China-Pakistan: Economic Corridor By Anjana Avva from Rizvi Law College
With critical and unpredicted vicissitudes in foreign policy of major world economies influencing countries across the globe, the China- Pakistan Economic Corridor (“CPEC”) is emerging as a game-changer in international relations.
The CPEC is a set of projects ranging from infrastructure, energy production, and mass transit to railways, roadways and Special Economic Zones between Pakistan and China with a proposition to transform and modernize Pakistan and its economy and potentially change prevailing international trade routes. This $62 billion[i] intrepid endeavor is one of the biggest foreign investments China has made under its One Belt, One Road initiative and reached a milestone when Chinese cargo reached Gwadar Port, a crucial part of the CPEC plan, via the corridor, to be shipped off to markets in West Asia and Africa on 13 November, 2016[ii].
CPEC was signed in July 2013 and the first phase of the project is expected to be completed by 2018.
Pakistan is ambitiously taking the initiative by its reins and is expected to gain immensely from the CPEC. With the projects being implemented and utilized in full force, Pakistan can watchfully hope for economic stability in the decades to come. Employment generation is a priority for Pakistan where 5.9%[iii] unemployment hovers over its people and the CPEC is a lustrous opportunity to be utilized. Energy generation projects act as a stimulus to curb Pakistan’s energy shortfall, which has been hindering the growth of its local industries. The CPEC will also transform Pakistan’s weak and disconnected infrastructure through construction of railways and roadways.
In spite of its euphoric reception, Pakistan has some major challenges ahead of it. Economic burden of the CPEC on Pakistan is immense as its struggles with corruption. Security issues also loom over the giant venture. Gwadar Port, the crux of maritime operations of the CPEC is located in the Balochistan province of Pakistan, a location marred by nationalist and separatist insurgencies that threatens the smooth flow of functions. Political instability in the country also acts as a deterrent to development.
China has strategically invested in this initiative with a view to change and control world trade. China’s shortest maritime access to Europe, Africa and the Middle East is through the Strait of Malaccca, between the Malay Peninsula and the Indonesian island of Sumatra, an area patrolled by the United States Navy and the Indian Navy. In case of hostility, China’s 70% import of energy through the Indian Ocean could be cut off along with trade and could potentially paralyze the Chinese economy.[iv]
China is also comprehensively reliant on the South China Sea, on routes that are proximate to disputed territories of Spratly Islands and Paracel Islands between China, Vietnam, Taiwan, the Philippines, and the United States. The CPEC would allow China to circumvent these routes and avoid tension with the United States and find an alternate way to the West.[v]
The CPEC is more than just an initiative between two countries. It could potentially do some great damage to prevailing trade routes and all the countries concerned with it. The China-Pakistan Economic Corridor, if effectually executed, could be a fundamental transformation in international trade. The geopolitical ramifications of the CPEC could deeply influence trade routes and international maritime security.
[i] Salman Siddiqui, “CPEC investment pushed from $55bn to $62bn”, The Express Tribune (Apr 12, 2017), https://tribune.com.pk/story/1381733/cpec-investment-pushed-55b-62b/
[ii] Sudha Ramachandran, “CPEC takes a step forward as violence surges in Balochistan”, Asia Times (Nov 16, 2016 8:28 PM), http://www.atimes.com/cpec-takes-step-forward-violence-surges-balochistan/?platform=hootsuite
[iv] Mahwish Chowdhary, “ China’s Billion Dollar Gateway To The Subcontinent: Pakistan May Be Opening A Door It Cannot Close”, Forbes (Aug 25, 2015, 12:24PM), https://www.forbes.com/sites/realspin/2015/08/25/china-looks-to-pakistan-to-expand-its-influence-in-asia/#3a1c6c403de9
[v] Omar Alam, “China-Pakistan Economic Corridor: Towards A New ‘Heartland’?”,ETH Zürich (Dec 21,2015) http://isnblog.ethz.ch/international-relations/china-pakistan-economic-corridor-towards-a-new-heartland
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