Global implications of economic corridors in China and ECO countries

Economic history of Central and South Asia is largely associated with the connectivity of trade and natural and human resources among the peoples of Central and South Asian countries. The silk rout and the Grand Trunk road (famously known as ‘GT Road’ in Pakistan and India) have been providing the major source of this connectivity.

In the bipolar regime in 20th century, the direction of trade and mobility of resources of Central Asian States have been shifted from South Asia to Eastern Europe which was not an historical route of the trade and resource mobilization. The economic, political and social history of Central Asian States is significantly connected with South Asia. The visible signs of the revival of historical routes can be observed in the region after the fall of Soviet Union.

The ratification of TIR Convention by the ECO countries, the white card scheme to facilitate the drivers to travel across the boarders in ECO member countries, simplification of visa process for travelling ECO member countries, ECO Trade Agreement to enhance the trade among the member countries, Visa sticker scheme for the leading businessmen to allow travel across the border without visa and the formation of ECO trade and development bank and the insurance company are the indicators of reviving the historical relations among the Central and South Asian countries.

In 2013, Chinese leader Xi Jinping introduced a new development strategy and framework called “One Belt, One Road (OBOR)”, which focuses on connectivity and co-operation among countries, primarily between People’s Republic of China and the rest of Eurasia. OBOR has 6 trade corridors spread mainly over Eurasia but also touch the fringes of Pacific, North & East Africa.

The main corridors are:

  1. China – Mongolia – Russia Corridor
  2. New Eurasian Land Bridge
  3. China – Central Asia – West Asia Corridor
  4. China – Indochina Peninsula Corridor
  5. China- Myanmar – Bangladesh – India Corridor
  6. China – Pakistan Economic Corridor (CPEC)

It is expected that within a decade China’s annual trade with OBOR countries will exceed $2.5 trillion. OBOR will cater for 2/3 of the world population, 1/3 of the world GDP and 1/3 of the world services &goods. China- Pakistan Economic Corridor (CPEC) is the main component of OBOR. The basic concept of CPEC is to join Gwadar (Arabian Sea port in Pakistan) with Kashgar / (Xinjiang province) in Western China.

It is interesting that Eastern and Central Chinese provinces have been developed but the Western side is still lacking. When Deng Xiaoping created China’s first special economic zone (SEZ) in 1980, Shenzhen was transformed from a tiny fishing village to the 3rd busiest port of the world. Now, more than 30 years later, China has focused on another special economic zone: Kashgar, the center of Uygur civilisation and once an important staging post along the Silk Road. Chinese government is keen to regain the status of the Kashgar as was hundreds of years ago, when caravans between East and West made it to the most important city in western China. In 2010, the slogan “Shenzhen in the East, Kashgar in the West” became emblematic of the city’s new status as an economic zone. To materialise that dream, the base and jump off point has to be Gwadar. In this way Gwadar becomes the main component of CPEC, giving shortest access. CPEC has the most obvious advantages over the other corridors because of its location. It links Gwadar with Kashgar at the middle of OBOR, where the quantum of business and traffic will be at highest peak.

Corridors in ECO Member Countries:

Besides Chinese government, the Economic Co-operation Organisation (ECO) is the flagship institution to enhance the trade and economic relations among ECO member countries namely Afghanistan, Azerbaijan, Iran, Kazakhstan, Kirgizstan, Pakistan, Tajikistan, Turkmenistan, Turkey and Uzbekistan. The secretariat of ECO Chamber of Commerce and Industry in Pakistan is serving to promote the trade among ECO countries and materialising the benefits of China-Pakistan Economic Corridor (CPEC) for all ECO member states. Other than CPEC the following corridors and trade enhancement projects are in progress in ECO Countries:

a. Quadrilateral Agreement on Traffic in Transit (QATT):

Pakistan, China, Kazakhstan and Kyrgyzstan are included in this agreement, while Tajikistan has also requested for being part of this arrangement. The road between Almaty (Kazakhstan) and Karachi (Pakistan) is likely to be extended to Turkmenistan, Uzbekistan and Tajikistan subject to peace in Afghanistan.

b. Islamabad-Tehran-Istanbul (ITI) Train Network:

