China-Pakistan Economic Corridor (CPEC)

The China-Pakistan Economic Corridor (CPEC) is a 3,000-kilometer-long network of infrastructure projects that links China’s Xinjiang region to Pakistan’s Gwadar Port in Balochistan. The main goal of the China-Pakistan Economic Corridor is to make a secure and shorter path for China to get energy from the Middle East.

Instead of using the current route through the Straits of Malacca, which could be blocked during a war, this new corridor provides an alternative way for China to meet its energy needs and support its economy.

In this article, we will look into the background of the China-Pakistan Economic Corridor (CPEC), its history, developments, challenges, and impact in detail. We will also discuss the projects under the China-Pakistan Economic Corridor (CPEC) and the CPEC Map.

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What is China-Pakistan Economic Corridor (CPEC)?

The China-Pakistan Economic Corridor is an initiative by China. It is a 3000 km long network of infrastructure in Pakistan. The objective of this land-and-sea corridor is to avoid the existing route from the Straits of Malacca between Malaysia and Indonesia to secure and reduce China’s energy imports from the Middle East. Because China’s energy-dependent economic routes could be hampered and it could be closed in the case of a war. A deepwater port in the Arabian Sea and a solid road and rail network from this port to Xinjiang Province in western China would be a quick method to expand trade between Europe and China. It also aims to upgrade transportation networks, increase infrastructure, and address Pakistan’s electricity shortage.

History of the China-Pakistan Economic Corridor

While the Karakoram Highway was being built, plans for a China-Pakistan Economic Corridor originated in the 1950s. Chinese interest in Gwadar harbor in Pakistan came back in 2002, and work was finished in 2006. However, the port was closed as a result of political unrest in Pakistan. The agreement to improve connectivity between Chinese Premier Li Keqiang and Pakistani President Zardari in 2013 resulted in the signing of a memorandum of understanding for a long-term strategy.

CPEC Announcement

Chinese President Xi Jinping went to Pakistan to officially sign the China-Pakistan Economic Corridor (CPEC) deal. Fast-tracked “Early Harvest” projects totaling $28 billion are included in the $46 billion agreement, which represents around 20% of Pakistan’s yearly GDP and was developed by the end of 2018. To connect seaports in Gwadar and Karachi with northern Pakistan as well as locations further north in western China and Central Asia, the CPEC has constructed a massive network of roads and trains.

Later Developments of CPEC

To extend the China-Pakistan Economic Corridor (CPEC), with an emphasis on boosting energy-producing capacity, China and Pakistan signed 20 agreements for a combined $1.6 billion in 2015.

• The agreement included partnership in space exploration as well.
• China declared in 2016 that it would invest an additional $8.5 billion in Pakistan, of which $4.5 billion would be used to upgrade the country’s main railway line and $4 billion would be used to build transmission lines and an LNG plant.
• The direct rail line and marine freight service between China and Pakistan were initiated in November 2016 with the arrival of the first cargo train from China in Gwadar.
• There were around $14 billion worth of projects underway as of September 2017.
• Pakistan declared in 2022 that hydropower would be the main energy source for CPEC projects in the future.
• Pakistan accepted the CPEC Authority’s theoretical dissolution in 2022.

China-Pakistan Economic Corridor Map

The Map of China-Pakistan Economic Corridor (CPEC) is shown below:

China-Pakistan Economic Corridor

China-Pakistan Economic Corridor (CPEC) Projects

China’s One Belt, One Road, and 21st Century Maritime Silk Road projects depend heavily on Pakistan’s military naval port, Gwadar. Only three of the projects, costing over $1 billion, have been completed by 2022. Solar panels have been supplied by China to families in Gwadar.

Major Projects under China-Pakistan Economic Corridor

There are various projects initiated under China Pakistan Economic Corridor. The list of CPEC projects is listed below:

• Projects in Gwadar Port Complex
• Projects in Gwadar City
• Roadway Projects
• Railway Projects
• Energy Sector Projects

1. Gwadar Port Complex

With its first expansion in 2007, Gwadar Port can handle larger ships up to 70,000 deadweight tons. A floating liquefied natural gas facility and a $130 million breakwater are among the improvements made. With plans to invest $4.5 billion in infrastructure, the port is situated close to a special economic zone that is modeled after China’s SEZs.

