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BRICKS
BRICKS
AND CHINA-PAKISTAN
ECONOMIC CORRIDOR
BY: SUMAYA ALI
AGENDA FOR TODAY
• LECTURE ON BOTH BRI AND CPEC – QUESTIONS ON THESE TOPICS REPEAT ALMOST
EVERYWHERE IN BOTH PA AND CA. MAKE NOTES AND TRY TO KEEP UP.
• STUDY THE TOPIC BEYOND THIS LECTURE. ALWAYS STUDY EVERY TOPIC BEYOND THE
LECTURE GIVEN AND MAKE GOOD NOTES OUT OF THEM TO BE USED FOR REVISION LATER.
• IN 2013, CHINESE PRESIDENT XI JINPING ANNOUNCED THE LAUNCH OF BOTH THE SILK ROAD
ECONOMIC BELT AND THE 21ST CENTURY MARITIME SILK ROAD, INFRASTRUCTURE DEVELOPMENT
AND INVESTMENT INITIATIVES THAT WOULD STRETCH FROM EAST ASIA TO EUROPE.
• ONE OF THE MOST AMBITIOUS INFRASTRUCTURE PROJECTS.
• HISTORICALLY HARKENED BACK TO THE ORIGINAL SILK ROAD, WHICH CONNECTED EUROPE TO
ASIA CENTURIES AGO, ENRICHING TRADERS FROM THE ATLANTIC TO THE PACIFIC.
• IS IT AN ATTEMPT BY CHINA TO INCREASE ITS RISING POWER. OPPOSITION IN SOME COUNTRIES
SUCH AS US, SOMETIMES INDIA.
• OWN INTEREST OF US IN THE REGION.
ORIGINAL SILK ROAD
• VISION OF CREATING A VAST NETWORK OF RAILWAY, PIPELINES FOR ENERGY TRADE, HIGHWAYS AND
STREAMLINED BORDER CROSSINGS BOTH WESTWARD - THROUGH MOUNTANOUS FORMER SOVIET
REPUBLICS AND SOUTHWARD TO PAKISTAN, INDIA AND THE REST OF THE SOUTH ASIA.
• ROLE OF CHINESE CURRENCY.
• AIMING AT BREAKING THE BOTTLENECK OF ASIAN CONNECTIVITY.
• THE ADB ESTIMATES THAT THE REGION FACES A YEARLY INFRASTRUCTURE FINANCING SHORTFALL OF NEARLY
$800BN.
• CHINA ALSO AIMS AT BUILDING 50 SEZS MODELED AFTER SHENZEN SPECIAL ECONOMIC ZONES.
• PORTS DEVELOPMENT ALONG INDIAN OCEAN, FROM SOUTHWEST ASIA ALL THE WAY TO EAST AFRICA.
• 60 COUNTRIES INVOLVED (2/3RD OF WORLD POPULATION)
• CPEC - $68BN – LARGEST WITHIN THE TOTAL INVESTMENT OF $200BN BY CHINA SO FAR
WHAT DOES CHINA GAIN OUT OF THE BRI?
• GEOPOLITICAL AND GEO-ECONOMIC MOTIVATION.
• MORE ASSERTIVE CHINA – REMAKING CHINAS IMAGE IN THE WORLD (SOFT VIEW).
• THE NEW NORMAL OF SLOWING GROWTH HAS PUT PRESSURE ON THE COUNTRY’S LEADERSHIP TO
OPEN NEW MARKETS FOR ITS CONSUMER GOODS AND EXCESS INDUSTRIAL CAPACITY.
• POWER AMBITION? REMAKING THE GLOBAL GEOPOLITICAL BALANCE OF POWER.
• RETIRED CHINESE GENERAL QIAO LIANG DESCRIBED THE BRI AS A “HEDGE STRATEGY AGAINST THE
EASTWARD MOVE OF THE US”, “PIVOT TO ASIA”.
• BOOSTING GLOBAL ECONOMIC LINKS TO ITS WESTERN REGIONS, WHICH HISTORICALLY HAVE BEEN
NEGLECTED.
• RESTRUCTURING THE ECONOMY TO AVOID THE SO-CALLED MIDDLE INCOME TRAP.
• BRI WILL OFFER NEW IMPORT AND EXPORT OPTIONS, CREATING NEW PRODUCTION CHAINS THAT
WILL SPUR THE DEVELOPMENT OF THE CHINESE ECONOMY.
WHAT DOES THE REGION INVOLVED GAIN?
