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Research Thesis
Related: Business Law
Semester Fall 2018 /2019 Winter

Topic: CPEC in Pakistan

Submitted to:
Respected Mam KhushBakhat Khan Qaiser,
LL.B, LL.M, LL.D Environmental Law( Specialized in bilateral affairs Law)

Submitted By:
Mobushar Iqbal Chohan,
LL.B, LL.M, Specializing in Evidence & Business Law ( banking & taxation )

LL.M Leading to Ph.D(LL.D)


Roll No: A.LL.M 010147259
Cell No: 0300-0096491
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Contents
1. Preface ............................................................................................................................................ 5
2. How will CPEC boost Pakistan economy ............................................................................................ 5
I. Benefits Of Pakistan .................................................................................................................... 6
II. Conflicts between motives.......................................................................................................... 7
III. The Final Route ....................................................................................................................... 8
IV. Route ....................................................................................................................................... 8
3. Background ........................................................................................................................................ 8
4. Subsequent developments ................................................................................................................ 9
5. Projects in Gwadar Port and City ..................................................................................................... 10
I. Gwadar Port Complex ............................................................................................................... 10
II. Projects in Gwadar city ............................................................................................................. 11
III. Roadway projects.................................................................................................................. 11
IV. Karakoram Highway .............................................................................................................. 11
V. China and Pakistan already conduct trade via the Karakoram Highway. ................................. 12
VI. Eastern Alignment..................................................................................................................... 12
Main articles: M5 motorway (Pakistan) and M-9 Super Highway ........................................................ 12
VII. Western Alignment ................................................................................................................... 13
VIII. Associated roadway projects .................................................................................................... 14
IX . Future Central Alignment ............................................................................................................... 15
X. Railway projects ........................................................................................................................ 15
i. Main Line 1 ............................................................................................................................ 16
ii. Main Line 2 ............................................................................................................................ 16
iii. Main Line 3 ............................................................................................................................ 17
XI. Lahore Metro ............................................................................................................................ 17
XII. Khunjerab Railway .................................................................................................................... 17
XIII. Energy sector projects .............................................................................................................. 18
XIV. Renewable-energy .................................................................................................................... 18
XV. Coal ........................................................................................................................................... 19
XVI. Balochistan ................................................................................................................................ 19
XVII. Punjab ....................................................................................................................................... 20
XVIII. Sindh ..................................................................................................................................... 20
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XIX. Liquified natural gas .................................................................................................................. 21


XX. "Early Harvest" projects ............................................................................................................ 21
6. Table of projects.............................................................................................................................. 22
"Early Harvest" Energy Project Capacity Location.............................................. 22
7. Other areas of cooperation ............................................................................................................. 23
8. Agriculture ....................................................................................................................................... 23
9. Science and technology................................................................................................................... 23
10. Other fields.................................................................................................................................... 24
11. Finance .......................................................................................................................................... 24
12. Interest-free loans ......................................................................................................................... 25
13. Private consortia ........................................................................................................................... 25
ADB assistance ...................................................................................................................................... 26
14. Impact ........................................................................................................................................... 26
15. Pakistani economy ......................................................................................................................... 27
16. CPEC and the "Malacca Dilemma" ................................................................................................. 28
17. Route to circumvent Afghanistan ................................................................................................. 30
18. Alternate route to Central Asia ..................................................................................................... 31
19. Comparison to Chabahar Port ....................................................................................................... 31
20. Security Issues ................................................................................................................................ 33
21. Security........................................................................................................................................... 33
22. Baloch militants ............................................................................................................................. 34
23. Islamist militants ............................................................................................................................ 34
24. Alleged Indian subversion .............................................................................................................. 35
25. KP Provincial Assembly.................................................................................................................. 35
26. Finances......................................................................................................................................... 36
27. Trade imbalance ............................................................................................................................. 36
28. Baloch Nationalists ......................................................................................................................... 36
29. Gwadar residents' concerns .......................................................................................................... 37
30. Indian objections ............................................................................................................................ 38
i. Sovereignty claims ......................................................................................................................... 38
31. Encirclement fears......................................................................................................................... 39
32. List of major projects..................................................................................................................... 40
33. BY CPEC GLOBAL............................................................................................................................ 45
1. Quaid-e-Azam Solar Power Park Bahawalpur – .................................................................... 45
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2. $4.8 Billion is being spent by China in developing ................................................................ 45


3. Lahore Line Metro Train: ...................................................................................................... 45
4. 2,000 km of rail and road networks ...................................................................................... 46
5. 3000 locals were hired by Sahiwal coal fired power plant: .................................................. 46
6. $35 Billion is being spent by China to construct 19 power plants: ....................................... 46
7. 30,000 direct job opportunities have been created in power and infrastructure sectors for
Pakistanis: ..................................................................................................................................... 46
8. Karakoram Highway Phase 2: ............................................................................................... 46
9. Special economic zones where companies can enjoy business incentives and tax holidays:
46
10. 2.5% projected annual growth for Pakistan via CPEC: ...................................................... 47
34. ADVANTAGES OF CPEC FOR PAKISTAN AND CHINA AND EXPLOITATION OF OPPORTUNITIES
AFFORDED BY CPEC............................................................................................................................... 47
I. Strategic and Economic Context ...................................................................................................... 47
II. Strategic and Economic Gains for Pakistan & China. ............................................................... 47
III. Key Imperatives for Pakistan. ..................................................................................................... 48
IV. Pursuits and Initiatives by FWO to Exploit Opportunities Afforded by CPEC. ........................... 49
V. Road Infrastructure ..................................................................................................................... 49
VI. Pilot Project Trade Convoy.................................................................................................... 49
VII. Railway Infrastructure............................................................................................................... 50
VIII. Petroleum / Oil Sector Infrastructure / Projects...................................................................... 50
IX. Energy and Water Sector Projects ............................................................................................. 50
X. Miscellaneous Infrastructure Including Transit Facilities............................................................ 50
XI. Exploration / Development of Mineral Potential....................................................................... 51
XII. Human Resource Development ................................................................................................ 51
35. OTHER ADVANTAGES .................................................................................................................... 51
36. DISADVANTAGES ........................................................................................................................... 52
A. My take: .................................................................................................................................... 52
37. Preclude .......................................................................................................................................... 54
Bibliography .......................................................................................................................................... 55
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1. Preface
China-Pakistan Economic Corridor is a framework of regional connectivity. CPEC will not only
benefit China and Pakistan but will have positive impact on Iran, Afghanistan, India, Central
Asian Republic, and the region. The enhancement of geographical linkages having improved
road, rail and air transportation system with frequent and free exchanges of growth and
people to people contact, enhancing understanding through academic, cultural and regional
knowledge and culture, activity of higher volume of flow of trade and businesses, producing
and moving energy to have more optimal businesses and enhancement of co-operation by
win-win model will result in well connected, integrated region of shared destiny, harmony
and development.

China Pakistan Economic Corridor is journey towards economic regionalization in the


globalized world. It founded peace, development, and win-win model for all of them.

China Pakistan Economic Corridor is hope of better region of the future with peace,
development and growth of economy.

CPEC is a flagship project of Chinese leadership’s overarching initiative of One Belt One Road
and envisions connecting Kashgar City with Gwadar Deep Sea Port through highways,
railways and pipelines. What makes this corridor unique is the fact that it affords the vital
link between Eurasian land routes and maritime silk routes envisaged under OBOR.
Therefore, Pakistan serves as an International Interchange enabling us a great strategic
advantage to be the hub for international trade and integration of economies of Asia, Africa
and Europe. This geo strategic advantage needs to be harnessed on the basis of mutuality of
interests to translate into geo-economic gains.

2. How will CPEC boost Pakistan economy


According to Pakistan Economic Survey 2014-15, the volume of trade between Pakistan and
China has increased to $16 billion. China’s exports to Pakistan increased by ten percent
during the five years from 2009-10 to 2014-15. As a result, China’s share in Pakistan’s total
exports has gradually picked up from four percent in 2009-10 to nine percent during the
fiscal year 2014-15.The most recent milestone achieved in this bilateral relationship is the
signing of Memorandum of Understanding on the construction of China-Pakistan Economic
Corridor (CPEC).

CPEC is a 3,218 kilometer long route, to be built over next several years, consisting of
highways, railways and pipelines. The actual estimated cost of the project is expected to be
US$75 billion, out of which US$45 billion plus will ensure that the corridor becomes
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operational by 2020. The remaining investment will be spent on energy generation and
infrastructure development.

The much advertised US$45 billion China-Pakistan Economic Corridor will pass through the
beautiful Gilgit-Baltistan province in the north which will connect Kashgar in China’s western
province Xinjiang to rest of the world through Chinese-operated Gwadar port in the
country's south. This mega project is expected to take the bilateral relationship between
Pakistan and China to new heights, it’s a beginning of a journey which hopes to transform
the economy and help bridge Pakistan’s power shortfall.

The CPEC project has been divided into phases, the first phase being the completion of
Gwadar International Airport and major developments of Gwadar Port. This phase is
expected to be completed by the year 2017. The project also includes the expansion of
Karakoram Highway- the road that connects China with Pakistan and placement of fiber-
optic line ensuring better communication between the two countries.

It is estimated that if all the planned projects are implemented, the value of those projects
would exceed all foreign direct investment in Pakistan since 1970 and would be equivalent
to 17% of Pakistan's 2015 gross

domestic product. It is further estimated the CPEC project will create some 700,000 direct
jobs during the period 2015–2030 and add up to 2.5 percentage points to the country's
growth rate.

I. Benefits Of Pakistan
1 The CPEC will open doors to immense economic opportunities not only to Pakistan but will
physically connect China to its markets in Asia, Europe and beyond. Almost 80% of the China’s oil is
currently transported from Strait of Malacca to Shanghai, (distance is almost 16,000 km and takes 2-
3 months), with Gwadar becoming operational, the distance would reduce to less than 5,000 km. If
all goes well and on schedule, of the 21 agreements on energy– including gas, coal and solar energy–
14 will be able to provide up to 10,400 megawatts (MW) of energy by March 2018. According to
China Daily, these projects would provide up to 16,400 MW of energy altogether. As part of
infrastructure projects worth approximately $11 billion, and 1,100 kilometer long motorway will be
constructed between the cities of Karachi and Lahore,

2 while the Karakoram Highway between Rawalpindi and the Chinese border will be completely
reconstructed and overhauled. The Karachi–Peshawar main railway line will also be upgraded to
allow for train travel at up to 160 kilometers per hour by December 2019.

3 Pakistan's railway network will also be extended to eventually connect to China's Southern
Xinjiang Railway in Kashgar

4 A network of pipelines to transport liquefied natural gas and oil will also be laid as part of the
project, including a $2.5 billion pipeline between Gwadar and Nawabshah to transport gas from Iran.
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5 Oil from the Middle East could be offloaded at Gwadar and transported to China through the
corridor, cutting the current 12,000 km journey to 2,395 km. It will act as a bridge for the new
Maritime Silk Route that envisages linking 3 billion people in Asia, Africa and Europe, part of a trans-
Eurasian project. When fully operational, Gwadar will promote the economic development of
Pakistan and become a gateway for Central Asian countries, including Afghanistan, Uzbekistan,
linking Sri Lanka, Iran and Xinjiang to undertake marine transport.

6 Over $33 billion worth of energy infrastructure will be constructed by private consortia to help
alleviate Pakistan's chronic energy shortages,

7 which regularly amount to over 4,500MW,

8 and have shed an estimated 2-2.5% off Pakistan's annual GDP.

9 With approximately $33 billion expected to be invested in energy sector projects, power
generation assumes an important role in the CPEC project. Over 10,400MW of energy generating
capacity is to be developed between 2018 and 2020 as part of the corridor's fast-tracked "Early
Harvest" projects.

10 The region of Baltistan is known for its fresh fruit exports, like cherries, apricot and apples, CPEC
will be a game changer by opening business opportunities for the region's traders. This will provide
local traders with an advantage and help them double their sales by tremendous saving in cost of
transportation. Presently, fruits are being exported through air-cargo via Dubai it would be faster
and cheaper if the same could be sent by road to China via Xinjiang.

Tourism which currently makes up an insubstantial part of our earnings is believed to be elevated by
opening of this economic corridor. The CPEC, some believe, will also boost tourism in the 73,000
square km region. The region is considered to be a mountaineer’s paradise, since it is home to five of
the ‘eight-thousands’ (peaks above 8,000 meters), as well as more than 50 mountains over 7,000
meters. It is also home to the world’s second highest peak K2 and the Nanga Parbat.

11 K2, Pakistan. K2 is the second-highest mountain on Earth, after Mount Everest. It is located on
the border between Baltistan, in the Gilgit–Baltistan region of Pakistan, and the Taxkorgan Tajik
Autonomous County of Xinjiang, China.

II. Conflicts between motives


The project surrounded by all optimism yet cannot be totally perceived without apprehensions.
Government of Pakistan (GoP) claims to revive Diamer-Bhasha dam on Indus River in Gilgit –
Baltistan, in the second phase of CPEC, resulting in the production of 4500MW of electricity in
addition to serving as a huge water reservoir for the country, which being authenticated by Asian
Development Bank (ADB), Gilgit-Baltistan has the potential to produce nearly 50,000MW of energy.
Just Bunji Dam, a run-of-the-river project that the ADB has invested in, has the capacity to generate
up to 7,100MW electricity when completed. The question being raised in the mind of the
commoners are when by building hydro projects Pakistan can safely import energy and will have
enough to use it for its development also why construct an expensive 750km transmission line?

There is also the fear that the CPEC may lead to widespread displacement of the locals. “Of the
73,000 square kilometers, cultivable land is just 1pc. If that is also swallowed by rich investors from
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outside, we will become a minority and economically subservient once there will be no farmland or
orchards left to earn our livelihood from," Hunzai –a local businessman expressed concern while
talking to Giligit Times.

Not only by the local businessmen but serious concerns have been raised by various sectors and
many political parties on the opaqueness regarding the project. “CPEC is not the problem. It has just
highlighted the imbalance in provinces with the largest one, Punjab, being seen as favored specially
as far as investments on road infrastructure are concerned and fueling bitterness among the rest of
the three provinces,” repented Vaqar Zakaria, energy sector expert and managing director of
environmental consultancy firm Hagler Bailley Pakistan.

