Submitted to: Submitted by:

Mirza Aqeel Baig Shahreen Shafaq

Seminar in Economic Policy 18285
▫ A mega project of USD 45+ billion
taking the bilateral relationship
between Pakistan and China to
new heights.

▫ Beginning of a journey of
prosperity of Pakistan and China’s
Xinjiang.

▫ Economic corridor about 3000

Kilometers long consisting of
 highways,
 railways and
 pipelines

(Pakistan Times)
•Connect China’s Xinjiang province to rest of the world
through Pakistan’s Gwadar port.

• Pakistani officials predict that the project will result in the

creation of upwards of 1700,000 direct jobs between 2015–
2030, and add 2 to 2.5 percentage to the country's annual
economic growth.

•If all the planned projects to be implemented, the value of

those projects would be equal to all foreign direct investment
in Pakistan since 1970
•Infrastructure projects under the sponsorship of CPEC will
span the length and breadth of Pakistan, and will eventually
link the Pakistani city of Gwadar in southwestern Pakistan to
China's northwestern autonomous region of Xinjiang via a
vast network of highways and railways.

•Electricity from these projects will primarily be generated by

coal, though wind projects are included under CPEC, as is the
construction of one of the world's largest solar energy plants.
BRIEF HISTORY OF CPEC
• Chinese interest in Pakistan’s deep-water port date
back to 1950 and motivated the construction of
Karakoram Highway in 1959.

• Chinese interest rekindled in Gwadar port by 1998

and in 2002 China began construction at Gwadar port
which was completed in 2006.

• However the expansion of Gwadar port is ceased in

2006 owing to political instability.

• The project was proposed by Musharraf, however was

postponed due to Musharraf’s step down
 • Proposed by Chinese Premier Li Keqiang during his visit to Pakistan
in May 2013 .

• Asif Ali Zardari agreed to build an economic corridor betwwen two

countries

• The China-Pak Economic Corridor Secretariat was inaugurated in

Islamabad on 27 August 2013.

• It is formerly launched in 2014, during Nawaz Shareef’s tenure.

• Investment under CPEC to an extraordinary $56 billion.

• Estimated time of accomplishment of CPEC will be by 2030.

• It is also a initiative to the prject Belt and Road, in intend to revival of

Maritime Silk Road

http://gbtimes.com/china/li-keqiang-china-pakistan-ties-unbreakable-economic-corridor-planned
http://www.thefridaytimes.com/tft/the-tft-guide-to-cpec-for-incredibly-smart-people/
 Province Wise Breakup Of Projects

http://pakchinanews.pk/details-of-cpec-projects-by-chinese-embassy-1/
Projects for Balochistan
• Khuzdar-Basima Highway (N-30)
• I.Khan-Quetta Highway (N-50)
• Hubco Coal Power Plant
• Gwadar Power Plant
• Gwadar-Nawabshah LNG Terminal and Pipeline
• Gwadar Eastbay Expressway
• Gwadar New International Airport
• Gwadar Smart Port City Master Plan
• Expansion of Multi-purpose Terminal including Breakwater &
Dredging
• Wastewater Treatment Plants for Gwadar City
• Gwadar Primary School
• Gwadar Hospital Upgradation
• Gwadar Technical & Vocational College
• Gwadar Eastbay Expressway II
• Fresh Water Supply
• Gwadar Free Zone
Projects for Punjab

• Optical Fiber Cable from Rawapindi to Khunjrab

• Haier & Ruba Economic Zone II
• Karachi-Lahore Motorway (Sukkur-Multan)
• Joint Feasibility Study for Upgradation of ML1
• Upgradation of ML-1
• Sahiwal Coal-Fired Power Plant
• Rahimyar Khan Coal Power Plant
• Karot Hydro-Power Plant
• Lahore Orange Line Metro Train
• Matiari-Lahore Transmission Line
• Matiari-Faisalabad Transmission Line
• Quaid-e-Azam Solar Park in Bahawalpur
Project for Sindh
• Matiari-Lahore Transmission Line
• Matiari-Faisalabad Transmission Line
• Port Qasim Power Plant
• Engro Thar Power Plant & Surface Mine in Block II of
Thar Coal Field
• Dawood Wind Farm
• Jhimpir Wind Farm
• Sachal Wind Farm
• China-Sunec Wind Farm
• Upgradation of ML-1
• Thar Coal Block I & Mine Mouth Power Plant
• Gwadar-Nawabshah LNG Terminal & Pipeline
• Karachi-Lahore Motorway (Sukkur-Multan)
• Joint Feasibility Study for Upgradation of ML1
Projects For KPK

