A Game Changer
It seems New Delhi has missed the opportunity for economic integration with South Asia and has allowed China to take the advantage. The recently announced China-Pakistan Economic Corridor - CPEC – could turn out to be a veritable megaproject. It is designed to connect Gwadar Port in southwestern Pakistan to China’s northwestern autonomous region of Xinjiang, via a network of highways, railways and pipelines. No wonder, the economic corridor is considered central to China-Pakistan relations. It will cover about 3,000 km between Gwadar and Kashgar, with a construction cost estimated at around $46 billion. The corridor is an extension of China’s proposed 21st century Silk Road initiative and is the biggest overseas investment by China announced yet. It is expected to be a strategic game changer for Pakistan.
Pakistan's economy is currently hamstrung by the failure of successive governments to get to grips with the lack of infrastructure. With a population fast approaching 200 million, the country’s economy is losing up to six percent of GDP just because of a lack of power and infrastructure bottlenecks. Now Beijing has unveiled plans to invest extensively in the world's sixth-most populous country through its ‘One-Belt-One-Road’ project that will ultimately connect inner China with the Middle East and Europe. The corridor will put Pakistan in a much better economic situation and make it a more powerful entity in the region - a prospect that has negative connotations for India though the Indian envoy in Pakistan has said that his country is not perturbed by the forthcoming China-Pakistan economic cooperation. However, seen in the larger perspective, the economic corridor should be giving sleepless nights to the Indian leadership as it is likely to create a new economic entity in the Arabian Sea region in the form of a more stable Pakistan. The economic corridor will provide Pakistan with a transport network, an advanced telecommunication link and an energy infrastructure. China and Pakistan hope the massive investment will boost the growing ties between Pakistan and China and open trade routes for Western China, providing it direct access to the resource-rich Middle East, bypassing longer logistical routes through the Strait of Malacca.
The deal includes $622 million for Gwadar Port. Under the agreement, $15.5 billion worth of coal, wind, solar and hydro energy projects will add 10,400 megawatts of energy to the national grid in Pakistan. The project also includes a $44 million fibre optic cable and various coal, nuclear and renewable energy projects. The corridor will expand the number of trade routes between China and the Middle East and Africa. The first phase of the project involves development of Gwadar Port and construction of an international airport. This should be done by 2017. The Karakoram Highway connecting the two countries will also be widened, while the rail network between Karachi and Peshawar will be upgraded. The project received a major boost when control of Gwadar Port was transferred to China's state-owned China Overseas Ports Holding in February 2013. Built by Chinese workers and opened in 2007, Gwadar is undergoing a major expansion to turn it into a full-fledged deep-water commercial port. With the development of the corridor Central Asia, traditionally an economically closed region owing to its geography and lack of infrastructure, will have greater access to the sea and to the global trade network.
Several different facets will be utilized for the financing of the project. Both sides will increase cooperation, to jointly provide financing support but it remains to be seen whether the AIIB or the Silk Road Fund will be used. The completion of Gwadar will create a strategic nexus between Pakistan, China and Central Asia, generating billions in revenue and providing shorter land routes. It would provide links from the Caspian Sea to the Strait of Hormuz and Gwadar will then compete with other Persian Gulf ports. The United States has shown its wariness of Chinese strategic access to the Arabian Sea and its presence in the region and this could also spell trouble for the project and the region. India may have its own apprehensions in this regard. It has already invested in the Port of Chabahar in Iran, through which it will try to gain access into landlocked Afghanistan and Central Asia, bypassing Pakistan. The coming years are certainly bound to bring a lot of development – and excitement to the region.
Syed Jawaid Iqbal