Justifying the parity it is clarified by GoP that of the US $46bn, between $35bn to $38bn were
earmarked for the energy sector– of this, $11.6bnwill be invested in Khyber Pakhtunkhwa, $11.5bn
in Sindh, $7.1bn

in Baluchistan and $6.9bn in Punjab.12Repeated assurances of the Federal Government as to the


parity of the project and that no province or region of the country would be discriminated in CPEC,
doubts still remain as to its fair allocation.

III. The Final Route


After evaluating various possible routes, The All Party Conference held in May 28, 2015 unanimously
decided to adopt a modified Western Route for CPEC that would pass through:

Gwadar-Turbat-Hoshab-Panjgur-Besima-Kalat-Quetta-Qila Saifullah-Zhob-Dera Ismail Khan-


Mianwali-Attock-Hasanabdal-and onwards

This route is considered better than other routes in terms of opportunity cost of land and dislocation
compensation costs.

12 Gilgit Times

IV. Route
Source: China Pakistan Economic Corridor-Route Controversy? Issued by Chief Minister’s Reform
Unit, Government of Baluchistan

3. Background
Plans are for a corridor stretching from the Chinese border to Pakistan's deep water ports
on the Arabian Sea date back to the 1950s, and motivated construction of the Karakoram
Highway beginning in 1959.[33] Chinese interest in Pakistan's deep-water harbour at
Gwadar had been rekindled by 1998 and in 2002 China began construction at Gwadar port
which was completed in 2006. Expansion of Gwadar Port then ceased thereafter owing to
political instability in Pakistan following the fall of General Pervez Musharraf and
subsequent conflict between the Pakistani state and Taliban militants.

In 2013, the then Pakistani President Asif Ali Zardari and Chinese Premier Li Keqiang decided
to further enhance mutual connectivity.[35] A memorandum of understanding on
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cooperation for long-term plan on China–Pakistan Economic Corridor between the two
governments was inked by Xu Shao Shi and Shahid Amjad Chaudhry.

In February 2014, Pakistani President Mamnoon Hussain visited China to discuss the plans
for an economic corridor in Pakistan.[37] Two months later, Pakistan Prime Minister Nawaz
Sharif met with Premier Li Kequiang in China to discuss further plans,[38] resulting in the full
scope of the project to be devised under Sharif's tenure.[39] In November 2014, Chinese
government announced its intention to finance Chinese companies as part of its $45.6 billion
energy and infrastructure projects in Pakistan as part of CPEC.

Announcement of CPEC

During the state visit of Xi Jinping to Pakistan in April 2015, he wrote in an open editorial stating:
"This will be my first trip to Pakistan, but I feel as if I am going to visit the home of my own brother."
On 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,[40] with approximately $28 billion worth
of fast-tracked "Early Harvest" projects to be developed by the end of 2018.[41][42]

4. Subsequent developments
On 12 August 2015 in the city of Karamay, China and Pakistan signed 20 more agreements
worth $1.6 billion to further augment the scale and scope of CPEC.[43] Details of the plan
are opaque,[44] but are said to mainly focus on increasing energy generation capacity.[45]
As part of the agreement, Pakistan and China have agreed to co-operate in the field of space
research.[46]

In September and October 2015, the government of the United Kingdom announced two
separate grants to the Government of Pakistan for construction of roadways that are
complementary to CPEC.[47][48] In November 2015, China included the CPEC into its 13th
five-year development plan,[49] while in December 2015, China and Pakistan agreed on a
further $1.5 billion investment to set up an information and technology park as part of the
CPEC project.[50] On 8 April 2016, during the visit of Xinjiang's Communist Party chief Zhang
Chunxian companies from Xinjiang with their Pakistan counterparts signed $2 billion of
additional agreements covering infrastructure, solar power and logistics.[51]

The first convoy from China arrived in Gwadar on 13 November 2016, thereby formalizing
operation of CPEC.[52] On 2 December 2016, the first cargo train, launching the direct rail
route and sea freight service between China and Pakistan, departed from Yunnan. A cargo
train loaded with 500 tonnes of commodities left Kunming for the port city of Guangzhou
from where the cargo will be loaded on ships and transported to Karachi, marking the
opening of the new route.[53] The new rail, sea freight will cut logistics cost, including that
of transport, by 50 per cent.[54]
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In November 2016, China announced an additional $8.5 billion investment in Pakistan with
$4.5 billion allocated to upgrade Pakistan's main railway line from Karachi to Peshawar
including tracks, speed and signalling, and $4 billion toward an LNG terminal and
transmission lines to help alleviate energy shortages.[55] In February 2017, the Egyptian
Ambassador to Pakistan expressed interest in CPEC cooperation.[56] In January 2017, Chief
Minister Pervez Khattak of Khyber Pakthunkhwha stated that he had received assurances
from Chinese investment companies that they would invest up to $20 billion for
projects.[57] In March 2017, an agreement was signed for the projects, which include: a
$1.5 billion oil refinery, irrigation projects worth $2 billion, a $2 billion motorway between
Chitral and DI Khan, and $7 billion worth of hydro-electric projects.[58]

As of September 2017, more than $14 billion worth of projects were under construction.[32]
In March 2018, Pakistan announced that following the completion of under-construction
energy projects, future CPEC energy projects would be geared towards hydropower
projects.[59]

5. Projects in Gwadar Port and City


Gwadar forms the crux of the CPEC project, as it is envisaged to be the link between China's
ambitious One Belt, One Road project, and its 21st Century Maritime Silk Road project.[60]
In total, more than $1 billion worth of projects are to be developed around the port of
Gwadar by December 2017.

I. Gwadar Port Complex


Main article: Gwadar Port

Initial infrastructure works at Gwadar Port commenced in 2002 and were completed in
2007,[34] however plans to upgrade and expand Gwadar's port stalled. Under CPEC
agreement, Gwadar Port will initially be expanded and upgraded to allow for docking of
larger ships with deadweight tonnage of up to 70,000.[61] Improvement plans also include
construction of a $130 million breakwater around the port,[62] as well as the construction
of a floating liquefied natural gas facility that will have a capacity of 500 million cubic feet of
liquefied natural gas per day and will be connected to the Gwadar-Nawabshah segment of
the Iran–Pakistan gas pipeline.

The expanded port is located near a 2,282-acre free trade area in Gwadar which is being
modelled on the lines of the Special Economic Zones of China.[64] The swathe of land was
handed to the China Overseas Port Holding Company in November 2015 as part of a 43-year
lease.[65] The site will include manufacturing zones, logistics hubs, warehouses, and display
centres.[66] Businesses located in the zone would be exempt from customs authorities as
well as many provincial and federal taxes.[61] Business established in the special economic
zone will be exempt from Pakistani income, sales, and federal excise taxes for 23 years.
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II. Projects in Gwadar city


China will grant Pakistan $230 million to construct a new international airport in
Gwadar.[70] The provincial government of Balochistan has set aside 4000 acres for the
construction of the new $230 million Gwadar International Airport which will require an
estimated 30 months for construction,[71] the costs of which are to be fully funded by
grants from the Chinese government which Pakistan will not be obliged to repay.[72]

The city of Gwadar is further being developed by the construction of a 300MW coal power
plant, a desalinisation plant, and a new 300 bed hospital.[73] Plans for Gwadar city also
include construction of the East Bay Expressway – a 19 kilometre controlled-access road
that will connect Gwadar Port to the Makran Coastal Highway.[74] These additional projects
are estimated to cost $800 million, and are to be financed by 0% interest loans extended by
the Exim Bank of China to Pakistan.[73]

In addition to the aforementioned infrastructure works, the Pakistani government


announced in September 2015 its intention to establish a training institute named Pak-China
Technical and Vocational Institute at Gwadar,[34] which is to be developed by the Gwadar
Port Authority at the cost of 943 million rupees,[34] and is designed to impart to local
residents the skills required to operate and work at the expanded Gwadar Port.[34]

III. Roadway projects


The CPEC project envisages major upgrades and overhauls to Pakistan's transportation
infrastructure. Under the CPEC project, China has announced financing for $10.63 billion
worth of transportation infrastructure so far; $6.1 billion have been allocated for
constructing "Early Harvest" roadway projects at an interest rate of 1.6 percent.[75] The
remainder of funds will be allocated when the Pakistani government awards contracts for
construction of road segments which are still in the planning phase.

Three corridors have been identified for cargo transport: the Eastern Alignment through the
heavily populated provinces of Sindh and Punjab where most industries are located, the
Western Alignment through the less developed and more sparsely populated provinces of
Khyber Pakhtunkhwa and Balochistan, and the future Central Alignment which will pass
through Khyber Pakhtunkhwa, Punjab, and Balochistan.[76]

IV. Karakoram Highway


Highlighted in red is the route of National Highway 35, which is to be completely rebuilt and
upgraded under the CPEC agreement. Highlighted in blue is the 175 kilometre road between
Gilgit and Skardu which is to be upgraded to a 4-lane highway.
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V. China and Pakistan already conduct trade via the Karakoram


Highway.
Main article: Reconstruction of the Karakoram Highway

The CPEC projects call for reconstruction and upgrade works on National Highway 35 (N-35),
which forms the Pakistani portion of the Karakoram Highway (KKH). The KKH spans the 887
kilometre long distance between the China-Pakistan border and the town of Burhan, near
Hasan Abdal. At Burhan, the existing M1 motorway will intersect the N-35 at the Shah
Maqsood Interchange. From there, access onwards to Islamabad and Lahore continues as
part of the existing M1 and M2 motorways. Burhan will also be at intersection of the
Eastern Alignment, and Western Alignment.

Upgrades to the 487 kilometer long section between Burhan and Raikot of the Karakoram
Highway are officially referred to in Pakistan as the Karakoram Highway Phase 2 project. At
the southern end of the N-35, works are already underway to construct a 59-kilometer-long,
4-lane controlled-access highway between Burhan and Havelian which upon completion will
be officially referred to as the E-35 expressway. North of Havelian, the next 66 kilometres of
road will be upgraded to a 4-lane dual carriageway between Havelian and Shinkiari,

The entire 354 kilometres of roadway north of Shinkiari and ending in Raikot, near Chilas
will be constructed as a 2-lane highway.[79] Construction on the first section between
Shinkiari and Thakot commenced in April 2016 jointly with construction of the Havelian to
Shinkiari 4-lane dual carriageway further south.[80] Construction on both these sections is
expected to be completed with 42 months at a cost of approximately $1.26 billion with 90%
of funding to come from China's EXIM bank in the form of low interest rate concessional
loans

VI. Eastern Alignment

Main articles: M5 motorway (Pakistan) and M-9 Super Highway


The term Eastern Alignment of CPEC refers to roadway projects located in Sindh and Punjab
provinces – some of which were first envisioned in 1991.[91] As part of the Eastern
Alignment, a 1,152 km long motorway will connect Pakistan's two largest cities, Karachi and
Lahore with 4 to 6-lane controlled access highway designed for travel speeds up to 120
kilometres per hour.[92] The entire project will cost approximately $6.6 billion, with the
bulk of financing to be distributed by various Chinese state-owned banks.

The entire Eastern Alignment motorway project is divided into four sections: a 136
kilometre long section between Karachi and Hyderabad also known as the M9 motorway, a
345 kilometre long section between Hyderabad and Sukkur, a 392 kilometre long section
between Sukkur and Multan,[94] and a 333 kilometre section between Multan and Lahore
via the town of Abdul Hakeem.
13

The first section of the project will provide high speed road access from the Port of Karachi
to the city of Hyderabad and interior Sindh. Upgrade and construction works on this section
currently known as Super Highway between Karachi and Hyderabad began in March 2015,
and will convert the road into the 4-lane controlled access M9 Motorway which will be
completed in an estimated 30 months.[96] In February 2017, a completed 75 kilometre
stretch of the motorway was opened for public use by Prime Minister Nawaz Sharif.[97]

At the terminus of the M9 motorway in Hyderabad, the Karachi-Lahore Motorway will


continue onwards to Sukkur as a six lane controlled-access motorway known also as M6
motorway that will be 345 kilometers long,[94] The planned cost for this project is $1.7
billion,[98] and will provide high speed road access to interior Sindh – especially near the
towns of Matiari, Nawabshah, and Khairpur. The project will require the construction of
seven interchanges, and 25 bridges on the Indus river and irrigation canals.[99] The planned
route of the motorway runs roughly parallel to the existing National Highway and Indus
Highway at various portions. In July 2016, the Pakistani government announced that the
project would be open to international bidders on a build-operate-transfer basis, with
Chinese and South Korean companies expressing interest in the project.[98]

The 392 kilometre Sukkur to Multan section of the motorway is estimated to cost $2.89
billion,[92] with construction works inaugurated on this section of roadway on 6 May
2016.[100] The road will be a six lane wide controlled access highway,[101] with 11 planned
interchanges, 10 rest facilities, 492 underpasses, and 54 bridges along its route.[100] The
Pakistani government in January 2016 awarded the contract to build this section to China
State Construction Engineering,[92] but final approvals required for disbursement of funds
were not granted by the Government of the People's Republic of China until May
2016.[82][92] 90% of the project's cost is to be financed by concessionary loans from China,
with the remaining 10% to be financed by the government of Pakistan.[102] Construction on
this segment is expected to last 36 months.[92]

VII. Western Alignment

The Western Alignment of CPEC is depicted by the red line. The 1,153-kilometer route will link the
Brahma Bahtar Interchange of the M1 Motorway with the city of Gwadar in Balochistan province.
The portion depicted by the orange line between Basima and Shahdadkot is sometimes regarded as
part of the Western Alignment.

Main articles: Western Alignment and Brahma Bahtar-Yarik Motorway

The CPEC project envisages an expanded and upgraded road network in the Pakistani provinces of
Balochistan, Khyber Pakhtunkhwa, and western Punjab Province as part of the Western Alignment.
The Western Alignment project will result in the upgrading of several hundred kilometres worth of
road into 2 and 4-lane divided highways by mid-2018, with land acquisition sufficient for upgrading
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parts of the road to a 6-lane motorway in the future.[109] In total, the CPEC project envisages re-
construction of 870 kilometres of road in Balochistan province alone as part of the Western
Alignment. Of those 870 kilometres of road, 620 kilometres have already been rebuilt as of January
2016.

