CHINA-PAKISTAN ECONOMIC CORRIDOR (CPEC)

& ITS IMPACT ON REGIONAL ECONOMY

 AIM

To apprise you about China Pakistan Economic Corridor (CPEC)

& its Impact on Regional Economy

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 SCOPE
 What is CPEC?
 Purpose
 Commencement of CPEC
 Background
 Projects
 Critics
 Impact on Regional Economy
 Conclusion

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 WHAT IS CPEC

• China-Pakistan Economic Corridor (CPEC) is a major and pilot project of the Belt
and Road Initiative (BRI) which is proposed by Chinese President Xi Jinping.

• [ BRI: Formerly known as One Belt One Road or OBOR for short, is a global
infrastructure development strategy adopted by the Chinese government in 2013
to invest in nearly 70 countries and international organizations to promote
economic development and inter-regional connectivity ]

• CPEC is a collection of infrastructure projects that are under construction

throughout Pakistan beginning in 2013. It currently has no planned completion
date.

• Worths $62 billion as of 2020.

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 WHAT IS CPEC

• 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.

• CPEC is intended to rapidly upgrade Pakistan's required

infrastructure and strengthen its economy by the construction of:

 Modern transportation networks

 Numerous energy projects

 Special economic zones

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 WHAT IS CPEC

Xi Jinping

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 PURPOSE

• The poor transportation system of Pakistan is causing a loss of 3.55% of GDP

• Modern transportation networks under CPEC will link seaports in Gwadar and
Karachi with northern Pakistan, as well as Western China and Central Asia

• Contributing 40,000 jobs for local Pakistanis and 80,000 for Chinese

• Will provide 2.3 million jobs between 2015-2030, and add 2 to 2.5% to the GDP

• $33 billion worth of energy infrastructure to lessen Pakistan's chronic energy

shortage

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 PURPOSE

• Over 10,400 MW of energy generating capacity

• A network of pipelines for Liquefied Natural Gas and oil, including pipeline
between Gwadar and Nawabshah to eventually transport gas from Iran

• Electricity generated from fossil fuels, hydroelectric and wind-power projects,

& also construction of one of the world's largest solar farms

• Tangible benefits of this initiative including an end to the major energy

shortages in Pakistan which had previously crippled economic growth

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 COMMENCEMENT OF CPEC

• 20 April 2015

• Pakistan and China signed an agreement to commence work on the $46 billion
agreement, which is roughly 20% of Pakistan's annual GDP

• With approximately $28 billion worth of fast-tracked "Early Harvest" projects to

be developed by the end of 2018

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 BACKGROUND

• Plans on corridor stretching from the Chinese border to Pakistan's deep-water

ports in 1950s, construction of the Karakoram Highway beginning in 1959

• Chinese interest in Pakistan's deep-water harbor at Gwadar since 2002 & China
began construction at Gwadar port completed in 2006

• In 2013, President Asif Ali Zardari and Chinese Premier Li Keqiang decided to
further enhance mutual connectivity

• In May 2013, Chinese Premier proposed the initiative of CPEC, got positive
response and support from the Pakistani government

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 BACKGROUND

• In July 2013, during Prime Minister Nawaz Sharif’s visit to China, an MOU was
signed on CPEC

• In February 2014, President Mamnoon Hussain also visited China to discuss

further plans

• Two months later, Prime Minister Nawaz Sharif met Premier Li Kequiang,
resulting in the full scope of the project to be developed under Nawaz Sharif's
tenure

• In November 2014, Chinese govt announced to finance Chinese companies as

part of its $46 billion energy and infrastructure projects in Pakistan as part of
CPEC. On 20 Apr 2015, CPEC was signed
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 PROJECTS
TRANSPORTATION INFRASTRUCTURE

PROJECTS PROGRESS
KKH PhaseII(Havelian- Thakot Section),120 km Completed
Karachi-Lahore Motorway (Sukkur-Multan Section),392 km Completed
Joint Feasibility Study for Upgradation of ML1 and Establishment of Havelian Completed
Dryport

Upgradation of ML-1 (Multan-Lahore Section, 339 km; Hyderabad-Multan 40%

Section, 749 km; Kemari-Hyderabad Section, 182 km)

New Havelian Dry Port 25%

Khuzdar-Basima Highway (N-30), 110 km 25%
KKH Phase III(Raikot-Thakot Section)280km 25%
D.I.Khan-Quetta Highway (N-50), 533km 15%
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 PROJECTS
TRANSPORTATION INFRASTRUCTURE

