China-Pakistan Economic Corridor

China-Pakistan Economic Corridor is a development programme to connect Gwadar Port in southern Pakistan to China’s north-western region of Xinjiang via highways, railways and pipelines to transport oil and gas. Economic corridor is not only the road to economic prosperity for Pakistan, it can also be termed as future of the world. It is estimated that about 3 billion people from China, South Asia and Central Asia, would benefit from the economic corridor. The project has the potential to empower half of the world’s population living in Asia. This is probably the most important agreement signed between Pakistan and China till now and it will expand the depth and breadth of our bilateral strategic relations.

What is a Corridor?

Economic corridors are integrated networks of infrastructure within a geographical area designed to stimulate economic development. Corridors may be created to link manufacturing hubs, areas with high supply and demand, and manufacturers of value-added goods. When implemented, the economic corridors are often one of a package of different measures including infrastructure development, visa and transport agreements and standardization.

Geography of Pak-China Economic Corridor

The corridor is about 533 km from Karachi and 120 km from the Iranian border and 380 km northeast of the nearest point in Oman across the Arabian Sea. Gwadar Port is located at the mouth of the Persian Gulf, just outside the Strait of Hormuz, near the key shipping routes in and out of the Persian Gulf. It is situated on the eastern bay of a natural hammerhead-shaped Peninsula protruding into the Arabian Sea from the coastline.

Project Details

This 107-km long track will be built with 50 bridges over beautiful lakes and tunnels across different mountains. By this project, 5 million commuters will be benefited annually. Pakistan is also working on Karachi-Lahore motorway. This 1160-km long motorway will connect Karachi, Hyderabad, Dadu, Sukkur, Rohri, Pannu Aqil, Ghotki, Obara, Rahim Yar Khan, Sadiqabad and Multan. This six-lane road will be built over terrain composed of mainland, mountains and plateaus. Three bridges will also be constructed over River Sindh, Sutlej and Ravi. These mega-projects along with several others will help Pakistan stable its economy in order to execute these projects.

Effects on the Region

At the regional level, India is not very happy with growing Pak-China military and diplomatic ties. During his visit to India, the Chinese president announced $20 billion of Chinese investment in India over the next five years while it has promised to invest over $42 billion in Pakistan; a strong Pakistan-Chinese alliance is a grave threat to India. China has also increased its trade with Southeast Asian countries including Vietnam, Philippines, Myanmar, Singapore and Malaysia to balance increased US influence in the region under its Asia-Pacific policy. China is spending heavily on its navy and building its seaports in Bangladesh, Sri Lanka and Pakistan as a part of its “String of Pearls” strategy.

Strategic Importance

When the corridor is completed, it will serve as a primary gateway for trade between China and the Middle East and Africa. In particular, oil from the Middle East could be offloaded at Pakistan’s Gwadar Port, which is located just outside the mouth of the Persian Gulf, and transported to China through the Balochistan province. Such a link would vastly cut the 12,000-kilometre route that Mideast oil supplies must now take to reach Chinese ports. Gwadar is located on the shores of the Arabian Sea it is in Pakistan’s western province of Balochistan.

Importance for Pakistan

Despite its economy being hit hard by flawed economic policies, political chaos, and a spate of terrorism, Pakistan has made a significant breakthrough on the economic front as well as against terrorist outfits. With the military going all out in North Waziristan Agency and adjoining areas to dismantle the operational infrastructure and hideouts of terrorists, the PML-N government has achieved a landmark goal by signing numerous agreements with the Chinese government.

Agreements and MoUs

Though the amount for all agreements and MoUs, a part of the China-Pakistan Economic Corridor, is around US$34 billion, around 22 agreements have already been signed between the friendly neighbours. These include bilateral agreements for Economic and Technical Cooperation; Government’s Concessional Loan Agreement for Construction of Cross-Border Optical Fibre Cable System between China and Pakistan; Signing of Minutes of the 3rd JCC Meeting of CPEC; Signing of MoU on the Outline of Long Term Plan of CPEC; Signing of MoU on Capacity Building for Development of CPEC; Framework Agreement for Construction of Cross-border Optical Fibre Cable System between China and Pakistan; MoU on Cooperation of Textile Garment Industrial Park Projects in Pakistan; and some other projects.

In energy sector, MoU on Surface Mine in Block-II of Thar Coal Mine and the Engro Thar 2X330 MW Coal Fired Power Plant between Sindh Engro Coal Mining Company and China Development Bank Corporation have been signed.

