China-Pakistan Economic Corridor: Perils and

Prospects
Mar. 03, 2017 | | 0 comments

The China-Pakistan Economic Corridor (CPEC) has magnified and magnetized the attention of
China and non-China watchers at the regional and global levels. The CPEC has received a wide
currency and been attributed with different catchphrases, including: the revival of Mackinder
theory, the Great Game, New Asia is Emerging, China’s Rise as a Global Power. However, the
reality is that China has translated its vision into reality.

Boris Johnson, the UK’s Secretary of State for Foreign and Commonwealth Affairs, while
delivering a lecture at the Government College University at Lahore, termed the CPEC project as
a “wonder project,” and is the “revival of the ancient Silk route and the rebirth of trading
caravans connecting East and West,” and Karachi should be Asia’s “biggest trading entrepot”
besides Singapore and Shanghai. Moreover, Chinese Premier Wen Jiabao, while delivering his
historic speech at the Parliament of Pakistan, summed up the Pakistan-China friendship in the
following words: “The steadfastness of the pine tree is shown in the frigid winter; the strength of
a horse is tested in a long journey.” It is interesting to note that before the launching ceremony of
the CPEC in Pakistan, Chinese President Xi Jinping expressed his feelings in the following way:
“I feel as if I am going to visit the home of my own brother.”

The launch of the CPEC in Pakistan has been termed as a watershed in the annals of Pakistan. It
is a mega-initiative to develop infrastructure, energy resources, roads, railways, and bridges. The
Chinese project in Pakistan has been well received, yet it is not devoid of challenges.
China proposed the idea for CPEC in May 2013, and in April 2015 Xi made a brief sojourn to
Pakistan, during which both sides agreed to elevate their relationship to an “all-weather strategic
partnership”. During Xi’s visit, the two countries signed fifty-one agreements at an estimated
value of USD 46 billion.

In the words of Professors Shi Zhiqin and Lu Yang of Tshingua University, Pakistan is situated
at the crossroads of Central Asia, South Asia, and the Middle East. Pakistan could be a potential
conduit for China to access these other regions. Therefore, China believes that economic stability
and security in Pakistan could ensure safe passage to China to exercise its influence in other parts
of the world. In connection to the rapid pace of developments in the region, the Ministry of
Planning and Development has mapped out a plan for the economic development of Pakistan up
to 2025.

This plan aims to develop Pakistan from a lower middle-income to upper middle-income nation.
To turn this vision into reality, Pakistan has pinned high hopes in attracting more FDI, construct
different energy centric projects, create more employment opportunities, and strengthen its
institutions by improving the level of governance. In fact, even prior to the CPEC agreement,
Pakistan had inked many trade-related agreements with China. The 1989 bilateral agreement
between Pakistan and China was a prelude to other trade agreements like their FTA in 2006, and
Trade and Services Agreement in 2009. Under the umbrella of CPEC, around fifty MoUs have
been signed.

Revisiting the OBOR Concept

The development of CPEC is an integral part of China’s One Belt One Road (OBOR) initiative,
which reaches the Baltic region in Europe, Southeast Asia and Africa. It is now considered as a
landmark initiative of Beijing’s global strategy. It is the lynchpin for routes or road infrastructure
development. It has been already launched in various parts of Africa, for instance, Kenya,
Tanzania and Zimbabwe. Consequently, East Europe reflects China’s geographically more
distant stretch that seems to be an advanced approach towards the capitalist economies in the
region. China started a railway project in Poland in 2013, and more recently, Hungary became
the first EU state to initiate a Chinese high-speed rail project.

Against this backdrop, the prime goal behind extending global connectivity is not only for the
benefit of China’s partners, but the growth and global economic integration of China’s economy.
It is clear that China is expanding its links with Central Asia and Southeast Asia. Tai Wei Lim
has succinctly pointed out that “global connectivity is not just about the physical transportation
networks of highways, railways, ports, and shipping lines. It is also more than the economic
integration based on trade and finance … In the long run, connectivity will also be concerned
with people-to-people connection, social interaction and cultural exchange.”

The Perils of CPEC

The CPEC project is not devoid of challenges. This section explains briefly the security and
political issues.

Security challenges: Pakistan’s internal security and the regional spillover impact of terrorism
have been the major impediments in developing the CPEC. The security challenge arises from
China’s Xinjiang province and stretches over all the major locations of the CPEC, especially
Gwadar. The militant groups like the Tehrik-i-Taliban Pakistan (TTP), the East Turkestan
Islamic Movement (ETIM), Lashkar-e-Jhangvi (LeJ), ISIS, and separatist terrorist groups in
Balochistan are expected to pose major threats to the security of the project. For instance, the
Indian intelligence officer Kulbhashan Yadav who was arrested in Pakistan conceded that he had
been tasked to spy over the major developments of the CPEC in order to jeopardize its progress.
In addition, given the failed talks with the Afghan Taliban through the Quadrilateral Group in the
aftermath of Mullah Mansoor’s death in an American drone attack, the Afghan border is another
major security challenge for Pakistan. The major concern regarding Afghanistan’s internal
security arises from the concentration of anti-Pakistan terrorist factions in the region. Groups like
TTP, the Movement of Islamic Uzbekistan, and the Turkmenistan Islamic Party can cause
colossal damage to the CPEC project. For the safety and security of the Chinese engineers and
workers in the CPEC project, the Pakistani Army has prepared a rapid response force of around
10,000 men.

