CPEC: A win-win project for re­gion

Pakistan Observer - - OPINION - Email: han­i­f­sar­dar@hot­mail.com Col M Hanif (Retd)

CHINA-Pak­istan Eco­nomic Cor­ri­dor (CPEC) is a US$ 46b mega project of con­struc­tion of roads, rail­ways, oil and gas pipe­lines and fi­bre op­ti­cal ca­ble net­work, to be com­pleted in next 15 years, that will con­nect Kashghar city of Xin­jiang prov­ince of China with Gwadar port of Pak­istan. The project con­sists of three routes which pass through all the prov­inces of Pak­istan that also in­cludes con­struc­tion of in­dus­trial zones along the CPEC. As part of the project, the ca­pac­ity of Gwadar port will also be ex­panded from ex­ist­ing four berths to 13 berths, in­clud­ing the con­struc­tion of a new in­ter­na­tional air­port, oil and gas terminals and stor­age fa­cil­i­ties.

Af­ter its com­ple­tion, the CPEC would be of im­mense strate­gic and eco­nomic sig­nif­i­cance to China, Pak­istan and other re­gional coun­tries. For China the CPEC would re­duce the trav­el­ling dis­tance, for its huge vol­umes of trade with the Gulf coun­tries, from ex­ist­ing 13000 kilo­me­tres to mere 2500 kilo­me­tres. While it will cut down the trav­el­ling time from the ex­ist­ing 45 days to only 10 days, it will also re­duce the cost of freight by one third. Through CPEC China will be able to trade with South Asia, West Asia, the Mid­dle East and North Africa through a much shorter route.

For Pak­istan the CPEC will be the game changer from strate­gic as well as eco­nomic devel­op­ment an­gles. Due to CPEC, Pak­istanChina’s en­dur­ing and trusted strate­gic part­ner­ship would be fur­ther ce­mented. The CPEC will also give many eco­nomic ad­van­tages to Pak­istan. The Con­struc­tion of CPEC in­cludes 21 elec­tric­ity pro­duc­ing projects, out of which half would be com­pleted by the end of 2018, adding 10400 megawatts of elec­tric­ity to the na­tional grid, thus mak­ing up Pak­istan’s huge en­ergy short­ages due to which its in­dus­trial and agri­cul­tural pro­duc­tion was suf­fer­ing.

With the avail­abil­ity of elec­tric­ity, Pak­istan’s eco­nomic growth will en­hance con­sid­er­ably, that will en­able it to mul­ti­ply its ex­ports and in­crease the much needed for­eign ex­change re­serves. The CPEC will also act as a source of en­hanc­ing em­ploy­ment op­por­tu­ni­ties in Pak­istan.

Pak­istan’s trade with Cen­tral Asian Re­publics would also mul­ti­ply us­ing CPEC since the CARs will be con­nected with CPEC based on the Quadri­lat­eral Agree­ment for Traf­fic in Transit, which has al­ready been signed by Pak­istan, China, Kaza­khstan and Kyr­gyzs­tan. Af­ter com­ple­tion of CPEC, Pak­istan’s na­tional in­come will also in­crease since it will get roy­al­ties or transit fee on huge vol­umes of Chi­nese and CARs ex­ports and im­ports to and from West Asia, South Asia, Mid­dle East and North Africa through CPEC, be­ing the short­est route.

Like Pak­istan, other South Asian coun­tries in­clud­ing Afghanistan, Iran and In­dia would also use CPEC for trad­ing with China and CARs and vice versa. Afghanistan’s trade is al­ready be­ing done with South Asia and outer world through the Karachi port of Pak­istan. Af­ter com­ple­tion of CPEC, Afghanistan and Iran will also be able to trade with China, CARs and outer world us­ing this route. Even Bangladesh and Sri Lanka are show­ing in­ter­est in trad­ing with China and CARs by us­ing CPEC. Since long In­dia is vy­ing for es­tab­lish­ing a land route link­age with Iran and CARs for trad­ing and im­port­ing oil and gas. This can be done by con­nect­ing with these coun­tries through Pak­istan and Afghanistan.

But In­dia is not able to do that due to its dis­putes with Pak­istan and the in­sta­bil­ity pre­vail­ing in Afghanistan. Al­though In­dia is strug­gling to have an al­ter­na­tive route by help­ing con­nect Afghanistan with the Chah­ba­har port of Iran, it would face prob­lems in trad­ing through that route, be­ing too long and costly, and the fact that the Chah­ba­har port has very nar­row, deep water berthing area to han­dle large vol­umes of trade.

There­fore, the CPEC could bring ma­jor eco­nomic ad­van­tages to In­dia if it would chose to use this route by re­solv­ing its dis­putes with Pak­istan, rather than ob­ject­ing to the con­struc­tion of CPEC. In view of the fore­go­ing dis­cus­sion, it seems very log­i­cal to con­clude that CPEC would be a win win project for Pak­istan, China, CARs and the re­gion. —The writer works at Is­lam­abad Pol­icy Re­search In­sti­tute, a think­tank based in Is­lam­abad.

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