CPEC EFFECTS ON ECONOMY

1) What Is CPEC?
Cpec is an abrevation of China-Pakistan Economic Corridor. It is collection of
Infrastructure projects that are currently under construction throughtout Pakistan. It was
Originally Valued at 46 Billion Dollors. But As of 2017 the value of Cpec Projects is worth 62
Billion Dollors. The Main Purpose Of Cpec is to quickly Upgrade Pakistan’s required
Infrastructure and Strength its economy by the construction of Numerous Transportation
Networks, Numerous Energy Projects and Special Economic Zones.
The much advertised China-Pakistan Economic Corridor will pass through the beautiful
GilgitBaltistan province in the north which will connect Kashgar in China’s western province
Xinjiang to rest of the world through Chinese-operated Gwadar port in the country's south. This
mega project is expected to take the bilateral relationship between Pakistan and China to new
heights, it’s a beginning of a journey which hopes to transform the economy and help bridge
Pakistan’s power shortfall. The CPEC project has been divided into phases, the first phase being
the completion of Gwadar International Airport and major developments of Gwadar Port. This
phase is expected to be completed by the year 2017. The project also includes the expansion of
Karakoram Highway- the road that connects China with Pakistan and placement of fiber-optic
line ensuring better communication between the two countries.
It is estimated that if all the planned projects are implemented, the value of those projects
would exceed all foreign direct investment in Pakistan since 1970 and would be equivalent to
17% of Pakistan's 2015 gross domestic product. It is further estimated the CPEC project will
create some 700,000 direct jobs during the period 2015–2030 and add up to 2.5 percentage
points to the country's growth rate. According to official statistics, 20% of CPEC is debt-based
finance. Official statistics suggested a return of US$6 billion to 8 billion from taxes per annum
such as road and bridge tolls. The total CPEC loan is 6% of Pakistan's GDP, however the Indian
Government has labelled the project a debt-trap. Nevertheless, officials countered that 3.5% of
Pakistani GDP per annum is lost due to poor transportation networks, which the CPEC
investment aims to remedy leading to added benefits for any lag in Pakistan's growth
statistic.Economic analysts have stated tangible benefits of this initiative including an end to the
major energy shortages in Pakistan which had previously crippled economic growth.

BENEFITS OF CPEC ON ECONOMY

1) The CPEC will open doors to immense economic opportunities not only to Pakistan but will
physically connect China to its markets in Asia, Europe and beyond. Almost 80% of the China’s
oil is currently transported from Strait of Malacca to Shanghai, (distance is almost 16,000 km
and takes 2-3 months), with Gwadar becoming operational, the distance would reduce to less
than 5,000 km. If all goes well and on schedule, of the 21 agreements on energy– including gas,
coal and solar energy– 14 will be able to provide up to 10,400 megawatts (MW) of energy by
March 2018. According to China Daily, these projects would provide up to 16,400 MW of energy
altogether.
2} As part of infrastructure projects worth approximately $11 billion, and 1,100 kilometer long
motorway will be constructed between the cities of Karachi and Lahore,2 while the Karakoram
Highway between Rawalpindi and the Chinese border will be completely reconstructed and
overhauled. The Karachi–Peshawar main railway line will also be upgraded to allow for train
travel at up to 160 kilometers per hour by December 2019.3 Pakistan's railway network will also
be extended to eventually connect to China's Southern Xinjiang Railway in Kashgar.4 A network
of pipelines to transport liquefied natural gas and oil will also be laid as part of the project,
including a $2.5 billion pipeline between Gwadar and Nawabshah to transport gas from Iran.
3) Oil from the Middle East could be offloaded at Gwadar and transported to China through the
corridor, cutting the current 12,000 km journey to 2,395 km. It will act as a bridge for the new
Maritime Silk Route that envisages linking 3 billion people in Asia, Africa and Europe, part of a
trans-Eurasian project. When fully operational, Gwadar will promote the economic
development of Pakistan and become a gateway for Central Asian countries, including
Afghanistan, Uzbekistan, linking Sri Lanka, Iran and Xinjiang to undertake marine transport.
4) Over $33 billion worth of energy infrastructure will be constructed by private consortia to
help alleviate Pakistan's chronic energy shortages,7 which regularly amount to over 4,500MW,8
and have shed an estimated 2-2.5% off Pakistan's annual GDP.9 With approximately $33 billion
expected to be invested in energy sector projects, power generation assumes an important role
in the CPEC project. Over 10,400MW of energy generating capacity is to be developed between
2018 and 2020 as part of the corridor's fast-tracked "Early Harvest" projects.

