PAK CHINA ECONOMIC CORRIDOR

INTRO
TheChinaPakistan Economic Corridor(CPEC)is a

ongoing developmentmegaprojectwhich aims to

connectGwadar portin southwestern Pakistan to Chinas

northwestern region ofXinjiang, via a network of

highways, railways and Pipelineto transport oil and gas

 AIM
To brief regarding China Pakistan Economic Corridor

(CPEC) imp and progress while analyzing its benefits to

its stake holders

 SEQ
Hist of Pak-China relationship
Hist of Gawadar Port
Backgr of CPEC proj
Imp of CPEC
Routes of CPEC
Major projects under CPEC
Benefits of CPEC
Controversies in CPEC
HIST OF PAK-CHINA
RELATIONSHIP
 HIST OF PAK CHINA RELATIONS
PakistanChina relations began in 1950

Strategic alliance was formed in 1972 and economic co-

operation began in 1979

China has invested $20 billion in various energy and

mega infrastructural projects in Pakistan
HIST OF GAWADAR PORT
 HIST BACKGR OF GAWADAR PORT
On 8 September 1958, Prince Karim Agha Khan purchased
Gawadar Enclave for Pakistan from Oman for worth $3 Million

In 1993, The government of Pakistan conceived a plan to

develop Gawadar into a major port city

Phase-1 of Gawadar was completed in 2007, and inaugurated

on 20 March 2007
BACKGR OF CPEC PROJECT
 BACKGR OF CPEC PROJECT
Vision for the economic corridor stretches far back as
President Musharraf era
Project was proposed by Chinese premier Li Keqiang
during his visit to Pakistan in May 2013
Pak-China Economic Corridor was inaugurated in
Islamabad on 27 August 2013
On 20 April 2015, Pakistan and China signed an agreement
to commence work on the $46 billion proj named CPEC
that incl various energy and infrastructural / dev projects
IMP OF CPEC
 CPEC IMP TO CHINA
Chinese industries are facing problems to compete in global market due
to high transportation cost and delivery time
China is using a longest way due to which transportation cost and time
increases, which gives a competitive edge to competitors e.g. Japan,
USA
It would decrease the travel distance and cost greatly from China to Gulf
Even if China uses CPEC for 50% of its Oil supplies then it will save $6
Million every day, almost $2 billion every year
Independent path from India and USAs interference
New business market in another country
 CPEC IMP TO CHINA

2000
KM 12900
KM
 CPEC IMP TO PAK
Req of Strategic and economic trade routes

Higher poverty rate

Poor growth indicators

Energy starved country

Meagre rd infrastructure

Unstable business envmt

GEO STRAT IMP
CPEC ROUTES
ROUTES OF CPEC

LONG
LONG
TERM
TERM
ROUTE
ROUTE

ROUTE
ROUTE
1
1

ROUTE
ROUTE
2
2

ROUTE
ROUTE
3
3
MAJ CITIES IN CPEC
MAJ PROJECTS IN CPEC
 MAJOR PROJECTS
Sales

Energy ($33.8 billion)

Infrastructure ($11.8
billion)
Communication ($44
Million)
Cotton biotech research

Total $46 billion projects

 MAJOR ENERGY PROJECTS
Total 18 x Power project under CPEC
Total cost worth 33.8$ billion
Energy MW Cost USD (Billion)

Coal 7560 8.8

Wind 300 0.5

Hydel 1590 4.2

Solar 1000 1.7

Second Phase 6445 9.5

Mining Exp - 9.0

TOTAL 16895 33.8

MAJOR INFRASTRUCTURAL PROJECTS
Total 8 x infrastructural project under CPEC
Total cost worth 11.8$ billion

Infrastructural Cost USD (Billion)

Road 5.8

Rail 3.7

Mass transit in lahore 1.6

Gawadar Port 0.7

TOTAL 11.8
MAJOR INFRASTRUCTURE PROJECTS

Gawadar Port up Eastern Western

gradation Alignment (KLM) Alignment

Havelian- Gwadar
Hazara
Khujerab Ratodero
Motorway
Railway Motorway

Lahore Orange
KKH Upgradation
Lane Metro Train
BENEFITS OF CPEC
 BENEFITS TO PAK
CPEC focuses on building the nec infrastructure and energy self sufficiency for Pakistans economic take-off

Total CPEC Investment Net Foreign Direct Investment over the years
Sectors MW/KM Est. Cost
(US $ Bn)

Energy (Priority ) MW 10,400 15.506

Energy (Actively
6,645 18.287
Promoted) MW
Road (Km) 832 5.900
Rail (Km) 1,736 3.690
24,020
Gwadar (including sea,
0.662
air, land links)

