Discuss the prospects and challenges to the construction of "China-Pakistan Economic Corridor". How will CPEC become a game changer for the region?

Introduction

Napoleon is credited with the observation that "the policy of a state lies in its geography." Pakistan's geography places it at the meeting point of South Asia, Central Asia, China and the Middle East, beside the Arabian Sea. The China-Pakistan Economic Corridor (CPEC), launched with great fanfare in 2015, aims to turn that geography into economic power by linking Kashgar in western China with Gwadar through roads, railways, pipelines and fibre-optic cables. In 2016, as construction began, CPEC's prospects were bright but its challenges were serious. Its significance, however, goes beyond Pakistan: it could change the economic map of the whole region.

Overview

CPEC was agreed in 2013 and formally launched during President Xi Jinping's visit to Islamabad on 20–21 April 2015, when the two countries signed 51 agreements worth about US$46 billion. About three-quarters of the investment was for energy projects, and the rest for infrastructure, Gwadar Port and industrial cooperation. An All Parties Conference on 28 May 2015 agreed to build the western route first, through Khyber Pakhtunkhwa and Balochistan, to address provincial concerns. In November 2016, the first convoy of Chinese goods travelled through CPEC to Gwadar for export by sea.

Prospects of CPEC's construction

1. Committed Chinese financing.

China's willingness to invest heavily, through loans and private investment, gave CPEC funding on a scale Pakistan could not raise elsewhere. (Reference: Joint Statement of China and Pakistan, 20 April 2015; Ministry of Planning, Development and Reform, CPEC portfolio, 2016.)

2. Political consensus.

All major parties supported CPEC after the May 2015 All Parties Conference, and the army created a dedicated force to protect it, giving the project national ownership. (Reference: Declaration of the All Parties Conference on CPEC, 28 May 2015; ISPR statements on the Special Security Division, 2016.)

3. Early harvest projects.

Energy and road projects such as Sahiwal and Port Qasim coal plants and Karakoram Highway upgrades moved quickly, promising results within a few years. (Reference: CPEC Joint Cooperation Committee minutes, 2015–2016; National Highway Authority.)

4. Gwadar's development.

The handover of Gwadar Port operations to China Overseas Port Holding Company in 2013, and plans for a free zone and airport, positioned Gwadar as a future trade hub. (Reference: Gwadar Port Authority; Ministry of Ports and Shipping, 2013–2016.)

Challenges to CPEC's construction

1. Security.

Militancy in Balochistan and Khyber Pakhtunkhwa threatened workers and projects, requiring a large security force and raising costs. (Reference: Ministry of Interior; ISPR statements, 2015–2016.)

2. Route controversy and provincial concerns.

Smaller provinces feared that Punjab would benefit most, leading to disputes over the western and eastern routes. (Reference: Senate Special Committee on CPEC reports, 2015–2016; Khyber Pakhtunkhwa and Balochistan Assembly resolutions.)

3. Financing and debt risks.

Economists warned that loans and guaranteed returns to power producers could add to Pakistan's external liabilities. (Reference: IMF, Pakistan Article IV Consultation, 2016; State Bank of Pakistan, Annual Report 2015–16.)

4. External opposition.

India objected to CPEC passing through Gilgit-Baltistan, and some regional and Western actors viewed it as a strategic project of China. (Reference: Ministry of External Affairs of India statements, 2015–2016.)

How CPEC can become a game changer for the region

1. China's western development and the Malacca alternative.

CPEC offers western China a route to the Arabian Sea roughly 3,000 km long instead of a sea route of about 12,000 km, and reduces China's dependence on the Strait of Malacca for energy imports. (Reference: US Energy Information Administration, World Oil Transit Chokepoints; Long-Term Plan for CPEC 2017–2030.)

2. Afghanistan's integration.

Extending CPEC to Afghanistan, as China, Pakistan and Afghanistan agreed in 2017 and later, could give Afghanistan trade routes, investment and a stake in regional peace. (Reference: China-Afghanistan-Pakistan Foreign Ministers' Dialogue, Beijing, December 2017.)

3. Central Asia's access to the sea.

Landlocked Central Asian states could reach Gwadar and Karachi through CPEC and Afghanistan, opening new markets for their energy and goods. (Reference: Quadrilateral Traffic in Transit Agreement among China, Pakistan, Kazakhstan and Kyrgyzstan, 1995; ECO Transit Transport Framework Agreement.)

4. Links with Iran, the Gulf and Africa.

Gwadar's location near the Strait of Hormuz can connect CPEC with Iran, the Gulf states and East Africa, making it a hub for trade across the Arabian Sea. (Reference: Gwadar Port Authority master plan; Saudi and UAE investment interest in Gwadar.)

5. An energy corridor.

Proposed oil and gas pipelines and power projects can make CPEC an energy corridor linking Gulf and Central Asian resources with markets in Pakistan and China. (Reference: Long-Term Plan for CPEC, energy chapter; Ministry of Energy.)

6. A model for South Asian connectivity.

If regional tensions ease, CPEC's infrastructure could connect with other corridors and help integrate the least-connected region in the world. (Reference: World Bank, A Glass Half Full, 2018; Asian Development Bank, CAREC programme.)

7. Reshaping the regional balance.

CPEC strengthens China's presence in the Arabian Sea and its strategic partnership with Pakistan, affecting the balance of power in the Indian Ocean. (Reference: US Department of Defense, China Military Power Report; Indian Navy, Indian Maritime Security Strategy, 2015.)

8. A flagship for the Belt and Road.

As the BRI's flagship, CPEC's success or failure will influence how other countries view China's model of development partnership. (Reference: Joint Communiqué of the Belt and Road Forum, May 2017; NDRC, Vision and Actions, 2015.)

Conclusion

Malcolm X is credited with saying that "the future belongs to those who prepare for it today." CPEC is Pakistan's and China's preparation for a future in which trade routes, energy corridors and connectivity shape the region's destiny. Its prospects rest on Chinese financing, national consensus and quick early results, while its challenges lie in security, provincial harmony, debt and external opposition. If these are managed, CPEC can become a true game changer, linking China, Central Asia, Afghanistan, the Gulf and South Asia through Pakistan.