Introduction

The China-Pakistan Economic Corridor (CPEC) is a major infrastructure project connecting Gwadar Port
in Pakistan to China’s Xinjiang region. It forms part of the Belt and Road Initiative (BRI), aimed at
strengthening economic ties through transportation, energy, trade, industry, agriculture, and IT projects.
CPEC faces several challenges, including security concerns, debt sustainability, environmental impact,
local discontent, bureaucratic and administrative obstacles, regional geopolitics, and Pakistan’s internal
political instability. However, it also presents numerous opportunities, such as economic growth, job
creation, infrastructure development, energy security, industrial advancement through special economic
zones, trade connectivity, agricultural improvements, enhanced connectivity, and long-term sustainability.
The 21st century has seen the establishment of regional and global strategic environment around the
world. This CPEC: Challenges and Opportunities for Pakistan 143 strategic environment encourages geo-
economical and geo strategic partnership among countries. Both the state interests and national security
are important parameters of this partnership. States have defined their interests and have reshaped their
policies because they have realized that it is not possible for them to defend their interests with their own
capacities. High-level talks and diplomatic consultations are the hallmark of ever-growing cooperation
among states in multi-faceted fields such as industrial ventures, infrastructure and development
programmes, defense, commerce and related area of the economy. China was regarded as a sleeping giant
in earlier decades. But now, China is playing a core role not only in the Asian region but in the entire
world. Being the largest country in the world population-wise and fast becoming economically as big as it
is demographically, it has finally succumbed to the charms of multilateral diplomacy which it had been
known to ignore during the earlier decades. The other reason behind the changes in the Chinese foreign
strategy is economic stemming from its rising energy demands. The Chinese President, Hu Jintao, who
took office in 2003, explained his country’s “Good Neighbour Policy” as part of a new strategy of
peaceful development which China sought to promote as an interdependent, rather than competitive,
relationship with its neighboring countries and the world. In cynic with this strategy, China has turned its
nearest regions into a new regional trade hub. Regional connectivity is one of the most important aspects
of Pakistan foreign policy. Pakistan has also been trying to cultivate good relations with its neighboring
countries. Maintaining worthy and good relationship with China has been an integral part of Pakistan’s
foreign policy objectives, as China is Pakistan’s strategic partner; it helps Pakistan in maintaining balance
of power in the region. Pak-China ties have kept growing and have strengthened ever since 1951 when
their friendship began. China has always been a key component of Pakistan’s foreign policy so 144
Pakistan Vision Vol. 16 No. 2 much so that in 1970, Pakistan played a key role in arranging Nixon’s visit
to Beijing. With the support of China, Pakistan has gained significant importance not only in the region
but the entire world. In recent years, both China and Pakistan have been making concerted efforts to
revive the historic Silk Road which is one of the oldest known trade route in the world and will provide a
route for trade from Kashgar (China) to Gwadar (Pakistan). China-Pakistan Economic Corridor plan will
help Pakistan to become one of the most strategically important countries in the region. It will also
provide an opportunity to China to build a naval base on Gwadar port that will increase influence of
China in the region and also counter US influence in the Asia-Pacific region. The CBS News quoted
some Western diplomats on Pakistan-China partnership. According to them, China’s increasing economic
engagement with Pakistan should be seen in the context of Beijing’s “efforts to counter the US efforts to
deepen alliances around the Asia-Pacific region”.3
The Concept of One Belt and One Road
The “One Belt One Road” concept has international strategic importance. The One Belt One Road
initiative covers countries and regions with a total population of 4.4 billion and a total economic volume
of US$ 21 trillion, 63 percent and 29 percent respectively of the World’s total.4 According to the
assessment of the Corridor, the plan is involved in laying the foundation for regional cooperation,
improving economic growth, offering trade diversifications, investing in transportation, mining and
energy sectors and creating political flexibility. It is a vision with world-changing implications, an
unfolding plan that would weave much of Asia, Europe, Africa, Oceania and the Middle East much more
closely together through a patchwork of diplomacy, new infrastructure and free trade zones.5 CPEC:
Challenges and Opportunities for Pakistan 145 The “One Belt one Road” Project consists of three routes,
southern, central and northern route. The southern corridor begins from Guangzhou, which is the third
largest city of China in South Central China. This route moves towards western parts of China and
connects Kashgar with Pakistan at Kunjarab – a point from where China wants to link to Gwadar port in
the Arabian Sea. It is the shortest and the most feasible option for China.6 The second Chinese option is
the Central Corridor that starts from Shanghai and links the country to Tashkent, Tehran and onwards to
Bandar Imam Khomeini Port of Iran on the Persian Gulf. One of its branches goes up towards Europe.
