China Pakistan Economic Corridor (CPEC) stretched from Gwadar to Kashgar is a reflection of unprecedented geo-economic cooperation between China and Pakistan. The development of this Corridor perfectly dovetails with our vision 2025 and China’s 12th five year plan. One belt one road plan, maritime silk road and Western development strategy envisages progress to unlock our potential for peace and prosperity and one of the factor for the same is CPEC. World Bank, IMF and ADB has forecasted the recent GDP growth figures of 5% annually for 2017, which is further expected to grow to 5.9% till 2019 for Pakistan in their annual Global Prospective1 and in all recent reports of all major monitory agencies, shows growth. The Economist has also predicted this country as the fastest growing Muslim economy ahead of Indonesia and Malaysia2 in their recent issue. The country was once at brink of default and was labelled as sponsor of terrorism. The only change that has occurred between now and then is just one project termed as ‘game.
The CPEC MoU was signed by Prime Minister of Pakistan, Muhammad Nawaz Sharif in China in July 2013. President Xi. Jinping clearly defined the central role of the corridor and launched number of priority projects in the areas of energy, transport infrastructure, industrial cooperation and development of Gwadar port with an unprecedented capital investment of US
$46 billion. Subsequently, the projects under the CPEC were divided to be completed in various phases. As the early harvest Projects (EHPs) will be completed by 2017/18, short-term projects are planned to be completed by 2017-20. Midterm-term projects by 2025 and the long-term projects by 2030.
Through CPEC, Pakistan is harnessing geo economic advantage and integrating into an economic hub, promising a great future for its populace. According to the Minister for Planning and Development “CPEC demonstrates the all-weather and time tested friendship between China and Pakistan. It has translated strategic bilateral political relations into strategic economic partnership based on win-win paradigm”3. He further elaborated, “the corridor is spread over entire Pakistan from South to North having several projects on energy, infrastructure, health, education and clean drinking water” 3. The dream of CPEC conceived in 2013 is ready to be realized, with a large workforce of engineers, professionals, scholars and soldiers engaged in the EHPs of energy and transport infrastructure.
Most of the deliverables set for completion in the EHPs of the Project by 2018 are either under active implementation or have already been completed. There are a total of 19 power projects under PEC, which would produce around 12114 Megawatts of electricity. This combination includes hydro, solar, wind and imported/local coal energy projects. The coal projects will generate 3960 mega watts hydal projects will produce 2714 megawatt, while 4260-megawatt electricity will be produced through imported coal. It was informed that the government would pay nothing for these projects, as the investment in them was being made by Chinese investors under Public Private Partnership.
It is expected that by the end of 2018 the imported Coal Power Project at Port Qasim and Sahiwal would be completed by the end of the year, while Neelam-Jhelum hydropower project would start producing. More than 5000 MW of energy will be injected into the system through 12 energy projects. Transport infrastructure projects Western and Eastern routes will be completed and the Mainline-1(ML1)up-gradation project will be set to commence with an aim to build total 3200 km long route.
Project Site of Sahiwal Coal Power Plant
CPEC Long Term Plan 2030
The long term plan is at the final stage of finalization which contains the basis of planning from the perspective of China and Pakistan, highlighting the planning vision and development goals, identifying key areas including spatial structure and functional zones, construction of an integrated transport system, IT connectivity, energy cooperation, industrial parks, agriculture development and poverty alleviation, cooperation in livelihood areas and people to people communications and financial cooperation. . Under the long term plan, all provincial capitals were included as nodes that is the key corner stones of CPEC on which it will be constructed. These nodes are at Gilgit, Muzaffarabad, Peshawar, Islamabad, Lahore, Sukkur, Karachi, Gwadar and Quetta.Thus, given full play to China’s industrial, capital and institutional advantages and effectively integrating these with Pakistan’s market, demographic & geographic divide and comparative advantages, Pakistan can achieve a sustainable and inclusive yearly growth.
Gawadar Deep Sea Port:
Gwadar with its potential to become a hub of regional connectivity has started to embrace development and positive change. The work on new airport, express way and the 5.0 Million gallons per day (MDG) water plant is set to commence in 2017. The change has been initiated with people of Gwadar being the real beneficiaries. The sail of first Cargo ship from Gwadar on
13thNovember 2016 had heralded the beginning of new era. H.E Sun Wei-dong said in a speech to the ceremony, “it is the significance development as for the first time, a trade convoy has passed through the Western route to the South and North of the country, showing the great connectivity”4. He further added,“ it proves the capacity of the port to handle the shipment of the trade cargo to international destinations” 4.
Opportunities in the Industrial Development under CPEC:
The new and improved infrastructure along with enhanced power generation capacity will enable Pakistan to enter the phase of Industrial cooperation. The interest shown by regional and European nations in CPEC in general and Pakistan in particular is also extraordinary. For every country, trade and Industrial Development and Cooperation is always a driving force for economic growth. Therefore, there is a requirement to give this phase the required Impetus and Push forward force. The perceived Industrialization under CPEC will also supplement the “Vision 2025”, under which Pakistan is to strengthen infrastructure construction, tap the demographic dividends, accumulate human and social capital, improve the level of industrialization and develop a competitive knowledge-based economy. CPEC will help speed up the industrialization and urbanization of Pakistan so it can grow into an inclusive and prosperous country with global competitiveness and offering high life quality. In order to develop new driving force for economic development and remove major bottlenecks to infrastructure construction, new industrial clusters needs to be formed in a balanced way, as to tap the regional economic growth.
