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The China-Pakistan Economic Corridor One Year On – Analysis

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It has just been over a year since Chinese President Xi Jinping announced the China-Pakistan Economic Corridor (CPEC) during his inaugural state visit to Pakistan in April 2015. What has been the progress of the construction of the megaproject since then? Zhang Baozhong, the chairman of China Overseas Ports, the company that will run the Pakistani port of Gwadar, stated in late April 2016 that Gwadar will commence full operations by the end of 2016. Gwadar is essential to CPEC as it will connect CPEC with shipping on the Arabian Sea; and being close to the Straits of Hormuz, will serve as a strategic gateway for Middle Eastern oil shipments to be transported overland to China via CPEC’s planned oil pipelines. Logistics will be transformed by CPEC, as container ships that today have to make the “the nearly 13,000 km sea voyage from Tianjin to the Persian Gulf through the Strait of Malacca and around India” can be replaced by cheaper container trucks that make “a mere 2,000 km road journey from Kashgar to Gwadar.”1

Infrastructure that will connect Gwadar with the Chinese city of Kashgar in Xinjiang include highways and railways. Progress has been made this past year on the highway network. A 335 km section of the Karakoram Highway between the Sino-Pakistani border city of Khunjerab to Raikot has been upgraded, and a 59 km section of the Hazara Motorway between Burhan and Havelian is expected to be completed by the end of 2017.2 Pakistan’s Prime Minister Nawaz Sharif is scheduled to visit Dera Ismael Khan on May 17, 2016 to inaugurate the CPEC Western Route. The initial phase of the Western Route—which when completed will connect Havelian with Gwadar—consists of a 285 km highway between Hakla and Yarik, including “eleven interchanges, nineteen flyovers, fifteen bridges, seventy-four underpasses, two hundred fifty-nine culverts, and three major bridges.”3 For the CPEC Eastern Route, construction work is expected to begin soon as China’s State Council has just approved a 4.2 billion USD concessionary loan package for a 120 km section of the Karakoram Highway II between Thakot and Havelian, and a 392 km section of the Lahore-Karachi Motorway between Multan and Sukkur.4 Apart from the construction of highways, CPEC’s transportation infrastructure also includes the construction of rail lines, dry ports, as well as the Gwadar airport, the construction of which is scheduled to commence in the middle of 2016. Energy infrastructure—including hydropower dams—and industrial zones will also be constructed under the CPEC framework. By 2030, when projects under the third and final phase of CPEC are scheduled to be completed, the populations living in the currently underdeveloped communities in the CPEC region are expected to enjoy the economic benefits of industrial development provided by the new infrastructure.5

In terms of regional economic integration, CPEC has attracted interest from Iran and the countries of Central Asia.6 The 2015 accessions of Afghanistan and Kazakhstan to the World Trade Organization, and regional trade agreements like the quadrilateral transit trade agreement between China, Kyrgyzstan, Kazakhstan, and Pakistan, have facilitated regional integration through trade, and CPEC is envisioned to accelerate this process of economic integration and transform Pakistan into a Central and South Asian economic hub. Indeed, despite reservations from India, which we shall shortly see, CPEC promises to serve as “a bridge between three engines of growth, China, South Asia and Central Asia, thus giving a stimulus to a deep regional economic integration and creating a trading bloc of 3 billion people, nearly half of the planet.”7 Pakistan’s Commerce Minister Khurram Dastagir notes that should the economic promise of CPEC come to fruition, this will offer significant progress for global development:

“Mind you these also include half of world’s extreme poor. The deepening of economic integration will lower trade costs, essential for ending poverty. Trade is a critical enabler of growth, opening up opportunities of new and better work for the poor.”8

Security Concerns

Security threats to CPEC may have expanded over the past year. Pakistan’s security apparatus has recently highlighted a threat from India’s and Afghanistan’s intelligence services “to encourage and assist Baloch violence against the CPEC.”9 In March 2016, Pakistani security forces arrested an alleged Indian spy in Balochistan, a province with major CPEC projects, including the port of Gwadar.10 The following month, General Raheel Sharif, Pakistan’s Chief of Army Staff, identified India’s intelligence agency RAW (Research and Analysis Wing) as being “blatantly involved in destabilizing” Pakistan and CPEC.11