• Joint Feasibility Study for Upgradation of ML1

• Establishment of Havelian Dry Port
• KKH II (Havelian-Thakot)
• Upgradation of ML-1
• KKH III (Raikot-Thakot)
• I.Khan-Quetta Highway (N-50)
• Suki Kinari Hydropower Project
• Optical Fiber Cable from Rawapindi to Khunjrab
Projected Investment Plan
Investment Projects USD
Energy Railway
Energy Projects 34 Billion
Roads Gwadar City
Others High Speed Railway 9.15 Billion
2%
7%
Highways & Motorways 4 Billion
9%
Development of Gwadar
1 Billion
City
8%
Others 3.35 Billion

74%
 Gwadar Master Plan
3 Internationa
2 Industrial
areas l airport

Export
1 Residential 4
processing
area zone

5
Fishing jetty

Gurab 6
housing
scheme
Oil refinery 7
& storage
5 Access 8
Fishing jetty
roads
10
Tourism
Railway 9
1 Residential terminal
area

Efficient completion of all key projects are critical to help facilitate Gwadar
port development
POSITIVE IMPACT OF
CPEC
 CHINA PAKISTAN
DIFFERENCE
SHANGHAI GWADAR
COUNTRY DISTAN DISTAN DISTAN
CE DAYS CE DAYS CE DAYS
KM KM KM
BRAZIL 20357 33 14745 24 5612 09
CANADA 9276 15 18673 31 -9397 -16
DENMARK 20152 32 11881 20 8271 12
FRANCE 19031 30 10761 18 8270 12
KUWAIT 11158 18 1642 3 9516 15
NETHERLA 19383 32 11112 18 8271 12
ND
OMAN 9894 16 1386 2 8508 14
QATAR 10762 18 1246 2 9516 16
SAUDI 10868 18 1352 2 9516 16
ARABIA
UAE 10427 18 911 2 9516 16
UK 19301 32 11030 18 8271 14
USA 10608 18 19943 33 -9335 -15
 Trade Deficit (Last 5 years)
Deficit %
93%
88% 89%
83%
78%

61%

2010-11 2011-12 2012-13 2013-14 2014-15 2015-16*

Deficit %

(Pakistan Bureau of Statistics)

http://www.pbs.gov.pk/content/external-trade-statistics-last-5-years
 Countries/Export Partners
FY 2015 – 2016
5
• Pakistan exported in total 182 Bangladesh,
4.26%
countries in the said fiscal year with 4 Germany,
amount totaling to approx. $16 5.27%
1 United
Billion States,
• Top 5 Major countries of exports 18.98%

were US, China, UK, Germany &

3 United
Bangladesh with following Kingdom,
proportions 7.65%

• This sums up 45% of total

proportion of exports or approx. $7 2 China,
Billion in terms of monetization 9.28%
 Pakistan's Export In Terms Of Product
Leather 0.26%

Optical Fibers And Bundles 0.26%

Salt, Sulphur, Plastic Materials 0.31%

Ores, Slag And Ash 0.45%

Cotton 2.81%

Rice 2.98%

Blanket & Travelling Rugs 3.25%

Cotton 6.47%

Beverages, Spirits And Vinegar 7.46%

Textile ( Garments ) 13.90%

0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00%

Data of Top 6 Exporting countries by Pakistan for FY 2015-2016

*Total Exports in the Fiscal year was approx $16 Billion
(Multiple sources)

http://www.fbr.gov.pk/TradeStatistics/PCTSUMMARY411.ASPX
Main Exporting Items Of Top 5
Exporting Countries

Product Export Weightage

Amount
Textile ( Garments ) 1,642,499,000 55%

UNITED Beverages, Spirits

1,084,389,763 36%
And Vinegar
STATES
Cotton 112,830,000 4%

Rice 25,860,197 1%

Total Exports 2,984,448,823

Product Export Weightage

Amount
Cotton 838,813,643 58%

Rice 263,652,669 18%

CHINA
Beverages, Spirits
88,236,000 6%
And Vinegar
Ores, Slag And Ash 70,649,000 5%

Total Exports 1,458,319,062

 Product Export Weightage
Amount
Blanket & Travelling
351,874,288 29%
Rugs
UNITED Textile ( Garments ) 323,923,304 27%
KNIGDOM
Cotton 65,074,000 5%

Rice 54,052,000 4%

Total Exports 1,202,005,043

Product Export Weightage

Amount
Textile ( Garments ) 163,638,922 20%
Blanket & Travelling
159,756,657 19%
GERMANY Rugs
Leather 35,903,657 4%

Sports goods 3%
22,408,300
Total Exports 827,813,270
Product Export Weightage
Amount
Cotton 441,109,045 66%
BANGLAD
Machinery 15,395,578 2%
ESH
Raw Hides and Skin
2,318,270 0%
of animals
Total Exports 669,242,995
 Following graph depicts summed up proportion of further 25
countries that adds up to 39.79% of total exports for Pakistan FY
2015 - 2016