Mass Transportation
1.600
Orange Line

Cross-Border Fibre Optic

0.044 5,011
Cable System
1,134
DTMB Pilot Project 0.002
1980s 1990s 2000-2010 2010-2020 2020-2030
Total 45.651
Source: State Bank of Pakistan Page 30
 BENEFITS TO PAK
Due to the energy initiatives under CPEC, Pakistan is expected to meet its
electricity demand by 2018
2016 2017 2018
33000

31000

29000

27000

25000
Total Demand Supply (MW)
23000

21000

19000

17000

15000
Demand Planned Supply
31
 BENEFITS TO PAK
Sustainable Growth

Indirect Impact
$46 Billion Baseline 4-5 %
Chinese GDP Growth rate
Rise in GDP
Investment rises above 6-7%
1.5 % additional Potential
in medium term
Incremental
GDP Growth
Private Sector
Direct Impact Investment
Overall Impact

Source: BMA Capital Management Limited, Investor 360

 BENEFITS TO PAK
Employment
Growth- related : Jobs created through
improved services and lower costs to existing
businesses (electricity supply, access to
infrastructure)

Induced: Increased consumption through new

job creation spurs employment in providers of
goods and services

Indirect : Jobs created through backward and

forward linkages in the supply chain

Direct: Jobs created directly in the energy and

infrastructure sector
 BENEFITS TO PAK
Employment

Number of
Lives
Average touched
Household 30 million
Size=6.7
Employme
nt
4-5 million
Source Jobs Study 2013 , IFC World Bank
 BENEFITS TO PAK
MISC

Connect all provinces

Development of Fata, KPK and Baluchistan

Equalization among Provinces

 BENEFITS TO CHINA
Independent path from India and USAs interference
New business market in another country
Chinas stake in Gwadar will also allow it to expand its
influence in the Indian Ocean
China is that it will be able to bypass the Strait of Malacca
Economic adv to China
 BENEFITS TO THE REGION
INDIA
Gravity Model* suggests a potential increase of 10-15 times of the current trade with
central Asia if routed through Pakistan & Afghanistan.

CPEC will double the Indian trade with china.

After improvement in bilateral relations, India can secure 2.6 billion USD trade in
addition to the current 3 billion USD with Pakistan.

Pakistani Ports will be the convenient transit for North western India as compared to
Mumbai and Calcutta. *trade
1 2
GDP1 GDP2 / D1 2

Central Asian fuel will cater growing Indian energy needs.

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 BENEFITS TO THE REGION
CENTRAL ASIA
Gwadar will be a gateway for Central Asia.

Central Asia can be connected to CPEC via Tirmiz, the southern city of Uzbekistan.

CPEC and its related future projects can cater both Turkmenistan and Uzbekistans
liquid cargo through pipelines and Kazakhstan and Kyrgyzstans dry cargo via road.

Can increase energy market share in Western China and India. .

For Landlocked countries, distance coefficient of gravity model is 5.5% (every 1%

*trade GDP1 GDP2 / D1 2
decrease in distance from port increases the trade by 5.5% and CPEC will decrease this
1 2

distance by 22%.)
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 BENEFITS TO THE REGION
AFGHANISTAN

Afghanistan can be connected to western alignment of CPEC from Chaman

and eastern alignment with Peshawar from Jalalabad.
CPEC will provide shortest and most cost effective route for landlocked
Afghanistan to China, India and Indian ocean.
Approx. 600km less as compared to the other nearest port of Chabahar.
CPEC will also help in making Afghanistan a transit route for energy rich
Central Asia and energy starved South Asia.
Improve Geo-Political scenario for early completion of CASA 1000 and
TAPI *trade
1 2
GDP1 GDP2 / D1 2
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CONTROVERSIES IN CPEC
 CONTROVERSIES IN CPEC
CPEC is a potential threat especially for the local industries of
Pak, that can saturate local markets with Chinese products and
eff the business of local producers

Native Baloch fear that under the banner of economic

development and prosperity, CPEC might turn them into a
minority within their own land and deprive them of jobs and
other opportunities like the past
 CONTROVERSIES IN CPEC
India has formally registered a protest with China regarding
the land route used in the project, which is connecting western
China to the Arabian sea through Kashmir

KPK has reservations against federal govt for prioritizing

Eastern route over western route, like wise no megaprojects
have been linked to CPEC in KPK except rd
 CONCLUSION
Pak-China relationship holds great importance in the world. It is not
only at political level but people of both countries shares a deep and
special bond.This historic friendship is termed as stronger than
steel, sweeter than honey, deeper than ocean, higher than
mountain