Others included MoUs for development of Thermal Power Assets for Pakistan, HUBCO Power Company Limited (2 x 660MW including Jetty); Memorandum of Facilitation between Port Qasim Electric Power Company Private Limited and Government of Pakistan (2X660); Memorandum of Facilitation Agreement between Govt. of Punjab and M/s Huaneng Shandong Rui Group, China for Development of 1320 (2×660) MW Coal Fired Power Project at Qadirabad, Sahiwal; Signing of Framework Facility Agreement on Sukhi-Kinari Hydro Power Project; Memorandum of Facilitation Agreement between Govt. of Punjab and M/s China Machinery Engineering Corporation China (CMEC) for 1×660 MW Coal Fired Power Plant at Muzaffargarh.

In Gwadar, agreements have been made to construct Gwadar New International Airport; Gwadar Eastbay Expressway; Hospital at Gwadar; Technical & Vocational Training Institute; Water Supply and Distribution; Infrastructure for Free Zone & EPZs port related Industries and Marine works.

Infrastructure Projects

The infrastructure projects planned included Karakorum Highway (KKH) Phase II (Raikot-Islamabad); Karachi-Lahore Motorway (KLM) – (Multan-Sukkur Section); Expansion & Reconstruction of existing Mail Railway Line (ML-1); Peshawar to Karachi; Construction of Havelian Dry Port; Orange Line Project at Lahore; and Cross Border Optical Fiber Cable system project.

Energy Projects

Significant Energy Projects are being installed of around 10,400 megawatts. Those projects included the Port Qasim Electric Power Company (2X660) 1320 megawatts; Engro Thar Coal-fired Power Plant 660 megawatts; Sindh Sino Resources Power Plant of Thar Coal (Block-1) 1320 megawatts; Gwadar Coal Power Project 300 megawatts; Rahimyar Khan Coal Power 1320 megawatts; Muzaffargarh Coal Power 1320 megawatts; Sahiwal Power Plant 1320 megawatts; Suki Kinari Power Project 870 megawatts; Karot Hydro Power Station 720 megawatts; UEP Wind Power Project 100 megawatts; Sunec Wind Power Project 50 megawatts; Sachal Wind Power Project 50 megawatts; Dawood Wind Power Project 50 megawatts; Quaid-e-Azam Solar 900 megawatts; and Quaid-e-Azam Solar 100 megawatts.

Making Corridor Operational

For the purpose of making the economic zone operational, the Chinese government has been involved in constructing a multi-billion-dollar New Kashgar City, where Kashgar Special Economic Zone is being constructed. With its proximity to Pakistan (approximately 500 kilometres) and a flying time of around one hour, Kashgar-Gawadar Economic Corridor may prove to be a game-changer for development in Pakistan, India and beyond.

The Chinese government plans to complete this economic zone by year 2020, and industrialists have been offered tax-free zone and other government concessions.

This economic zone would prove to be the linchpin for trade between China, Pakistan, India, Afghanistan and eight other central Asian states.

The integrated project has been designed under a holistic approach to link modern means of communication including rail, road links with trade and economic opportunities not only for both China and Pakistan but for the entire South Asia.

The early harvest projects of China-Pakistan Economic Corridor would be completed within a span of two to three years. These include laying of rail, road networks besides several long and short term energy projects.

Strategic Importance for China

This trade initiative has strategic importance for China as well as Pakistan as it would provide an opportunity to reach out to the Central Asian states through Pakistan and Afghanistan.

There is an integrated communication network which would not only benefit Pakistan but also China to help open a new vista of trade with the rest of the world in a short period of time. Chinese trade through this route would grow manifold.

In order to operationalise China-Pakistan Economic Corridor, the Chinese government has set up a special economic zone in the historical city of Kashgar, which is the border city between China and Pakistan.

The New Kashgar Economic Zone is spread on 6600 acres of land and various provincial governments of China and some private firms are developing their own projects within the tax free zone.

All necessary civic facilities are available in Kashgar New City Project where the preservation of farms is also being ensured. In the eastern part of the Kashgar New City, residential areas, hospitals, parks and other civic facilities are being made available. Since Kashgar borders eight countries, a business city has been named after each country of the region.

Conclusion

The business community of the entire region may benefit from the ambitious project designed to share and expand the trade opportunities for progress and development of South Asia. This would not only help regional governments to fight poverty, illiteracy and religious fanaticism, but would also bring development and prosperity of the people of around ten developing states.

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