• REGIONAL CONNECTIVITY.
• INFRASTRUCTURE AND LOWER COST TO FACILITATE INTRAREGIONAL TRADE.
• BETTERMENT OF SOCIAL INDICATORS IN DEVELOPING ECONOMIES OF THE
CENTRAL ASIAN AND SOUTH ASIAN ECONOMIES.
• FOCUS ON OVERALL DEVELOPMENT AND FINANCIAL BENEFITS FROM THE
PROJECT.
• STRENGTHENING OF POLITICAL AND ECONOMIC TIES WITHIN THE REGION.
POTENTIAL ROADBLOCKS
• IRON BROTHERS.
• CLOSE ECONOMIC AND BILATERAL RELATIONS.
• THE RELATIONSHIP HAS SEEN SOME FRICTION IN THE PAST YET BOTH OF THEM ARE
INDISPENSABLE ALLIES FOR EACH OTHER AND THE CPEC THAT WAS SIGNED IN APRIL 2015
SERVES AS A COMPLIMENT TO THE RELATIONSHIP.
• CPEC ALLOWS CHINA TO ACCESS THE INDIAN OCEAN ALLOWING CHINA TO BYPASS THE CHOKE
POINTS OF THE CONTENTIOUS SOUTH CHINA SEA.
• HELPS CHINA TO DEVELOP ITS WESTERN CITIES CLOSE TO PAKISTAN.
• PAKISTAN HAS RECEIVED THE MUCH NEEDED FINANCIAL INVESTMENT AND THE OPPORTUNITIES
THAT COME WITH IT.
WHATS IN IT FOR PAKISTAN? BENEFITS.
• INCREASE IN ECONOMIC GROWTH AND IMPROVEMENT IN THE LIVING CONDITIONS OF THE MASSES
LIVING IT. PROMISE OF BETTER SOCIO-ECONOMIC INDICATORS.
• ENERGY PROJECTS OF ABOUT $30BN OF THE TOTAL INVESTMENT CAN ADDRESS PAKISTANS’ ANNUAL
ENERGY SHORTAGE OF ABOUT 7000MWS. IF PAKISTAN COULD FULFIL ITS ENERGY SHORTAGE, ECONOMIC
GROWTH MAY INCREASE BY 3%. THESE PROJECTS WILL ADD 10,000MWS TO PAKISTANS ELECTRICITY
GRID WITH ANOTHER 17000MWS IN FUTURE PROJECTS GIVEN THAT PAKISTANS ENERGY NEEDS GROW BY
10% EACH YEAR.
• PIPELINES IN THE PROJECT WILL CONNECT MIDDLE EAST, CENTRAL ASIA AND SOUTH ASIA WITH
EACHOTHER THEREBY PROVIDING FOR PAKISTAN TO EMERGE AS A REGIONAL ENERGY HUB.
• DEVELOPMENT OF GWADAR PORT. AIRPORTS, RAILWAYS AND ROAD NETWORK BEING CONSTRUCTED
NEAR THE CITY. THIS WILL OPEN THE OPPORTUNITY FOR TRADE AND BILATERAL RELATIONS
DEVELOPMENT WITH MIDDLE EASTERN AND AFRICAN COUNTRIES.
• HUGE OPPORTUNITY FOR EMPLOYMENT.
PROBLEMS WITH CPEC IN PAKISTAN
• PAYOFFS MAY NOT BE EVENLY DISTRIBUTED ACROSS THE COUNTRY UPSETTING SOME MORE THAN OTHERS.
• DOMESTIC LANDSCAPE OF PAKISTAN. COMPETITION BETWEEN PROVINCES FOR POLITICAL POWERS HINDERS
THE GROWTH OPPORTUNITY OFFERED BY THE PROJECT.
• BALOCHISTAN VERSUS PUNJAB. SOCIO-POLITICAL ENVIRONMENT.
• TERRORISM AND SECURITY RISKS IN THE COUNTRY.
• FINANCIAL ROADBLOCKS – CURRENCY OF PAKISTAN AND INDEBTEDNESS OF THE COUNTRY. THE FOREIGN
EXCHANGE RESERVES OF THE COUNTRY HAVE DROPPED TO LESS THAN $10BN WHILE THE EXTERNAL DEBT
HAS BECOME 30% OF THE GDP.
• OFFER OF ADDITIONAL LOANS BY CHINA. PAKISTAN WILL BE IN FURTHER DEBT AND ECONOMIC CRISIS WILL
ONLY EXACERBATED BY THIS.
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