25TH MCMC

INDIVIDUAL RESEARCH PAPER

CPEC AS A GAME CHANGER FOR

PAKISTAN’S ECONOMY: ISSUES,
CHALLENGES AND WAY FORWARD

BY
AHMED RAZA TAHIR
EX-CADRE(NAB)

A paper submitted to the Faculty of the National Institute of Management

(NIM), Lahore, in partial fulfillment of the requirements of the 25 th Mid-Career
Management Course.
The paper is the end product of my own efforts, research and writing, and its
contents are not plagiarized. The paper reflects my own views and is not
necessarily endorsed by the faculty or the NIM.

Signature………………………
Date……………………..
Paper supervised by:

i
 Mr. Khalid Nazir Wattoo

Glossary of Terms
CPEC China Pakistan Economic Corridor

OBOR One Belt One Road

NAFTA North American Free Trade Agreement

FC Financial Closed

COD Commercial Operation Date

MW Megawatts

EPA Environmental Protection Agency

LOI Letter of Intent

ECNEC Executive Committee of National Economic Council

CDWP Central Development Working Party

KKH Karakoram Highway

LOE Level of Effort

MOU Memorandum of Understanding

COPHCL China Overseas Ports Holding Company Limited

SEZ Special Economic Zone

ETIM East Turkestan Islamic Movement

TTP Tahreek-e-Taliban Pakistan
LeJ Lashkar-e-Jhangvi
BLA Balochistan Liberation Army
BLF Balochistan Liberation Front
PTI Pakistan Tehreek-e-Insaff
PAT Pakistan Awami Tehreek
TIR Transports Internationaux Routiers or International Road
Transports

AAGC Asia-Africa Growth Corridor

ii
 CONTENTS
Glossary of Terms....................................................................................................................ii
Introduction..............................................................................................................................1
Preamble............................................................................................................................................1
Statement of the Problem...................................................................................................................2
Hypothesis.........................................................................................................................................2
Scope of the Study.............................................................................................................................2
Literature Review..............................................................................................................................3
Research Methodology......................................................................................................................3
Organization of the Paper..................................................................................................................3
Section-I: CPEC Background.................................................................................................3
1.1. Regional Cooperation and Integration...................................................................................3
1.2. One Belt One Road (OBOR).................................................................................................4
1.3. Pak China Relations...............................................................................................................6
Section-II: CPEC Components and Execution......................................................................7
2.1. Energy...................................................................................................................................7
2.2. Infrastructure.........................................................................................................................9
2.3. Gwadar................................................................................................................................10
2.4. Rail Based Mass Transit Projects.........................................................................................12
2.5. CPEC New Provincial Projects............................................................................................13
2.6. Proposed Special Economic Zones (SEZs)..........................................................................14
2.7. Social Sector Development..................................................................................................14
Section-III: CPEC Gains.......................................................................................................15
3.1. To Pakistan..........................................................................................................................15
3.2. To China..............................................................................................................................17
Section-IV: CPEC Issues / Challenges.................................................................................19
4.1. Internal Challenges..............................................................................................................19
4.1.1. National Consensus......................................................................................................19
4.1.2. Internal Security...........................................................................................................19
4.1.3. Execution Capacity.......................................................................................................19
4.1.4. Ambiguity and Uncertainty..........................................................................................20
4.1.5. Political Instability........................................................................................................20
4.1.6. Civil Military Relations.................................................................................................20
4.1.7. Lack of Trained Labour.................................................................................................21

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 4.2. External Challenges.............................................................................................................21
4.2.1. India.............................................................................................................................21
4.2.2. China............................................................................................................................22
4.2.3. Iran...............................................................................................................................22
4.2.4. Arabs............................................................................................................................22
4.2.5. USA..............................................................................................................................22
4.2.6. Japan............................................................................................................................22
4.2.7. Afghanistan..................................................................................................................23
Section-V: Conclusion and Way Forward...........................................................................23
5.1. Conclusion...........................................................................................................................23
5.2. Way Forward.......................................................................................................................24
Figures.....................................................................................................................................28
Bibliography...........................................................................................................................32

iv
 Introduction
Preamble

A Trade or Economic Corridor is normally not a straight road but a bundle of numerous
passages and a network of roads and railways along with relevant infrastructure / services that
promotes trade flows between different centers of economic activity. Such corridors have
existed for centuries between different regions of the world and these are still considered to
be pillars of policy making for furtherance of financial interests. “One Belt One Road
(OBOR)” was announced by Mr. Xi Jinping, the President of China in Kazakhstan in 2013,
mainly to counter slow growth of Chinese economy and to sponsor economic and strategic
objectives of his country1.

This OBOR initiative started to materialize in April 2015, when CPEC—connecting Kashgar
to the Gawadar Port—was officially launched during the visit of Chinese President to
Pakistan2 with a goal that it would not only address energy, infrastructure and development
needs of Pakistan but would also be tactically and economically crucial to China.

Whether such corridors are successful or otherwise depend on the will, nature of cooperation
and consistency of various stakeholders. In the case of CPEC as well, its positive conclusion
would depend on how Pakistan, China and people of both the countries work coherently to
make it a source of national prosperity and development. National / international media,
academicians and opinion makers believe that CPEC would be the harbinger of turnaround of
development and growth of Pakistan’s economy. But, it has become a debated issue even
within Pakistan that whether it is a ‘game changer’ in real sense or it is the China alone that
would gain mostly out of this project. How various stakeholders perceive and react to this
project and how China and Pakistan face different challenges coming in its way, would
determine its fate.

1
WEF. (2016). One Belt, One Road Initiative Signals China’s Economic and Strategic Objectives. Retrieved
from www.weforum.org: https://www.weforum.org/press/2016/06/one-belt-one-road-initiative-signalschina-s-
economic-and-strategic-objectives/ (Accessed on 14th Jan 2018)

2
Haider, Mateen and Irfan Haider, “Economic corridor in focus as Pakistan, China sign 51 MOUs”, Dawn dated
20th April 2015 https://www.dawn.com/news/1177109 accessed on 4th Feb 2018.
1
Whereas, China would have to dissipate the reservations of international powers in respect of
CPEC serving as the base for furtherance of Chinese influence in the region. Pakistan, in
addition to building confidence of its neighbours that they can as well be part in garnering the
dividends from this project, would have to address the doubts of its federating units
about CPEC. How far, Pakistan is successful in dispelling the skepticism being cast on this
project and whether CPEC is a ‘game changer’ or not would be the focus of this study.

Statement of the Problem

CPEC is being hailed by the majority as a ‘Game Changer’ for Pakistan’s economy; but there
is another perception that Pakistan will not gain much from this initiative as the same is still
clouded in uncertainty—and instead of a ‘Game Changer’, it may be a ‘Game Over’. Just
when Pakistan was trumpeting the CPEC as a game changer during the ECO Summit held in
Islamabad in 2017; at that very time, people were skeptical that CPEC may not bring the
promised benefits on the notion that “China is our brother, but business is business”. The
CPEC became further enigmatic as a ‘Game Changer’ for Pakistan; when speculations arose
in Pakistan that China had temporarily stopped funding some projects, particularly those
related to the road network till ‘new guidelines’ by Beijing. To some people, CPEC’s ability
to change Pakistan’s economic outlook seems to be hollow and unreal, they discern that how
CPEC is a game changer when it changes nothing in Pakistan and that CPEC begins and ends
at giving the Chinese a corridor to do business across the region via Pakistan.