This is the longer route but could be an option, if Pakistan does not deliver on the timelines of completing
its road network to become a beneficiary of the New Silk Road Economic Belt. The third Chinese option
is the Northern Corridor that starts from Beijing, passes through Russia, and links it to European cities.7
China Pakistan Economic Corridor
Recognizing the fact that regional integration is an inevitable measure to meet the demands of
economically globalized world, the notion of Silk Road was reformulated and rephrased by China in 2013
under ‘one road, one belt’ initiative i.e., Economic Belt along the Silk Road and the Maritime Silk Road.8
146 Pakistan Vision Vol. 16 No. 2 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. Both countries have been working on enhancing their
coordination and strategic communication to safeguard common interests. China Pakistan Economic
Corridor (CPEC) represents a new model of Pakistan and China cooperation which will serve against the
backdrop of complex and changing regional and international situations. China and Pakistan have
developed strong bilateral trade and economic ties and cooperation over the years. China has gradually
emerged as Pakistan’s major trading partner both in terms of exports and imports. Bilateral trade and
commercial links between the two countries were established in January 1963 when both signed the first
bilateral long term trade agreement.9 Both countries signed Free Trade Agreement (FTA) on November
24, 2006 and implemented from July 1, 2007. Later on, both signed the FTA on Trade in Services on
February 21, 2009 that became active from October 10 that year. CPEC is an under-construction mega-
project which will achieve the political and economic objectives through trade and development and will
also strengthen the economic and trade cooperation between the two countries. This corridor will also be
helpful in creating regional stability in South Asia. After completion of the corridor, it will function as a
primary gateway for trade between China and Africa and the Middle East. It is expected that this corridor
will help cut the 12,000 kilometer route which Middle East oil supplies must now take to reach the
Chinese ports. Historical perspective The vision for an economic route between China and Pakistan
stretches as far back as the Musharraf era. This idea CPEC: Challenges and Opportunities for Pakistan
147 speculated for many years, gained traction in May 2013 when Chinese Premier Li Keqiang
emphasized the construction of the CPEC during his visit to Pakistan. He signed the landmark CPEC
agreement at that time. In the same year, Pakistani Prime Minister Nawaz Sharif visited Beijing and
signed eight agreements approximately costing $18 billion that included building around 200 kilometers
tunnels for the CPEC. Pakistan’s President Mamnoon Hussain visited China in February 2014 to discuss
the plans of the corridor. In the same year, Pakistan’s Prime Minister Nawaz Sharif again visited China
and signed 19 agreements with China. At that time, the Chinese banks and companies pledged over US$
45.6 billion for energy and infrastructure projects along the corridor. The agreements proved a deepening
strategic linkage between the two countries. Chinese President Xi Jinping visited Pakistan in April 2015.