One reason for the alleged Indian interference is the section of CPEC which extends through Gilgit Baltistan to the Sino-Pakistani border. This is disputed territory which India identifies as Pakistan-occupied Kashmir (PoK). Indeed, India’s Minister of State for External Affairs V. K. Singh recently stated that CPEC will extend “through a territory which belongs to India.”12 (Pakistan’s Finance Minister Ishaq Dar has rebutted such claims, stating that CPEC will only extend through Pakistani territory.13) This has drawn the attention of anti-Chinese nationalists in India who see this as an attack by China on Indian interests.14 Some, for example, see China as a “a reliable ally” of Pakistan’s that “has always come to Pakistan’s aid when India has seemed on the ascendant,” and that its planned CPEC projects in Gilgit Baltistan will legitimize what India has identified as “Pakistan’s illegal occupation of these areas.”15 These are not fringe views. M. K. Narayanan, a former Indian National Security Adviser, states bluntly that CPEC poses a “major threat” to India, and that China’s “One Belt One Road” global development strategy, of which CPEC is a showpiece megaproject, could have “the most degrading impact” on Sino-Indian relations.16

To counter what they see as China’s geostrategic advancements through its CPEC initiative, some Indian strategists recommend the military capture of Gilgit Baltistan and the rest of PoK, especially since this territorial seizure would “provide India a direct land link to Afghanistan and thence to the Central Asian Republics, both of which are increasingly falling into the Chinese sphere of economic and political influence.”17 Of course, should a war between India and Pakistan over Kashmir break out, China would find itself dangerously entangled in a likely nuclear exchange between India and Pakistan. Worrisomely, India is not the only geostrategic threat to CPEC. As Peter Lee recounts:

“On the other hand, you have diehard separatists in Balochistan, PoK, Xinjiang, and Tibet eager to make it fail. You’ve got a pool of resentful Islamist extremists near the route of the CPEC in Pakistan, Xinjiang, Afghanistan, and Uzbekistan. You have China hawks in India and the United States who would be happy to see the CPEC turn into quagmire for the PRC.”18

As CPEC progresses past its first year of construction, its Pakistani and Chinese overseers will have to ensure that their security and intelligence apparatuses remain alert to these and all other possible threats to the megaproject.

References:
“Central Asian states keen to benefit from CPEC, says Mamnoon.” Dawn, October 13, 2015. Accessed May 15, 2016. http://www.dawn.com/news/1212635.

“China-Pakistan Economic Corridor: Pakistan’s road of high hopes.” The Indian Express, April 18, 2016. Accessed May 15, 2016. http://indianexpress.com/article/explained/cpec-pakistan-china-nawaz-sharif-xi-jinping-2758111/.

“CPEC to Benefit 3B People Thru Enhanced Connectivity.” Pakistan Observer, April 25, 2016. Accessed May 15, 2016. http://pakobserver.net/2016/04/25/cpec-to-benefit-3b-people-thru-enhanced-connectivity/.

Daud, Khawaja. “Iran ready to become part of China Pakistan Economic Corridor.” Daily Pakistan, April 16, 2016. Accessed May 15, 2016. http://en.dailypakistan.com.pk/headline/iran-ready-to-become-part-of-cpec/.

“Gwadar Port will be operating fully by end of this year, says Zhang Baozhong.” INP, April 23, 2016. Accessed May 14, 2016. http://nation.com.pk/national/23-Apr-2016/gwadar-port-will-be-operating-fully-by-end-of-this-year-says-zhang-baozhong.

Johnson, Kay. “Pakistan army chief accuses India of undermining China investment corridor.” Reuters, April 13, 2016. Accessed May 14, 2016. http://in.reuters.com/article/pakistan-india-port-idINKCN0XA13X.