Hypothesis

“CPEC is a game changer for Pakistan’s economy”.

Scope of the Study

This research shall mainly focus on the nature of China Pakistan Economic Corridor
and the positive outcomes it is likely to hold for Pakistan. Various components of the project
shall be analysed in detail including their status of implementation and execution. Special
attention shall also be given to the challenges Pakistan faces which could hinder the
maximization of benefits from CPEC and whether these challenges could be addressed by

2
Pakistan. If so, shall benefits from CPEC be reaped by all parties concerned so as to make it a
game changer for Pakistan’s economy?

Literature Review

Various research reports, web and journal articles, websites and interviews were
reviewed to understand the topic under research and to move forward.

Research Methodology

A combination of descriptive, analytical and qualitative research method was used to evaluate
if, Pakistan’s economy would really benefit from CPEC’s successful implementation.
Reliance had mostly been placed on reports, research papers and newspaper articles written
on the subject, and wherever possible, depending on data availability, a qualitative estimate
of the economic benefits accruing to Pakistan was also worked out.

Organization of the Paper

The paper has been divided into five sections. Section-I shall discuss the CPEC
background in the context of China’s Economic Development and Pak-China relations.
Section-II will discuss the components of the project and their execution status. Section-III
will account for the gains accruing to Pakistan and China. Section-IV shall review the issues /
challenges to the project both at internal and external fronts. Finally, based on the discussion
in the document concluding remarks shall be made and a way forward would be suggested in
Section-V.

Section-I: CPEC Background

1.1. Regional Cooperation and Integration

In a global economy, nations achieve economic efficiency by utilizing increased world-wide

trade opportunities. Regionalization, however, has its major impact on world trade due to low
transportation outlay, decreased time of shipment, similarity in customs procedures and
lingual and cultural leanings. Regionalization, therefore, maximizes economic benefits to

3
larger communities from synergizing the natural endowments and man made progress by
countries in the region.

One of the key prerequisite for regional integration, however, is development of an

economic corridor to connect economic agents along a defined geography. It is believed that
economic corridors can only achieve the desired results through global and regional unified
economic networks and creation of NAFTA3 and the European Union4 can be taken as
examples. That is the reason of extensive trade relations within Western Europe and North
America. This recent trend also manifested in trade within Asia by increasingly integrated
economies of Japan, China, Korea and Taiwan.

Asia (Figure1) is the largest continent in the world (Figure 2) both in area (about 30% of land
area of earth) and population (about 60% of the population of earth).
The Continent is divided into six regions of North Asia, Central Asia, Southwest Asia, South
Asia, Southeast Asia and East Asia (Figure 3) and shared by 48 countries (Figure 4). Asia has
many partially and fully landlocked countries that always need shorter routes for trade with
other countries of the world5.

The biggest economy in the Asia region goes to China (Figure 5). China has become the
second largest economy growing at the rate of about 10% a year due to its switch from a
centrally controlled to market based economy6. For ages, USA exercised firm control over
world affairs and its economies and it was a common perception that “when America
sneezes, the world catches a cold.” But now this trend is shifting towards China.

1.2. One Belt One Road (OBOR)

Rapid economic growth and productivity has also some attached challenges because when a
country starts producing that is in excess of local consumption / needs, the economy becomes
static and its GDP slows down7. The production sectors of China had been facing over

3
Office of the Unites States Trade Representative, “North American Free Trade Agreement (NAFTA)”
https://ustr.gov/trade-agreements/free-trade-agreements/north-american-free-trade-agreement-nafta
accessed on 4th Feb 2018.
4
European Union https://europa.eu/european-union/about-eu/eu-in-brief_en accessed on 4th Feb 2018.
5
Ijaz, A. (2015). Significance of Gwadar Port. Retrieved from www.ipripak.org:
http://www.ipripak.org/significance-of-gwadar-port/ accessed on 14th Jan 2018.
6
Countries By Continent. 2016. http://www.nationsonline.org/oneworld/asia.htm. accessed on 14th Jan 2018.
7
Mridusmita Choudhury, “What is One Belt, One Road in China?” Quora, 9 th June 2017
https://www.quora.com/What-is-One-Belt-One-Road-in-China accessed on 5th Feb 2018.
4
production since 2006 and this issue could only be resolved by finding new markets for
products in adjoining countries / regions in particular and in whole world in general.

Some two thousand year ago, China’s emissary Zhang Qian helped to launch the Silk Road—
a network of trade routes that connected China to Central Asia and the Arab world. This road
played a vital role in the development of region for centuries 8. A modern version of this silk
road was proposed in 2013 by President Xi Jinping of China in the shape of ‘One Belt One
Road (OBOR)’; this initiative not only consists of roads but also includes railways, pipelines,
and utility grids and would link China not only to other parts of the Asia but also to the
world. The OBOR project does not aim only at physical connections but also focuses on
provision of a source / base to world for economic, policy, trade / finance, social / cultural
cooperation. In nut shell, OBOR can create benefits for everyone. OBOR is the first key
endeavor by China to plan and execute a cross-continental business approach with
considerable worldwide geopolitical consequences. The OBOR initiative (Figure-6) injected
with investment of $900bn and covering 65 countries 9 can be divided into following two
parts10: -

a. The ‘belt’ means the ‘Silk Road Economic Belt’ that is on land and would link
China with Central Asia, Eastern and Western Europe. This belt comprises
following six economic corridors: -

i. New Eurasian Land Bridge—connecting Western China to Western

Russia.
ii. China – Mongolia – Russia Corridor (North China to Eastern Russia
via Mongolia)
iii. China – Central Asia – West Asia Corridor (Western China to Turkey
via Central and West Asia
iv. China – Indochina Peninsula Corridor (Southern China to Singapore
via Indo-China)

8
Tian Jinchin, “One Belt and one Road: Connecting China and the world”
https://www.mckinsey.com/industries/capital-projects-and-infrastructure/our-insights/one-belt-and-one-
road-connecting-china-and-the-world accessed on 5th Feb 2018.
9
Tom Hancock, “China encircles the world with One Belt, One Road strategy”, Financial Times dated 4 th May
2017 https://www.ft.com/content/0714074a-0334-11e7-aa5b-6bb07f5c8e12 accessed on 5th Feb 2018.
10
Mridusmita Choudhury, “What is One Belt, One Road in China?” Quora, 9 th June 2017
https://www.quora.com/What-is-One-Belt-One-Road-in-China accessed on 5th Feb 2018.
5
 v. China – Pakistan Corridor (South Western China to and through
Pakistan)
vi. Bangladesh – China – India – Myanmar Corridor (Southern China to
India via Bangladesh and Myanmar)

b. The ‘road’ is the ‘21st Century Maritime Silk Road’ that is sea route and it
would establish a link between China, South-East Asia, Central Asia and
Africa.
To start a project with significant global and geopolitical consequences, it is but natural
for any country to start it from the point it could possibly gain immediate economic
advantages as well as where the project can be implemented with relative ease, support and
safety of environment. China, therefore decided to initiate first out of 6 corridors from its
time-tested ally- Pakistan.