This was the second visit of a Chinese leader in Pakistan in 21st century after Hu Jintao's visit to Pakistan
in 2006. Xi was to visit Pakistan in 2014 during his South Asia trip to Maldives, Sri Lanka and India. It
was postponed due to political unrest in Pakistan. During his visit, a total of 51 agreements were signed
between China and Pakistan having worth of $46 billion which also included the development of China
Pakistan Economic Corridor. The $46 billion investment China intends to commit to Pakistan under the
CPEC is impressive. The amount exceeds all foreign direct investment Pakistan has received in the past
several years, and is considerably more than all the aid Pakistan has received from the US since 9/11.10
Infrastructure The CPEC, the construction period for which is from 2014 to 2030, has integrated links
with the Chinese One Belt, One Road and an extension of China’s proposed 21st century Silk Road
initiative. Implementation of the projects under the CPEC has been divided into three phases. The short-
term projects are estimated to be completed by 2017; 148 Pakistan Vision Vol. 16 No. 2 midterm-term by
2025, and the long-term by 2030.11. The overall construction costs are estimated at $46 billion. It is the
network of highways, railways and pipelines to transport oil and gas. The first phase comprises
development at Gwadar Port and the construction of an international airport. It will be completed in 2017.
The Karakoram Highway connecting the two countries will also be widened, while the rail network
between Peshawar in the north and Karachi in southern Pakistan will be upgraded. The two countries also
have a plan of fiber-optic communication links.
Gwadar port
Gwadar is actually the tail of the silk belt, which will connect Kashgar through different communication
networks. Gwadar holds central place in the project of the China Pakistan Economic Corridor because
without making the Gwadar Port fully functional, it would be difficult to see the anticipated corridor as an
energy corridor that appears as one of its main objectives behind the construction of the CPEC. Located
near the Strait of Hormuz, which channels about one third of the world's oil trade, Gwadar could play a
key role in ensuring China's energy security as it provides a much shorter route than the current 12,900km
route from the Persian Gulf through the Strait of Malacca to China's eastern seaboard.12 It has been said
that Gwadar will also put China and Pakistan in a strategically advantageous position along the Arabian
Sea compounding the existing Indian concerns that stem from ‘China's involvement in nearby ports such
as Hambantota in Sri Lanka, Sittwe in Myanmar and Chittagong in Bangladesh.13 On the other hand, as
India is also energy hungry it looks forward to developing Iran’s Chabahar Port. In October 2014, India
decided to develop Chabahar Port, which many believe is to open up a route to landlocked CPEC:
Challenges and Opportunities for Pakistan 149 Afghanistan, where India has developed close security ties
and economic interests.14 The port has the potential to serve as a secure outlet as well as a storage and
trans-shipment hub for the Middle East and Central Asia oil and gas suppliers through a well-defined
corridor passing through Pakistan.15 The operational control of the port will enable China’s access to the
Indian Ocean, which is strategically important for China as it expands its influence across the region.
Gwadar port will be connected with China’s western province of Xingjiang through rail and road links.
China eastern seaboards are 3,500 km away from the city of Kashgar in western China while the distance
from Kashgar to Gwadar port is only 1500 km.
Geography of China Pakistan Economic Corridor in Pakistan
This project will run through most of Pakistan starting from Gwadar in Balochistan and ending in
Kashgar in western China, while passing through parts of Punjab, Sindh, Balochistan, Khyber
Pakhtunkhwa provinces and Gilgit Baltistan in northern Pakistan to reach the Khunjrab Pass and beyond
to China. Pakistan has prepared a plan to construct three corridors after active consultation with the
Chinese authorities; these are the eastern alignment, the central alignment and the western alignment. The
eastern alignment of the corridor originates from Gwadar, travels parallel to the Makran Coastal Highway
eastwards (towards Karachi), and then after passing through parts of interior Sindh, and southern, central
and northern regions of Punjab, it reaches Islamabad. From Islamabad, it extends to Haripur, Abbottabad
and Mansehra districts of the relatively peaceful Hazara Division in KP –this part of the corridor will also
run through Muzaffarabad, the capital of Azad Jammu and Kashmir–and reaches Khunjrab after 150
Pakistan Vision Vol. 16 No. 2 passing through Diamer and Gilgit areas in northern Pakistan. The corridor
will also run through the Pamir Plateau and Karakoram mountains. A link from Taxila through Peshawar
and Torkhum will connect the eastern alignment of the corridor to Jalalabad in Afghanistan. Regional
connectivity with India through the eastern alignment is designed to be provided through the Hyderabad-
Mirpurkhas-Khokhrapar-Zero Point link and the Wagha border, Lahore. 17 Western alignment was the
original alignment which the government says has been deferred until the eastern alignment of the
corridor is completed. According to the western alignment plan, the economic corridor (highway and
railway) starts from Gwadar and runs through some southern and eastern districts of Balochistan
(Khuzdar and Dera Bugti, respectively), and some districts in South Punjab to reach D.I. Khan in KP.