The Western Alignment roadway network will begin at the Barahma Bahtar Interchange on the M1
Motorway near the towns of Burhan and Hasan Abdal in northern Punjab province.[111] The newly
reconstructed Karakoram Highway will connect to the Western Alignment at Burhan, near where the
new 285-kilometre-long controlled-access Brahma Bahtar-Yarik Motorway will commence.[112] The
motorway will terminate near the town of Yarik, just north of Dera Ismail Khan.[113]
Groundbreaking for the project took place on 17 May 2016.[114] The motorway will traverse the
Sindh Sagar Doab region, and cross the Indus River at Mianwali before entering into Khyber
Pakhtunkhwa province. It will consist of 11 interchanges, 74 culverts, and 3 major bridges spanning
the Indus, Soan, and Kurram Rivers.[115] Total costs for the project are expected to be $1.05
billion.[116]

At the southern terminus of the new Brahma Bahtar-Yarik motorway, the N50 National Highway will
also be upgraded between Dera Ismail Khan in Khyber Pakhtunkhwa and Zhob in neighbouring
Balochistan province, with eventual reconstruction between Zhob and Quetta.[117] The upgraded
roadway will consist of a 4 lane dual-carriageway spanning the 205 kilometre distance between the
two cities.[118] The first portion of the N50 to be upgraded will be the 81 kilometre portion of the
N50 between Zhob and Mughal Kot, with construction works having begun in January 2016.[119]
Construction on this portion is expected to be completed by 2018 at a cost of $86 million.[117]
While the project is considered a vital link in the CPEC's Western Alignment,[119] the project's cost
will not be financed by Chinese state-owned banks, but instead by Asian Development Bank under a
2014 agreement which preceded CPEC,[120][121] as well as by a grant provided by the United
Kingdom's Department for International Development.[122]

Heading south from Quetta, the Western Alignment of the CPEC will continue to the town of Surab
in central Balochistan as the N25 National Highway. From Surab, a 470 kilometre long route known
as the N85 National Highway will connect central Balochistan with the town of Hoshab in
southwestern Balochistan province near the city of Turbat. The stretch of road between these cities
was completed in December 2016,[123] as per schedule.[124]

VIII. Associated roadway projects


ADB funded projects

The 184 kilometre long M-4 Motorway between Faisalabad and Multan does not fall under the
scope of CPEC projects, but is nevertheless considered vital to the CPEC transportation project. It will
instead be financed by the Asian Development Bank and the Asian Infrastructure Investment
Bank,[106] and will be the first project jointly financed by those banks.[127] Further funding comes
from an additional $90.7 million grant announced in October 2015 by the government of the United
Kingdom towards the construction of portion of the M4 Motorway project.[128]
15

The Karakoram Highway south of the city of Mansehra will also be upgrade into a controlled-access
highway to officially be known as the E-35 expressway. While it is considered to be a crucial part of
the route between Gwadar and China, the E35 will not be financed by CPEC funds. The project will
instead be financed by the Asian Development Bank[129] with a $121.6 million grant from the
United Kingdom towards the project.[130] Once completed, the E35 Expressway, the M4 Motorway,
and Karachi-Lahore Motorway will provide continuous high-speed road travel on controlled-access
motorways from Mansehra to Karachi – 1,550 kilometres away.

Approximately halfway between Zhob and Quetta, the town of Qilla Saifullah in Balochistan lies at
the intersection of the N50 National Highway and the N70 National Highway. The two roads form
the 447 kilometre route between Quetta and Multan in southern Punjab. While the N70 project is
not officially a part of CPEC, it will connect the CPEC's Western Alignment to the Karachi-Lahore
Motorway at Multan. Reconstruction works on the 126 kilometre portion of the N70 between Qilla
Saifullah and Wagum are slated for completion by 2018,[131] and are financed as part of a $195
million package by the Asian Development Bank,[121] and by a $72.4 million grant from the United
Kingdom's Department for International Development.[122]

IX . Future Central Alignment


Long-term plans for a "Central Alignment" of the CPEC consist of a network of roads which will
commence in Gwadar and travel upcountry via the cities of Basima, Khuzdar, Sukkur, Rajanpur,
Layyah, Muzaffargarh, and terminating in Dera Ismail Khan, with onward connections to Karakoram
Highway via the Brahma Bahtar–Yarik Motorway.[132]

X. Railway projects

Phase 1 of the ML-1 overhaul and reconstruction is highlighted black between Peshawar and Lahore.
Overhauling and reconstruction of the line will allow trains to travel at up to 160 kilometres per
hour.

Phase 2 of the ML-1 overhaul between Multan and Hyderabad is marked in orange. Phase 3 of the
project is indicated by the green line between Hyderabad and Karachi.

The CPEC project emphasises major upgrades to Pakistan's ageing railway system, including
rebuilding of the entire Main Line 1 railway between Karachi and Peshawar by 2020;[133] this single
railway currently handles 70% of Pakistan Railways traffic.[134] In addition to the Main Line 1
railway, upgrades and expansions are slated for the Main Line 2 railway, Main Line 3 railway. The
CPEC plan also calls for completion of a rail link over the 4,693-meter high Khunjerab Pass. The
railway will provide direct access for Chinese and East Asian goods to Pakistani seaports at Karachi
and Gwadar by 2030.[134]

Procurement of an initial 250 new passenger coaches, and reconstruction of 21 train stations are
also planned as part of the first phase of the project – bringing the total investment in Pakistan's
16

railway system to approximately $5 billion by the end of 2019.[135] 180 of the coaches are to be
built at the Pakistan Railways Carriage Factory near Islamabad,[136] while the Government of
Pakistan intends to procure an additional 800 coaches at a later date, with the intention of building
595 of those coaches in Pakistan.[136]

In September 2018, the new government led by Prime Minister Imran Khan reduced the Chinese
investment in railways by $2 billion to $6.2 billion because of financing burdens.[137]

i. Main Line 1
Main article: Karachi–Peshawar Railway Line

The CPEC "Early Harvest" plan includes a complete overhaul of the 1,687 kilometre long Main Line 1
railway (ML-1) between Karachi and Peshawar at a cost of $3.65 billion for the first phase of the
project,[75] with the first phase expected to be completed by December 2017.[138] In June 2016,
China and Pakistan unveiled plans for the second phase of the project, with a total cost of $8.2
billion for both phases of the project.[139] The second phase of the ML-1 overhaul project is
expected to be completed in 2021.[139]

Upgrading of the railway line will permit train travel at speeds of 160 kilometres per hour, versus the
average 60 to 105 km per hour speed currently possible on existing track,[140] and is expected to
increase Pakistan Railways' annual revenues by approximately $480 million.[134][141] The upgrades
are also expected to cut transit times from Karachi to Peshawar by half.[142] Pakistani railways
currently account for 4% of freight traffic in the country, and upon completion of CPEC, Pakistani
railways are expected to transport 20% of the country's freight traffic by 2025.[143]

At the time of CPEC's announcement, the ML-1 consisted of mostly dual track railway between
Karachi, and the Lahore suburb of Shahdara, with long stretches of single track. From Shahdara, the
track mainly consisted of a single track until the city Peshawar. Construction works to dualize the
entire track between Karachi to Shahdara were completed and inaugurated in January 2016.[145] As
part of the first phase of the CPEC railway project, the remaining stretch of track between Shahdara
and Peshawar is to upgraded to a dual track railway.[146]

The 676 kilometer portion between Lalamusa, north of Lahore, and Peshawar will require complete
reconstruction with the addition of tunnels, culverts, and bridges, while over 900 kilometers south of
Lalamusa towards Karachi will be upgraded to handle cars with a 25-ton axle load capacity.[147] A
spur from Taxila to Havelian will also be constructed, with a dry port to be established near the city
of Havelian.[148] Further, the entire length of track will have computerised signal systems, with
stretches of track in urban areas to also be fenced off to prevent pedestrians and vehicles from
crossing tracks in unauthorised areas.[149]

ii. Main Line 2


Main article: Kotri–Attock Railway Line
17

ML-2 of Pakistan Railways is marked in purple, while ML-3 is marked in orange. Other lines are in
blue.

In addition to upgrading the ML-1, the CPEC project also calls for similar major upgrade on the 1,254
kilometre long Main Line 2 (ML-2) railway between Kotri in Sindh province, and Attock in northern
Punjab province via the cities of Larkana and Dera Ghazi Khan.[150] The route towards northern
Pakistan roughly parallels the Indus River, as opposed to the ML-1 which takes a more eastward
course towards Lahore. The project also includes a plan to connect Gwadar, to the town of
Jacobabad, Sindh[151] which lies at the intersection of the ML-2 and ML-3 railways.

iii. Main Line 3


Main article: Rohri–Chaman Railway Line

Medium term plans for the Main Line 3 (ML-3) railway line will also include construction of a 560
kilometer long railway line between Bostan near Quetta, to Kotla Jam in Bhakkar District near the
city of Dera Ismail Khan,[152] which will provide access to southern Afghanistan. The railway route
will pass through the city of Quetta and Zhob before terminating in Kotla Jam, and is expected to be
constructed by 2025.[134]

XI. Lahore Metro


Main article: Orange Line (Lahore Metro)

The $1.6 billion Orange Line of the Lahore Metro is under construction and is regarded as a
commercial project under CPEC.[153] Construction on the line has already begun, with initial
planned completion by Winter 2017 however this has now been delayed to end of 2018.[154][155]
The line will be 27.1-kilometre (16.8 mi) long, of which 25.4 kilometres (15.8 mi) will be elevated,
with the remaining portion to be underground between Jain Mandir and Lakshmi Chowk.[156] When
complete, the project will have the capacity to transport 250,000 commuters per day, with plans to
increase capacity to 500,000 commuters per day by 2025.[157]

XII. Khunjerab Railway

The proposed route of the Khunjerab Railway is indicated by the brown line.

Main article: Khunjerab Railway

Longer term projects under CPEC also call for construction of the 682 kilometre long Khunjerab
Railway line between the city of Havelian, to the Khunjerab Pass on the Chinese border,[152] with
18

extension to China's Lanxin Railway in Kashgar, Xinjiang. The railway will roughly parallel the
Karakoram ighway, and is expected to be complete in 2030

The cost of the entire project is estimated to be approximately $12 billion, and will require 5 years
for completion. A 300 million rupee study to establish final feasibility of constructing the rail line
between Havelian and the Chinese border is already underway.[158] A preliminary feasibility study
was completed in 2008 by the Austrian engineering firm TBAC.

However the construction of the Khunjerab Railway line was not mentioned in the CPEC Long Term
Plan from 2017-2030 [160] released jointly by China and Pakistan in 2017.

XIII. Energy sector projects


Pakistan's current energy generating capacity is 24,830 MW,.[161] Energy generation will be a major
focus of the CPEC project, with approximately $33 billion expected to be invested in this sector.[20]
An estimated 10,400 MW of electricity are slated for generation by March 2018 as part of CPEC's
"Early Harvest" projects.[23]

The energy projects under CPEC will be constructed by private Independent Power Producers, rather
than by the governments of either China or Pakistan.[162] The Exim Bank of China will finance these
private investments at 5–6% interest rates, while the government of Pakistan will be contractually
obliged to purchase electricity from those firms at pre-negotiated rates.[163]

XIV. Renewable-energy
In March 2018, Pakistan announced that hydropower projects would be prioritized following the
completion of under-construction power plants.[59] Pakistan aims to produce 25% of its electricity
requirements by renewable energy resources by 2030.[164] China's Zonergy company will complete
construction on the world's largest solar power plant – the 6,500 acre Quaid-e-Azam Solar Park near
the city of Bahawalpur with an estimated capacity of 1000MW is expected to be completed in
December 2016.[165][166] The first phase of the project has been completed by Xinjiang SunOasis,
and has a generating capacity of 100 MW.[167] The remaining 900 MW capacity will be installed by
Zonergy under CPEC.[167]

The Jhimpir Wind Power Plant, built by the Turkish company Zorlu Enerji has already begun to sell
56.4 MW of electricity to the government of Pakistan,[168] though under CPEC, another 250MW of
electricity are to be produced by the Chinese-Pakistan consortium United Energy Pakistan and
others at a cost of $659 million.[169][170] Another wind farm, the Dawood wind power project is
under development by HydroChina at a cost of $115 million, and will generate 50 MW of electricity
by August 2016.[171]
19

SK Hydro Consortium is constructing the 870 MW Suki Kinari Hydropower Project in the Kaghan
Valley of Pakistan's Khyber Pakhtunkhwa province at a cost of $1.8 billion,[172] SK Hydro will
construct the project with financing by China's EXIM bank.[173]

The $1.6 billion 720 MW Karot Dam which is under construction is part of the CPEC plan, but is to be
financed separately by China's Silk Road Fund.[174]

Pakistan and China have also discussed the inclusion of the 4,500MW $14 billion Diamer-Bhasha
Dam as part of the CPEC project,[175] though as of December 2015, no firm decision has been made
– though Pakistani officials remain optimistic at its eventual inclusion.[176] On 14 November 2017,
Pakistan dropped its bid to have Diamer-Bhasha Dam financed under the CPEC framework.[177]

The $2.4 billion, 1,100 MW Kohala Hydropower Project being constructed by China's Three Gorges
Corporation predates the announcement of CPEC, though funding for the project will now come
from CPEC fund.[178]

XV. Coal
Despite several renewable energy projects, the bulk of new energy generation capacity under CPEC
will be coal-based plants, with $5.8 billion worth of coal power projects expected to be completed
by early 2019 as part of the CPEC's "Early Harvest" projects.