1.3. Pak China Relations

When china emerged on world map in 1949, Pakistan was the 1 st Islamic country
and the 3rd worldwide, to recognize China and established formal diplomatic relations on 21 st
May 1951 and remained an unwavering partner during China’s era of international loneliness
in the 1960s and early 1970s11. Pakistan-China friendship is regarded as one of the great
examples of long-lasting alliances in world history. The strong bond between the two
countries has been metaphorically described as “deeper than oceans, higher than the
Himalayas and sweeter than honey”12. The friendship has broken boundaries and barriers
beyond the conventional diplomatic relationships and major manifestation occurred when;
China sided Pakistan against India in the wars of 1965 & 1971, Pakistan performed a decisive
role in bringing China and USA closer by arranging a discreet visit of Henry Kissinger to
China in 1971, China used its veto power for the first time in 1972 blocking Bangladesh’s
entry into the United Nations, China approved Pakistan’s alliance with USA against Soviet
occupation of Afghanistan in 1979, Pakistan, along with Cuba, stood by the side of China
after the Tiananmen Square incident of 1989, ever available Chinese help in Military

11
“China-Pakistan Relations”, Council on Foreign Relations, 6th July 2010
https://www.cfr.org/backgrounder/china-pakistan-relations accessed on 5th Feb 2018.
12
Dunyanews. (2015). Pakistan, China celebrating 64 years of friendship. Retrieved from www.dunyanews.tv:
http://dunyanews.tv/en/Pakistan/274609-Pakistan-China-celebrating-64-years-of-friendship accessed on 14th
Jan 2018.

6
hardware supplies to Pakistan and finally the CPEC—which is expected to make the two
countries more closely intertwined at each level of society.

Section-II: CPEC Components and Execution

The CPEC envisages projects in energy and infrastructure over a period of next 10 years with
approximate investment of 48 billion US$. The projects / components of CPEC are separately
discussed: -

2.

2.1. Energy

23 energy projects with estimated cost of 26,370 Million US$ are included in CPEC 13. These
energy projects after their completion would generate and transmit energy of 13,810 MW—
virtually doubling the energy production of Pakistan. These projects and their present status is
summarized in below table: -

S# Name of Project Estimated Present Status

Cost
(US$ Millions)
1. 1320 MW (2x660 MW) Coal 1980 Financial Closed (FC) achieved. Civ
fired Power Plants at Port Qasim, works on site started in May 2015.
Karachi Jetty completed. Plant 2 months
ahead of schedule. Energization in
October 2017. 1st Unit Inaugurated in
Nov 2017. Expected Commercial
Operation Date (COD) June 2018.
Project to be completed ahead of
schedule.
2. 870 MW, Suki Kinari 1802 Financial Close achieved. Land
Hydropower Station, Naran, KP acquisition award announced on 17th
Nov 2016. EPC Contractor
mobilized to initiate construction
activities. COD 2020/2021.
3. 1320 MW (2x660MW), Sahiwal  1600 Project Completed in 2017,
Coal-fired Power Plant, Punjab connected to national grid and is
operational at present.
4. Engro 2x330MW Coal fired, 2000 Financial Closed (FC) achieved in
TEL 1x330 Mine Mouth Lignite April, 2016. Team mobilized at site
fired, ThalNova 1x330, Mine and construction work in progress.

13
China Pakistan Economic Corridor, “CPEC Projects Progress Update” http://cpec.gov.pk/progress-update
accessed on 10th Feb 2018.
7
 Mouth Lignite fired at Thar
Block-II, Sindh, Pakistan (Total
1320 MW)
5. Surface Mine in Thar Coal Field
Block-II (3.8 million tons/year)
6. Hydro China Dawood, 50MW
Wind Energy Farm(Gharo,
Thatta)
7. 300MW Imported Coal Based
Power Project at Gwadar,
Pakistan
8. Quaid-e-Azam 1000MW Solar
Park (Bahawalpur) Quaid-e-
Azam
9. UEP 100MW Wind Farm
(Jhimpir, Thatta)
10. Sachal 50MW Wind Farm
(Jhimpir, Thatta)
11. SSRL Thar Coal Block-I 6.8
MTPA & SEC Mine Mouth
Power Plant 1320
MW(2×660MW)
12. 720 MW, Karot Hydropower
Station on River Jehlum
13. 100 MW, Three Gorges, 2nd and 150
3rd Wind Power Projects,
Jhampir, Thatta (50 MW each)
14. CPHGC 1,320MW Coal-fired 1940
Power Plant, Hub,Balochistan
15. Matiari to Lahore ±660kV 1500
HVDC Transmission Line
Project. This can handle 2000
MW with 10% overloaded
capability for 2 hours
16. Matiari (Port Qasim) — 1500
Faisalabad Transmission Line
Project which can handle 2000
MW with 10% overloaded
capability for 2 hours
17. Thar Mine Mouth Oracle Power 1300
Plant ( 1320MW) & surface mine
Construction of Transmission line
contract awarded. Contractor
mobilized. COD June, 2019.
1,470 Financial close achieved in April
2016. Mining work in progress.
Expected COD Dec 2018.
125 Operational since 5th April 2017.
600 Site finalized. Land acquisition and
approval from EPA Balochistan
under process.
1,302 COD of 3 x 100 MW attained in
August 2016.
250 COD achieved on 30th Mar 2015 and
the project is operational.
134 FC on 18th Dec 2015. COD 11th April
2017 and project complete and
operational.
2,000 + FC of Plant and Mine achieved in
1,300= 2017. Mine Commercial production
3,300 is expected by 2019, while COD of
plant is 2018/2019.
1,420 Award for land acquisition issued.
FC achieved on 22nd Feb 2017. 25%
civil works completed. Expected
COD 2020/2021
FC Mar 2017. Construction under
process. COD Sep 2018.
Power Purchase Agreement
signed on 25th Jan 2017. Ground
breaking held on 21st Mar 2017 and
expected COD for first 660 MW is
Dec 2018 and for second 660 MW is
Aug 2019.
Feasibility study done. Tariff
determined by NEPRA. Land
acquired for converter stations at
Lahore and Matiari. Expected COD
in 2018/2019.
Feasibility study done. Expected
COD in 2018/2019.
Feasibility stage tariff obtained for
coal. Share holding agreement on
new equity associates under process.
8
 18. 1100 MW, Kohala Hydel Project 2,397 Feasibility Study (stage-1) Tariff
on river Jehlum near Announced by NEPRA. Land
Muazaffarabad, AJK acquisition and environmental
approvals under process. Expected
COD in 2013.
19. 1320 MW, imported fuel (coal) 1600 Project is listed as actively promoted
Power Plant in Rahim Yar Khan. project. LOI issued by Government
of Pakistan.
20. 50 MW, Wind Power Project -- Potential Energy Project
(Sindh)
21. 50 MW, Western Energy (Pvt.) -- -do-
Ltd.Wind Power Project (Sindh)
22. 80 MW, Phandar Hydropower -- -do-
Station, GB
23. 100 MW, Gilgit KIU -- -do-
Hydropower
Total Production: 13,810 MW Total Cost: 26,370 Million US$

2.2. Infrastructure

CPEC consisting of organized motorways / roads, rail tracks and scheme of pipelines would
cause a swift modernization of Pakistani transport infrastructure and would establish a link
between—ports of Karachi and Gwadar, Pakistani Northern areas, Western China and
Central Asia. The development of this infrastructure would result in strengthening of
Pakistan’s economy as according to Werner E. Liepach, Country Director of Asian
Development Bank, “inefficiency in the performance of the transport sector costs Pakistan’s
economy 4-6% of GDP”14. Already started infrastructure projects including roads of 1288
KM with estimated cost of 5340 Million US$, rail track with length of 1872 KM with
estimated cost of 8172 Million US$ and some others15, are depicted in table below: -

S# Project Description Estimated Present Status

Cost (US$
Millions)
1. Karakoram Highway, Phase-II 1,366 Work started in Sep 2016 and would
(Thakot-Havelian Section). This be completed by Mar 2020. The
project envisages improvement Havelian- Abbotabad-Mansehra
and broadening of 440 KM of Section (39 KM) would be completed
KKH. by May 2018.

