar will
effectively be a way station for energy imports coming from the Gulf region and destined for
Afghanistan and Central Asia. It will also be a gateway to the Middle East, and possibly Europe, for
exports originating from Afghanistan and Central Asia.41 CPEC: Challenges and Opportunities for
Pakistan.

While the Chabahar project has not yet been started due to the ongoing talks on the Iranian nuclear
issue, the Gwadar port has already become functional. However, there is no need for contention
between these two ports. Iran has a stake in the CPEC through the proposal to link the Iran– Pakistan

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gas pipeline with China, which has been described as a “common interest” between the three
countries.

Indian involvement in Chabahar is linked to Pakistan’s refusal to allow India access of transit to and
from Afghanistan, so India sees Iran as the next-best option. If Pakistan extends transit facilities to
India, and then India may not be interested in building up Chabahar. In recent years, India has been
particularly active in engaging Central Asian states for the sake of pursuing energy deals. India can be
easily accommodated via the CPEC itself through eastern interface in Punjab and Sind and
transformed into a stakeholder in the success of both Gwadar and the CPEC.

Geopolitical and security risks.

The geopolitical environment is inherently unstable in South Asia. World powers' adjustment of their
policy towards this region might add to the uncertainty. The mix of international, regional, national
and extremist factors might cause disruptive activities, threatening the security of the CPEC building.

The restraints of natural and geographical factors.

Southern Xinjiang of China suffers from a weak industrial base and limited economic scale. Because
of the special natural and geographical conditions in China-Pakistan border area, the construction,
operation and management of major infrastructure projects is costly. The Indus River valley in
Pakistan is comparatively economically advanced, but with high population density and limited
resource carrying capacity, while the western area is poorly developed and troubled with harsh
natural conditions.

Restraints to economic growth prospects.

Pakistan needs to address major bottlenecks to economic and social development to sustain
economic growth momentum. The energy, infrastructure, administration and governance
deficiencies, besides unbalanced regional economic and social development, and external sector
vulnerabilities need to be monitored to avoid any possible challenges to CPEC.

CPEC as a Game Changer

The 3,000 km economic corridor under the aegis of CPEC is the leading project of China’s ambitious
vision for a modern reconstruction of the Silk Road. The inclusion of the project as part of China’s
13th five-year development plan reflects its significance. CPEC was first proposed in 2013 by Chinese
Premier Li Keqiang that has now become a route for wider connectivity.

In April 2015, the visit of Chinese President Xi Jinping to Pakistan with CPEC plan after the time span
of nine years has cemented Pakistan-China friendship further, opened new avenues for cooperation
and made Pakistan the investment destination at national and international levels. Pakistan and
China are now moving in the era of geo-economics and towards regional connectivity. The year 2015
is marked the implementation year of CPEC. Bulk of the projects are largely intra-Pakistan in nature.

It is $ 46 billion infrastructure project currently under construction that is equal to roughly 20 per
cent of Pakistan's annual GDP (Stevens, April 20, 2015: CNN Money) and the Asian Development
Bank (ADB) is agreed to lend $8bn additional to upgrade the main railway line from Karachi to
Peshawar. Chinese investment on CPEC is equivalent to all the foreign direct investment inflows
(FDI) into Pakistan since 1970 combined.

When the corridor will be operational, it will function as a doorway for trade between China, Africa
and the Middle East. In particular, oil from Middle East can be deposited at Gwadar and carried to
China via Balochistan that will lessen the 12,000km route that Middle East oil supplies takes to reach

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Chinese ports. CPEC has been designed as the flagship project for economic rejuvenation and the
region will share a “Community of Common Destiny’. Hua Chunying, the Foreign Ministry
spokesperson stated that the corridor will “serve as a driver for connectivity between South Asia and
East Asia.”

This corridor could see Pakistan emerge as a regional trading hub. Opening new vistas of
cooperation in trade, commerce and industry, CPEC has proved to be a game and fate changer for
Pakistan because it will bring about development and prosperity to country’s dwindling economy.
The chairman of the Pakistan-China Institute, Mushahid Hussain emphasized that the economic
corridor “will play a crucial role in regional integration of the ‘Greater South Asia’, which includes
China, Iran, Afghanistan, and stretches all the way to Myanmar.”

Having a time frame of 2014 – 2030, it’s a long-term project. There are five main chunks of CPEC.