XVI. Balochistan
In Balochistan province, a $970 million coal power plant at Hub, near Karachi, with a capacity of
660MW to be built by a joint consortium of China's China Power Investment Corporation and the
Pakistani firm Hub Power Company as part of a larger $2 billion project to produce 1,320MW from
coal.[179]

A 300MW coal power plant is also being developed in the city of Gwadar, and is being financed by a
0% interest loan.[73]
20

XVII. Punjab
The $1.8 billion Sahiwal Coal Power Project, in full operation since 3 July 2017,[180] is a project in
central Punjab that has a capacity of 1,320MW. It was built by a joint venture of two Chinese firms:
the Huaneng Shandong company and Shandong Ruyi, who will jointly own and operate the
plant.[181] Pakistan will purchase electricity from the consortium at a tariff of 8.36 US
cents/kWh.[182]

The $589 million project to establish a coal mine and a relatively small 300MW coal power plant to
be built in the town of Pind Dadan Khan by China Machinery Engineering Corporation in Punjab's Salt
Range.[183] Pakistan's NEPRA has been criticized for considering a relatively high tariff of 11.57 US
cents/kWH proposed by the Chinese firm,[184] which had been initially agreed at 8.25 US
cents/kWH in 2014.[185] The Chinese firm argued that coal transportation costs had greatly
increased due to the nonavailability of coal from nearby mines which had initially been regarded as
the primary coal source for the project. The company argued that coal would instead have to be
transported from distant Sindh province, which along with inefficiencies in mining procedures,
increased the cost of fuel by 30.5%.[186]

XVIII. Sindh
The Shanghai Electric company of China will construct two 660MW power plants as part of the
"Thar-I" project in the Thar coalfield of Sindh province, while "Thar-ll" will be developed by a
separate consortium.[187][188] The facility will be powered by locally sourced coal,[189] and is
expected to be put into commercial use in 2018.[190] Pakistan's National Electric Power Regulatory
Authority (NEPRA) has agreed to purchase electricity from both Thar-l and Thar-ll at a tariff of 8.50
US cents/kWh for the first 330 MW of electricity, 8.33 US cents/kWh for the next 660 MW, and 7.99
US cents/kWh for the next 1,099 MW as further phases are developed.[191][192]

Near the Thar-I Project, the China Machinery Engineering Corporation in conjunction with Pakistan's
Engro Corporation will construct two 330MW power plants as part of the "Thar-ll Project" (having
initially proposed the simultaneous construction of two 660MW power plants) as well as developing
a coal mine capable of producing up to 3.8 million tons of coal per year as part of the first phase of
the project."[193] The first phase is expected to be complete by early 2019,[194] at a cost of $1.95
billion.[195] Subsequent phases will eventually generate an additional 3,960MW of electricity over
the course of ten years.[188] As part of infrastructure required for electricity distribution from the
Thar l and ll Projects, the $2.1 billion Matiari to Lahore Transmission Line, and $1.5 billion in Matiari
to Faisalabad transmission line are also to be built as part of the CPEC project.[23]

The 1,320MW $2.08 billion Pakistan Port Qasim Power Project near Port Qasim will be a joint
venture of Al-Mirqab Capital from Qatar, and China's Power Construction Corporation – a subsidiary
21

of Sinohydro Resources Limited.[196][197] Pakistan's NEPRA and SinoHydro agreed to set the
levelized tariff for electricity purchased from the consortium at 8.12 US cents/kWh.[198] The first
660 MW reactor was commissioned in November 2017.[199]

XIX. Liquified natural gas


Liquefied natural gas power LNG projects are also considered vital to CPEC. The Chinese government
has announced its intention to build a $2.5 billion 711 kilometre gas pipeline from Gwadar to
Nawabshah in province as part of CPEC.[200] The pipeline is designed to be a part of the 2,775
kilometre long Iran–Pakistan gas pipeline, with the 80 kilometre portion between Gwadar and the
Iranian border to be connected when sanctions against Tehran are eased; Iran has already
completed a 900 kilometre long portion of the pipeline on its side of the border.[24]

The Pakistani portion of the pipeline is to be constructed by the state-owned China Petroleum
Pipeline Bureau.[201] It will be 42 inches in diameter, and have the capacity to transport 1 billion
cubic feet of liquified natural gas every day, with an additional 500 million cubic feet of additional
capacity when the planned off-shore LNG terminal is also completed[202] The project will not only
provide gas exporters with access to the Pakistani market, but will also allow China to secure a route
for its own imports.[203]

The project should not be confused with the $2 billion 1,100 kilometre North-South Pipeline liquified
natural gas pipeline which is to be constructed with Russian assistance between Karachi and Lahore
with anticipated completion by 2018.[204] Nor should it be confused with the planned $7.5 billion
TAPI Pipeline which is a planned project involving Turkmenistan, Afghanistan, Pakistan, and India.

Other LNG projects are currently under construction with Chinese assistance and financing that will
augment the scope of CPEC, but are neither funded by nor officially considered a part of CPEC. The
1,223MW Balloki Power Plant is currently under construction near Kasur, and is being constructed by
China's Harbin Electric Company with financing from the China's EXIM bank, is one such example. In
October 2015, Prime Minister Nawaz Sharif also inaugurated construction of the 1,180MW Bhikhi
Power Plant near Sheikhupura,[205] which is to be jointly constructed by China's Harbin Electric
Company and General Electric from the United States.[206] It is expected to be Pakistan's most
efficient power plant, and will provide enough power for an estimated 6 million homes.[206] The
facility became operational in May 2018.

XX. "Early Harvest" projects


As part of the "Early Harvest" scheme of the CPEC, over 10,000 megawatts of electricity-generating
capacity is to be developed between 2018 and 2020.[23] While some "Early Harvest" projects will
not be complete until 2020, the government of Pakistan plans to add approximately 10,000 MW of
energy-generating capacity to Pakistan's electric grid by 2018 through the completion of projects
which complement CPEC.
22

Although not officially under the scope of CPEC, the 1,223 MW Balloki Power Plant, and the 1,180
MW Bhakki powerplants have both been completed in mid 2018 ,[208] [209],[205][210] which along
with the 969 MW Neelum–Jhelum Hydropower Plant completed in summer 2018 and 1,410 MW
Tarbela IV Extension Project, competed in February 2018,[211] will result in an additional 10,000
MW being added to Pakistan's electricity grid by the end of 2018 with a combination of CPEC and
non-CPEC projects.[212] A further 1,000 MW of electricity will be imported to Pakistan from
Tajikistan and Kyrgyzstan as part of the CASA-1000 project, which is expected to be launched in
2018.[213]

6. Table of projects

"Early Harvest" Energy Project Capacity Location


Pakistan Port Qasim Power Project. 1,320 MW (2 x 660 MW plants) Sindh

Thar-l Project 1,320 MW (4 x 330 MW plants) Sindh

Thar-ll Project and coal mine 1,320 MW (2 x 660 MW plants) Sindh

Sahiwal Coal Power Project 1,320 MW (2 x 660 MW plants) Punjab

Rahimyar Khan coal power project 1,320 MW (2 x 660 MW plants) Punjab

Quaid-e-Azam Solar Park 1,000 MW Punjab

Suki Kinari Hydropower Project 870 MW (expected completion in 2020) Khyber-


Pakhtunkhwa

Karot Hydropower Project 720 MW (expected completion in 2020)[216] Punjab

China Power Hub Generation Company 2X660 MW Balochistan

Thar Engro Coal Power Project 660 MW (2 x 330 MW plants) Sindh

Gwadar coal power project 300 MW Balochistan

UEP Windfarm 100 MW Sindh

Dawood wind power project 50 MW Sindh

Sachal Windfarm 50 MW Sindh

Sunnec Windfarm 50 MW Sindh

Matiari to Faisalabad transmission line 660 kilovolt Sindh and Punjab

Matiari to Lahore Transmission Line 660 kilovolt Sindh and Punjab


23

7. Other areas of cooperation


The CPEC announcement encompassed not only infrastructure works, but also addressed areas of
co-operation between China and Pakistan.

8. Agriculture
CPEC includes provisions for cooperation in management of water resources, livestock, and
other fields of agriculture. Under the plan, agricultural information project, storage and
distribution of agricultural equipment and construction project, agricultural mechanisation,
demonstration and machinery leasing project and fertiliser production project for producing
800,000 tons of fertiliser and 100,000 tons of bio-organic fertiliser will be implemented.

9. Science and technology


As part of CPEC, the two countries signed an Economic and Technical Cooperation
Agreement,[219] as well as pledged to "China-Pakistan Joint Cotton Bio-Tech
Laboratory"[219] The two countries also pledged to establish the "China-Pakistan Joint
Marine Research Center" with State Oceanic Administration and Pakistan's Ministry of
Science and Technology[219] Also as part of the CPEC agreement, Pakistan and China have
agreed to co-operate in the field of space research.

In February 2016, the two countries agreed to establish the "Pak-China Science, Technology,
Commerce and Logistic Park" near Islamabad at an estimated cost of $1.5 billion.[220] The
park will be situated on 500 hectares, which will be provided by Pakistan to China's Xinjiang
Production and Construction Corps, with all investments expected to come from the
Chinese side over the course of ten years.

In May 2016, construction began on the $44 million 820 kilometer long Pakistan-China Fiber
Optic Project, an optical fiber cable that will enhance telecommunication in the Gilgit-
Baltistan region, while offering Pakistan a fifth route by which to transmit
telecommunication traf.
24

10. Other fields


The two nations also pledged co-operation in field ranging from anti-narcotic efforts,[219]
to co-operation in an effort to reduce climate change.[219] The two nations also agreed to
increase co-operating between the banking sectors of the two countries, as well as to
establish closer ties between China Central Television and the Pakistan Television
Corporation.

11. Finance
Concessionary loans

Approximately $11 billion worth of infrastructure projects being developed by the Pakistani
government will be financed at an interest rate of 1.6%,[222] after Pakistan successfully
lobbied the Chinese government to reduce interest rates from an initial 3%.[223] Loans will
be dispersed by the Exim Bank of China, China Development Bank, and the ICBC.[224] For
comparison, loans for previous Pakistani infrastructure projects financed by the World Bank
carried an interest rate between 5% and 8.5%,[225] while interest rates on market loans
approach 12%.[226]

The loan money would be used to finance projects which are planned and executed by the
Pakistani government. Portions of the approximately $6.6 billion[93] Karachi–Lahore
Motorway are already under construction.[227] The $2.9 billion phase which will connect
the city of Multan to the city of Sukkur over a distance of 392 kilometres has also been
approved,[228] with 90% of costs to be financed by the Chinese government at
concessionary interest rates, while the remaining 10% is to be financed by the Public Sector
Development Programme of the Pakistani government.[229] In May 2016, the $2.9 billion
loan were given final approvals required prior to disbursement of the funds were given by
the Government of the People's Republic of China on 4 May 2016, and will be concessionary
loans with an interest rate of 2.0%.[82] The National Highway Authority of Pakistan reported
that contractors arrived on site soon after the loan received final approval.[82]

The China Development Bank will finance the $920 million towards the cost of
reconstruction of the 487 kilometer portion of the Karakoram Highway between Burhan and
Raikot.[230][231] An addition $1.26 billion will be lent by the China Exim Bank for the
construction of the Havelian to Thakot portion of this 487 kilometer stretch of
roadway,[80][81] to be dispersed as low-interest rate concessionary loans.[82]

$7 billion of the planned $8.2 billion overhaul of the Main Line 1 railway is to be financed by
concessionary loans, which extended by China's state owned banks.[232]
25

The long-planned 27.1 km long $1.6 billion Orange Line of the Lahore Metro is regarded as a
commercial project,[219] and does not qualify for the Exim Bank's 1.6% interest rate. It will
instead by financed at a 2.4% interest rate[154] after China agreed to reduce interest rates
from an originally planned rate of 3.4%.[233]

The $44 million Pakistan-China Fiber Optic Project, an 820 km long fibre optic wire
connecting Pakistan and China, will be constructed using concessionary loans at an interest
rate of 2%, rather than the 1.6% rate applied to other projects.[234]

12. Interest-free loans


The government of China in August 2015 announced that concessionary loans for several
projects in Gwadar totalling $757 million would be converted 0% interest loans.[222] The
projects which are now to financed by the 0% interest loans include: the construction of the
$140 million East Bay Expressway project, installation of breakwaters in Gwadar which will
cost $130 million, a $360 million coal power plant in Gwadar, a $27 million project to dredge
berths in Gwadar harbour, and a $100 million 300-bed hospital in Gwadar.[222] Pakistan will
only repay the principle on these loans.

In September 2015, the government of China also announced that the $230 million Gwadar
International Airport project would no longer be financed by loans, but would instead be
constructed by grants which the government of Pakistan will not be required to repay.[223]

13. Private consortia


$15.5 billion worth of energy projects are to be constructed by joint Chinese-Pakistani firms,
rather than by the governments of either China or Pakistan. The Exim Bank of China will
finance those investments at 5–6% interest rates, while the government of Pakistan will be
contractually obliged to purchase electricity from those firms at pre-negotiated rates.[163]

As an example, the 1,223MW Balloki Power Plant does not fall under the concessionary loan
rate of 1.6%, as the project is not being developed by the Pakistani government. Instead, it
is considered to be a private sector investment as its construction will be undertaken by a
consortium of Harbin Electric and Habib Rafiq Limited after they successfully bid against
international competitors.[235] Chinese state-owned banks will provide loans to the
consortium that are subsidised by the Chinese government. In the case of the Balloki Power
Plant, state-owned banks will finance the project at an interest rate of 5%,[236] while the
Pakistani government will purchase electricity at the lowest bid rate of 7.973 cents per
unit.[235]
26

ADB assistance
While the E-35 expressway is considered to be a crucial part of the route between Gwadar and
China, the E35 will not be financed by CPEC funds. The project will instead be financed by the Asian
Development Bank.[129]

The N70 project is not officially a part of CPEC but will connect the CPEC's Western Alignment to the
Karachi-Lahore Motorway at Multan. The project will be financed as part of a $195 million package
by the Asian Development Bank announced in May 2015 to upgrade the N70 National Highway and
N50 National Highway.[121] In January 2016, The United Kingdom's Department for International
Development announced a $72.4 million grant to Pakistan for roadway improvements in the
province of Balochistan, thereby reducing the total Asian Development Bank loan from $195 million
to $122.6 million.[122]

The M-4 Motorway between Faisalabad and Multan is not to be financed by the Chinese
government as part of CPEC, but will instead be the first infrastructure project partially financed by
the Asian Infrastructure Investment Bank, and will be co-financed along with the Asian Development
Bank for a total of approximately $275 million.[106] Portions of the project will also be funded by a
$90.7 million grant announced in October 2015 by the government of the United Kingdom towards
the construction of the Gojra-Shorkot section of the M4 Motorway project.[128]

14. Impact
The importance of CPEC to China is reflected by its inclusion as part of China's 13th five-year
development plan.[237][238] CPEC projects will provide China with an alternate route for energy
supplies, as well as a new route by which Western China can conduct trade. Pakistan stands to gain
due to upgrade of infrastructure and introduction of a reliable energy supply.[239][240]

On 8 January 2017, Forbes claimed that CPEC is part of China's vision to write the rules of the next
era of globalization and help its export and investment engines run for years to come.[241] Writing
in January 2017, Arun Mohan Sukumar of India's Observer Research Foundation claimed that "CPEC
is an important enough project whose economic and strategic consequences require methodical
assessment", adding that "CPEC may be a bilateral endeavour, but New Delhi cannot ignore its
spillover effects on regional governance" and concluding that "India would be ill-advised to rely on
the false comfort that profits alone will drive China's business with Pakistan".[242]

According to China's prime minister, Li Keqiang, Pakistan's development through the project might
"wean the populace from fundamentalism".[32]
27

15. Pakistani economy


The CPEC is a landmark project in the annals of history of Pakistan. It is the largest
investment Pakistan has attracted since independence and largest by China in any foreign
country.[243] CPEC is considered economically vital to Pakistan in helping it drive economic
growth.[244] The Pakistani media and government have called CPEC investments a "game
and fate changer" for the region,[245][246] while both China and Pakistan intend that the
massive investment plan will transform Pakistan into a regional economic hub and further
boost the deepening ties between the two countries.[247] Approximately 1 year after the
announcement of CPEC, Zhang Baozhong, chairman of China Overseas Port Holding
Company told The Washington Post that his company planned to spend an additional $4.5
billion on roads, power, hotels and other infrastructure for Gwadar's industrial zone,[30]
which would be one of the largest ever sums of foreign direct investment into Pakistan.