2. Peshawar-Karachi Motorway 2,980 Construction started in Aug 2016.

14
Khaleeq Kiani, “Transport policy: need of the Day”, Dawn dated 13 th Feb 2017
https://www.dawn.com/news/1314522 accessed on 11th Feb 2018.
15
China Pakistan Economic Corridor, “CPEC Projects Progress Update” http://cpec.gov.pk/progress-update
accessed on 11th Feb 2018.
9
 (Multan-Sukkur Section with 129 KM (Multan- Tranda M. Panah)
length of 392 KM) and 125 KM (Sukkur-Sadiqabad)
Sections would be completed by
April 2018. This project is planned to
be completed in 2019.
3. Khuzdar-Basima Road N-30 80 Project approved by the ECNEC in
(110 KM) May 2017. Agreement and other
formalities have been shared with the
Chinese.
4. Upgradation of 210 KM long 195 Project approved by ECNEC in April
D.I.Khan–Zhob Road, Phase-I 2017. Process of land acquisition has
(N-50) been started.
5. Karakoram Highway (KKH) 719.8 PC-I prepared and completion of
Thakot-Raikot N-35 remaining procedural formalities is under
portion (136 KM) process.
6. Rehabilitation and Up-gradation 8,172 Agreement signed in May 2017. The
of Karachi-Lahore-Peshawar Project is to be completed on a fast
Railway Track (ML-1) having track and its COD is in 2022.
length of 1,872 KM. When the
needful would be done to the
track, it would allow speed up to
140 KM per hour.
7. Construction of Havelian Dry 65 Feasibility study done. Agreement
port including cargo handling signed. The project would be
facilities. completed on fast track basis with
DOC in May 2017.
8. Capacity Development of Not Special groups would be established
Pakistan Railways available for training and capacity building of
human resource of Pakistan Railways.
9. Cross Border Optical Fiber 44 Work started in Oct 2015 and 450 out
Cable of 820 KM completed. It is planned to
be completed by December 2018.
10. Pilot Project of Digital Not Completed and its demonstration
Terrestrial Multimedia Broadcast available project is being processed by the
(DTMB) Chinese.
11. Early Warning System (EWS), -do- PC-I is being revised as per
Pakistan Meteorological observations of CDWP. Rs. 100
Department Million have been allocated by
Planning Division in PSDP 2017-18.
This project is divided between CPEC
and World Bank. 

2.3. Gwadar

Gwadar Port—the gateway to CPEC is located in Balochistan Province in an area which was
purchased by Pakistan in 1958 from Oman and is the 3rd sea port of the country after Karachi
and Bin Qasim Ports. Its proximity to main shipping routes being used by major shipping

10
companies of the world enhances its significance manifold. Gwadar is the largest project of
infrastructural development in Pakistan since its inception and is capable of not only
rendering economic advantages to Balochistan in particular and to Pakistan in general, but
also to perform as power house of industry and a shipment hub. The operations of this port
were given to a Chinese company in 201316 and first ship carrying Pakistani and Chinese
goods left Pakistan on 13th Nov 2016, marking the beginning of operations in respect of
CPEC17. While, MS Tiger, first Container Carrier arrived at Gwadar Port on 7 th March 2018
under the ambit of CPEC18. 12x Gwadar projects presently under execution at different stages
under CPEC umbrella are described as under: -

S# Project Description Estimated Present Status

Cost (US$
Millions)
1. Gwadar East-Bay Expressway. 140.60 Project approved by ECNEC and
This new 6 lane road would ground breaking done on 22nd Nov
connect Gwadar Port with main 2017. DOC in 2018.
national highway ensuring
smooth transportation of goods.
2. New Gwadar International 230 Design and plan approved and
Airport agreement signed in May 2017.
Construction work to start this year.
3. Construction of Breakwaters for 123 Draft business plan provided by the
provision of more terminals at Chinese is being reviewed by Ministry
the Port. of Ports and Shipping and Gwadar Port
Authority.
4. Dredging of Berthing Areas and 27 -do-
Channels
5. Development of Free Zone. 32 Tax exemptions for port and these
This project includes Zones approved in Finance Bill 2016.
infrastructure development such Inside the Free Zone, all investment
as roads, utilities, warehouses, would be made by private persons.
offices and security There is a great response from the
arrangements for Free Zone and investors.
Export Processing Zones in
Gwadar.
6. Necessary facilities of fresh 130 PC-I for 5 MGD RO plant approved by
water treatment, water supply CDWP. Phase-1 of lying of pipelines
and distribution. The planning from Swad Dam to Gwadar is under
as per Gwadar Master Plan has process. The tender for establishment
been done keeping in view, the of desalination plant on Build Operate
medium (2030) and long term Transfer (BOT) basis has been floated.
16
Aymen Ijaz, “Significance of Gwadar Port”, Islamabad Policy Research Institute
http://www.ipripak.org/significance-of-gwadar-port/ accessed on 14th Jan 2018.
17
Khurram Hussain, “First ship leaves Gwadar amid fanfare”, Dawn dated 14 th Nov 2016
https://www.dawn.com/news/1296262 accessed on 14th Jan 2018.
18
Commander Ghulam Safeer, Pakistan Navy Gwadar Support Group, Gwadar, Interviewed on 8 th Mar 2018.
11
 (2050) issues.

7. Pak China Friendship Hospital. 100 Request for grant has been sent by
The existing 50 bed Gwadar Economic Affairs Division of Pakistan
Development Authority to Chinese Govt. Feasibility study of
Hospital would be upgraded to 100 beds completed by the Chinese
300 bed hospital along with team. Level of Effort (LOE) would be
establishment of medical signed in 2018.
college, nursing and
paramedical schools, residential
blocks and other allied facilities.
8. Technical and Vocational 10 Technical feasibility has been
Institute at Gwadar. This completed and MoU would be signed
initiative would skill the soon.
population of Gwadar so that
they can take part in the growth
of the Port City.
9. Gwadar Smart Port City Master 4 LOE and MoU signed in Aug and Nov
Plan 2015, respectively. Contract with
Chinese designing institute signed in
May 2017 and this project is likely to
complete in Aug 2018.
10. Bao Steel Park, petrochemicals, Not Approval process to include this
stainless steel and other available project in CPEC is under process
industries in Gwadar which is likely to be completed soon.
11. Development of Gwadar -do- Process has been initiated by the
University (Social Sector Chinese to identify some leading
Development) Chinese university to collaborate with
University of Gwadar.
12. Up gradation and development -do- China Overseas Ports Holding
of fishing, boat making and Company Ltd (COPHCL) would take
maintenance services to protect effectual actions for social sector
and promote livelihoods of local development. 
population

2.4. Rail Based Mass Transit Projects

Four such projects for cities of Karachi, Peshawar, Quetta and Lahore are envisaged in CPEC
which can be summarized below: -

S# Project Description Estimated Present Status

Cost (US$
Millions)
1. Karachi Circular Railway 1.58 bn19 Joint Coordination Committee (JCC)
of CPEC has approved this project as
component of CEPEC. Feasibility
completed while further studies and
19
Railway Technology, “Karachi Circular Railway Revival”
https://www.railway-technology.com/projects/karachicircularrailw/ accessed on 11th Feb 2018.
12
 consultations on this project are being
done by Transport Working Group.
2. Greater Peshawar Region Mass Not Joint Coordination Committee (JCC)
Transit available of CPEC has approved this project as
component of CEPEC. Feasibility
under process, while further studies
and consultations on this project are
being done by Transport Working
Group.
3. Quetta Mass Transit 21420 (1st -do-
Phase)
4. Orange Line Metro Train, Lahore 1478.1821 Work on the project started.