Read More: Gwadar Port and its Geopolitical Impact on India

2. Gwadar City Projects

For the construction of a new international airport in Gwadar, Pakistan, China has granted Pakistan $230 million. Grants from the Chinese government will finance the 30-month project. In addition, Gwadar is building 300 MW of coal-fired power, a 300-bed hospital, and a desalination facility. The expected cost of additional projects is $800 million.

3. Karakoram Highway

The Karakoram Highway (KKH) section of National Highway 35 in Pakistan is being upgraded and rebuilt as part of the Pakistan-China Economic Corridor (CPEC) projects. The project comprises the construction of a 2-lane highway north of Shinkiari, a 4-lane controlled-access highway between Burhan and Havelian, and hydropower projects between Thakot and Raikot. The Karakoram Highway Phase 2 project is also included in the project. In addition, a 4-lane road connecting Gilgit and Skardu and a 24-kilometer diversion to Attabad Lake are part of the project.

4. Railway Projects

By 2020, the CPEC project intended to restore the Main Line 1 railway between Karachi and Peshawar to renovate Pakistan’s outdated railway network. However, China’s unwillingness to contribute funding has declined the project. Upgrades to Main Lines 2, and 3, and a rail connection across Khunjerab Pass are also part of the plan. By 2019, it is anticipated that Pakistan’s railway infrastructure will have received approximately $5 billion in investments.

5. Energy Sector Projects

With 24,830 MW of energy producing capacity, Pakistan is the target market for the $33 billion CPEC project. The nation is giving hydropower projects first priority, hoping to meet 25% of its electricity needs through production by 2030. Along with other renewable energy projects, the nation is building the Quaid-e-Azam Solar Park, the largest solar power plant in the world. The Pakistani government would buy power from these companies at pre-negotiated rates, while the Exim Bank of China will finance these private investments at 5–6% interest rates.

The Diamer-Bhasha Dam, the Karot Dam, and the Kohala Hydropower Project are all being built as part of the CPEC project. The majority of new energy generation capacity under CPEC would come from coal-based facilities, even with renewable energy projects. $5.8 billion worth of coal power projects were anticipated to be finished by early 2019 in China. To support the development of future phases, the National Electric Power Regulatory Authority (NEPRA) of the nation has decided to buy electricity from Thar-l and Thar-ll at a tariff of 8.50 US cents/kWh for the first 330 MW, 8.33 US cents/kWh for the next 660 MW, and 7.99 US cents/kWh for the next 1,099 MW.

Impacts of China-Pakistan Economic Corridor on India

The following are the impacts of CPEC on India:

• Infringes on India’s Sovereignty: Because the CPEC goes through Pakistan-occupied Kashmir (PoK), it is believed to be a violation of India’s sovereignty and territorial integrity.
• Chinese String of Pearls: China’s “String of Pearls” initiative aims to increase China’s influence in the Indian Ocean. India might currently be facing challenges due to the String of Pearls, but CPECs might worsen these issues.
• Chinese Control Over Sea Trade: China will have the authority to determine the rules and regulations regulating the international transportation of products between the Atlantic and Pacific seas.
• Dominant China: China will have more influence in the UN if it is increasingly integrated with the rest of the world economy. It might work against India’s hopes of obtaining a permanent seat on the UN Security Council.

Challenges with China-Pakistan Economic Corridor

The following are some of the challenges with CPEC:

• The CPEC runs through Baluchistan and Pakistan-occupied Kashmir (PoK), two regions affected by prolonged insurgencies and threats from terrorism.
• The CPEC project may be strategically and economically biased in favor of China, which raises concerns about its lack of accountability and transparency.
• China is going to partner with Chinese media in the “dissemination of Chinese culture” by using broadcast TV’s terrestrial delivery to spread its ideology and culture throughout Pakistan. Similar sinification may be seen in Mandalay, Myanmar, where it has affected the native way of life, including architecture and culture.
• The project may compromise Pakistan’s sovereignty because China may dictate its foreign policy, particularly with India. It may further deteriorate already strained relations and cause political instability in South Asia.
• Also, China’s strategy of not working together with regional businesses will not assist Pakistan in creating jobs.
• The advantages of South Asian transit corridors may also be seriously hampered by the political unrest in Afghanistan.