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 PROJECTS
RAIL BASED MASS TRANSIT

PROJECTS PROGRESS
Karachi Circular Railway Ground breaking expected soon

Greater Peshawar Region Mass Transit Feasibility is under process

Quetta Mass Transit Feasibility is under process

Orange Line – Lahore Completed

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 PROJECTS
RAIL BASED MASS TRANSIT

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 PROJECTS
ENERGY [COMPLETED]

• 1320MW Sahiwal Coal-fired Power Plant

• 1320MW Coal-fired Power Plant at Port Qasim Karachi
• 1320MW China Hub Coal Power Project, Hub Balochistan
• 660MW Engro Thar Coal Power Project
• 1000MW Quaid-e-Azam Solar Park (Bahawalpur)
• 50 MW Hydro China Dawood Wind Farm, Gharo, Thatta
• 100MW UEP Wind Farm, Jhimpir, Thatta
• 50MW Sachal Wind Farm ,Jhimpir, Thatta
• 100MW Three Gorges Second and Third Wind Power Project
• Matiari to Lahore ±660 KV HVDC Transmission Line Project

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Coal-fired Power Plant at Port Qasim Karachi Sahiwal Coal-fired Power Plant

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 PROJECTS
ENERGY [UNDER CONSTRUCTION]

• 1320 SSRL Thar Coal Block-I 7.8 mtpa & Power Plant (2×660MW) (Shanghai
Electric)

• 330MW HUBCO Thar Coal Power Project (Thar Energy)

• 330MW HUBCO ThalNova Thar Coal Power Project

• 884MW Suki Kinari Hydropower Project, KP

• 720MW Karot Hydropower Project, AJK/Punjab

• 300MW Coal-Fired Power Project at Gwadar

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 PROJECTS
ENERGY [UNDER CONSIDERATION]

• 1124MW Kohala Hydropower Project, AJK

• 700.7MW Azad Pattan Hydropower Project, AJK/Punjab

• 1320 MW Thar Mine Mouth Oracle Power Plant & surface mine

• 50MW Cacho Wind Power Project

• 50MW Western Energy (Pvt.) Ltd. Wind Power Project

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 PROJECTS
GWADAR PORT CITY [COMPLETED]

• Development of Port and Free Zone

• Gwadar Smart Port City Master Plan

• Pak-China Technical and Vocational Institute at Gwadar

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Gwadar Port City

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 PROJECTS
GWADAR PORT CITY [UNDER CONSTRUCTION]

• Gwadar Eastbay Expressway

• New Gwadar International Airport

• Necessary facilities of fresh water treatment, water supply and distribution

• Pak-China Friendship Hospital

• 300MW Coal-Fired Power Project at Gwadar

• 1.2 MGD Desalination Plant

• 5 MGD Water Desalination Plant Gwadar

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 PROJECTS
GWADAR PORT CITY [UNDER CONSIDERATION]

• Construction of Breakwaters

• Dredging of berthing areas & channels

• Fish Landing Jetty and Fishermen Boat Making Industry on West bay

• Gwadar Smart Environment Sanitation System and Landfill Project

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 PROJECTS
INDUSTRIAL COOPERATION

PROJECTS PROGRESS
Gwadar-Nawabshah LNG Terminal and Pipeline, 700 km 40%

Haier & Ruba Economic Zone PhaseII 15%

DTMB Demonstration Project 5%

Lahore Orange Line Metro Train 70%

Promotion of TD-LTE commercialization in Pakistan 15%

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Lahore Orange Line Metro Train

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 PROJECTS
TELECOMMUNICATION [COMPLETED]

• Optical Fiber Cable from Rawapindi to Khunjrab

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 PROJECTS
PROPOSED SPECIAL ECONOMIC ZONES

PROJECTS PROVINCE AREA (km2)

Rashakai Economic Zone , M-1, Nowshera Khyber Pakhtunkhwa 1000
China Special Economic Zone Dhabeji Sindh 1000
Bostan Industrial Zone Balochistan 1000
Allama Iqbal Industrial City (M3), Faisalabad Faisalabad 3,000
ICT Model Industrial Zone, Islamabad Islamabad 200-500
Development of Industrial Park on Pakistan
Port Qasim Near Karachi 1500
Steel Mills Land at Port Qasim near Karachi
Special Economic Zone at Mirpur,AJK Mirpur 1078
Mohmand Marble City FATA