2.5. CPEC New Provincial Projects

There are 6 projects in this category22 which are described below: -

S# Project Description Estimated Present Status

Cost (US$
Millions)
1. Keti Bunder, Sea Port Not Studies / consultations are being
Development Project available initiated.

2. Naukundi-Mashkhel-Panjgur -do- -do-

Road. This project would connect
M-8 with N-85
3. CPEC link road from Gilgit, -do- -do-
Shandor and Chitral to Chakdara
4. A Road from Mirpur to Mansehra -do- -do-
via Muzaffarabad for connection
with CPEC route
5. Water Supply Scheme for Quetta -do- Concerned Provincial Departments
are working on proposals for
implementation of this project.
6. Iron Ore Mining, Processing & -do- -do-
Steel Mills complex at Chiniot,
Punjab

2.6. Proposed Special Economic Zones (SEZs)

Establishment of SEZs is a successful approach to promote trade, to increase employment

opportunities for people and to create economic activity / growth in a country. Industrial
cooperation is part of long term agenda of CPEC and so far under its auspices, 9 SEZs have
20
Saleem Shahid, “First phase of Quetta mass transit to complete in 2019”, Dawn dated 2 nd Nov 2016
https://www.dawn.com/news/1293736 accessed on 11th Feb 2018.
21
Punjab Mass Transit Authority, “Orange Line Metro Train System” http://pma.punjab.gov.pk/olmts accessed
on 11th Feb 2018.
22
China Pakistan Economic Corridor, “CPEC Projects Progress Update” http://cpec.gov.pk/progress-update
accessed on 11th Feb 2018.
13
been proposed23. The key identified sectors for manufacturing are—textile and clothing;
household gadgets; automobiles and parts; fruit processing; metal, leather, marble and cement
products. The proposed SEZs are discussed as under: -

S# Project Description Estimated Present Status

Cost (US$
Millions)
1. 1000 Acres, Rashakai EZ (M-1), Not Feasibility study shared with the
Nowsherad. available Chinese.
2. 1000 Acres, China SEZ, Dhabeji, -do- -do-
Sindh.
3. 1000 Acres, Bostan Industrial Zone, -do- 200 acres developed while the
Bolochistan. remaining development works
under process.
4. 3000 Acres, Allama Iqbal Industrial -do- Feasibility study shared with the
City (M3), Faisalabad. Chinese.
5. ICT Model Industrial Zone, Islamabad -do- Feasibility study shared with the
(200 to 500 Acres). Chinese while land for this
project is being identified.
6. Construction of Industrial Estate (1500 -do- Feasibility shared with the
Acre) on land of Pakistan Steel Mills, Chinese. Land of PSM selected
Karachi. which would be transferred to
National Industrial Park.
7. 1078 Acres, SEZ, Mirpur,AJK. -do- Feasibility of the project shared
with the Chinese.
8. Mohmand Marble City (FATA) -do- -do-
9. 250 Acres, Moqpondass SEZ GB. -do- -do-

2.7. Social Sector Development

CPEC in spite of its focus on roads, ports and allied infrastructure does not seem to neglect
development of social sector as any material development is meaningless without it.
Following 4 social sector projects are included in the CPEC: -
S# Project Description Estimated Present Status
Cost (US$
Millions)
1. People to People exchanges N/A This project envisages plans for
strengthening contacts between
people of the both the countries
through exchange of media
productions and cultural groups. This
would be achieved through yearly
programmes and would result in long

23
China Pakistan Economic Corridor, “CPEC Projects Progress Update” http://cpec.gov.pk/progress-update
accessed on 11th Feb 2018.

14
 lasting relationship.
2. Transfer of knowledge in various N/A Consultants belonging to different
fields fields would visit Pakistan. One such
workshop on Industrial Zones was
held in Pakistan from 11th to 18th Oct
2017.
3. Founding of Pakistan Academy N/A Responsibility from Pakistani side has
of Social Sciences been assigned to HEC which has
started necessary action for early
establishment of this academy. 
4. Transfer of knowledge in the N/A Consortium of top schools created
field of education through and HEC has been assigned the lead
consortium of Business Schools role.

Section-III: CPEC Gains

The gains from CPEC expected by Pakistan and China are discussed as under: -

3.

3.1. To Pakistan

Pakistan’s flail economy is in pressing want of major investments to get stability and also
needs to reduce its financial dependence on the USA. The investment of China in Pakistan
through CPEC initiative is two times greater than all foreign direct investment (FDI) coming
to Pakistan since 2008 (Figure-7). Through CPEC implementation, it is expected for Pakistan
that its infrastructure would be built up; the energy production capacity would stand
increased; manufacturing hubs would be established; living conditions in less developed
Provinces particularly Balochistan would improved; and reduction in unemployment, brain
drain and capital flight.

It is anticipated that if all the intended projects are executed their worth would be equal to
17% of 2015 GDP of Pakistan. Furthermore, it is also believed that this CPEC project would
create around 700,000 direct employment opportunities from 2015 to 2030 and would cause
positive impact of 2.5% on growth rate of Pakistan. It is also commonly understood in
Pakistan that boosting up of economy will help to control extremism and militancy in the
country as unemployment is one of its root causes. The CPEC created employments become
even more significant when we see that population of Pakistan is growing at rate of 2% per
annum and half of Pakistan’s 200 million population is under the age of 24. If the youth is not

15
channelized through proper economic / employment openings like CPEC related initiatives, it
is doubted that many of those may be got exploited by the miscreants. Some important
quarters are of the view that the CPEC would create conditions encouraging for those
involved in militancy to get themselves adjusted in productive employment which
consequently would greatly lessen the terrorism.

Energy crisis and load shedding had been a grave concern for Pakistan for quite some time
and it was causing loss of about 2% to the GDP. The CPEC’s investments in energy sector
have proved to be the most significant so far and these have already started producing
positive effects. Electricity production in June 2013 was 11,804 MW which increased to
18,658 MW in June 2017 and the shortfall of 7,938 MW became 2,888 MW reducing load
shedding from 10 to 12 hours to 3 to 4 hours during the same period. And it is pertinent to
mention that this gap between demand and supply of electricity was bridged in Nov 2017
when Pakistan was declared load shedding free24.