Pakistan as late as early 2017 faced energy shortfalls of over 4,500MW on a regular
basis[21] with routine power cuts of up to 12 hours per day,[22] which has shed an
estimated 2–2.5% off its annual GDP.[22] The Financial Times noted that Pakistan's
electricity shortages are a major hindrance to foreign investment, and that Chinese
investments in Pakistani infrastructure and power projects will lead to a "virtuous cycle"
that will make the country more attractive for foreign investment in a variety of
sectors.[248] Poor availability of electricity is considered by the World Bank to be a main
constraint to both economic growth and investment in Pakistan.

The impact of Chinese investments in Energy sector was soon visible as in December 2017,
Pakistan succeeded in producing surplus electricity. Pakistani Federal Minister for Power
Division, Awais Leghari announced a complete end to power cuts in 5,297 feeders out of
total 8,600 and claimed that the country's current electricity production had gone up to
16,477 Megawatts which was 2700 megawatts more than the demand.[249]

Pakistan's large textile industry has also been negatively affected by several-hour long
power cuts, with almost 20% of textile factories in the city of Faisalabad shutting down on
account of power shortages.[250] The CPEC's "Early Harvest" projects are expected to
resolve shortages in power generation by 2018 by increasing Pakistan's power generation
capacity by over 10,000 megawatts.[23] As a result of improved infrastructure and energy
supplies, the Pakistani government expects that economic growth rates will reach 7% by
2018.[251]

Former Pakistan Prime Minister Shaukat Aziz also stated in May 2016 that predicted
economic growth from CPEC projects would result in stabilization of Pakistan's security
situation,[252] which has also been cited by the World Bank as hindrance to sustained
economic growth in Pakistan.[253]
28

According to Chinese Foreign Ministry Spokesperson Hua Chunying,

the corridor will "serve as a driver for connectivity between South Asia and East Asia."
Mushahid Hussain, chairman of the Pakistan-China Institute, told China Daily that the
economic corridor "will play a crucial role in regional integration of the 'Greater South Asia',
which includes China, Iran, Afghanistan, and stretches all the way to Myanmar."[37] When
fully built, the corridor is expected to generate significant revenue from transit fees levied
on Chinese goods – to the tune of several billion dollars per annum.[254] According to The
Guardian, "The Chinese are not just offering to build much -needed
infrastructure but also make Pakistan a key partner in its grand economic and
strategic ambitions."

Moody's Investors Service has described the project as a "credit positive" for Pakistan. In
2015, the agency acknowledged that much of the project's key benefits would not
materialise until 2017, but stated that it believes at least some of the benefits from the
economic corridor would likely begin accruing even before then.[256] The Asian
Development Bank stated "CPEC will connect economic agents along a defined geography. It
will provide connection between economic nodes or hubs, centered on urban landscapes, in
which large amount of economic resources and actors are concentrated. They link the
supply and demand sides of markets."[257] On 14 November 2016, Hyatt Hotels
Corporation announced plan's to open four properties in Pakistan, in partnership with
Bahria Town Group, citing the investment of CPEC as the reason behind the $600 million
investment.

On 12 March 2017, a consortium of Pakistani broker houses reported that Pakistan will end
up paying $90 billion to China over a span of 30 years with annual average repayments of
$3–4 billion per year post fiscal year 2020. The report further said that CPEC-related
transportation would earn $400–500 million per annum to Pakistan, and would grow
Pakistani exports by 4.5% a year till fiscal year 2025.

16. CPEC and the "Malacca Dilemma"

Map showing territorial claims in South China Sea. A high percentage of Chinese energy
imports pass through this disputed region, rendering much of China's energy imports
vulnerable to conflict.

The Straits of Malacca provide China with its shortest maritime access to Europe, Africa, and
the Middle East.[260] Approximately 80% of its Middle Eastern energy imports also pass
through the Straits of Malacca.[261] As the world's biggest oil importer,[40] energy security
is a key concern for China while current sea routes used to import Middle Eastern oil are
frequently patrolled by the United States' Navy.[262]
29

In the event that China were to face hostile actions from a state or non-state actor, energy
imports through the Straits of Malacca could be halted, which in turn would paralyse the
Chinese economy in a scenario that is frequently referred to as the "Malacca
Dilemma".[261] In addition to vulnerabilities faced in the Straits of Malacca region, China is
heavily dependent upon sea-routes that pass through the South China Sea, near the
disputed Spratly Islands and Paracel Islands, which are currently a source of tension
between China, Taiwan, Vietnam, the Philippines, and the United States.[263] The CPEC
project will allow Chinese energy imports to circumvent these contentious areas and find a
new artery in the west, and thereby decrease the possibility of confrontation between the
United States and China.[264] However, there is evidence to suggest that any pipelines from
Gwadar up to China would be very expensive, would encounter numerous logistical
difficulties including difficult terrain and potential terrorism, and would barely make any
impact on China's overall energy security.[265]

In addition to potential weaknesses in regards to the United States' Navy, the Indian Navy
has recently increased maritime surveillance of the Straits of Malacca region from its base
on Great Nicobar Island.[266] India has expressed fears of a Chinese "String of Pearls"
encircling it.[267][268] Were conflict to erupt, India could potentially impede Chinese
imports through the straits.[269] Indian maritime surveillance in the Andaman Sea could
possibly enhance Chinese interest in Pakistan's Gwadar Port – the Kyaukpyu Port, which is
currently being developed in Myanmar by the Chinese government as another alternate
route around the Straits of Malacca, will likely be vulnerable to similar advances by the
Indian Navy. The proposed Bangladesh-China-India-Myanmar Corridor (BCIM) would also be
vulnerable to Indian advances against China in the event of conflict, thereby potentially
limiting the BCIM Corridor's usefulness to China's energy security, and thereby increasing
Chinese interest in CPEC.

China's stake in Gwadar will also allow it to expand its influence in the Indian Ocean, a vital
route for oil transportation between the Atlantic and the Pacific. Another advantage to
China is that it will be able to bypass the Strait of Malacca. As of now, 60 percent of China's
imported oil comes from the Middle East, and 80 percent of that is transported to China
through this strait, the dangerous, piracy-rife maritime route through the South China, East
China, and Yellow Seas.

Council on Foreign Relations[270]

Access to western China

The CPEC Alignments will improve connectivity to restive Xinjiang, thereby increasing the region's
potential to attract public and private investment.[260] CPEC is considered central to China–Pakistan
relations; its central importance is reflected by China's inclusion of the project as part of its 13th five-
year development plan.[237][238] The CPEC projects will also complement China's Western
Development plan, which includes not only Xinjiang, but also the neighbouring regions of Tibet and
Qinghai.[271]
30

In addition to its significance to reduce Chinese dependence on the Sea of Malacca and South China
Sea routes, CPEC will provide China an alternative and shorter route for energy imports from the
Middle East, thereby reducing shipping costs and transit times. The currently available sea-route to
China is roughly 12,000 kilometres long, while the distance from Gwadar Port to Xinjiang province is
approximately 3,000 kilometres, with another 3,500 kilometres from Xinjiang to China's eastern
coast.[261] As a result of CPEC, Chinese imports and exports to the Middle East, Africa, and Europe
would require much shorter shipment times and distances.

17. Route to circumvent Afghanistan


Negotiations to provide an alternate route to the Central Asian republics by way of China
predate the announcement of CPEC. The Afghanistan–Pakistan Transit Trade Agreement of
2010 provided Pakistan access to Central Asia via Afghanistan; however, the full agreement
has yet to be fully implemented. The "Quadrilateral Agreement on Traffic in Transit" (QATT)
was first devised in 1995, and signed in 2004 by the governments of China, Pakistan,
Kazakhstan, and Kyrgyzstan to facilitate transit trade between the various countries, with no
inclusion of Afghanistan.[272] Despite signing of the QATT, the agreement's full potential
was never realised, largely on account of poor infrastructure links between the four
countries prior to the announcement of CPEC.

During the visit of Afghan President Ashraf Ghani to India in April 2015, he stated "We will
not provide equal transit access to Central Asia for Pakistani trucks" unless the Pakistani
government included India as part of the 2010 Afghanistan–Pakistan Transit Trade
Agreement.[273] The current Transit Trade Agreement provides Afghanistan access to the
Port of Karachi to conduct export trade with India, and allows Afghan goods to be transited
up to any border of Pakistan, but does not guarantee Afghan trucks the right to traverse the
Wagah Border, nor does the agreement permit Indian goods to be exported to Afghanistan
via Pakistan.[274] Owing to continued tensions between India and Pakistan, the Pakistani
government expressed reluctance to include India in any trade negotiations with
Afghanistan, and as a result, little progress was made between the Afghan and Pakistani
sides.

In February 2016, the Pakistani government signalled its intention to completely bypass
Afghanistan in its quest to access Central Asia by announcing its intent to revive the QATT so
that Central Asian states could access Pakistani ports via Kashgar instead of
Afghanistan,[275] thereby allowing the Central Asian republics to access Pakistan's deep
water ports without having to rely on a politically unstable Afghanistan as a transit corridor.
In early March 2016, the Afghan government reportedly acquiesced to Pakistani requests to
use Afghanistan as a corridor to Tajikistan, after having dropped demands from reciprocal
access to India via Pakistan.[276]
31

18. Alternate route to Central Asia


The heads of various Central Asian republics have expressed their desire to connect their
infrastructure networks to the CPEC project via China. During the August 2015 visit of
Pakistani Prime Minister Nawaz Sharif to Kazakhstan, the Kazakh Prime Minister Karim
Massimov, conveyed Kazakhstan's desire to link its road network to the CPEC project.[277]
During the November 2015 visit of Tajikistan President Emomali Rahmon to Pakistan, the
Tajik premier also expressed his government's desire to join the Quadrilateral Agreement on
Traffic in Transit to use CPEC as a conduit for imports and exports to Tajikistan by
circumventing Afghanistan;[278] the request received political backing by the Pakistani
Prime Minister.[278]

The Chinese government has already upgraded the road linking Kashgar to Osh in
Kyrgyzstan via the Kyrgyz town of Erkeshtam while a railway between Urumqi, China and
Almaty, Kazakhstan has also been completed as part of China's One Belt One Road
initiative.[279] Numerous land crossings already exist between Kazakhstan and China as
well. Additionally, the Chinese government has announced plans to lay railway track from
Tashkent, Uzbekistan, towards Kyrgyzstan with onwards connections to China and
Pakistan.[280] Further, the Pamir Highway already provides Tajikistan access to Kashgar via
the Kulma Pass. These crossings complement the CPEC project to provide Central Asian
states access to Pakistan's deepwater ports by completely bypassing Afghanistan – a
country which has been ravaged by civil war and political instability since the late 1970s.

19. Comparison to Chabahar Port


In May 2016, Indian Prime Minister Narendra Modi and his counterpart, Iranian President
Hassan Rouhani, signed a series of twelve agreements in Tehran, in which India offered to
refurbish one of Chabahar's ten existing berths, and reconstruct another berth the Port of
Chabahar,[281] in order to allow Indian goods to be exported to Iran, with the possibility of
onward connections to Afghanistan and Central Asia.[282] As of February 2017, the project
remains delayed while the governments of Iran and India blame one another for delays.

A section of the Indian media described it as "a counter to the China-Pakistan Economic
Corridor", although the total monetary value of projects has been noted to be significantly
less than that of CPEC.
32

As part of the twelve memorandums of understanding signed by Indian and Iranian


delegations as per text released by India's Ministry of External Affairs, India will offer a $150
million line of credit extended by the Exim Bank of India,[286] while India Ports Global also
signed a contract with Iran's Aria Banader to develop berths at the port,[287] at a cost of
$85 million[288] over the course of 18 months.[289]

Under the agreement, India Ports Global will refurbish a 640 meter long container handling
facility, and reconstruct a 600 meter long berth at the port.[281] India further agreed to
extend a $400 million line of credit to be used for the import of steel for the construction of
a rail link between Chabahar and Zahedan,[290] while India's IRCON and Iran's Construction,
Development of Transport and Infrastructure Company signed a memorandum of
understanding regarding the construction and finance of the Chabahar to Zahedan rail line
at a cost of $1.6 billion.[291]

India's Highways and Shipping Minister, Nitin Gadkari suggested that the free trade zone in
Chabahar had the potential to attract upwards of $15 billion worth of investment in the
future,[292] although he stated that such investments are predicated upon Iran offering
India natural gas at a rate of $1.50 per million British Thermal Units,[293] which is
substantially lower than the rate of $2.95 per million British Thermal Units offered by
Iran.[294] The two countries also signed a memorandum of understanding to explore the
possibility of setting up an aluminum smelter at a cost of $2 billion,[295] as well as
establishing a urea processing facility in Chahbahar,[296] although these investments are
also contingent upon Iran supplying low-cost natural gas for operation of those
facilities.[297]

India, Iran, and Afghanistan also signed an agreement with the intention of simplifying
transit procedures between the three countries.[288] Despite the expressed desire to
circumvent Pakistan in order to augment Iranian and Indian economic ties, Indian goods
destined for Iran currently do not require transit through Pakistan, as those goods can be
exported to Iran via Bandar Abbas, where India also currently maintains a diplomatic
mission.[298] Bandar Abbas is also consider a key node on the North–South Transport
Corridor, backed by India and Russia since 2002.[299][300] Indian goods also can be
imported and transited across Iran upon arrival at Bandar-e Emam Khomeyni near the Iraqi
border.