Kalyanaraman, S. “Rethinking India’s approach towards Pakistan-occupied Kashmir.” Institute for Defence Studies and Analyses, May 3, 2016. Accessed May 14, 2016. http://idsa.in/idsacomments/rethinking-indias-approach-towards-pakistan-occupied-kashmir_skalyanaraman_030516.

Kiani, Khaleeq. “3bn people to benefit from CPEC: Dar.” Dawn, June 3, 2015. Accessed May 15, 2016. http://www.dawn.com/news/1185842.

Lee, Peter. “SCS for South China Sea aren’t the scariest letters in the world … they’re CPEC.” Asia Times, May 11, 2016, accessed May 14, 2016, http://atimes.com/2016/05/csc-for-south-china-sea-arent-the-scariest-letters-in-the-world-theyre-cpec/.

Lee, Peter. “The World’s Most Dangerous Letters Are Not SCS … They’re CPEC.” China Matters, May 11, 2016. Accessed May 14, 2016. http://chinamatters.blogspot.sg/2016/05/the-worlds-most-dangerous-letters-are.html.

Lim, Alvin Cheng-Hin. “‘Iron Brothers’: Sino-Pakistani Relations And The China-Pakistan Economic Corridor.” Eurasia Review, May 7, 2015. Accessed May 14, 2016. http://www.eurasiareview.com/07052015-iron-brothers-sino-pakistani-relations-and-the-china-pakistan-economic-corridor-analysis/.

“Pakistan, China ink agreements worth $4.2b.” The Express Tribune, May 4, 2016. Accessed May 15, 2016. http://tribune.com.pk/story/1096762/cpec-eastern-alignment-pakistan-china-ink-agreements-worth-4-2b/.

“Pakistan striving to become the economic hub for central Asia.” The News International, December 16, 2015. Accessed May 15, 2016. http://www.thenews.com.pk/print/82201-Pakistan-striving-to-become-the-economic-hub-for-central-Asia.

Pant, Harsh V. “The China-Pakistan axis gains momentum and could pull India into a war on two fronts.” Daily Mail, April 15, 2016. Accessed May 14, 2016. http://www.dailymail.co.uk/indiahome/article-3542499/The-China-Pakistan-axis-gains-momentum-pull-India-war-two-fronts.html.

“PM to inaugurate CPEC Western Route on Tuesday.” Pakistan Observer, May 15, 2016. Accessed May 15, 2016. http://pakobserver.net/2016/05/15/pm-to-inaugurate-cpec-western-route-on-tuesday/.

“PM to open CPEC DIK route soon.” Pakistan Observer, March 11, 2016. Accessed May 15, 2016. http://pakobserver.net/2016/03/11/pm-to-open-cpec-dik-route-soon/.

“Raised concerns over China-Pak Economic Corridor: V K Singh.” IANS, May 7, 2016. Accessed May 14, 2016. http://www.business-standard.com/article/news-ians/raised-concerns-over-china-pakistan-economic-corridor-vk-singh-116050700580_1.html.

Siddiqui, Shoaib-ur-Rehman. “NHA Striving to Expand, Modernize Road Network as per PM’s Vision.” Business Recorder, May 6, 2016. Accessed May 14, 2016. http://www.brecorder.com/top-news/front-top/294272-nha-striving-to-expand-modernize-raod-network-as-per-pms-vision.html.

Yousafzai, Fawad. “Pakistan asks China to include 4 industrial zones in CPEC.” The Nation, May 11, 2016. Accessed May 15, 2016. http://nation.com.pk/newspaper-picks/11-May-2016/pakistan-asks-china-to-include-4-industrial-zones-in-cpec.

Yousuf, Kamran. “RAW is blatantly destabilising CPEC, says General Raheel.” Express Tribune, April 12, 2016. Accessed May 14, 2016. http://tribune.com.pk/story/1083453/raw-is-blatantly-destabilising-cpec-says-general-raheel/.