From D.I. Khan, it further extends to Islamabad and Abbottabad and from there onwards, the route is the
same as in the eastern alignment. The western alignment will have an additional regional connectivity
link to Afghanistan through Chaman and will connect with Iran through Quetta-Kho-e-Taftan link.18
CPEC: Challenges and Opportunities for Pakistan 151 The work on central alignment will be completed
later whereas construction on some parts of Gwadar-Dera Ismail Khan via Quetta route. The argument
that some parts of the country are being deprived of the corridor’s benefits may be true in the short-term
but, in the longer term all these cities will be connected to the corridor. All provincial capitals are
included as nodes, the key corner stones of CPEC on which it will be constructed. These nodes are at
Peshawar, Islamabad, Lahore, Sukkar, Karachi, Gwadar and Quetta.19
Challenges for Pakistan
Pakistan faces several challenges in the implementation of the China Pakistan Economic Corridor (CPEC)
project. These challenges can be identified as external and internal. The Vice Director General of Policy
Research Office at the International Department of the Central Committee Communist Party of China, Dr.
Luan Jianzhang is of the view that political unrest, security situation and administrative issues are some of
the greatest challenges in the way of successful completion of the corridor. The construction of the
corridor has been defined by many as a strategic moment such that Pakistan has assumed the position of
economic pivot for the whole region. This paradigm shift in circumstances is a cause of great worry for
the enemies of Pakistan both within and outside. India, Israel and the US are unhappy. For India, CPEC is
a thorn in its paw. They have put their heads together to work out new strategies to block the project
forward march. RAW has opened a special office in Delhi and has been allotted $300 million to disrupt
CPEC. Already one can notice sudden upsurge in the acts of terror in the three restive regions and
activation of certain NGOs and think tanks all trying to air misgivings and create fear psychosis. 20 In
Pakistan, some political parties like ANP, Baloch nationalists, PkMAP raised serious objections to the
CPEC project. Even PTI and JUI (F) showed inclinations to climb 152 Pakistan Vision Vol. 16 No. 2 the
bandwagon of anti-CPEC forces. Objections were being raised despite assurances by the government that
this project will provide equal opportunities to all the provinces.21 There are numerous internal and
external challenges for Pakistan over Pakistan China One Belt One Road Project. Here some very serious
challenges have been described.
