CPEC: A win-win project for region
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.