Moqpondass SEZ Gilgit-Baltistan Gilgit-Baltistan 250

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 PROJECTS
NEW PROVINCIAL PROJECTS

• Keti Bunder Sea Port Development Project

• Naukundi-Mashkhel-Panjgur Road Project Connecting With M-8 & N-85

• Chitral CPEC Link Road from Gilgit, Shandor, Chitral To Chakdara

• Mirpur – Muzaffarabad – Mansehra Road Construction

• Quetta Water Supply Scheme from Pat Feeder Canal, Balochistan

• Iron Ore Mining, Processing & Steel Mills Complex At Chiniot, Punjab

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 PROJECTS
SOCIAL SECTOR DEVELOPMENT PROJECTS

• People to People exchanges

• Transfer of Knowledge In Different Sectors

• Establishment Of Pakistan Academy Of Social Sciences

• Transfer of Knowledge in Education sector through Consortium of Business

Schools

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 CRITICS

• The actual terms and conditions for the various debt financial instruments
agreed upon by Pakistan and Chinese govt have not been released

• The official documentation for the interest rates, debt obligations and the
deadlines for the project have never been made open to the public

• This secrecy and Pakistan's rising Debt-to-GDP ratio has been the main reason
for the criticism of the undertaking and the possibility of the debt-trap
diplomacy being observed in the order regions of the world

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 CRITICS

• As such, according to critics including the United States and India, the project is
a debt-trap

• However, the Pakistani govt stated that most of the project consists of equity
finance instead of debt finance

• Chinese exports through the Karakoram Highway entered the domestic Pakistani
market are cheaper. It has also been speculated that the CPEC will replace
Pakistani exports by Chinese ones in external markets

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 IMPACT ON REGIONAL ECONOMY
ACHIEVEMENTS OF PAKISTAN

• Largest investment Pakistan has attracted since independence and largest by

China in any foreign country

• Pakistan gains upgraded infrastructure and reliable energy supply

• Visible impact in 2017, Pakistan producing surplus electricity. The country's

current electricity production gone up to 16,477 MW which was 2,700 MW more
than the demand

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 IMPACT ON REGIONAL ECONOMY
INTEREST OF CHINA

• Importance of CPEC to China is reflected by its inclusion as part of China's 13th

five-year development plan

• Will provide alternate route for energy supplies

• Reduce Chinese dependence on the Sea of Malacca and South China Sea routes.

• Currently available sea-route to China is roughly 12,000-km-long, while the

distance from Gwadar Port to Xinjiang province is 3,000 km, with another 3,500
km from Xinjiang to China's eastern coast

• A new route by which Western China can conduct trade

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 IMPACT ON REGIONAL ECONOMY
PROSPECTS FOR ASIA

• Driver for connectivity between South Asia and East Asia

• When fully built, the corridor is expected to generate significant revenue from
transit fees levied on Chinese goods

• A great deal for the whole region if implemented successfully within planned
time framework

• Aiding to the source of economic development, regional peace and integrity.

The effort may be considered as an opportunity rather than threat for South
Asia
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 IMPACT ON REGIONAL ECONOMY
OBSERVATIONS FROM INDIA

• May 2016: Narendra Modi and his counterpart, Iranian President Hassan Rouhani,
signed a series of agreements in Tehran. India offered to refurbish one of
Chabahar's berths, and reconstruct another berth, in order to allow Indian goods
to be exported to Iran, with the possibility of onward connections to
Afghanistan and Central Asia. As of February 2017, the project remains delayed

• A section of the Indian media described it as "a counter to the CPEC

• Iran doesn't consider Chabahar project to be a rival of CPEC, also Iran is eager
to join CPEC with its full capabilities, possibilities and abilities

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 IMPACT ON REGIONAL ECONOMY
OBSERVATIONS FROM INDIA

• The govt of India objects to the CPEC project as upgrade works to the
Karakoram Highway are taking place in Gilgit-Baltistan; territory that India
claims as its own

• During the visit of Narendra Modi to China in 2015, the Indian Foreign Minister,
Sushma Swaraj reportedly told Xi Jinping that projects passing through Gilgit-
Baltistan are "unacceptable"

• Swaraj restated this stance during a meeting in August 2016 with Chinese
foreign minister Wang Yi, stating India would "definitely oppose" the corridor in
Kashmir

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“
there is no permanent friend & no permanent enemy in
international politics
”
but those are only interests which are permanent

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?
…thank you