As part of the CPEC industrial cooperation, nine economic zones and industrial parks shall be created on approved sites along the corridor to be built under modern market principles as to provide maximum benefit to all the investors. These zones focus to cater all types of environment friendly industries including textiles, light engineering, electronics, food processing, automobiles, manufacturing, minerals processing, agro promotion, logistics, science parks etc. This investment in Pakistan would surely boost economy, ensure energy security besides overcoming prevailing energy crisis, bolster Pakistan’s industrial capacity and link Pakistan’s rural and remote areas with urban centres. In addition, CPEC would strengthen Pakistan domestically, brings in prosperity, enable transfer of knowledge and technology as well as elevate Pakistan’s regional status. A careful study of the SEZs in neighbouring countries especially in developing countries like Vietnam, Cambodia and Thailand is imperative for providing incentives, shorter processing time and one window operation for setting up industries in these zones. Chinese Investors must be encouraged to establish Joint Ventures (JVs) with Pakistani partners and likewise Pakistani business enterprises must develop capacity to undertake these ventures. In this regard, it is pertinent to highlight and analyze the following aspects:
- The comparative advantage of Pakistani industries vis-à-vis neighboring economies
- Market access for Pakistani exporters in global supply chain
- Development of SEZs on modern lines
- Possible value addition to Pakistan’s economy
Furthermore, Special economic zones (SEZs) have been created which can play a catalytic role in economic development, provided the right business environment and policies are put in place. In Asia, SEZs have facilitated trade, investment, and policy reform. For SEZs to be successful, they must establish strong backward and forward linkages with the overall economy. Effective SEZs must be an integral part of dynamic national development strategies which will evolve as economies develop by transforming from manufacturing bases to technological platforms for innovation and modern services.
The new & improved infrastructure along with enhanced power generation capacity will annually increase GDP in medium and long term. To support the above claims Pakistan also needs to focus on sound macro-economic policies, optimum utilization of the country’s physical and human resources, full exploitation of the technological potential of its industry, agriculture and services.
CPEC; The Catalyst for Growth
The positive impact of CPEC can be comprehended by the Moody’s rating of Pakistan, which has improved from stable to promising. International media is also highlighting the significance of the projects. CPEC will show way to investors from other parts of world to invest in Pakistan, which is a market with great location advantage, rich resources and extremely talented people. So, in the end CPEC is not just a road for progress for Pakistan but it holds much economic significance for the Asian region and beyond. The construction of corridor is a strategic way to consolidate the bilateral friendship. Construction of the corridor will be built in a way beneficial to both sides. It will help consolidate and develop friendship between both sides and further strategic partnership.
CPEC provides Pakistan enormous opportunities as it will provide an integrating platform for over three billion people in central, West and South Asia, the Middle East and Africa Regions. The increase in trade, investment and financial flows would bring peace and prosperity to the region through enhancement in the competitiveness of the economies of the countries; contribute to reducing regional disparities and social inequality in the country and in the adjoining region.
Importantly, CPEC would bring in domestic and socio-economic stability. Pakistan has reached wide consensus on social stability, economic development and livelihood improvement. A series of economic reforms has started to take effect, and its advantage in the young workforce and demographic dividend are given a bigger role. The macro economy has turned a better in Pakistan in recent years. The economic growth has been picking up, boosting the market demand for related transportation and energy. Before CPEC, the macroeconomic environment has never been so feasible for Pakistan.
CPEC is one of the most significant corridors in these networks and branches with port of Gwadar being a very important point where the road and the belt intersect. CPEC is not only a significant linkage but a lever that shortens Chinese reach to Africa, Western Asia and Europe by over 10,000 kilometers. CPEC in this network of economic corridors therefore promises great fortunes for Pakistan to evolve from an agrarian to an industrialized and finally to a knowledge based economy. Conclusively, the Chinese President’s vision complements not only our economic well being through regional trade but equally benefits for Pakistan becoming a regional hub of global connectivity.
Pakistan predicted to be world’s fastest-growing Muslim economy in 2017, The Express Tribune https://tribune.com.pk/story/1290084/pakistan-predicted-worlds-fastest-growing-muslim- economy-2017/(accessed Apr 9, 2017)
AhsanIqbal’s speech delivered on CPEC. (2015, October 23). Retrieved April 11, 2017, from 1Gwadar to be made smart port city, says minister. (2015, January 29). Retrieved April 11, 2017, from https://tribune.com.pk/story/829896/gwadar-to-be-made-smart-port-city-says-minister/
Public Talk by H.E. Mr Sun Weidong, Ambassador, People’s Republic of China (Press Release).(n.d.). Retrieved April 11, 2017, from http://issi.org.pk/public-talk-by-h-e-mr-sun- weidong-ambassador-peoples-republic-of-china-2/
- Global Economic Prospects, World Bank, http://www.worldbank.org/en/publication/global-economic- prospects (accessed Apr 9, 2017)
- Pakistan predicted to be world’s fastest-growing Muslim economy in 2017, The Express Tribune https://tribune.com.pk/story/1290084/pakistan-predicted-worlds-fastest-growing-muslim-economy- 2017/(accessed Apr 9, 2017)
- AhsanIqbal’s speech delivered on CPEC. (2015, October 23). Retrieved April 11, 2017, from 3Gwadar to be made smart port city, says minister. (2015, January 29). Retrieved April 11, 2017, from https://tribune.com.pk/story/829896/gwadar-to-be-made-smart-port-city-says-minister/
- Public Talk by H.E. Mr Sun Weidong, Ambassador, People’s Republic of China (Press Release).(n.d.). Retrieved April 11, 2017, from http://issi.org.pk/public-talk-by-h-e-mr-sun-weidong-ambassador-peoples- republic-of-china-2/
This case was written by Hassan Daud Butt (PhD Scholar), Dr. Muhammad Ismail Ramay (Senior Professor) and Osman Bin Saif (PhD Scholar) from Bahria University Islamabad.