1. Development of Gwadar (including the Port city)

2. Energy projects
3. Transport Infrastructure
4. Investment and Industrial Cooperation
5. Any other area of interest mutually agreed

Total Chinese investment on CPEC is about $46 billion. The split up of CPEC venture portfolio
investment is following.

It is projected that $34 billion will be spent to the energy sector that will help assuage the power
shortage in Pakistan with the proposed wind, hydro, coal and solar power plants producing a total
generation capacity north of 10,000 MW while $11 billion will be provided on communication and
infrastructure development.

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Planning and Development Minister Ahsan Iqbal avers that Pakistan and China always enjoy
consummate political ties in the history and CPEC adds economic facet to cordial and friendly
relations, further stating, “CPEC is the first drop of big ocean to pave the way for more Chinese
investment in various sectors.”

Vision
The Chinese side vision: to further advance the western development strategy, promote economic
and social development in Western China, accelerate the Belt and Road construction, give play to
China's advantages in capital, technology, production capacity and engineering operation, and
promote the formation of a new open economic system.

The Pakistani side vision: to fully harness the demographic and natural endowment of the country
by enhancing its industrial capacity through creation of new industrial clusters, while balancing the
regional socioeconomic development, enhancing people's wellbeing, and promoting domestic peace
and stability.

The international and regional vision: to form a new international logistics network and industrial
layout based on major transportation infrastructure; elevate the status of South Asian and Central
Asian countries in labor division of global economy; promote regional economic integration through
stable trade growth, international economic and technological cooperation and personnel exchange.

Importance of CPEC
CPEC is important not only for Pakistan but for China as well because it will physically connect
Pakistan and China with trading companies and markets in Asia, Europe and Africa. China is
dependent on the Middle East regarding oil demand. Almost 80% of China’s oil is currently
transported through the Malacca Strait and the distance of this route is almost 16,000 km. It takes 2-
3 months to bring this oil. But on the other hand, if Gwadar Port becomes operational it will reduce

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this distance to 5,000 km only. After completing this project, the shortfall of energy sector of
Pakistan will be controlled.

On the other hand, Pakistan has innumerable resources but is unable to utilize these resources. In
this way, China will help Pakistan to develop better infrastructure that will help to set the track of
development for Pakistan. It will also help to establish a progressive way for the betterment of the
less developed province of Pakistan Baluchistan. Gwadar port is situated in Baluchistan that is the
largest province of Pakistan area wise but the least developed due to some factors. Now the destiny
of Baluchistan is going to be changed because the main point of CPEC is Baluchistan. It will provide
jobs, better infrastructure and other valuable opportunities to the people of Baluchistan that will be
very beneficial for both Baluchistan and Pakistan.

Projects of CPEC

CPEC is a grand project that includes further many smaller projects. There are different projects of
CPEC like the energy sector, the development of infrastructure and Gwadar Port etc. Here is a table
that shows the distribution of all major components of CPEC.

Energy Projects

Pakistan is a developing country and facing many issues. The energy crisis has become very serious
issue for Pakistan. In CPEC, the major priority is given to energy sector in order to tackle the energy
issue. A huge investment of 33,793 US $ millions is reserved for energy sector. Further, the table
below shows the distribution of different energy projects and its investment.

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Projects of Transport Infrastructure

The second important section of China Pakistan Economic Corridor is the development of
infrastructure. Through CPEC, there are going to be built different roads in Pakistan from Gwadar
Port (Pakistan) to Kashger (China). The development of infrastructure includes roads, railway lines
and extension of already existing roads and railway lines. The following table reveals the explanation
of infrastructure development.

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Projects Related to Gwadar

Gwadar Port is the main point of CPEC so it is also at the high priorities for this project. Amount of
786 US $ millions is reserved for the development of Gwadar port and city. The table below shows
the distribution of amount for Gwadar Port.

Significance of CPEC for China

Middle East is an important region in the regard of oil. It is estimated that more than half of the
world’s proven oil is reserved in the Middle East. The developed countries like US and China have a
leaning strategy to this part of the world. China is currently getting oil form the different countries of
Persian Gulf. China has to travel a long distance to bring oil and it also has to pass through many
disputed territories like Strait of Malacca (Cherng, 2013). Almost 40% of the world’s oil is reserved in
the Gulf region and the Persian Gulf is used to transport this oil to the rest of the world. The hurdles
in the progressive way of China is the involvement of Indian and American activities in Indian Ocean.
China is very curious to complete CPEC as soon as possible because it would provide it an alternative
route to bring raw materials from Middle East. China wants to discover an opposite route that will
enable it to contact Middle East, Africa and Europe because these parts are dominant regions in the
regard of trade. CPEC will provide a shorter route for China than the long route that is currently
being used by China. The infrastructure of CPEC will provide opportunities for the private sectors to
participate more with other countries via Pakistan. It will provide safe and disputed free way for the
investors of China.