CPEC is surely to have an important effect on information and communication fields of

Pakistan. There are reasons to believe that it would put Pakistan directly with India as
information technology hub. China leads the region with 46% internet penetration while India
and Pakistan follow with 15% and 11%, respectively. Installation of optic fiber and satellite
inter-net connections has been a major component of CPEC. This information technology
initiative would link up far flung areas of Pakistan and would cause a tremendous increase in
user base of internet. Once this component is fully executed; it is hoped that the technology
and telecommunication related multinational companies would rush to invest in Pakistan to
create their regional bases to cater the increasing needs of Middle East, Iran and Central Asia.

The Chinese’ craving for vegetables and fruits is voracious. Different fruits particularly
demanded by the Chinese like cherries, apples and apricots are grown in large quantities in
Gilgit-Baltistan region of Pakistan. At the moment, the fruits are being exported to China
through Dubai via air cargo. When CPEC turns into reality the traders in these fruits would
benefit a lot due to increased and quick exports with less transportation expenditures.

Pakistan’s underexplored aquaculture industry would also benefit as there is great demand of
sea food in China. The CPEC would establish a direct link of Pakistani aqua industry with
Chinese markets which would revolutionize this quiescent industry.
24
Zafar Bhutta, “Pakistan to have surplus power from November”, Express Tribune, 4 th Oct 2017
https://tribune.com.pk/story/1522290/pakistan-surplus-power-november/ accessed on 17th Feb 2018.
16
The CPEC would not only jump start the existing manufacturing industry of Pakistan but also
the number of new industries that would be established in Special Economic Zones and all
along the CPEC route. It is perceived that the Chinese with increased incomes would get
more consumerist just like the people of USA and they will need and demand more products.
It is a inevitable conclusion that China, in near future would concentrate more on high tech
manufacturing sector like air and space craft, pharmaceutical, computers and electronics
while outsourcing medium to low technology manufacturing such as food, textile, paper,
leather etc to Pakistan which would increase the demand from Pakistani industries
culminating into an unprecedented economic activity in Pakistan. So, it is clear that Pakistan
through CPEC will be beneficiary of China’s munificence.

Pakistan is abode of most spectacular Himalayas and other mountain ranges with five tops
over 8000 meters and fifty other peaks having height of more than 7000 meters. Pakistan has
natural beauties like Naran, Kaghan, Swat, Gilgit-Baltistan, Chitral and Kashmir. Only last
year 2.5 million national and international tourists visited northern areas of Pakistan.
Furthermore, Pakistan is home of ancient Buddha’s civilization. Tourism is an important
industry that would be boosted through accessibility / connectivity provided with the
development of new infrastructure of roads and railways under CPEC. A tourism corridor
with cost of Rs. 22 b has already been declared in Azad Jammu and Kashmir. With all these
initiatives, Pakistan can be turned into one of the greatest tourists destinations of the world. It
is hoped that lovers of natural / scenic beauty and mountains would congregate to Pakistan
once the CPEC becomes operational.

3.2. To China

China became the largest consumer of energy when it surpassed USA in 2010 and its oil
imports in 2017 were also more than those of USA. The Chinese local capacity to produce oil
is very limited and in year 2016, 64.4% of its oil needs were met through imports. Presently
100% of exports and 80% oil imports of China are through Strait of Malacca that is termed as
‘energy life line’ of China. The excessive reliance on Strait of Malacca is considered as the
‘Malacca dilemma’ by the Chinese leaders. The blockade of this energy route in case of any
untoward incident in the region such as war can paralyze the economy of China. Gwadar not

17
only provides substitute, the shortest and the quickest route to China through Arabian Sea by
reducing the current distance of 12,000 KMs to 2,395 KMs.

The authorities in China have alleged Uighur separatists to be responsible for many terrorist
attacks in China particularly in Tiananmen Square, Beijing in 2013. These rebels believe that
the Communist Party of China is not only repressing and treating the local people of Xinjiang
province as second grade citizens but also moving the Han Chinese into the Province who are
usurping their employment opportunities. As per Chinese estimations these separatists are
joining the ranks of ISIS and are going to Pakistan and Afghanistan for training to carry out
attacks in China. The Chinese experts believe that CPEC would help in addressing extremism
concerns of China in province of Xinjiang because it would not only create employment
opportunities for the Pakistanis but also for the dissident Chinese youth when economic
balance between affluent Eastern and less developed Western parts of China including
Xingjian would be achieved.

The Chinese banks and financial institutions are expecting to have their share in the fruits of
CPEC and as per news reports, these institutions are holding around US$ 20 b for potential
financing in this game land mark project.

The Chinese industries are producing products in excess in the fields of steel, cement, home
appliances and electronic goods. CPEC is going to offer shortest, cheapest and quickest
access to Chinese manufactured products to markets in Asia, Europe and beyond.

The CPEC initiative through connectivity would result in enhanced understanding of the
people of China in the fields of culture, regional knowledge and academics and further, they
would become part of an integrated region by sharing common destiny, harmony and
development.

Last but not the least, the fully operational CPEC and thereafter, the completion of OBOR
would certainly take China above USA as world super power.

Section-IV: CPEC Issues / Challenges

18
The CPEC is likely to alter the socio-economic conditions of Pakistan, to germinate vast
probabilities for the affluence of its citizens. At the same time, the CPEC would serve as the
basis for peaceful and gradual rise of China as super power of the world. Not only the
economic constancy of Pakistan is un-acceptable to its regional rivals but also China’s
materialization as a worldwide power is unbearable to many countries, so both regional and
world hegemons are spawning internal and external conspiracies to fail the CPEC projects.
Both these internal and external issues / challenges being faced by CPEC are separately
discussed in below lines: -

4.

4.1. Internal Challenges

4.1.1. National Consensus

The fifth column of the adversaries of the CPEC is on the move that is making efforts
to disrupt the national consensus in Pakistan on the CPEC. One of the major issues is the lack
of harmony on CPEC route. KPK and Balochistan have accused the Federal Government of
giving priority to Western route instead of promised Eastern route which is more beneficial to
the Province of Punjab. Secondly, an endless and damaging propaganda is being hurled by
certain elements that the Chinese through CPEC would prove to another ‘East India
Company’ which would sell its low-priced products in the markets of Pakistan resulting not
only in obliteration of local industries but also in unemployment.

4.1.2. Internal Security

The CPEC connects Gwadar to Xinjian through a tract where security is one of the
biggest challenges in presence of militant elements belonging to various terrorist outfits such
as ETIM, TTP, LeJ, BLA and BLF etc. These terrorists may not have any hostile intent
towards China but they may attack the Chinese and the CPEC installations just to hurt
Pakistan’s interests.

4.1.3. Execution Capacity

19
 The implementation / execution of the CPEC has not been able to meet deadlines in
some cases which creates doubts on the management capacities. Due to such delays the prices
skyrocket resulting into criticism by the domestic detractors.