Notes:
1 Alvin Cheng-Hin Lim, “‘Iron Brothers’: Sino-Pakistani Relations And The China-Pakistan Economic Corridor,” Eurasia Review, May 7, 2015, accessed May 14, 2016, http://www.eurasiareview.com/07052015-iron-brothers-sino-pakistani-relations-and-the-china-pakistan-economic-corridor-analysis/. “Gwadar Port will be operating fully by end of this year, says Zhang Baozhong,” INP, April 23, 2016, accessed May 14, 2016, http://nation.com.pk/national/23-Apr-2016/gwadar-port-will-be-operating-fully-by-end-of-this-year-says-zhang-baozhong. “China-Pakistan Economic Corridor: Pakistan’s road of high hopes,” The Indian Express, April 18, 2016, accessed May 15, 2016, http://indianexpress.com/article/explained/cpec-pakistan-china-nawaz-sharif-xi-jinping-2758111/.

2 Shoaib-ur-Rehman Siddiqui, “NHA Striving to Expand, Modernize Road Network as per PM’s Vision,” Business Recorder, May 6, 2016, accessed May 14, 2016, http://www.brecorder.com/top-news/front-top/294272-nha-striving-to-expand-modernize-raod-network-as-per-pms-vision.html.

3 “PM to inaugurate CPEC Western Route on Tuesday,” Pakistan Observer, May 15, 2016, accessed May 15, 2016, http://pakobserver.net/2016/05/15/pm-to-inaugurate-cpec-western-route-on-tuesday/. “PM to open CPEC DIK route soon,” Pakistan Observer, March 11, 2016, accessed May 15, 2016, http://pakobserver.net/2016/03/11/pm-to-open-cpec-dik-route-soon/.

4 “Pakistan, China ink agreements worth $4.2b,” The Express Tribune, May 4, 2016, accessed May 15, 2016, http://tribune.com.pk/story/1096762/cpec-eastern-alignment-pakistan-china-ink-agreements-worth-4-2b/.

5 “CPEC to Benefit 3B People Thru Enhanced Connectivity,” Pakistan Observer, April 25, 2016, accessed May 15, 2016, http://pakobserver.net/2016/04/25/cpec-to-benefit-3b-people-thru-enhanced-connectivity/. Fawad Yousafzai, “Pakistan asks China to include 4 industrial zones in CPEC,” The Nation, May 11, 2016, accessed May 15, 2016, http://nation.com.pk/newspaper-picks/11-May-2016/pakistan-asks-china-to-include-4-industrial-zones-in-cpec.

6 “Central Asian states keen to benefit from CPEC, says Mamnoon,” Dawn, October 13, 2015, accessed May 15, 2016, http://www.dawn.com/news/1212635. Khawaja Daud, “Iran ready to become part of China Pakistan Economic Corridor,” Daily Pakistan, April 16, 2016, accessed May 15, 2016, http://en.dailypakistan.com.pk/headline/iran-ready-to-become-part-of-cpec/.

7 “Pakistan striving to become the economic hub for central Asia,” The News International, December 16, 2015, accessed May 15, 2016, http://www.thenews.com.pk/print/82201-Pakistan-striving-to-become-the-economic-hub-for-central-Asia.

8 “Pakistan striving.”

9 Peter Lee, “SCS for South China Sea aren’t the scariest letters in the world … they’re CPEC,” Asia Times, May 11, 2016, accessed May 14, 2016, http://atimes.com/2016/05/csc-for-south-china-sea-arent-the-scariest-letters-in-the-world-theyre-cpec/.

10 Kay Johnson, “Pakistan army chief accuses India of undermining China investment corridor,” Reuters, April 13, 2016, accessed May 14, 2016, http://in.reuters.com/article/pakistan-india-port-idINKCN0XA13X.

11 Kamran Yousuf, “RAW is blatantly destabilising CPEC, says General Raheel,” Express Tribune, April 12, 2016, accessed May 14, 2016, http://tribune.com.pk/story/1083453/raw-is-blatantly-destabilising-cpec-says-general-raheel/.