CPEC and Balochistan Factor
Balochistan is one of the most important areas of Pakistan; a surprising location for what officials hope
will become one of the world’s great trade routes, linking the deepwater port of Gwadar with the city of
Kashgar.22 This province has been dogged for over a decade by a bloody separatist insurgency. Baloch
insurgents, who oppose Balochistan specially Gwadar’s development have blown up numerous gas
pipelines and trains and have attacked Chinese engineers.23They do not want to see Balochistan to
develop as an economic and trade hub unless it becomes independent. They fear that if Balochistan
develops and Gwadar port becomes a thriving port, then outsiders would move in. That could weigh the
province’s demographic balance even further against the Balochs.24 Ethno-sectarian is another important
cause of insurgency in Balochistan as if this was not enough for keeping Balochistan tense, controversy
over China Pakistan Economic Corridor project (CPEC) has added more fuel to the blaze. Going by the
history of the earlier Balochistan related mega projects, the CPEC is likely to become increasingly
contentious.25 Muhammad Ali Talpur in an article under the caption ‘A few questions answered’ wrote:
“The China Pakistan Economic Corridor is the center of interest for China, Pakistan and, naturally the
world, as all perceive it according to the strategic and economic advantages and disadvantages it holds for
them, whatever importance it may hold for others, it is extremely important CPEC: Challenges and
Opportunities for Pakistan 153 for the Baloch whose lives it will destroy in the name of development.”26
Various separatist leaders of the Balochistan province are opposing the China-Pakistan Economic
Corridor (CPEC). In this respect, Brahamdagh Bugti, the leader of the outlawed Baloch Republican Party
(BRP), criticized the CPEC and Gwadar port projects and called for an UN sponsored referendum in
Balochistan to decide its future. He alleged the military equipment and funds obtained by Pakistan from
the US and other western countries for combating terrorists and extremist groups were also being used
against the democratic and political struggle of the Baloch people.27 There have been occasional
kidnappings and killings of Chinese workers in Balochistan. Baloch separatists attacked tankers carrying
fuel to a Chinese company working on a mining project. Gwadar port, which was recently put under the
management of a Chinese state-owned company, is a particular target. Militants do not want to see it
developed.28Siddiq Baloch, editor of the Balochistan Express newspaper, said the rebels want to scare off
investors and developers who are working with the Pakistani government — such as the Chinese. He
further said that there is the thinking that by doing this, they want to disrupt the working of the economy,
disrupt the administration and challenge the administration in the area.29 It is high time that concerns of
Balochistan are addressed prudently. For a project as big as the CPEC, which is potentially a game-
changer for the economy of all the provinces, the nation cannot afford to fall in the trap of spoilers.30
CPEC and Khyber Pakhtunkhwa Factor
Some political parties in Khyber Pakhtunkhwa are also opposed to China Pakistan Economic Corridor
which is a big challenge for this multibillion dollars project. The reason 154 Pakistan Vision Vol. 16 No.
2 behind this opposition is changes being made in the original plan of this corridor by the federal
government which will divert economic benefits to Punjab only. The Western route as the original route
would be followed by building a road from Khunjerab to Gwadar via Mianwali, Dera Ismail Khan, Dera
Ghazi Khan, Khuzdar and Turbat.31However, China is most interested to work on Eastern route first
because of some security concerns. It is in fact a long term plan and will cover some parts of interior
Sindh, and southern, central and northern regions of Punjab. The political parties of Khyber Pakhtunkhwa
are against changing the original Gwadar-Kashgar route and demanded that government should desist
from modifying the project, warning that the move would divide the nation on the issue.32. The Qaumi
Waten Party parliamentary leader Sikander Sherpao tabled the resolution in the provincial assembly
which was supported by all parties. According to the resolution, any change in original plan of the project
will be sheer injustice with the people of Khyber Pakhtunkhwa who have already been adversely affected
due to terrorism.33 They believe that the original route will connect the under developed areas of Khyber
Pakhtunkhwa and Fata to the Corridor and will generate economic activities in the entire region but with
adoption of new the alignment, these areas would remain ignored.34 The lack of political harmony would
be the major challenge towards the implementation of the China Pakistan Economic Corridor (CPEC)
project in Pakistan. Some sub nationalist parties in all the provinces have expressed deep reservations
about the CPEC, claiming there a change in the routes by the Federal Government would only favor the
eastern provinces of Pakistan and deprive the western provinces. Since these allegations fail to meet the
facts on the ground, the Pakistani and Chinese governments have tried to allay the fears, by interacting
with the political parties that are making the allegations.35 CPEC: Challenges and Opportunities for
Pakistan 155 The 18th Amendment to Pakistan's Constitution has delegated numerous powers to the
provinces, which has strengthened the provinces but at times is detrimental to evolving consensus on vital
national issues such as the CPEC. Both the underdeveloped provinces of Balochistan and Khyber
Pakhtunkhwa have expressed reservations over the proposed new route of the corridor, which may
hamper the completion of the project. Moreover, security situation in these provinces is another
impediment towards the smooth construction of the corridor. Additionally, Pakistan's unstable political
system carries the potential to delay the implementation of the CPEC.36 Failure to address these irritants
will continue to affect Pakistan China Economic Corridor project. There is a need to bring political
harmony in all the provinces of Pakistan because it is important at present, when Pakistan is going to join
the race for economic development and regional connectivity.
