CPEC

China–Pakistan Economic Corridor also known by the acronym CPEC) is a collection of

infrastructure projects that are currently under construction throughout Pakistan. Originally
valued at $46 billion, the value of CPEC projects is now worth $62 billion. CPEC is intended to
rapidly modernize Pakistani infrastructure and strengthen its economy by the construction of
modern transportation networks, numerous energy projects, and special economic zones. On 13
November 2016, CPEC became partly operational when Chinese cargo was transported overland
to Gwadar Port for onward maritime shipment to Africa and West Asia, while some major power
projects were commissioned by late 2017.

CPEC's potential impact on Pakistan has been compared to that of the Marshall Plan undertaken
by the United States in post-war Europe. Pakistani officials predict that CPEC will result in the
creation of upwards of 2.3 million jobs between 2015 and 2030, and add 2 to 2.5 percentage
points to the country's annual economic growth.

According to official statistics, 20% of CPEC is debt-based finance, while 80% of CPEC are
investments in Joint Ventures (JV) enterprise between Pakistan and China, with the project
contributing to 40,000 jobs for local Pakistanis and 80,000 jobs for Chinese. 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
claimed 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. On 14 January 2020, Pakistan operationalized
Gwadar Port for Afghan transit trade.

According to critics including the United States and India, the project is a debt-trap. However,
the Pakistani government stated that most of the project consists of equity finance such as joint
ventures instead of debt finance, giving Pakistan alternative means of raising capital for the
project.
Projects in Gwadar Port and City

Gwadar forms the crux of the CPEC project, as it is envisaged to be the link between China's
ambitious One Belt, One Road project, and its 21st Century Maritime Silk Road project.  In total,
more than $1 billion worth of projects are to be developed around the port of Gwadar by
December 2017.

Gwadar Port Complex

The special economic zone will be completed in three phases. By 2025, it is envisaged that
manufacturing and processing industries will be developed, while further expansion of the zone
is intended to be complete by 2030.[43] On 10 April 2016, Zhang Baozhong, chairman of China
Overseas Port Holding Company said in a conversation with The Washington Post that his
company planned to spend $4.5  billion on roads, power, hotels and other infrastructure for the
industrial zone as well as other projects in Gwadar city.

Projects in Gwadar city

China will grant Pakistan $230 million to construct a new international airport in Gwadar. [79] The
provincial government of Balochistan has set aside 4000 acres for the construction of the new
$230 million Gwadar International Airport which will require an estimated 30 months for
construction,[80] the costs of which are to be fully funded by grants from the Chinese government
which Pakistan will not be obliged to repay. As of 2017, in total there are 9 projects funded
by China in and around Gwadar.[84]

Development of Gwadar includes the building of a hospital under a Chinese government grant.
Under the proposed project medical blocks, nursing and paramedical institutes, medical college,
central laboratory, and other allied facilities are to be constructed with the supply of medical
equipment and machinery.

Roadway projects

Three corridors have been identified for cargo transport: the Eastern Alignment through the
heavily populated provinces of Sindh and Punjab where most industries are located, the Western
Alignment through the less developed and more sparsely populated provinces of Khyber
Pakhtunkhwa and Balochistan, and the future Central Alignment which will pass through Khyber
Pakhtunkhwa, Punjab, and Balochistan.

Railway projects

The CPEC project emphasises major upgrades to Pakistan's aging railway system, including
rebuilding of the entire Main Line 1 railway between Karachi and Peshawar by 2020; [145] this
single railway currently handles 70% of Pakistan Railways traffic. [146] In addition to the Main
Line 1 railway, upgrades and expansions are slated for the Main Line 2 railway, Main Line 3
railway. The CPEC plan also calls for completion of a rail link over the 4,693-meter
high Khunjerab Pass. The railway will provide direct access for Chinese and East Asian goods to
Pakistani seaports at Karachi and Gwadar by 2030.[146]

Procurement of an initial 250 new passenger coaches, and reconstruction of 21 train stations are
also planned as part of the first phase of the project – bringing the total investment in Pakistan's
railway system to approximately $5 billion by the end of 2019.[147] 180 of the coaches are to be
built at the Pakistan Railways Carriage Factory near Islamabad, [148] while the Government of
Pakistan intends to procure an additional 800 coaches at a later date, with the intention of
building 595 of those coaches in Pakistan.