4.50%
4.00% 4.01%
3.87%
3.50% 3.55%
3.42%
3.31%
3.00%
2.50%
2.00%
1.79%
1.50% 1.60%
1.54%
1.48%
1.43%
1.29%
1.17%1.12%1.03%
1.00% 0.96%
0.96%
0.93%
0.90%
0.89%
0.88% 0.76%
0.79% 0.66%
0.80%
0.50% 0.65%

0.00%
Benefits Of CPEC
• While the CPEC may be ‘monumental’ for Pakistan, for China it is
part of more ambitious plans to beef up the country’s global economic
muscle. Chinese officials describe the corridor as the “flagship
project” of a broader policy — “One Belt, One Road” — which seeks to
physically connect China to its markets in Asia, Africa, Europe and
beyond.

• Pakistan is a significant partner for China as it links China to the

Central Asia, Southern Asian region and Middle East and its major
deep-sea port Gwadar offers direct access to the Indian Ocean and
beyond.

• The relationship between China and Pakistan will be more strong.

• It will contribute greatly for the Economic Development of Pakistan.

• The Imports and exports of Pakistan will increase.

• The Power Generation capacity will be enhanced (to
overcome energy crisis)

• Foreign Direct Investment will come in Pakistan (to stimulate

rapid industrialization)

• New businesses and industries will be established.

• It will bring enormous employment opportunities decreasing

the rate of unemployment.

• Pakistan and China both collectively target half of the

population of the world. It will provide great opportunities to
both the countries to expand their market

• The Gwadar port will be upgraded.

• Roads, Railway, Aviation and all other connectivities will be

upgraded.
Advantages To Pakistan
• Development of infrastructure.

• Connect all the province.

• Development of Fata, KPK and Balochistan.

• Employment Opportunities.

• Investment by China will boost Pakistan’s GDP.

• Pakistan can avail great opportunities from Chinese

experts in various sectors like Energy, Technology
and Education sector.
Business Opportunities Under CPEC

• Local & Foreign Investments

• Development opportunities

• Industrial Expansion & Employment Opportunities

• Prospects in areas like Power, Construction, Dry Port,

•Industrial parks & Economic Zones

Foreign Direct Investment and its
Impact on Growth

Indirect
• US$ 46 billion
Investment by china Impact • Current GDP in 4-5%
• Rise in GDP • GDP growth rate
• 1.5% additional GDP potential
growth increases by 6-7% in
medium terms
• Incremental private
sector investment
Direct Overall
Impact Impact
Disadvantages To Pakistan
• FTA leads to threat for local market and
manufacturers.

• Local industries will be disturbed.

• Difficult to compete Chinese product.

• Due to free trade agreement with china leads to

lack of competition
Advantages To China
• It would decrease the travel distance and cost greatly from
China to Gulf.

• 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.

• Even if China uses CPEC for 50% of its Oil supplies then it
will save $6 Million everyday, almost $2 billion every year.

• New business market in another country

Analysis

(On the bases of different articles, meetings with different

individual and data through various sites)
 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 provide a much needed base to
kick start its economic growth.
 Reduced freight cost of import & exports from China.
Currently cargo from China’s main Shanghai port reaches
Karachi port in 18 days and take further 04 days to reach
Dubai’s port Jebel Ali and vice versa. Through CPEC, Chinese
cargo will reach Pakistan in 02 days and can further be
shipped to Jebel Ali in further 04 days.
 More than 50% of crude for China will pass through CPEC.
Multiple Sources
 This will lead to huge transshipment of Chinese goods
through Pakistan, which will result in huge earnings
which are estimated to be more than $1 billion
annually and a boost to logistic industry.
 Pakistan imports huge amounts of raw materials for its
product, which will become cheaper due to decrease in
freight cost.
 For the development of CPEC and Gwadar port a lot of
Chinese and foreigners will visit Pakistan which will
give boost to Pakistan’s hotel industry.
 Infra structure development along the CPEC route
and Gwadar.
 Creation of new jobs, approx. 700,000 which will
decrease unemployment.
 Inflow of huge FDI in Pakistan.
The Good side of the picture..
• A Game Changer
• Foreign Investments
• Employment Opportunities
• Expected agreements with other land lock
countries
• Expected boom industries, Logistics & Hotels
• Expected money generation through tolls
• Manufacturing to Service providing
• Change in business patterns
The bad side of the picture..

• Maximum benefits to China.

• Shutdown of large business due to cheaper

Chinese goods.

• Unemployment of skilled labor.

• Income inequality
Recommendation
• Government Role
▫ Encourage usage of local material in the
development of CPEC
▫ Import restrictions of goods available in Pakistan
▫ High Tolls
▫ Agreements of Import benefits from China

• Private Sector
▫ Foresee future and adopt to the changing patterns
▫ Invest in Gwadar
THANK YOU