Security concerns
Security concerns have been the most critical challenge to the CPEC and both Pakistan and China have
been trying to meet these. An arc of militancy stretches from Xinjiang to Gwadar consisting of groups
like the East Turkestan Islamic Movement (ETIM), Tehreek-e-Taliban Pakistan (TTP), Lashkar-e-
Jhangvi (LeJ), Daesh (ISIS),Balochistan Liberation Army (BLA), Balochistan Liberation Front (BLF)
and the militant wings of some political parties. Most of these groups may not have an enmity with China
itself but rather intend to attacks the Chinese interests like the CPEC as a means to deal with the Pakistani
state.37 Gwadar is the tail of the Silk belt, which will connect at Kashgar through different
communication networks. The security of the whole corridor and Gwadar is a real concern for China.
After the military operation in different parts of Pakistan, the terrorist infrastructure still exists inside and
outside of the borders which will continue to pose a threat.38 156 Pakistan Vision Vol. 16 No. 2 The
support of American CIA, Israeli Mossad and Indian RAW has continuously been assisting the militant
groups and Sub-Nationalists in all the provinces to conduct subversive acts-and using terrorist elements in
the whole country to threaten the Pak-Chinese plans of developing the CPEC. In the past few years, they
kidnapped and killed many Chinese nationals in Pakistan despite Pakistan’s efforts to provide best
possible security. The army has announced the creation of 10,000 man special force for protecting the
development projects. The new force, named the Special Security Division, will comprise nine army
battalion and six wings of paramilitary forces, the Rangers and the Frontier Corps.39 There are major
concerns about the Kunar and Nuristan provinces of Afghanistan, where multiple terrorist groups
including Al Qaeda, the self-styled Islamic State, the Tehreek-i-Taliban Pakistan, the Movement of
Islamic Uzbekistan and the Turkmenistan Islamic Party, etc are concentrated. These groups can pose a
direct threat to the CPEC in Pakistan’s northern region. A better understanding between Islamabad and
Kabul is imperative to achieve border security.40
CPEC and Economic Factor
As an economic enterprise, for the CPEC, the greatest challenge comes from competitors. The most
significant is the Iranian port of Chabahar. India intends to invest significantly ($85 million) in the
development of Chabahar, which lies a few miles away from Gwadar and is part of its efforts for access
to landlocked Afghanistan and Central Asia while bypassing rival Pakistan. Chabahar will effectively be a
way station for energy imports coming from the Gulf region and destined for Afghanistan and Central
Asia. It will also be a gateway to the Middle East, and possibly Europe, for exports originating from
Afghanistan and Central Asia.41 CPEC: Challenges and Opportunities for Pakistan 157 While the
Chabahar project has not yet been started due to the ongoing talks on the Iranian nuclear issue, the
Gwadar port has already become functional. However, there is no need for contention between these two
ports. Iran has a stake in the CPEC through the proposal to link the Iran– Pakistan gas pipeline with
China, which has been described as a “common interest” between the three countries. 42 Indian
involvement in Chabahar is linked to Pakistan’s refusal to allow India access of transit to and from
Afghanistan, so India sees Iran as the next-best option. If Pakistan extends transit facilities to India, and
then India may not be interested in building up Chabahar. In recent years, India has been particularly
active in engaging Central Asian states for the sake of pursuing energy deals. India can be easily
accommodated via the CPEC itself through eastern interface in Punjab and Sind and transformed into a
stakeholder in the success of both Gwadar and the CPEC.43