The CPEC "Early Harvest" plan includes a complete overhaul of the 1,687 kilometre long Main
Line 1 railway (ML-1) between Karachi and Peshawar at a cost of $3.65 billion for the first
phase of the project

Main Line 2[edit]

Main article: Kotri–Attock Railway Line

In addition to upgrading the ML-1, the CPEC project also calls for similar major upgrade on the
1,254 kilometre long Main Line 2 (ML-2) railway between Kotri in Sindh province,
and Attock in northern Punjab province via the cities of Larkana and Dera Ghazi Khan.[162] The
route towards northern Pakistan roughly parallels the Indus River, as opposed to the ML-1 which
takes a more eastward course towards Lahore. The project also includes a plan to connect
Gwadar, to the town of Jacobabad, Sindh[163] which lies at the intersection of the ML-2 and ML-3
railways.
Main Line 3[edit]
Main article: Rohri–Chaman Railway Line

Medium term plans for the Main Line 3 (ML-3) railway line will also include construction of a
560 kilometer long railway line between Bostan near Quetta, to Kotla Jam in Bhakkar
District near the city of Dera Ismail Khan,[164] which will provide access to southern Afghanistan.
The railway route will pass through the city of Quetta and Zhob before terminating in Kotla Jam,
and is expected to be constructed by 2025.[146]

Lahore Metro[edit]
Main article: Orange Line (Lahore Metro)

The $1.6 billion Orange Line of the Lahore Metro is under construction and is regarded as a

commercial project under CPEC.[165] Construction on the line has already begun, with initial
planned completion by Winter 2017 however this has been delayed several times, first to end of
2018[166][167] and as of August 2019, the deadline is January 2019 [168] The line will be 27.1-
kilometre (16.8 mi) long, of which 25.4 kilometres (15.8 mi) will be elevated, with the remaining
portion to be underground between Jain Mandir and Lakshmi Chowk. [169] When complete, the
project will have the capacity to transport 250,000 commuters per day, with plans to increase
capacity to 500,000 commuters per day by 2025.[170]

Khunjerab Railway[edit]

Longer term projects under CPEC also call for construction of the 682 kilometre long Khunjerab
Railway line between the city of Havelian, to the Khunjerab Pass on the Chinese border, [164] with
extension to China's Lanxin Railway in Kashgar, Xinjiang. The railway will roughly parallel
the Karakoram Highway, and is expected to be complete in 2030.[146]

The cost of the entire project is estimated to be approximately $12 billion, and will require 5
years for completion. A 300 million rupee study to establish final feasibility of constructing the
rail line between Havelian and the Chinese border is already underway. [171] A preliminary
feasibility study was completed in 2008 by the Austrian engineering firm TBAC.

Energy sector projects

Pakistan's current energy generating capacity is 24,830 MW,.[173] Energy generation will be a
major focus of the CPEC project, with approximately $33 billion expected to be invested in this
sector.[27] An estimated 10,400 MW of electricity are slated for generation by March 2018 as part
of CPEC's "Early Harvest" projects.

Renewable-energy
China's Zonergy company will complete construction on the world's largest solar power plant –
the 6,500 acre Quaid-e-Azam Solar Park near the city of Bahawalpur with an estimated capacity
of 1000 MW

The Jhimpir Wind Power Plant, built by the Turkish company Zorlu Enerji has already begun to
sell 56.4 MW of electricity to the government of Pakistan, [182] though under CPEC, another 250
MW of electricity are to be produced by the Chinese-Pakistan consortium United Energy
Pakistan and others at a cost of $659 million.[183][184] Another wind farm, the Dawood wind power
project is under development by HydroChina at a cost of $115 million, and will generate 50 MW
of electricity by August 2016.[185]

SK Hydro Consortium is constructing the 870 MW Suki Kinari Hydropower Project in

the Kaghan Valley of Pakistan's Khyber Pakhtunkhwa province at a cost of $1.8 billion,[186] SK
Hydro will construct the project with financing by China's EXIM bank.[187]

The $1.6 billion 720 MW Karot Dam which is under construction is part of the CPEC plan, but is
to be financed separately by China's Silk Road Fund.