4.1.4. Ambiguity and Uncertainty

Some political parties of Pakistan and certain other stakeholders have made known
their concerns about the lack of clearness and have asked that all contract / agreements
related to CPEC be brought to public knowledge. But, the concerned quarter of the Govt. are
hesitant so far to comply with this demand which makes the situation more ambiguous and
suspicious. The amount of investment in CPEC coming to public knowledge varies from US$
46 to 48 to 57 billion. But, critical details such as terms of loan, level of debt and equity,
role / extent of Chinese ownership of assets of Pakistan, details and conditions of penalties
regarding default in repayments, evaluation process of bids, and details of tax incentives; are
missing. The uncertainty further seemed to be engulfing the CPEC, when it was reported by
media in December 2017 that China has halted work on some projects and Minister
concerned informed the Parliamentary Committee on CPEC in same month that the three
projects have not been shelved rather the Chinese are reviewing the financial mechanism of
these projects and work would start soon as the needful is done.

4.1.5. Political Instability

Political instability can be one of the gravest impediments to CPEC. The visit of
Chinese President scheduled in Sep 2014 was delayed due to PTI / PAT dharna in Islamabad.
Then there was second dhana / lock down of Islamabad and thereafter Islamabad was taken
hostage by Allama Khadim Rizvi and his supporters. All these events depict that on political
front, polarization amongst us is continuously increasing. The present government has seen
little period of respite owing to one reason or the other since 2013 and the things have further
deteriorated on political front since Supreme Court judgments on 28th July 2017 and 20th Feb
2018 disqualifying Mr. Nawaz Sharif as Prime Minister and then as head of his ruling party
PML-N. Hence, it can be safely presumed that the government is in survival mode since
coming to power in 2013 which is not giving positive picture on international front and the
doubts of the critics of the success of CPEC get strength from this instability.

4.1.6. Civil Military Relations

20
 The unnecessary magnification of civil-military differences on media about all
national policies in general and regarding national security in particular does not serve any
better purpose. The use of terms like ‘third umpire’ and ‘unseen forces’ behind dharnas and
agitation by so called leaders only serves the interest of the enemies who do not want
Pakistan to get economically stable.

4.1.7. Lack of Trained Labour

Keeping the enormity and scale of the CPEC in view, Pakistan does not have the
requisite trained / skilled labour to execute different projects. Therefore, there are doubts in
many minds that common poor man of Pakistan would not benefit much economically from
the CPEC as China would be compelled to bring in its own people to work in industries,
economic zones and ports established under the umbrella of the CPEC. One such example is
that the CPEC is basically a trade route and merchandise would be moved on heavy TIR
trucks having the capacity of 100 tons, their drivers earn hefty salaries; but we have not yet
trained any drivers for these trucks.

4.2. External Challenges

The majors external challenges to the CPEC relate to following countries: -

4.2.1. India

CPEC as an economic venture faces serious challenges from its competitors and India
has the lead role in this regard. Indian ruling elite is found to be hysterical towards CPEC
when Indian Prime Minister Mr. Modi terms it ‘unacceptable’ for India. The reasons of this
Indian frustration are many but the important ones are—firstly, CPEC would finish Indian
dream of becoming a regional power; secondly, most of the Indian trade particularly related
to energy passes through Strait of Hormuz that is merely 500 KM away from Gwadar and the
Indians believe that China would build a naval base at Gwadar and this route would be
threatened; and lastly India still considers Kashmir and Gilgit-Baltistan as its areas and CPEC
passes through these very areas. So, in order to thwart CPEC through insurgent activists,
India has established an anti CPEC Wing in RAW and the revelations made by the arrested
Indian spy Commander Kulbhushan Yadav manifest the same. In addition to promoting

21
insurgency, India has also signed an agreement with Iran to invest US$ 85 million for the
development of Chabahar Port as a competitor to Gwadar.
4.2.2. China

China has always been concerned about Uyghur terrorists belonging to Muslim
minority in Xinjiang and thought terrorist elements active in Pakistan had links with terror
attacks in Xinjiang. Therefore, the Government of China has been extremely fretful about
readiness, capability and fortitude of Pakistani administration to counter these terrorists.

4.2.3. Iran

Iran, at the outset saw development of Gwadar Port as rival to its Port in Chabhar and
harshly criticized Pakistan as well. Though, Iran has almost turned neutral about CPEC once
its grievances were addressed gently by Pakistan; but still, India is trying to influence Iran to
draw daggers.

4.2.4. Arabs

Pakistan has been a close ally since decades, of Arab countries in general and of Saudi
Arabia in particular and these countries have always supported Pakistan in military, economic
and political spheres. But, the latest initiatives of Arab countries in strengthening
collaboration with India may be taken as an indication that Arab support for Pakistan may not
be taken for granted. If Pakistan, completely get itself aloof from Arabs in favour of China
then they may transfer their support towards India.

4.2.5. USA

United States failure to re-establish the regional order in the Middle East and the rise
of Islamic State have resulted in domestic pressures to withdraw from the Middle East and
Afghanistan and to reduce military and political support for Pakistan. For this reason, the
United States is welcoming the participation of China in reconstruction process of
Afghanistan; but still the USA is alarmed at the CPEC as it would not only expand Chinese
excess but also its influence over European and Asian countries. The USA did not want to
lose power in the region that it has wielded since the days of cold war.

4.2.6. Japan

22
 There are fears in Japanese circles that once China gets easy, cheap and short route
through CPEC, the markets particularly those of electronic items of Africa, Middle East,
Central Asia and Europe would sway towards China and Japan would suffer a consequential
blow to its exports. Therefore, Japan in collaboration with India has envisioned Asia-Africa
Growth Corridor (AAGC) to counter CPEC.

4.2.7. Afghanistan

Pakistan as a token to goodwill formally invited Afghanistan join CPEC and offered
to build 256 KM Peshawar-Kabul motorway. But, the nexus of Indian Intelligence Agency
RAW and Afghan Intelligence NDS is the biggest hurdle in this regard. The insurgent
elements in Afghanistan are one of the greatest external challenges to CPEC.

Section-V: Conclusion and Way Forward

5.

5.1. Conclusion

OBOR is the new world order promoted by China. According to prominent researchers,
center of economic growth is changing from west to east and it would help ending up the
miseries of the Easterners. This initiative would considerably improve the lives of 3 billion 25
people in general and of the 208 million Pakistanis in particular. There are a handful of
elements that apprehend that CPEC would be another East India Company. But, we should
not beat around the bush and it can be safely believed on solid grounds that CPEC would not
be another East India Company and these reasons are—firstly, in spite of its mighty
numerical, territorial and economic strength, China has never invaded another country during
its long history spanning over 6000 years. Secondly, ‘Invest’ not ‘Invade’ has always been
motto of China and lastly, China is a trade giant and has always been in quest of new markets
for its products.

CPEC with its presently undergoing—23 energy projects producing 13,810 MW of

electricity, increasing per capita energy consumption which at present is below 1/5 th of world
average; 11 infrastructure projects including roads of 1288 KM, rail track of 1872 KM, dry
ports and optical fiber of 820 KM length, increasing 4-6% growth in GDP; Gwadar Port
25
The population of three neighbouring countries i.e. Pakistan, China and India is 3 billion which is 65% of Asia
and 39% of the world population.
23
projects; rail based mass transit projects; establishment of 9 Special Economic Zones (SEZs)
creating employment opportunities and causing economic growth; and different social sector
programs—would prove to be a ‘game changer for Pakistan’s economy’.