Political challenges: Fearing discrimination, several political parties from Khyber Pakhtunkhwa
and Balochistan provinces have raised serious objections against the CPEC. Despite the
government’s assurances, the dissonance among provinces seems to be an impending political
obstacle. One facet of the challenge arises from Baloch separatist groups. Gawadar, being the
main location of this transit project providing a deep seawater port for trade with China, is
located in Balochistan. The separatist groups see the CPEC as an anti-Baloch project which will
allow foreigners to have full access to Balochistan and ultimately drift Balochistan’s
demography further away from Balochs. In reality, the project will develop the impoverished
region of Balochistan, and it is essential that the government of Pakistan take stock of things
seriously and create awareness among the indigenous people of Balochistan that the CPEC will
benefit them and will not be used against them. Similar views have also been echoed in Khyber
Pakhtunkhwa over the diversion of CPEC from the Western to the Eastern route. Apart from
these obstacles, there are prospects of CPEC for Pakistan too.

The Prospects of CPEC

Analysts believe that CPEC entails more advantages than disadvantages for China-Pakistan
relations. The benefit that could first be realized will be in infrastructure development. Pakistan
is currently faced with a myriad of problems, and the development, expansion, and upgrading of
infrastructure in Pakistan may bring some relief. The second benefit that might accrue to
Pakistan would be in transportation. The vulnerable conditions of infrastructure have created a
havoc-like situation in Pakistan. The development of this sector will inevitably culminate in the
change in the dynamics of the transportation system.

More importantly, given that the Chinese OBOR project is aimed at promoting and establishing
global connectivity, Pakistan has a lot to gain from global connectivity. According to Salamat
Ali, Pakistan will have the opportunity to go through different modes of trade flows. He points
out that “with the embracing of CPEC project, Pakistan will reduce behind-the-border trade costs
and bring about a shift in the modes of transportation; strengthen economic integration with the
world’s largest trading nation; boost intra-country trade within Pakistan; expand its export
product and link the northern areas to airports in Peshawar, Rawalpindi, and Lahore.” However,
if we look into the facts of trade between Pakistan and China, around 16 billion dollars of trade is
carried out through sea routes. Trade through the sea stands at 97 percent, while trade by air
stands at only 2 percent.The worst scenario to be noted on Pakistan-China trade is that only 1
percent of trade takes place over land.

The global power shift from the West to the East could be a transcendental phenomenon in the
history of global power. It would not be wrong to assume that the center of gravity not only in
trade and investment but also in production has tilted in favor of Asia. China has a spectacular
civilization, dynamic leadership, and is the most populous country in the world. If we just look at
the trade figures of the previous year, out of total world trade of 19 trillion dollars, China alone
accounted for more than 10 percent. Pakistan can reap the fruits of this trade with China at the
global level.

Conclusion

This article has analyzed the CPEC in the context of the OBOR project. It has also explored the
perils and hindrances in the way of the smooth sailing of this megaproject in Pakistan. It has also
explored the prospects that could accrue to Pakistan. Pakistan is indeed in the eye of a storm. The
ship of the Pakistani state has drifted into uncharted territory given the host of challenges and the
nature of regional geopolitics. The Civil-Military dichotomy; corruption; poor governance; the
patriarchal nature of political dynamics; uneven distribution of resources among provinces; and
the recent spate of terrorism are the biggest challenges in the way of peace and prosperity.

What needs to be done, suggests Lu Yang, is that “China should abandon its traditional way of
dealing only with the Pakistani government and instead get in contact with local communities to
better accommodate local interests so that more Pakistani people can benefit from the CPEC.”
He further suggests that “China and Pakistan need to strengthen their cultural ties and increase
people-to-people interactions.” In addition, he cautions that “until the country’s political and
security conditions turn a corner, it will be difficult to judge the corridor’s future prospects.” At
the same time, “for China, this means neutrality, strategic patience, and caution are needed as the
construction of this grand initiative continues.”

In fact, Chinese investment in the development of infrastructure has also registered a mixed
response among Pakistani China-watchers and the media. Liu Zongyi has rightly pointed out that
the smooth sailing of CPEC is possible only when Pakistan has a stable and peaceful domestic
milieu. It should have peaceful neighbors. On the security front, the Pakistani army and civilian
people have paid the heavy price of war on terrorism. The government of Pakistan has resolved
to offer safety and security to the Chinese workers and engineers. It is safe to say that CPEC is
not only a test case for China’s grand initiative, but also for Pakistan’s influence in the
region. Cooperation, caution, and patience should be staples of the China-Pakistan relationship.