The $2.4 billion, 1,100 MW Kohala Hydropower Project being constructed by China's Three

Gorges Corporation predates the announcement of CPEC, though funding for the project will
now come from CPEC fund

Coal
Balochistan

In Balochistan province, a $970 million coal power plant at Hub, near Karachi, with a capacity
of 660 MW to be built by a joint consortium of China's China Power Investment Corporation and
the Pakistani firm Hub Power Company as part of a larger $2 billion project to produce 1,320
MW from coal.[196]
A 300 MW coal power plant is also being developed in the city of Gwadar, and is being financed
by a 0% interest loan.[82] Development of Gwadar also include a 132 KV(AIS) Grid Station along
with associated D/C Transmission line at Down Town, Gwadar along with other 132 KV Sub
Stations at Deep Sea Port Gwadar.[197]

Punjab

The $1.8 billion Sahiwal Coal Power Project, in full operation since 3 July 2017, [198] is a project
in central Punjab that has a capacity of 1,320 MW. It was built by a joint venture of two Chinese
firms: the Huaneng Shandong company and Shandong Ruyi, who will jointly own and operate
the plant.[199] Pakistan will purchase electricity from the consortium at a tariff of 8.36 US
cents/kWh.[200]

The $589 million project to establish a coal mine and a relatively small 300 MW coal power
plant to be built in the town of Pind Dadan Khan by China Machinery Engineering Corporation
in Punjab's Salt Range.[201] Pakistan's NEPRA has been criticized for considering a relatively high
tariff of 11.57 US cents/kWH proposed by the Chinese firm, [202] which had been initially agreed
at 8.25 US cents/kWH in 2014.[203] The Chinese firm argued that coal transportation costs had
greatly increased due to the nonavailability of coal from nearby mines which had initially been
regarded as the primary coal source for the project. The company argued that coal would instead
have to be transported from distant Sindh province, which along with inefficiencies in mining
procedures, increased the cost of fuel by 30.5%.[204]

Sindh

The Shanghai Electric company of China will construct two 660 MW power plants as part of the
"Thar-I" project in the Thar coalfield of Sindh province, while "Thar-ll" will be developed by a
separate consortium.[205][206] The facility will be powered by locally sourced coal, [207] and is
expected to be put into commercial use in 2018. [208] Pakistan's National Electric Power
Regulatory Authority (NEPRA) has agreed to purchase electricity from both Thar-l and Thar-ll
at a tariff of 8.50 US cents/kWh for the first 330 MW of electricity, 8.33 US cents/kWh for the
next 660 MW, and 7.99 US cents/kWh for the next 1,099 MW as further phases are developed.
[209][210]
Near the Thar-I Project, the China Machinery Engineering Corporation in conjunction with
Pakistan's Engro Corporation will construct two 330 MW power plants as part of the "Thar-ll
Project" (having initially proposed the simultaneous construction of two 660 MW power plants)
as well as developing a coal mine capable of producing up to 3.8 million tons of coal per year as
part of the first phase of the project."[211] The first phase is expected to be complete by early
2019,[212] at a cost of $1.95 billion.[213] Subsequent phases will eventually generate an additional
3,960 MW of electricity over the course of ten years. [206] As part of infrastructure required for
electricity distribution from the Thar l and ll Projects, the $2.1 billion Matiari to Lahore
Transmission Line, and $1.5 billion in Matiari to Faisalabad transmission line are also to be built
as part of the CPEC project.[30]

The 1,320 MW $2.08 billion Pakistan Port Qasim Power Project near Port Qasim will be a joint

venture of Al-Mirqab Capital from Qatar, and China's Power Construction Corporation – a
subsidiary of Sinohydro Resources Limited.[214][215] Pakistan's NEPRA and SinoHydro agreed to
set the levelized tariff for electricity purchased from the consortium at 8.12 US cents/kWh.
[216]
 The first 660 MW reactor was commissioned in November 2017.