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Significance for Pakistan

In 2014, Pakistan signed currency swap with China which made Pakistan the only South Asian
country who initiated such a unique step with China.

 China is the second largest trade partner of Pakistan and both are all weather friends.
 China is the biggest investor in Pakistan.
 There are multiple Chinese companies working in different trading and economic fields in
Pakistan.

Benefits:
 CPEC will prove a game changer for Pakistan because it will change the entire shape of
Pakistan.
 In the regards of CPEC Pakistan will get better infrastructure facilities.
 It will also provide job and investment opportunities in Pakistan.
 China Pakistan Economic Corridor will make Pakistan a trading hub of the world.
 Although there are many social and political issues attached with CPEC but it has numerous
benefits both for Pakistan and China. Currently Pakistan is facing many issues and the most
important issue is energy crisis.
 CPEC will help to solve the issue of energy crisis because a huge investment is reserved for
energy sector.
 This project will provide an opportunity for the Pakistanis to interact the people of different
races and colors. CPEC will improve the infrastructure of the whole country like roads,
railway lines etc.

I. Balanced environment in South Asia

CPEC is the crown jewel in the new Pakistan economic paradigm because Pakistan has the
opportunity to act independently of the western influence especially the US influence as it has
proved of late, an irritant factor. CPEC Project will also bring an opportunity to Pakistan for
normalization of ties with India, Iran and Afghanistan which will keep balance, strengthen prospects
of peace and improve socio-economic status of the people of the region.

II. Overcoming Energy crises

Energy is described as life line of the economy of any country. It is most vibrant instrument of
socioeconomic development of a country. Due to population growth and industrial demand, there
have been severe energy crises in Pakistan. The major reason behind Pakistan’s poor power
generation is the political instability and the exponentially increasing demand for power and lack of
efficiency. No significant solution to the problem has yet been found and it continues to torment the
citizens as power supply is one of the basic necessities in this era of modern technology. Power
blackouts and load shedding (deliberate blackouts) are common in every area around Pakistan
especially the major cities. Wapda and KESC have failed to tackle the problem that exposes the
failure of the system of the state.

CPEC is the ideal project which will help rid country of the energy crises. Energy availability in
country will revive existing industries, such as textile to full production and add an estimated 2
percent to Pakistan’s GDP growth.

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Chief Minister Punjab, Shahbaz Sharif said that China is extending great economic cooperation to
Pakistan and that the government is making serious effort for resolving the energy crisis and a
number of projects with Chinese cooperation would start producing electricity.

III. Infrastructure development

Infrastructure development – including the development of roads, ports and highways is another
important segment of CPEC. This project basically will improve Pakistan’s infrastructure connection
with all sub regions in Asia, and between Europe Asia and Africa step by step and will remove all
investment and trade barriers for the creation of a sound business environment within the region
and in all related countries.

After the complementation of this Project, Pakistan will become modernize and then by spreading
out markets for manufactured good. The areas adjacent to the corridor would become attractive
locations for manufacturing, agricultural and services industries, small and medium enterprises
would be special beneficiaries. Employment and economic growth expand significantly.

It will also attract whole world for economic and trade assistances. under which the Karakoram
Highway had been identified for the first phase and Khunjerab-Havelian-Islamabad section of the
road was expected to be completed in three years, moreover, CPEC route would be utilized for the
creation of economic and industrial free zones, for which a fresh economic zone working group
would be created soon after the upcoming visit to link all the four provinces, AJK, Fata and Gilgit-
Baltistan to expand benefits of the initiative across the country.

IV. Economic Development

China Pakistan Economic Corridor will help build a robust and stable economy in Pakistan and will
create a significant opportunity for Pakistan to revive its industry and advance its economic
interests. It will also help in overcoming the psychological barriers to flows of foreign investment
from other sources. Despite its restrictive economic regime, over 150 private equity funds, foreign
and domestic, are active in India.

Only three or four such funds are dedicated to investing government, with the participation of the
private sector, to encourage foreign direct investment in Pakistan is indispensable. This project will
go beyond regional ambits to bring about enormous changes not only to the national economies of
the benefiting states but also to the economics of the people at the grassroots level.