12 “Raised concerns over China-Pak Economic Corridor: V K Singh,” IANS, May 7, 2016, accessed May 14, 2016, http://www.business-standard.com/article/news-ians/raised-concerns-over-china-pakistan-economic-corridor-vk-singh-116050700580_1.html.

13 Khaleeq Kiani, “3bn people to benefit from CPEC: Dar,” Dawn, June 3, 2015, accessed May 15, 2016, http://www.dawn.com/news/1185842.

14 Peter Lee, “The World’s Most Dangerous Letters Are Not SCS … They’re CPEC,” China Matters, May 11, 2016, accessed May 14, 2016, http://chinamatters.blogspot.sg/2016/05/the-worlds-most-dangerous-letters-are.html.

15 Harsh V. Pant, “The China-Pakistan axis gains momentum and could pull India into a war on two fronts,” Daily Mail, April 15, 2016, accessed May 14, 2016, http://www.dailymail.co.uk/indiahome/article-3542499/The-China-Pakistan-axis-gains-momentum-pull-India-war-two-fronts.html.

16 “Raised concerns.”

17 S. Kalyanaraman, “Rethinking India’s approach towards Pakistan-occupied Kashmir,” Institute for Defence Studies and Analyses, May 3, 2016, accessed May 14, 2016, http://idsa.in/idsacomments/rethinking-indias-approach-towards-pakistan-occupied-kashmir_skalyanaraman_030516.

18 Lee, “SCS for South China Sea.”


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Alvin Cheng-Hin Lim

Alvin Cheng-Hin Lim

Alvin Cheng-Hin Lim is a research fellow with International Public Policy Pte. Ltd. (IPP), and is the author of Cambodia and the Politics of Aesthetics (Routledge 2013). He received his Ph.D. in Political Science from the University of Hawaii at Manoa, and has taught at Pannasastra University of Cambodia and the American University of Nigeria. Prior to joining IPP, he was a research fellow with the Longus Institute for Development and Strategy. Email: Alvin Cheng-Hin Lim

2 thoughts on “The China-Pakistan Economic Corridor One Year On – Analysis

  • May 16, 2016 at 2:00 pm
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    CPEC is bound to be successful. Opponents may cause some bellyaches to Pakistan but will most likely fail. The land are of Pakistan then called Sindh had an excellent relationship with China even in 100 AD and China carried out her trade through the Sindhi ports. History is repeating itself. It is the modern Eurasian geopolinomics that has led to strong China-Pakistan relationships now added by Russia, not the Western geopolitics that is attempting to derail CPEC project. Geopolitics explains economic integration and Geopolitics divide and rule. Moreover, India must accept Gilgit-Baltistan as an integral part of Pakistan, just as it is also keeping the Jamu and Kashmir. Any attempt by India to risk a war in Kashmir for access to Central Asian markets is bound to have serious consequences for both India and Pakistan. Nuclear capabilities provide deterrence. However, India will never again be able to even hope for transportation rights through Pakistani corridor. China and Pakistan together have started the CPECX project and are in control. USA will likely be balancing her interests visa-a-vis CPEC and OBOR and maritime Silk Roads. Indeed the US rebalancing act means a new competition between land-based Eurasia, which by now remains in partnerships, and the maritime alliance of varied interests. Should India attempted to attacked Pakistan in Kashmir and declared war, it will only be isolating herself in Eurasia and like minded maritime powers surrounding the region.

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  • May 17, 2016 at 7:44 am
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    CPEC is a positive project for the economy of Pakistan. It is moving fast in the last two years. A number of infrastructural projects are underway. The coordination between Pakistan and China is going well in this regard. Pakistan regards it vital for its economy and for future. For China it is the flagship project of the OBOR. America has not showing ‘concerns” about the CPEC as it is an inter-connectivity and inter-dependence project in Asia. India is isolated and engaged in sabotage activities against this project. Iran has joined the CPEC and so is other regional countries. Hope Japan will soon join it.

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