Recent Developments on China-Pakistan Economic Corridor (CPEC)

Here are some recent developments and future prospects of CPEC:

1. Expansion of Projects: CPEC has expanded beyond infrastructure and energy projects to include industrial parks, technology, and agricultural sectors. This diversification aims to boost Pakistan’s economy and create job opportunities.
2. Gwadar Port Development: The development of Gwadar Port is a key focus, with efforts to make it a major shipping hub. Recent developments include the construction of new terminals and infrastructure to enhance its operational capacity.
3. Energy Sector Focus: CPEC has prioritized addressing Pakistan’s energy shortages. Recent projects include the development of coal, hydro, and solar power plants to increase the country’s energy production capacity.
4. Digital Corridor: There’s an increasing focus on establishing a digital corridor to enhance connectivity and technological cooperation between China and Pakistan, including the development of fiber optic networks.
5. Railway and Road Infrastructure: Upgrades and expansions of railway lines and highways continue to be a focus, aiming to improve connectivity within Pakistan and with China.

Way Forward – China-Pakistan Economic Corridor

India must do a thorough analysis of the potential advantages and drawbacks of the OBOR initiative before pushing for CPEC in the future. India and Japan’s economic collaboration has led to the creation of the Asia-Africa Growth Corridor. It might provide India with significant strategic advantages and put China’s OBOR agenda to the test. Prioritization should be given to Indian strategic projects such as the Chabahar Port and the Bangladesh-China-India-Myanmar Economic Corridor (BCIM).

China-Pakistan Economic Corridor UPSC

Candidates should be aware that the UPSC IAS Exam’s “CPEC” topic is important for the Prelims, Mains (GS-II), and Interview stages. Candidates looking for CPEC Notes can refer to this article for comprehensive notes and ease of understanding of the topic.

China-Pakistan Economic Corridor UPSC PYQs

1. The China-Pakistan Economic Corridor (CPEC) is viewed as a cardinal subset of China’s larger ‘One Belt One Road’ initiative. Give a brief description of CPEC and enumerate the reasons why India has distanced itself from the same. (2018)
2. China and Pakistan have entered into an agreement for the development of an economic corridor. What threat does this pose for India’s security? Critically examine. (2014)
3. “China is using its economic relations and positive trade surplus as tools to develop potential military power status in Asia”. In the light of this statement, discuss its impact on India as her neighbour. (2017)

Summary – China-Pakistan Economic Corridor

The China-Pakistan Economic Corridor (CPEC) is a massive development project aiming to connect China’s Xinjiang region to Pakistan’s Gwadar Port through a network of highways, railways, and pipelines, covering a distance of 3,000 kilometers. The primary goal is to provide China with a secure and shorter route to obtain energy resources from the Middle East, bypassing the Straits of Malacca. This initiative involves significant infrastructure projects, including the development of Gwadar Port, road and railway networks, and various energy sector projects such as power plants. Despite its potential benefits, the CPEC faces challenges, including geopolitical concerns, territorial disputes, and questions about economic fairness. Recent developments include expansions beyond infrastructure projects, with a focus on industrial parks, technology, and agriculture, aiming to diversify and boost Pakistan’s economy.

FAQs on China-Pakistan Economic Corridor

1. What is China-Pakistan Economic Corridor?

The China-Pakistan Economic Corridor (CPEC) is a large-scale development project that aims to link Pakistan’s Gwadar Port with China’s Xinjiang region through a system of highways, railways, and pipelines.

2. What is CPEC between Pakistan and China?

The framework of regional connectivity is known as the China-Pakistan Economic Corridor. China, Pakistan, and other Central Asian nations will all gain from the China-Pakistan Economic Corridor (CPEC).

3. What is the main purpose of CPEC?

Building an economic corridor, exploring possible bilateral investment, construction, economic and trade, logistics, and people-to-people interaction for regional connectivity are all ways to better the lives of people in China and Pakistan.

4. What is the Corridor of CPEC?

The CPEC aims to connect the deep-water Pakistani ports of Gwadar and Karachi to the Xinjiang Uygur Autonomous Region in China and beyond via overland routes, as well as to modernize Pakistan’s road, rail, air, and energy transportation networks.

5. Who stopped CPEC in Pakistan?

Prime Minister Shehbaz Sharif gave his approval in principle on August 17, 2022, to dissolve the China-Pakistan Economic Corridor (CPEC) Authority, provided China gives its approval.

6. Who benefits from CPEC?

It serves China as well as Pakistan and has a special function. CPEC will help Pakistan overcome its energy crisis, develop cutting-edge infrastructure, encourage quick industrialization, and generate a tonne of new job possibilities.