CPEC and Tax and Power Tariff Issues
China has raised serious concerns over the issue of tax, power tariff and electricity price with Pakistan
along with the implementation process of the China Pakistan Economic Corridor (CPEC) energy projects
in Pakistan. According to sources, China has expressed serious reservations over the hurdles and delaying
tactics purportedly being employed by the Federal Board of Revenue (FBR).According to the agreement,
under the CPEC, the imported equipment would be exempt from sales tax and withholding tax. However,
the approval procedure from FBR is proving time consuming, which is negatively impacting on project
construction timelines in Pakistan.44 The Chinese authorities have pointed out that the decrease in tariff
for renewable energy will negatively impact on the cost-effectiveness of project implementation, dampen
investment enthusiasm and affect projects implementation based on China-Pakistan Inter-governmental
Agreement. 158 Pakistan Vision Vol. 16 No. 2 The Pakistan side replied that renewable energy tariff will
not remain the same in the future and the tariff decreasing range is closely related to the cost of the
project at the time of application for tariff. The cost of renewable energy is declining in the international
market; besides National Electric Power Regulatory Authority (NEPRA) determines tariff which is
independent of the Pakistan government. NEPRA reviews the tariff on all fuels after a certain time frame
considering the international benchmarks and cost of power for common consumers.45
Indian Concerns
The dice of connectivity loaded by China has left India confused and bewildered. India is also concerned
about China’s huge investment in Pakistan, particularly its recent decision to fund for China Pakistan
Economic Corridor. China is also helping Pakistan in producing plutonium at the Chinese built Kyushu
reactor and will also sell 8 submarines worth $5 billion, which will give a quantum jump to Pak Navy’s
sea capability. After the completion of CPEC, Pakistan may become a trade hub in the region after
Gwadar Port starts functioning fully and duty-free economic zones are set up. Many Central Asian states
have also expressed interest in becoming part of the corridor. This strategic partnership between Pakistan
and China has upset India that openly voiced its opposition and even premier Narendra Modi pressed the
president of China during his visit to Beijing to drop the plan of developing the corridor. However, China
did not cave in to the pressure and vowed to push ahead with work on the project. India is also not happy
with the handing over of Gwadar Port development and its operations to China. There have long been
reports that Delhi is fuelling insurgency in Balochistan, which is rich in oil and gas resources, but poor
law and order conditions have halted work on exploration CPEC: Challenges and Opportunities for
Pakistan 159 activities there. Experts believe the India-UAE nexus will try to fail the Gwadar Port
development project and create hurdles in the way of exploration activities in Balochistan.46 With
Chinese clout growing and Russia flexing muscles to regain control over Central Asia, India is struggling
to make some headway and spread its sphere of influence in the region. Delhi has bet on Iran and
Afghanistan to reach the Central Asian states via land route as Pakistan and China have control over
many land links that provide access to the resource-rich region. India hopes it will be able to reach
Central Asia through the Iranian port of Chabahar and build a north-south corridor that will run to
Afghanistan and eventually stretch to Central Asia.47
CPEC Benefits for Pakistan
Pakistan has been playing a significant role in South Asia. After the completion of China Pakistan
Economic Corridor; economic, commercial as well as geostrategic environment will improve in Pakistan.