As per the Afghanistan–Pakistan Transit Trade Agreement, Afghan goods can be transited
across Pakistan for export to India as well, though Indian goods cannot be exported to
Afghanistan via Pakistan.[301] Upon completion of Chabahar, Indian exporters will benefit
from the potential ability to export goods to Afghanistan, a country with an annual gross
domestic product estimated at $60.6 billion.[302]
33

After signing the agreement, Iran's ambassador to Pakistan, Mehdi Honerdoost, stated that
the agreement was "not finished", and that Iran would welcome the inclusion of both
Pakistan and China in the project.[303] While clarifying that Chabahar Port would not be a
rival or enemy to Pakistan's Gwadar Port,[304] he further stated that Pakistan and China
had both been invited to contribute to the project before India, but neither China nor
Pakistan had expressed interest in joining.[305][306]

However, eventually, Iranian ambassador made it clear that Iran doesn't consider
Chahbahar to be a project which could feasibly rival CPEC as he said "Iran is eager to join
CPEC with its full capabilities, possibilities and abilities".[307]

20. Security Issues


While agreements have specifically cited improvements for Afghan connectivity to the world
as a benefit of Indian investment in the region,[308] Afghanistan's politically instability could
limit the potential usefulness of transit corridors to population centers near Kabul or
Kandahar,[309] as those routes traverse southern and eastern Afghanistan, where the
Taliban is most active.[310] The Chabahar plan relies upon connections to the Afghan Ring
Road.[311] By August 2016, the Taliban was noted to have captured large swathes of land in
Helmand Province, and threatened to capture the provincial capital of Lashkar Gah,[312]
which lies on the portion of the Afghan Ring Road connecting Chabahar to Kandahar and
Kabul. As a result, portions of the Afghan Ring Road were closed due to Taliban insurgent
activity.[313] Also in August 2016, the Taliban claimed responsibility for an attack which left
twelve foreign tourists dead as they were traveling on an alternative route to the Afghan
Ring Road, between Kabul and Herat.[314] In September 2016, Iran's president Hassan
Rouhani expressed his country's interest in joining CPEC during a meeting with Nawaz Sharif.

21. Security
Pakistan Navy and Chinese Navy ships are to jointly guard the safety and security of the
trade corridor, as Pakistan seeks to expand the role of its maritime forces.[316] From
December 2016, Pakistan's Navy established a special taskforce "TF-88" to ensure there is
maritime security for trade.[317][318] Chairman Parliamentary Committee on CPEC
confirmed that Sindh province will dispatch 2000 police officers, while Punjab will dispatch
5000 police officers for the project, while the Pakistani Army will deploy 12,000 troops to
safeguard the route.[319] China plans to transfer 4 ships to the Maritime Security Agency
with two ships called PMSS Hingol and PMSS Basol.[320] For territorial security, Pakistan has
formed the Special Security Division.[321] Pakistan plans to train 12,000 security personnel
to protect Chinese workers on the corridor.[322][323][324] As of August 2015, 8,000
Pakistani security officials were deployed for the protection of over 8,100 Chinese workers
in Pakistan.[325] As part of CPEC, Pakistan has boosted its international engagement in
34

terms of foreign policy with China, Iran, USA, Turkey and Malaysia are to be engaged for the
maritime economy related to CPEC.[326] Iranian President Rouhani revealed his intentions
to Pakistan to join CPEC in a meeting at the UN[327] Russia has also expressed support for
CPEC.[328][329]

22. Baloch militants


Baluchistan province has been site of nationalist and separatist insurgencies,[330] which
Pakistan alleges are supported by Indian intelligence services, as provided evidence to the
United Nations on alleged Indian spy Kulbhushan Yadav caught on soil of Baluchistan
province on 3 March 2016.[331] Exiled Baloch nationalist Hyrbyair Marri in 2016 warned the
safety of Chinese nationals working on the project could not be guaranteed,[332] though
violence in the region peaked in 2013 before sharply declining.[333][A]

The Pakistani government reported that over 800 Baloch militants surrendered to security
forces in 2016 after the launch of a reconciliation programme,[335] including over 200 at a
single ceremony in November 2016.[336] Balakh Sher Badini, a senior militant commander
of the Balochistan Liberation Army, surrendered to Pakistani forces in January 2017.[337]
Another 21 militants from another militant group, the Balochistan Republican Army,
surrendered shortly thereafter along with 3 militant commanders.[338] A few days later,
high-ranking militant commander Lal Din Bugti surrendered to Pakistani security forces,
along with 6 other commanders.[339] Separatist violence had decreased in the province so
much by 2017, that such groups had become much less of a threat compared to Islamist
militants.

23. Islamist militants


Pakistan faced Taliban insurgent violence that largely began in 2008 during the rule of
General Pervez Musharraf. The outlawed terrorist organisation Tehrik-i-Taliban has claimed
responsibility for past attacks on some Chinese nationals,[341] and Chinese commentators
have raised concerns that the safety of construction workers could be under threat.[342]
China reportedly also expressed concern that militant groups in Xinjiang could collaborate
with Tehrik-i-Taliban militants in Pakistan.[40][343] In 2014, Pakistan launched Operation
Zarb-e-Azb to eradicate Tehrik-i-Taliban militants from Pakistani territory, following an
attack on Karachi's airport, and the 2014 Peshawar school massacre in which terrorists from
Tehrik-i-Taliban killed 148 school children.

Following the launch of Operation Zarb-e-Azb, violence in Pakistan has drastically


declined.[344] 2016 saw the lowest number of deaths from acts of violence since the
current wave of violence began in 2007,[345] with total fatalities dropping nearly 66%
compared to 2014.[345] Acts of terrorist violence fell 75% between 2014 and 2016.[346]
According to the South Asia Terrorism Portal, civilian fatalities from terrorist attacks in 2013
35

stood at 3,001, while the number had declined to 612 by 2016[347] – the lowest number
since 2005.

Though terrorism-related deaths declined in Pakistan as a whole in 2016, the toll rose
slightly in Baluchistan,[344] where Tehrik-i-Taliban militants maintain a degree of subversive
capability. In August 2016, Quetta was struck by a terrorist suicide bombing which killed 70
people,[348] while sectarian militants still frequently target Baluchistan's Shia Hazaras.[346]

24. Alleged Indian subversion


CPEC passes though the disputed region of Kashmir where Indian and Pakistani border
guards have occasionally exchanged fire across the Line of Control,[349][350] though no
CPEC project is located near the line. Chinese intelligence agencies have also reportedly
shared information with Pakistani authorities regarding alleged efforts by the India's
Research and Analysis Wing to subvert CPEC.[351][351] In March 2016, Pakistan Reported
that it had arrested a suspected terrorist spy from India's Research and Analysis Wing,
Kulbhushan Yadav, who Pakistan believe he has entered Pakistan from Iran specifically to
destabilize regions in Pakistan's Baluchistan province along with terrorist organization
Tehrik-i-Taliban and Baloch liberation army (B.L.A) in order to hinder implementation of
CPEC projects.[352] Former Chief of Army Staff General Raheel Sharif in April 2016 accused
India's Research and Analysis Wing of destabilizing Pakistan in an attempt to disrupt and
stymie implementation of various CPEC projects.[353] Pakistan's Secretary of Defense
Lieutenant General Alam Khattak stated in April 2016 that the arrest of Kulbhushan Yadav
indicated Indian interference in CPEC, and further alleged that India's Research and Analysis
Wing, in collusion with Afghanistan's National Directorate of Security, had set up a
dedicated espionage unit with express intent to sabotage CPEC.[354]

Criticism and miscellaneous issues

CPEC is viewed by many critics in western media as a neo-imperialist exercise.[32]

25. KP Provincial Assembly


Some planning aspects and technicalities associated with the route have been criticised in
political forums and by the media.[355] The Provincial Assembly of Khyber Pakhtunkhwa
province adopted a resolution against the alleged decision of the central government to
change the multibillion route of the proposed project by diverting it away from Khyber
Pakhtunkhwa province.[356] The supposed change in CPEC routing was noted in an article
published by China's Global Times newspaper,[357] two years before the official
announcement of CPEC when levels of violence were much higher in that province, which he
acknowledged could factor into any decision to re-route the corridor from KP.[357]
36

The federal Minister of Planning Development and Reform Ahsan Iqbal formally denied any
change in the alignment.[39][358][359] As a rebuttal to this argument, Wu Zhaoli, an
assistant research fellow at the National Institute of International Strategy, Chinese
Academy of Social Sciences, in his article also published in Global Times, stated that
"security concerns are a critical cause which helps to determine the path of this
corridor",[342] implying that security concerns, rather than political bias, would be
responsible for any route changes. According to Dr Ahmad Rashid Malik, senior research
fellow at the Institute of Strategic Studies Islamabad (ISSi), the route controversy is
"baseless and an unfounded reality...".[360] As a result of objections to CPEC, the Chinese
government in 2015 issued a statement urging Pakistani political parties to resolve their
differences over the project.[361]

26. Finances
In addition to the aforementioned issues, some sources have suggested that the interest
rate for CPEC related loans would be high, with India's Daily News and Analysis paper
suggesting that Pakistan had unwittingly accepted loans that would "be offered at very high
rates of interest",[362] although the actual interest rates were negotiated prior to
acceptance, and for most projects will be 1.6%.[62]

Several articles in Pakistan have criticised the project's finances as being shrouded in
mystery, while one article suggested that "there is far too much secrecy and far too little
transparency".[363] The Private Power and Infrastructure Board has also been accused of
irregularities in the approval process for coal power plants and the tariffs at which Pakistan
is contractually obliged to purchase electricity from those plants,[364] with special concern
regarding potential irregularities in the tariff approved for the 300MW coal power plant to
be built in Pind Dadan Khan by China Machinery Engineering Corporation.[365]

27. Trade imbalance


Chinese exports through the Karakoram Highway have entered the domestic Pakistani
market, and are cheaper due to the relatively higher cost of production in Pakistan.[366] It
has also been speculated that the CPEC will replace Pakistani exports by Chinese ones in
external markets.[366]

28. Baloch Nationalists


Some Baloch nationalists have opposed the large-scale development projects envisioned by
CPEC, fearing that such developments in the province would eventually result in local
residents "losing control" over natural resources.[367] Others have alleged that CPEC is a
"conspiracy" meant to stimulate the settlement of migrants from other regions of Pakistan
in order to render ethnic Baloch a minority in the province.[368]
37

In accordance to the Pakistani Government's announcement of its intent to issue resident


cards to the city's inhabitants as a security measure to prevent the movement of firearms
into the city,[369] former Chief Minister of Balochistan province, Akhtar Mengal, suggested
at a political rally in November 2015, that execution of CPEC projects and the resident card
policy would eventually result in ethnic Baloch being denied entry into the city.[370] The
resident cards measure would require any non-resident visitor to the city to register at
designated security checkpoints prior to entering the city by road,[369] without any
reference to ethnicity. The former Chief Minister did, however, clarify that he would not
oppose development projects in the province that he believed would uplift the plight of
local residents.[370] Shortly thereafter, the Pakistani government announced its intention
to establish a training institute named Pak-China Technical and Vocational Institute at
Gwadar which is to be completed at the cost of 943 million rupees to impart skills to local
residents to train them to operate machinery at the port.[34]

Athar Hussain, the director of the Asia Research Centre at London School of Economics, has
expressed concerns that the CPEC is "likely to bring more development to regions that are
already developed, instead of poor areas such as Balochistan."[371] Burzine Waghmar, a
member of the Centre for the Study of Pakistan, SOAS, University of London, suggested that
CPEC projects are not targeted towards benefiting the indigenous Baloch population, and
will accelerate human rights violations in the province.

29. Gwadar residents' concerns


While nationalists openly oppose CPEC, some local leaders and residents of Gwadar city
have also expressed concern in regards to the project – the head of Gwadar's local
fisherman association stated in an interview with NBC News that "Development is good,
China is our great friend, this CPEC thing sounds amazing, but don't forget that this is our
land, first."[372] Other residents doubt they will see any of the benefits promised by CPEC,
while others fear they will be evicted from their homes in order to make way for
infrastructure works.

In response to concerns of local residents, Lt. General Amer Riaz who heads security
operations in the province, stated that locals would not be deprived of benefits, and that
local Gwadar residents would have "the first right to everything."[374] Pakistan's Minister of
Planning, National Reforms, and Development, Ahsan Iqbal, further stated in May 2016 that
Gwadar residents would be regarded as "main stakeholders" in the city's master plan, and
that fishermen specifically would also be accommodated by the plan.[375] The developer of
Gwadar Port, COPHC, has also announced that it will assist Gwadar's fishermen to help
38

boost the region's seafood industry by developing programmes to improve the quality of
local seafoods.[376]

30. Indian objections

i. Sovereignty claims
 The Government of India, which shares tense relations with Pakistan, 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 Indian Prime
Minister Narendra Modi to China in 2015, the Indian Foreign Minister, Sushma
Swaraj reportedly told Chinese Premier Xi Jinping that projects passing through
Gilgit-Baltistan are "unacceptable" as they require construction in the claimed
territory. India's Foreign Secretary Subrahmanyam Jaishankar also confirmed that
the issue had been raised with the Chinese government on the trip. Swaraj
reiterated this stance during a meeting in August 2016 with Chinese foreign minister
Wang Yi, stating India would "resolutely oppose" the corridor in Kashmir.
 India did not object to Chinese construction of the Karakoram Highway, which was
built between 1959 and 1979. India further did not initially object to major Chinese-
sponsored upgrade works to the Karakoram Highway after a 2010 earthquake,
though it did object the presence of Chinese troops in the region that were sent to
guard Chinese workers.
 India further did not object to construction of the Mangla Dam, undertaken with
World Bank funding and British technical assistance in southern Kashmir − a region
which India claims as its own territory. India even maintained that the Wullar
Barrage project in Indian-administered Kashmir, which Pakistan regards as a
violation of the Indus Water Treaty, would ultimately be beneficial for the Mangla
Dam.[383] India further did not object to construction works at the Kashmir's
Neelum–Jhelum Hydropower Plant, under construction with Chinese assistance since
2008. India in 1991 agreed to allow the Neelum-Jhelum project to move forward,
despite the project's location in territory which India legally considers as its own.
 Following the 2005 Kashmir earthquake, large-scale reconstruction work of
infrastructure took place across northern Kashmir with the assistance of South
Korean, Turkish, and Saudi firms.[385] Chinese companies took part in 14 post-
earthquake reconstruction projects in the disputed region, worth $6 billion.[386]
India did not object to these works, despite the fact that infrastructure near the
militarily sensitive Line of Control were upgraded.
 Indian objection to Chinese construction works in the Gilgit-Baltistan arose in 2011 in
response to a Chinese complaint regarding a joint Indian-Vietnamese oil exploration
project in the disputed South China Sea.[387] The influential Institute for Defence
Studies and Analyses, a think tank funded by the Indian Ministry of Defence,[388] in
39

2011 called for India to begin raising objection to Chinese projects in the region at
the "international level."[389]

31. Encirclement fears


Former Indian ambassador, Phunchok Stobdan, alleged that China and Pakistan intended to
develop the corridor not just for its economic benefits, but also is motivated by the
"strategic intent of besieging India", though he also stated that India can do little to scuttle
CPEC, and that avoiding China's One Road One Belt project altogether would be to the
detriment of India.