It is a part of the Trilateral Connectivity Networks between Iran, Pakistan and Turkey which covers connectivity through rail, road, air and optic fiber. The journey (6566 Kilo meter) from Islamabad to Istanbul via Tehran 6566 takes 14-16 days, as compared to 40-45 days from Karachi to a Turkish sea port. Agreement has been reached to cut the journey time from 15 to 10 days through swift trains.

c. Trilateral Transit Trade Agreement (TTTA):

The trade passage of Pakistan-Afghanistan-Tajikistan shall pass through the Khyber-Pakhtunkhwa Province, Lowari Tunnel through Afghanistan’s Wakhan district near Khandud village (where distance between Pakistan and Tajikistan is nearest around 10 KM). It may link Gwadar sea port in Arabian Sea to Dushanbe. The main hurdle in this transit exchange is insistence by Afghanistan to include India in the agreement, while Pakistan has been hesitant until political settlement with India.

d. Pakistan – Uzbekistan Transit Trade Agreement:

This agreement covers the facilitations in all transport methods between Pakistan and landlocked Uzbekistan.

e. Pakistan – Iran – Turkmenistan Commerce Co-operation (PITCC):

It is part of a larger vision of International North-South Transport Corridor where goods can be offloaded in Gwadar and carried to Russia.

f. Afghanistan – Pakistan – India – Bangladesh – Myanmar (APIBM) Corridor:

It is a proposed corridor to restoring historical Afghanistan-Pakistan-India-Bangladesh-Myanmar (APIBM) route which is considered a road of shared prosperity for South Asia.

g. Pakistan – India – Nepal Integrated Network:

The route to Nepal shall give Pakistan access to major Chinese cities of Chengdu, Chongqing and Kunming.

h. Central Asia & South Asia (CASA) – 1000:

It is an ambitious project of regional energy co-operation among Pakistan, Afghanistan, Tajikistan and Kyrgyzstan with a potential to reach from 1000 MW to 4,000MW electricity transmission alleviating power woes for the South Asian countries involved.

i. Indus River Trade Corridor:

It is envisaged that by developing this river a fast alternative track for goods and passengers’ transportation can be developed. The transport expenses can be reduced to half, as one liter of fuel is able to ship one ton of consignment up to 180 km over waterways as compared to only 25 km and 75 km by road and rail respectively.

j. North-South Transnational Corridor (Kazakhstan – Turkmenistan – Iran railway link):

It provides Arabian Sea access to landlocked Kazakhstan and Turkmenistan through railway link via Iran.

k. Iran – Pakistan – India Pipeline:

Originally India was included in this project to buy natural gas from Iran but now the work is in progress between Iran and Pakistan.

l. Turkmenistan – Afghanistan – Pakistan and India (TAPI) Pipeline:

The TAPI pipeline is a major interlinking project for energy.

m. Trans-Iranian canal:

The idea of linking the Persian Gulf and the Caspian Sea by a canal.

All the projects for efficient connectivity in transportation and energy reflect the direction of trade and mobilization of resources in future. However, China Pakistan Economic Corridor has become more crucial because of its geostrategic and economic importance. It has become a part of the largely debatable global issues and politicised by neighbouring countries of Pakistan. No doubt the project has its political impact as it can change the patterns of regional development and will improve the strength of Pakistan’s relations with China and other participating countries.

China and South Asia: The Two Largest Economies for 400 Years

According to economic historian Angus Maddison of Groningen University (The World Economy: A Millennial Perspective), India had the world’s largest economy in the 1st century and 11th century, with a 33 percent share of world GDP in the 1st century and 29 percent in 11thCentury. Though, Maddison’s estimates have been criticised by some historical national account statisticians because of taking some controversial assumption, they provide an historical economic ranking. It was revealed that India’s share of the world income went from 24 percent in 1700to a low of 4 percent in 1952. A broader macroeconomic view of India during this period reveals that there were segments of both growth and decline, resulting from changes brought about by colonialism and a world that was moving towards industrialisation and economic integration. Historically, India and China were the biggest economies. Now, in globalisation regime the history is being repeated as Asian economies are growing at faster track.

The changes in the global economic ranking and patterns of development are highly expected in the present regime of liberalisation. The role of emerging economies, growing number of democracies, implementations of the WTO’ clauses and promoting competitiveness are the sufficient indicators to believe the changes in the global development patterns. It will be quite natural and historical. South Asia has no exemption from this scenario. It is observed in global economic data that South Asia and China are rapidly moving towards their historical positions.

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