V. Removal of poverty
CPEC is a game changer project which will lift millions of Pakistanis out of poverty and misery. The
project embraces the construction of textile garment, industrial park projects, construction of dams,
the installation of nuclear reactors and creating networks of road, railway line which will generate
employment and people will also take ownership of these projects. Fully equipped hospitals,
technical and vocational training institutes, water supply and distribution in undeveloped areas will
also improve the quality of life of people.

VI. Peace and prosperity in Provinces

CPEC is not only the name of road, port and railway system but a multi-dollar’s mega project which
will bring peace and prosperity in all the provinces of Pakistan. The chairman of the Gwadar port,
Dostain Khan Jamaldini said that the CPEC would not only benefit Balochistan but also prove
beneficial for the country’s three other provinces.

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Economist Dr Shahid Hassan said CPEC would bring more prosperity in the whole country and would
reduce unemployment in the country. Functioning of Gwadar port will bring an economic revolution
and business activities will get a much-needed boost.

Recommendations
 All political parties should express full support for the implementation of China Pakistan
Economic Corridor.
 All political parties should be united and resolve their political issues and act for their mutual
benefits. The government and all the provinces should work jointly for the commercial,
economic and cultural development as well as peaceful environment in the country.
 The government should share all details of CPEC project with all the political parties of all the
provinces.
 The government should discuss the benefits and challenges of this multi- dollar project with
all the provinces.
 The Pakistani government should provide full support and assistance to foreign workers of
different CPEC projects.
 The government should provide security to the foreign workers on different projects of
CPEC.
 The government should not delay work on CPEC because it can provide space to the
terrorists and militants to create hurdles in the smooth construction of this project.

Implications of CPEC in South Asia

The China Pakistan Economic Corridor is almost 3,000 Kilometers long transportation corridor
between Pakistan and China. It will start from Gwadar (Baluchistan) and connect Kashgar (China).
Both of the governments are very hopeful to complete this project despite the opposition of many
other regional and global countries. Basically, India and U.S.A are not happy about this bilateral
agreement of Pakistan and China. India has not smooth relations with both Pakistan and China that’s
why putting hurdles in the smooth way of CPEC. On the other hand, US also opposing CPEC indirectly
because China in ringing alarms in the ears of U.S as next super power. Both of them are blaming
that this rout is going to be built for military purposes not for economic benefits only. The strategic
location of Pakistan is very important because it is situated at such important place that can connect
South Asia with Middle East and Central Asia etc. That is why China is investing such huge amount in
this region because due to CPEC it will get more benefits. It will provide the shortest route to China
to connect with the Middle East (Aqeel, 2016). In 2015, a historical event took place in Pakistan in
the form of CPEC that will change the entire shape of South Asia as well as the global shape of the
trade.
South Asia is the part of third world countries whose member countries are mostly developing. The
developed countries have set up industries here. They bring raw material here and take the
readymade items out of the industries to the most developed countries where they earn a lot. The
China Pakistan Economic Corridor will change the entire fate of this trading system because there is
going to be built the best infrastructure ever in Pakistan that will connect the different continents by
roads and the movement of raw materials will be more comfortable. In return, the businessmen of
the whole world will be attracted to invest here. The issue of shortage of energy is going to be
handled as according to BBC News report, 15.5 billion US will be invested on coal, wind, solar and
hydro energy projects to control the problem of shortage of energy. It will add 10,400 megawatts
energy to Pakistan’s national energy sector. China has many concerns in the return of the
investment in the form of CPEC.

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Through CPEC China will get access to the Indian Ocean directly while crossing the territory of
Pakistan only. China has already very stable relations with Pakistan from very start that is the only
reason that China is investing such huge amount in the less developed areas of Pakistan. No doubt
Pakistan will also get many advantages from this huge investment. China is going to invest in
Pakistan 20% of country’s GDP and it is three times of the total direct investment that Pakistan has
received since 2008.

Conclusion
The CPEC is destined to be a game changer project under Pak-China economic partnership that
encompasses 2,000km trade link from Kashgar, China to Gwadar at Pakistan. With the
implementation of CPEC, Pakistan would appear as a hub of trade and commerce that would require
instituting numerous industrial and economic zones, physical roads and railways linking Pakistan to
China. When the CPEC would be operational, it would enhance peace and stability in the region.

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