The Indian Ministry of External Affairs in May 2015 also summoned the Chinese envoy in
New Delhi to lodge India's opposition to the project.[391] The Chinese Premier dismissed
the concerns, describing CPEC as a "commercial project"[392] that would not target any
third party.

In May 2016, India's Minister of State and External Affairs, Vijay Kumar Singh raised
concerns regarding CPEC. Despite Indian objections, China and Pakistan initiated works on
the $44 million Pakistan-China Fiber Optic Project on 19 May 2016 which will require
passage through Gilgit-Baltistan; the same region for which India expressed concerns to
China. Former Indian National Security Advisor M. K. Narayanan also in May 2016 stated
"CPEC must be viewed as a major threat. Both countries [China and Pakistan] have a
common intention to undermine India`s position in the region."

Despite objections, segments of the Indian public, as exemplified by former Indian


Ambassador Melkulangara Bhadrakumar, regard the project as in India's interest vis-à-vis
Central Asia, and warn that India might "lose heavily" were India to remain opposed and
isolated from the project.

On 28 August, the China Institutes of Contemporary International Relations suggested that


China will have "to get involved" if India disrupts CPEC.[397] Indian National Congress leader
Manish Tewari said that if ultimately the CPEC is going to threaten India, then it should be
opposed
40

32. List of major projects

Project Notes

Phase 1 complete. Phase 2


Gwadar Port
under construction.[399][400]

Under construction.
Gwadar-Ratodero Motorway (M-8) 193 km out of 892 km
operational[125]

Commercial operation
Dawood wind power project (50 MW) date (COD) 5 April 2017.
Fully operational.[401]

Under
construction[219] Funded
by the Asian Development
Bank,[77] but is considered
vital to the Karakoram
Highway Reconstruction
E-35 Expressway (Hazara Motorway)
project. The 47 kilometers
long Burhan to Shah
Maqsood section was
completed and opened to
traffic in December
2017.[402]

Under construction.
Iranian portion
completed.[219] Gwadar to
Nawabshah portion is to
Iran–Pakistan gas pipeline be funded by CPEC
agreements, while the
Gwadar – Iran border
portion will be funded by
the Pakistani government.

Under construction.
Portion between Raikot
Reconstruction of the Karakoram Highway and Chinese border had
been under construction
prior to CPEC
41

Project Notes

announcement, and was


completed in 2012.[86] The
24 kilometer
long Karakorum Highway
Realignment around
Attabad Lake was also
completed in 2015.[88]

Thakot-Havelian (118 km)


is in early harvest Project
category and it is to be
completed by March 2020.
KKH Phase II (Thakot -Havelian Section)
Havelian- Abbotabad-
Mansehra (39 KM) section
will be completed in
2018.[403]

Completion planned in
August 2019. It's Multan
to Shujabad section has
Multan-Sukkur Motorway (M-5) (392 KM)
been completed and
inaugurated in May
2018.[404][405][406]

Work in Progress. Date of


Hakla D.I Khan Motorway (285 Km)
Completion May 2019.[407]

41% civil work completed.


Karot Hydropower Project (720 MW) expected COD December
2021.[408]

Rahimyar khan imported fuel Power Plant 1320 MW LOI by GoP issued[409]

expected completion in
Kohala Hydel Power Project, AJK (1100MW)
2025[410]

Under
construction.[153] train will
Orange Line (Lahore Metro)
be on track in March
2019.[411]

Pakistan Port Qasim Power Project (1320 MW) Project has been
42

Project Notes

completed on 25 April
2018[412]

Under
construction[165] First
Quaid-e-Azam Solar Park (1000 MW) phase complete,
generating 400 MW of
electricity.[167]

Completed in July 2017. In


Sahiwal Coal Power Project (1320 MW)
operation.[180]

Under construction. Of the


870 kilometres of road in
Balochistan province to be
constructed/reconstructed
as part of CPEC's Western
Alignment, 620 kilometres
have already been rebuilt
Western Alignment projects in Balochistan province. as of January
2016.[110] Surab to Gwadar
portion is funded by
the Asian Development
Bank, but is considered
vital for completion of
CPEC's Western
Alignment.

Project has been


completed and
Pakistan-China Fiber Optic Project
inaugurated on 13 July
2018[413]

Recruitment in
Economic Corridor Support Force
progress[414]

Planning studies
Main-Line 1 railway overhaul between Karachi and Peshawar
underway[133]

Framework agreement
Havelian Abbottabad Dry Port
signed in May 2017
43

Project Notes

China-Pakistan Joint Cotton Bio-Tech Laboratory Approved[219]

Mansehra Muzaffarabad Mirpur Expressway Approved[415]

China-Pakistan Joint Marine Research Center Approved[219]

Construction work
underway. Date of
Gwadar East Bay Expressway
Completion October,
2020.[219]

Gwadar Hospital Approved[219]

Construction work to start


New Gwadar International Airport
in 2018[219]

Gwadar-Nawabshah LNG terminal and pipeline project Approved[219]

Commercial operation
UEP 100 MW Wind Farm (Jhimpir, Thatta) date (COD) 16 June 2017,
Operational[416]

Commercial operation
Sachal 50 MW Wind Farm (Jhimpir, Thatta) date (COD) attained 11
April 2017, Operational[417]

Commercial operation
Three Gorges Second and Third Wind Power Projects(100MW) date (COD) attained 9th
Jul 2018, Operational[418]

LOI ( letter of intent)


Cacho 50MW Wind Power Project
Stage[419]

Western Energy (Pvt.) Ltd. 50MW Wind Power Project Approved[420]

Under issuance of
Thar Mine Mouth Oracle Power Plant ( 1320MW) & Surface Mine
NTP/LOI[421]

Expected Commercial
Operation Date (COD) 660
CPHGC 1,320MW Coal-fired Power Plant, Hub,Balochistan
MW Dec 2018, 660 MW
Aug 2019[422]
44

Project Notes

Project will be completed


in 2 phases. PC-1 of Phase-
Expansion And Reconstruction Of Existing Line ML-1 1 approved by CDWP in
May 2018

Expected COD 2022.[423]

under review of experts


Phandar Hydropower Station (80MW)
from both sides[424]

under review of experts


Gilgit KIU Hydropower (100MW)
from both sides[425]

Completion expected in
Matiari to Faisalabad transmission line
2020/21[219]

Expected COD in March


Matiari to Lahore Transmission Line (878 Km)
2021.[426]

Under construction,
Commercial operation
Suki Kinari Hydropower Project (870 MW)
date (COD) December
2022.[427]

SSRL Thar Coal Block-I 6.8 Mtpa &SEC Mine Mouth Power Expected completion in
Plant(2×660MW) 2018/19[428]

Thar block II unearths coal


Surface mine in block II of Thar Coal field, 3.8 million tons/year
on 10 June 2018[429]

Expected to be completed
Engro Thar Block II 2×330MW Coal fired Power Plant
by December 2018[430]

TEL 1×330MW Mine Mouth Lignite Fired Power Project at Thar Block-II, Expected completion in
Sindh, Pakistan June 2019[431]

ThalNova 1×330MW Mine Mouth Lignite Fired Power Project at Thar Expected completion in
Block-II, Sindh, Pakistan June 2019[431]

Feasibility studies
Khunjerab Railway
underway[219]
45

Project Notes

Under Growing -
China Pakistan Economic Corridor Businessman Networking Membership Open for
business community

33. BY CPEC GLOBAL


For over seven decades, Pakistan and China have had a friendly and supportive relationship. In
recent years the close ties between the two countries has resulted in an agreement that will be
extremely beneficial to both. The China Pakistan Economic Corridor (CPEC), is the flagship project of
the $5 trillion investment programme that is One Belt, One Road (OBOR) and it has been informally
discussed by the Chinese and Pakistani officials for the last 2 decades. Named “The Project of the
Century” by China’s President Xi, it has finally started to catch its roots on the soil of Pakistan and
promises a bright future not just for the people of China but also Pakistan.

Below we celebrate the ten benefits of CPEC and pull out the key assets that will help Pakistan,
China and that part of the world, continue to grow and development. lifestyle.

1. Quaid-e-Azam Solar Power Park Bahawalpur –


The Largest Solar Power Plant: The 100MW Solar Power Park in Bahawalpur has generated
not just jobs but the cleanest and the most reliable source of energy to Pakistan, thanks to
the collaboration of the governments of China and Pakistan. This unique solar project, is the
biggest solar producer in Pakistan and has surpassed its intended energy production by 4.42
% in 2015-2016 and 5.48 % in 2016-2017 .

2. $4.8 Billion is being spent by China in developing


Gwadar to be the busiest shipping port in South Asia by 2022: Gwadar has become a major global
port city and will be the gateway of trade for the continent, linking China with markets in Central and
South Asia. Over 500,000 professionals are expected in the city by 2023.

3. Lahore Line Metro Train:


Lahore Line Metro Train promises to connect the vast city of Lahore from one end of the city to the
other end. A One-Of-A-Kind project, funded by China, this train line will drastically improve
Pakistan’s infrastructure and will cater to 250,000 passengers on a daily basis. The train was recently
trialed and is due to be completed in a matter of months.
46

4. 2,000 km of rail and road networks


connecting Kashgar, China to Gwadar, Pakistan: CPEC solely focuses on the infrastructure of Pakistan
from North to South along the economic corridor. The chains of roads and rail networks ensure both
the investors and the public a route to communicate more efficiently and it is expected that both
countries will see economic benefits. It is estimated that around $2-2.5 billion revenues per year
could be added to the economy of Pakistan within a few years.

5. 3000 locals were hired by Sahiwal coal fired power plant:


Coordinated by the Ministry of Water and Power of Pakistan, Sahiwal’s Coal Fired Power Plant
promises to deliver 1.3MW of energy and was completed in 2017, a landmark in the history of
Pakistan and China relationships.

6. $35 Billion is being spent by China to construct 19 power plants:


Out of the $46 billion, $35 billion is being invested by Chinese firms and companies. This huge
investment promises to bring 12,114MW of energy to Pakistan. Given the current crisis of Pakistan’s
energy deficits, this gigantic investment promises to deliver Pakistan all its energy crisis solutions in a
very short span of time.

7. 30,000 direct job opportunities have been created in power and infrastructure
sectors for Pakistanis:
Specifically, 5,000 jobs have been formed at Port Qasim Coal Power Project and It is estimated that
around 800,000 employment opportunities will be available in the next two decades, owing to the
diversity and nature of the ever-expanding projects and investments of CPEC.

8. Karakoram Highway Phase 2:


The phase 2 of Karakoram highway connects Thakot and Havelian in KPK (Khyber Pakhtunkhwa) in a
120km highway and is already under construction. The road is considered to be a major highway
that would establish a foundation of networks from the north to the south. The project is expected
to be complete in the first quarter of 2020. The financial estimate of this project is $1.36 Billion .

9. Special economic zones where companies can enjoy business incentives and tax
holidays:
to facilitate rapid commercial and economic development and encourage investment from
industries around the world, Pakistan promises to set up special economic zones. These zones can
be found on the outskirts of large cities in Pakistan such as Faisalabad, Islamabad, Mirpur,
Nowshera, Karachi, and Gilgit.
47

10. 2.5% projected annual growth for Pakistan via CPEC:


The projects being undertaken in CPEC are promising to help boost the GDP of Pakistan to 7.5% . It
has been estimated the introduction of CPEC in Pakistan is going to give a straight boost of 2.5% to
the current GDP of 5%. CPIC specialise in real estate opportunities within the $62bn China Pakistan
Economic Corridor (CPEC). Comprised of world leading investment and real estate professionals,
they deliver international standards of development to Pakistan. CPIC aim to bring positive change
through building safe, sustainable communities that encourage cohesion, enable businesses to
thrive and offer a positive lifestyle.

34. ADVANTAGES OF CPEC FOR PAKISTAN AND CHINA AND


EXPLOITATION OF OPPORTUNITIES AFFORDED BY CPEC

I. Strategic and Economic Context


A . Gwadar Port is the cornerstone of the whole gambit and Gateway to South West and Central Asia
with its strategic significance extending from Persian Gulf through the Indian Ocean to South East
Asia and the Far East. Almost 35 to 40% of sea borne oil shipment transits through Strait of Harmuz.
Gwadar located at cross roads of three sub regional systems, bridges the gap for transportation of
this vital source of energy. Therefore, it retains fundamental role in the future economic prospects
of about 20 countries of Central Asia, South Asia and China by providing economically viable, cost
effective and shortest route for transit and supply.

B . The corridor will reduce sea land route distance between Europe and Western China to less than
half. A trial was conducted last year for transportation of containers from Beijing to Gwadar and
Karachi through Sea Route as well as Land Route through Khunjrab. Transportation through land
route took almost half the time with

II. Strategic and Economic Gains for Pakistan & China.

CPEC is a classic manifestation of convergence of geo strategic and geo economic interests of the
two countries with socio-economic and diplomatic relations fostered through vicissitudes of time.
While complementarity of the economies would serve the economic interests of the two states,
development of mutually beneficial infrastructure will further harmonize the efforts to counter
common adversaries. Envisaged advantages and gains for the two sides are as under:-

A. China

(1) Economic development of relatively backward Western Regions especially Xinjiang will bring
peace and stability facilitating trade with Central Asia to meet the growing energy needs.