Liquified natural gas[edit]

Liquefied natural gas power LNG projects are also considered vital to CPEC. The Chinese
government has announced its intention to build a $2.5 billion 711 kilometre gas pipeline from
Gwadar to Nawabshah in province as part of CPEC.

The 1,223 MW Balloki Power Plant is currently under construction near Kasur, and is being
constructed by China's Harbin Electric Company with financing from the China's EXIM bank, is
one such example

Other areas of cooperation

Agriculture and aquaculture

The framework includes cooperation in Remote Sensing (RS) and Geographical Information
System (GIS), food processing, pre-and-post-harvest handling and storage of agricultural
produce, selection and breeding of new breeds of animals and new varieties of plants,
specifically fisheries and aquaculture.
Science and technology
As part of CPEC, the two countries signed an Economic and Technical Cooperation Agreement,
[237]
 as well as pledged to "China-Pakistan Joint Cotton Bio-Tech Laboratory" [237] The two
countries also pledged to establish the "China-Pakistan Joint Marine Research Center" with State
Oceanic Administration and Pakistan's Ministry of Science and Technology [237] Also as part of
the CPEC agreement, Pakistan and China have agreed to co-operate in the field of space
research.

 "Pak-China Science, Technology, Commerce and Logistic Park"

In May 2016, construction began on the $44 million 820 kilometer long Pakistan-China Fiber
Optic Project, a Cross Border Optical Fiber Cable that will enhance telecommunication and ICT
Industry in the Gilgit Baltistan, Khyber Pakhtunkhwa and Punjab region, while offering Pakistan
a fifth route by which to transmit telecommunication traffic. [239][240] which will be extended to
Gwadar.[241][86]

in May 2019, Vice President of China and Pakistan has decided to launch Huawei Technical
Support Center in Pakistan

CPEC and the "Malacca Dilemma"[edit]

The Straits of Malacca provide China with its shortest maritime access to Europe, Africa, and the
Middle East.[283] Approximately 80% of its Middle Eastern energy imports also pass through the
Straits of Malacca.[284] As the world's biggest oil importer, [49] energy security is a key concern for
China while current sea routes used to import Middle Eastern oil are frequently patrolled by the
United States' Navy.[285]

In the event that China were to face hostile actions from a state or non-state actor, energy imports
through the Straits of Malacca could be halted, which in turn would paralyse the Chinese
economy in a scenario that is frequently referred to as the "Malacca Dilemma". [284] In addition to
vulnerabilities faced in the Straits of Malacca region, China is heavily dependent upon sea-routes
that pass through the South China Sea, near the disputed Spratly Islands and Paracel Islands,
which are currently a source of tension between China, Taiwan, Vietnam, the Philippines, and
the United States.[286] The CPEC project will allow Chinese energy imports to circumvent these
contentious areas and find a new artery in the west, and thereby decrease the possibility of
confrontation between the United States and China.[287] However, there is evidence to suggest
that any pipelines from Gwadar up to China would be very expensive, would encounter
numerous logistical difficulties including difficult terrain and potential terrorism, and would
barely make any impact on China's overall energy security.[288]

In addition to potential weaknesses in regards to the United States' Navy, the Indian Navy has
recently increased maritime surveillance of the Straits of Malacca region from its base on Great
Nicobar Island.[289] India has expressed fears of a Chinese "String of Pearls" encircling it.[290]
[291]
 Were conflict to erupt, India could potentially impede Chinese imports through the straits.
[292]
 Indian maritime surveillance in the Andaman Sea could possibly enhance Chinese interest in
Pakistan's Gwadar Port – the Kyaukpyu Port, which is currently being developed in Myanmar by
the Chinese government as another alternate route around the Straits of Malacca, will likely be
vulnerable to similar advances by the Indian Navy. The proposed Bangladesh-China-India-
Myanmar Corridor (BCIM) would also be vulnerable to Indian advances against China in the
event of conflict, thereby potentially limiting the BCIM Corridor's usefulness to China's energy
security, and thereby increasing Chinese interest in CPEC.