DISADVANTAGES OF CPEC ON ECONOMY

1) The first of risks is terrorism, which has long affected Pakistan’s internal security and
stability. Although Pakistan has worked hard to strike at religious extremism and terrorist
activities, its problems with terrorism have not substantially improved in recent years. Because
the CPEC is so important to the Pakistani government, these projects’ construction sites and
engineering personnel may become targets for religious as well as nationalist extremists.
Indeed, there already have been numerous occasions when Chinese engineers working in
Pakistan have been attacked or even lost their lives. In May 2016, for instance, engineers in
Karachi were attacked By Sindh Separatists. Fortunately, no Chinese personnel were wounded
or killed. Then in September, Baloch rebels at least two Chinese engineers and injured many
others.8 Moreover, several large scale Terrotist attacks in Balochistan have killed dozens of
people, which shows that the security situation in this province where China has key projects is
far from ideal.9
The security threat posed by terrorism remains ongoing, despite the economic benefits that the
CPEC can offer Pakistan. The corridor aims to enhance the well-being of people throughout the
country and bring long-term prosperity and stability. The Pakistani authorities, meanwhile, have
promised China they will do everything possible to ensure the safety of Chinese workers.10 This
is a feasible commitment in the short term. However, over time, it will become more difficult
for Pakistan to guarantee the security of the CPEC’s growing transportation networks, which
will require increasing investments of security personnel and material support. It will likely
become uncertain in the future whether Pakistan can maintain a strong enough military
presence to ensure the security of all these transportation routes.
2) Gwadar port in Balochistan holds the key to the success of the corridor and Pakistan’s
ambition of becoming an economic stalwart in the region. However, increasing calls in
Balochistan for a separate state and the ensuing armed conflict pose an enormous challenge to
the corridor. Baloch nationalists oppose CPEC, as it could potentially turn the demographic
balance of the region against them. Many people from other provinces of Pakistan could move
to Balochistan and settle there, if the corridor does become a success. Various Baloch rebel
groups have already attacked Chinese engineers and officials working on different CPEC
projects.Many banned terrorist organizations also pose a threat to the project as they seek
ways to settle scores with the Pakistani state. Plus, numerous political organizations from
provinces like Khyber Pakhtunkhwa and Sindh have voiced concerns over changing the original
plan of the corridor, which allegedly diverts the economic benefits to Punjab province only. To
add to the woes, Pakistan’s strong military establishment also feels that it has a little say in the
project.

3) Ceaseless bad blood between India and Pakistan has led to the ever-present sense of
precariousness and instability in the entire region. As the corridor passes through Pakistan-
administered Kashmir and Gilgit Baltistan, which India claims to be its own integral and
indispensable territory, illegally held by Pakistan, New Delhi has openly opposed CPEC. Pakistan
has continuously accused India of conspiring to disrupt the project by fueling the Baloch
insurgency, a claim vehemently contested by Indian state. Unhealthy Indo-Pak relations cast
shadows over the prospects of a peaceful and stable South Asia.

REFRENCES
 https://thediplomat.com/2016/11/cpec-boon-or-bane-for-pakistan/

 https://www.coursehero.com/file/23029985/Disadvantages-of-cpec/

 https://carnegietsinghua.org/2016/12/21/benefits-and-risks-of-china-pakistan-economic-
corridor-pub-66507

 https://en.wikipedia.org/wiki/China%E2%80%93Pakistan_Economic_Corridor