(2) CPEC would afford China shortest access to its markets in Asia, Europe and beyond. Use of
Gwadar Port will facilitate trade from Persian Gulf and Africa to Western and Northern China
reducing the distance by several thousand kilometres (almost 12500 Km) and slashing the cost by
Billions of Dollars.
48

(3) Almost 80% of China’s oil is currently transported from Strait of Malacca to Shinghai.
Transportation time of oil imports from the Middle East and Africa will be reduced from over 30 days
to just 2 days after completion of pipeline projects and will not be dependent on shipping through
Straits of Malacca and the vulnerable maritime routes. Besides economic factor, presence in Gwadar
is of great strategic value for China and would be a great strategic advantage in case of war in Asia
and blockade of Strait of Malacca.

(4) For the Chinese investors, Pakistan has lot to offer in multiple sectors because of low labour cost.

B. Pakistan

(1) In the strategic context, CPEC conforms to Pakistan’s security paradigm and “Look East” policy
and will serve towards furtherance of strategic partnership.

(2) Located at the crossroads of huge supplying and communicating markets, fully functional Gwadar
Port linked with China and Central Asia can play a vital role in economic revival of Pakistan.

(3) It also affords us great opportunity for socio-economic development of GB and Balochistan
Province.

(4) Pakistan would benefit through investment from China for development of requisite
infrastructure and to bridge energy shortfall. This will help Pakistan in realizing the potential to
become a regional trade hub and energy corridor thereby bringing huge transit revenues and
employment opportunities.

(5) Even the conservative estimates show projected possible revenues of over 100 Billion US Dollars
on account of transit revenue per annum in long term besides creating employment opportunities in
hundreds of thousands.

(6) With 95% of Pakistan’s trade through sea and economy heavily dependent on sea trade,
development of Gwadar Port and its connectivity is of extreme significance to reduce load on
Karachi and Bin Qasim ports for furtherance of Pakistan’s Sea borne trade.

III. Key Imperatives for Pakistan.


Having seen the immense potential; what should be our focus to make the most of this opportunity
for seeking sustained economic development and securing our socio-economic future; Improvement
and development of requisite infrastructure is absolutely essential. Key imperatives in this context
are:-

a. Regional connectivity by linking major ports of the country with trade routes through highways,
railways and oil pipelines.

b. Development of world class efficient Logistic Chain and Infrastructure and Trade Facilitation.

c. Development of Special Economic Industrial Zones and Transit Facilities along the Corridor.
49

d. Increasing oil storages connected through pipelines.

e. Water and Hydro Power Development including mega dams on Indus Cascade coupled with
medium sized HPPs.

f. Exploration and development of mineral resources to fund the economic programme.

g. Last, but not the least is development of skilled Human Resource.

IV. Pursuits and Initiatives by FWO to Exploit Opportunities Afforded by


CPEC.
FWO, being the leading infrastructure development organization of Pakistan, is cognizant of its
responsibilities. Besides implementation of CPEC projects entrusted by the Govt, FWO has conceived
and planned projects of immense national significance to optimally capitalize on the enormous
opportunities through Public Private Partnership and Built, Operate and Transfer Regime. Pursuits
and initiatives of FWO in the context of CPEC are covered in ensuing paragraphs.

V. Road Infrastructure
 FWO is maintaining Karakoram Highway since its construction in 1978. However, capacity
has been enhanced to keep the Khunjrab Pass opened during winters for ensuring round the
year functionality of CPEC
 b. Road Jalkhad - Chilas was completed last year and now Road Kaghan - Jakhad - Chilas
serves as an alternate route for vulnerable portion of KKH.
 c. Down from Northern Areas, FWO is playing a central role in development of Western and
Eastern Routes of CPEC.
 d. Along the Western Route, the most arduous and challenging portions and missing links in
Baluchistan have been constructed by FWO where almost 900 Kms of roads have been
completed in record time of 2 years against envisaged time frame of 6 years.
 e. Completion of these projects have linked Gwadar with China through KKH and
Afghanistan and Central Asia through Chaman and Torkham.
 f. Western Route has been further connected with Afghanistan at Ghulam Khan and Angoor
Adda through development of Central Trade Corridor in FATA last year.
 g. FWO is also developing one package of Hakla - D I Khan Motorway that constitutes part of
CPEC Western Route.
 h. Along Eastern Route of CPEC, Lahore - Islamabad Motorway has been rehabilitated and
modernized by FWO on BOT Basis while 75 Kms portion of Karachi - Hyderabad Motorway
has also been completed and inaugurated and remaining portion shall be completed by
August this yr.
VI. Pilot Project Trade Convoy.
Completion of missing portions of Western Route in Balochistan by FWO last year enabled
organization of first ever mega trade convoy from Kashgar to Gwadar. The historic event marked the
founding of 21th Century Maritime Silk Trade Route and has set in stone the actualization of CPEC.
This pilot project was a water shed event that validated the viability of Economic Corridor and shall
prove to be a catalyst for operationalization of CPEC. The event has further helped in identification
50

of certain inadequacies in legal framework for transit trade and logistic infrastructure from futuristic
perspective which are being addressed.

VII. Railway Infrastructure


a. As for Railway Infrastructure, FWO is working in close harmony with Pakistan Railways and
Chinese Firms for development of Pakistan - China Dedicated Freight Corridor along ML-2 on BOT
Basis to carry anticipated freight traffic of 80 Million Tons per annum.

b. In a phased undertaking, the corridor will extend from Karachi and Gwadar to Kashagar, which
would eventually link GCC Railway Network and New Eurasion Bridge.

c. FWO has also proposed upgradation of ML-I and ML-3 besides development of Kashmir Railway
that can also be subsequently linked with China.

VIII. Petroleum / Oil Sector Infrastructure / Projects.


In order to contribute to the needs of Petrolueum Sector, FWO has planned and proposed various
projects.

a. First project is development of Oil Village along M-2 with a capacity of 50,000 MT. Work on this
project has already commenced. Project to connect the Oil Village with Bin Qasim Port through
White Oil Pipeline is in advanced stages of approval. The Pipeline shall also be further extended to
Tarujaba in KPK where 35000 MT storage facility shall be developed. In future, this pipeline would be
extended to Afghanistan and Central Asia.

b. Other mega project is Gwadar - Kashgar Cross Country Oil Pipeline on Design, Build, Finance, Own
and Operate Basis. This oil pipeline shall reduce the distance between Persian Gulf to Western China
by over 7000 Kilometers ensuing huge saving in time and cost of transportation of Oil.

c. An Oil Refinery is also being established in KPK.

IX. Energy and Water Sector Projects


a. FWO is currently undertaking Kurram Tangi Dam in FATA and Jagran-II HPP in Kashmir while 3 x
HPPs in Chitral and Mohmand Dam have been awarded to FWO which shall be developed on BOOT
Basis.

b. FWO has planned and proposed development of Indus Cascade on BOOT Basis in Joint Venture
with various Chinese Firms to harness water and power potential. Proposals are at various stages of
approval with the Government.

X. Miscellaneous Infrastructure Including Transit Facilities


a. A comprehensive plan has been formulated for development of Industrial Zones, Smart Cities and
direly needed logistic infrastructure along M-2, M-9 and Pakistan - China Dedicated Freight Corridor.
51

b. Accordingly, number of Smart Cities, Industrial Zones, Container Terminals, Grain and Fuel Storage
Facilities and Ware Houses etcetera are planned along the Motorways. Similarly, 8 x Smart Cities, 10
x Oil Storage Facilities, 10 x Industrial Zones and 15 x Dry Ports are planned along Freight Corridor.

XI. Exploration / Development of Mineral Potential.


In order to exploit enormous mineral potential, a special ‘Mine Exploration and Development
Organization’ was created in FWO during 2015 and pilot project in FATA has been successfully
completed. Requisite technical expertize has been developed to undertake strategic mining.

XII. Human Resource Development.


FWO is presently managing the country’s best Technical Training Institute (CTTI). Realizing the
requirement of huge technical and skilled workforce encompassing an entire spectrum of skill
industry at implementation tier, General and Technical Education System (GATES) institutes are
being developed along CPEC routes. On the request of KP Govt, FWO is in the process of taking over
non functional technical institutes of KP to manage them and organize training in line with modern
day requirement as part of Corporate Social Responsibility. Moreover, National University of
Technology and Skills Development (NUTECH) has been conceptualized and being established with
its constituent institutes all along the corridor especially in remotest parts to train and prepare our
youth. The university will introduce the concept of basic to higher education in the field of
technology and skills development for the first time in Pakistan.

35. OTHER ADVANTAGES

 It provide profit to enhance the economy of country


 It also increase bilateral relation between Pakistan and the other countries
 it provide number of small projects for the ENERGY which is pragmatic need of Pakistan
 it increase the number of jobs and decrease the unemployment of country
 it provide a balance of rupee with dollar
 it will combine the parts of country and modify the internal structure of security of
Pakistan
 it provide a chance to the people of pakistan to introduce their products throughout the
world
 it will also increase the export of country which is in too declined form today
 it also provide a way to make CHINA- PAKISTAN friendship strogest
 it provide benefit to other countries for trade through safe rout
 it is major game changer due to access of number of landlocked countries to hot water
52

36. DISADVANTAGES

note: its all disadvantages comes peoples of Pakistan do not avail this
opportunity, and don’t consider its importance in globule village

 62bn dollar, a debt to poor economy of Pakistan which too much feeble to bear it
 it will increase the influence of chines market in pakistan
 it can crash the small manufacturing of Pakistan completely.
 it can become a challenge for the Pakistan's national security
 it has increases the western pressure on pakistan
 in future Pakistan will face sanctions regarding this project as it hearts some countries and
their economy also

A. My take:

I. Pakistan’s economic sovereignty essentially mortgaged to China –


The CPEC is based on a $46 Billion loan that Pakistan has taken from China. It is not a FDI
that China will recover from the proceeds of the CPEC. The success of CPEC depends on
China’s economy remaining successful and free of global sanctions to freely move its goods
to the rest of the world. This certainty has recently turned suspect under the new US
administration. What happens a when the CPEC fails to generate the proverbial golden
eggs? How does Pakistan propose to repay this loan?

II. Military sovereignty at risk too –


China has sent a naval ship and other military assets to “safeguard” its investment. If the
port is in Pakistan and the ships are docked in Pakistan’s terrirotorial waters, what is China
protecting its investments against? It is doubtful that a boatload of armed terrorists will
arrive from Mumbai to indiscriminately shoot the Chinese or Pakistanis! To a casual
observer, it seems an awful lot like China is setting up a small naval base in Pakistan to
militarily control this part of the world.

III. China with the lions share –


it is estimated that the movement of Chinese goods over the next decade will be $1 Trillion.
And no, that is not a typo! All that business growth for China, while Pakistan assumes all the
risk and is liable for the $46 Billion loan. Suddenly the $46 Billion seems like loose change,
which it is for China. But it is a mountain of a loan for Pakistan.
53

IV. India conflict –


Pakistan’s assertion of being a peaceful nation seeking friendly relations with its neighbors is
contradicted by this project, because this inevitably exacerbates conflict with India. It is an
unnecessary provocation with short term economic benefit and appeasement of China in
mind. It might have been more prudent to negotiate India’s involvement and partnership
into this venture - not as an afterthought as has been demonstrated through some half
hearted comments from vague unknown persons in Pakistan - but as a truly well thought
out venture that could wipe out the India enmity and the risk of the venture in one master
stroke. Very shortsighted indeed!

V. US relations –

The US was not in good terms with China earlier under the Obama administration, and the
relationship has exponentially worsened under Trump. In fact, there is a real chance of
military conflict between the US and China. In an extreme scenario, China might even
implode and break apart like the erstwhile Soviet Union. In such an event, US’s need-based
“friendship” will evaporate very quickly for China’s allies and especially its “"all weather
friend”.

VI. Balochistan –
With its track record in corruption and catering to the powerful Pounjabi elites in civilian
and military circles, Pakistan is not expected to fairly distribute the riches of this venture to
its rightful recipients, including the Balochistan people. This will result is further aggravation
and disillusionment of this large province that is already trying to break away from Pakistan.
This is a tremendous opportunity to bring them back in the fold, and away from Indian
influence, and hopefully Pakistan will play its cards well.

VII. Indigenous industry –


China has an established track record of arriving much like a horde of locusts and
completely wiping out local indigenous industry. The floodgates to Pakistan have been
opened to the Chinese and it is just a matter of time before Chinese goods do the Walmart-
effect on Pakistani industry and destroy what is left of it. Perhaps Pakistan could learn a
lesson or two from neighbouring India’s "Make in India” initiative to not only sustain local
industry but also master strategic technology in house.

VIII. Environmental impact –


A repeat of the point above, except China’s disregard for the environment and utter
destruction of ecological systems wherever its tentacles reach, are a sad eventuality of
letting China in.
54

IX. Pakistani leadership,


while obviously well intentioned in CPEC, has shown immense immaturity,
shortsightedness, and lack of good judgement in signing off on CPEC. As time will tell, the
CPEC will soon become Atlas’s burden, a symbol for the world to see but for Pakistan to
carry.

37. Preclude
CPEC is being touted as some sort of a magic dust that will make all of Pakistan’s problems
disappear. That is not the case. It has the potential for the much needed economic benefit,
but also brings additional problems. I suspect these problems will eventually outweighs the
benefits of CPEC.

The CPEC appears to be a very crucial project for both the countries. For China it provides an
alternate secure route to import Energy and find new markets for its goods and services. For
Pakistan it helps counters Indian influence in the region, position itself as a major transit
point connecting Eurasian region with South Asia and South East Asia and provide a much
needed base to kick start its economic growth.. CPEC is a win win synergy for both the
nations and the region. It is a rare opportunity for Pakistan to realize its true strategic and
economic potential. FWO in its capacity is vigorously pursuing multi sectoral initiatives in
sync with our socio-economic imperatives. This of course, if not gigantic, is at least a colossal
undertaking requiring the private sector and financial institutions to come forward and join
hands for expeditious implementation.
55

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17 Dawn Article
56