Pakistan has been able to come out of bottom-20 in Global Competitive Index 2017-2018
while ranking at 115 out of 137 countries. It is probable that the CPEC after its complete
implementation would transform Pakistan’s low growing economy (3%-4%) to a faster,
higher and sustainable growing economy. It is further expected that the Corridor would add
2% growth from 2016 to 2020 and further growth of 1.5% from 2020 to 2030. It is likely to
create new job opportunities ranging from 800,000 to 1 million. The total length of newly-
built or upgraded roads and railways under the auspices of CPEC would be 3871 KM and
1872 KM, respectively. New power generation of 19,785 MW and 2084 KM length of optical
fiber would be added. The installation of optic fiber would increase internet penetration
which would consequently cause increase in GDP as concept of ‘knowledge economy’ is
flourishing in the world and it is considered that there is a direct co-relation between GDP
and internet penetration.

So, it is an undeniable fact that CPEC is truly a ‘game changer for Pakistan’s economy’.

5.2. Way Forward

In spite of baseless allegations, the Government should make best efforts to develop national
consensus on CPEC and address concerns of all the stakeholders. The Government should
engage all political parties which are leveling allegations in order to dispel their fears about
CPEC. There is an arrant requirement to initiate dialogue with the common man in the
country to win his confidence so that people can keep themselves away from anti CPEC
activities such as protests. For CPEC to succeed, the fears of people of Balochistan, in
particular, need to be essentially addressed which can be done through a sensible policy of
accommodating the least accommodated Balochistan and its people in the polity of Pakistan.
One of the major causes of disturbance in Balochistan is the political and economic
deprivation and addressing this, is a must for the peace in Balochistan and for the success of
CPEC. And most importantly, all political parties and other stakeholders should understand
that CPEC is not the target of political gimmicks and they should be aware of the national
consensus over this initiative.

24
Fool proof provision of security to CPEC related installations and personnel should be
ensured. The Government of Pakistan has already not only established 12,000 strong ‘Special
Security Division’ for CPEC protection but also launched Operations Zar-e-Azab and Rad-ul-
Fasad to counter terrorist elements that can be threat to internal security and can consequently
affect CPEC. But, still need of the hour is that all the remaining terrorists and security issues
be countered across the board at the top priority by applying all tools of diplomacy,
intelligence, and military.

Both the Governments of China and Pakistan should particularly focus on increasing the
execution capacity wherever required so that the projects can be completed within the given
timelines. This would not only save additional costs but also silence the critics of the CPEC.

The Government should be transparent and forthcoming about CPEC; should take public in
confidence through electronic and print media, by holding seminars and workshops; and by
not withholding critical details such as terms of loan, level of debt and equity, role / extent of
Chinese ownership of assets of Pakistan, details and conditions of penalties regarding default
in repayments, evaluation process of bids, and details of tax incentives. These steps would
remove un-necessary ambiguity and uncertainty regarding CPEC.

The politicians of Pakistan should act with responsibility and maturity and may not
destabilize the Government for the sole purpose of coming to power. The dharna politics and
thereafter, post Panama verdict rift of the Government with judiciary has created un-called
for situation of instability. The new elections are round the corner in middle of this year,
whoever, comes to power through ballot should be accepted by the opposition and it should
refrain from resorting to such practices which create an unhealthy and instable outlook of
Pakistan’s polity. This is the dream of enemies of Pakistan to create panic and instability in
Pakistan through which country as a whole and CPEC in particular would suffer.

Harmony between and civil and military institutions is need of the day. Army is one of the
most important and powerful organizations of the country, it should lend a supporting hand to
the Government for the betterment of Pakistan and CPEC. If, the Army has reservations
sometimes about certain actions of the Government; the same need not to be taken to twitter
and be solved in closed doors because by manifestation of such disparity, a nuclear power
becomes a laughing stock in world. There is another angle of civil-military relations as it is
alleged by the ruling politicians and some media circles that it backs certain political and

25
religious elements to pressurize the Government and the Faizabad dharna is one of the
examples which ended only when the agreement with Allama Khadim Rizvi was signed by a
serving Major General of the ISI. Pakistan is emerging as an economic power on the world
map after the launch of CPEC; it is right time for the Army to focus on its duties, stand with
Government and get itself away from mullahs of all types—whether Jihadi or Siyasi.

All the benefits of industrial cooperation envisaged under CPEC cannot be enjoyed until
Pakistan has the sufficient, efficient and skilled human resource to work in industries and
special economic zones. A study should be conducted to identify the areas of expertise and
the requisite skills required for CPEC projects and all vocational and technical education
authorities of Pakistan may be asked to kick start crash training programs in these fields.
Universities and vocational / technical institutions may be encouraged to form partnership
with firms in SEZs and design the curriculum that can satisfy the demand of skills in future.

The SEZs model should be carefully designed in a way that it—helps the transfer of
knowledge and technology to the local business; the tax base is not hurt; prioritizes the
industries that best fit with location of SEZs; encourages private investments both
independent and joint ventures; lays special focus on establishment of services specific
economic zones as services sector contributes significantly towards GDP; focuses on exports
and value addition for sustainable economic growth; prioritizes the establishment of
industries such as tourism, sports, transport, textile/apparel and finance services where we
already have skilled human resource.

Participation of private sector of both China and Pakistan is mandatory to efficiently achieve
targets envisioned by the CPEC. Small and medium enterprises of Pakistan may be supported
and encouraged to get engaged with the Chinese companies. Pakistan Business Council
through identification of specific ventures and by establishing a mechanism of regular
exchange of information can play a very important part.

Another significant step that needs to be taken is the improvement in coordination regarding
CPEC projects. Serious efforts may be made to create an independent ‘CPEC Authority’ to
serve as ‘one window’ for all CPEC related issues.

China has already asserted that CPEC is not only a bilateral but also a regional move. Most of
the external challenges coming from countries like India, Afghanistan and Iran can be

26
addressed if all these countries are convinced that CPEC is not only for China and Pakistan
and these countries can also be part of this project. The ideas to transform CPEC into IICPEC
(Indian, Iran, China, Pakistan Economic Corridor) may be explored. The signing of TAPI
agreement in Dec 2015 between Turkmenistan, Afghanistan, Pakistan and India; can be taken
as an indication of shift in attitude and trust deficit between these countries. Pakistan and
India had also signed gas pipe line agreement with Iran known as IPI but both the countries
had to withdraw under US pressure. If IPI can be restored and CPEC can be turned into
IICPEC; an historic opportunity would be created for Pakistan, China, India, Iran,
Afghanistan and Central Asian States for north south connectivity promoting trade and
economies of these countries. The inclusion of these countries in CPEC would not only have
a positive impact on regional cooperation and confidence building but it would also help to
resolve political and territorial disputes between Pakistan, India and China.

As for as other countries like USA, Japan and Arabs are concerned, we should simply adopt a
policy of non-alignment—focusing on good relations with all and amicably addressing their
concerns—but, at the same time keeping our own national interest supreme.

27
 Figures
Figure 1: Map of Asia

28
Figure 2:

Source: www.pinterest.com

Figure 3: Six Regions in Asia

Source: http://intersectionalfeminism.tumblr.com

29
Figure 4: Countries in Asia

Source:
Figure 5: China the biggest country of Asia

http://www.worldometers.info/geography/how-many-countries-in-asia/

30
Figure 6: OBOR Initiative

Source: http://themarketmogul.com/chinas-6-magical-economic-corridors/amp/

Figure 7: FDI Flow to Pakistan

Source: http://www.cfr.org/pakistan/behind-chinas-gambit-pakistan/p37855

31
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