It will help Pakistan in dealing with the problems of poverty, unemployment and inequities of
undeveloped provinces. During his meeting with President Xi Jinping, President Mamnoon Hussain said
the China Pakistan economic Corridor would prove to be a game-changer in the whole region by
generating massive trade and economic activity and opening new vistas of progress and prosperity for the
people of the two countries and about three billion people of the region.48 CPEC from all counts will
prove a game changer and will make China a real stakeholder in Pakistan’s stability and security. It is a
win-win situation for both. It will greatly expand the scope for the sustainable and stable development of
China’s economic development. Investments by China will boost Pakistan’s $274 billion GDP by over 15
%.Corresponding progress and prosperity in Pakistan and China’s patronage will help Pakistan in getting
rid of the decade old labels of ‘epicenter of terrorism’, ‘most 160 Pakistan Vision Vol. 16 No. 2
dangerous country’ and a ‘failing state’. Pakistan enjoys a more favorable fiscal situation compared to
India by reducing its budget deficit to 4.7% of GDP in 2014 (as against India’s 7%) and Pakistan is both
competitive and cheaper as an emerging market. China’s economic and military assistance will help
Pakistan a great deal in narrowing its ever widening gap in economic-military-nuclear fields with India
and in bettering its defense potential. 49 Ambassador of China to Pakistan Sun Weidong while talking
about the corridor said that the setting up of energy, transport, infrastructure and industrial projects under
China Pakistan Economic Corridor (CPEC) would benefit all the provinces of Pakistan. He said that the
CPEC was not limited to just a road but it will connect the country with a number of motorways and
infrastructure projects. He explained that infrastructure projects included Gwadar port, the second phase
of the upgrading project of Karakoram Highway, motorway project between Karachi and Lahore, Thakot-
Havelian motorway, Gwadar port expressway, Gwadar international airport and Karachi Sukkur
motorway, adding further that the project will increase collaboration in areas of energy, finance,
commerce, banking, industry and education.50 Here are some benefits which Pakistan will take after the
completion of CPEC.
Overcoming Energy crises
Energy is described as life line of the economy of any country. It is most vibrant instrument of
socioeconomic development of a country. Due to population growth and industrial demand, there have
been severe energy crises in Pakistan. The major reason behind Pakistan’s poor power generation is the
political instability and the exponentially increasing demand for power and lack of efficiency. No
significant solution to the problem has yet been found and it continues to torment the citizens as power
supply is one of CPEC: Challenges and Opportunities for Pakistan 161 the basic necessities in this era of
modern technology. Power blackouts and load shedding (deliberate blackouts) are common in every area
around Pakistan especially the major cities. Wapda and KESC have failed to tackle the problem that
exposes the failure of the system of the state.51 CPEC is the ideal project which will help rid country of
the energy crises. Energy availability in country will revive existing industries, such as textile to full
production and add an estimated 2 percent to Pakistan’s GDP growth.52 Chief Minister Punjab, Shahbaz
Sharif said that China is extending great economic cooperation to Pakistan and that the government is
making serious effort for resolving the energy crisis and a number of projects with Chinese cooperation
would start producing electricity.53 Planning Development and Reforms Minister Ahsan Iqbal said CPEC
framework will cover four major areas and energy zone is one of them. In the energy sector, project
totaling 10,400 megawatts had been included in the early harvest (first priority) programme, which could
be completed by 2018. In all, Chinese firms will put up $35 to $37bn in the foreign direct investment for
independent power production (IPP)under an investment policy that was available to all investors.54
These projects would be based on wind, solar, coal and hydropower generation of 16,400 MW as well as
the transmission system and would be located in all the provinces and Azad Kashmir. He further said
China would be setting up 10 projects of 6,600MW in the Thar Desert that would transform this remote
and underdeveloped region into Pakistan’s energy capital and open up economic opportunities for the
people.55
Infrastructure development
Infrastructure development – including the development of roads, ports and highways is another
important segment of CPEC. This project basically will improve Pakistan’s 162 Pakistan Vision Vol. 16
No. 2 infrastructure connection with all sub regions in Asia, and between Europe Asia and Africa step by
step and will remove all investment and trade barriers for the creation of a sound business environment
within the region and in all related countries.56 After the complementation of this Project, Pakistan will
become modernize and then by spreading out markets for manufactured good. The areas adjacent to the
corridor would become attractive locations for manufacturing, agricultural and services industries, Small
and medium enterprises would be special beneficiaries. Employment and economic growth expand
significantly.57 It will also attract whole world for economic and trade assistances. under which the
Karakoram Highway had been identified for the first phase and Khunjerab-Havelian Islamabad section of
the road was expected to be completed in three years, moreover, CPEC route would be utilized for the
creation of economic and industrial free zones, for which a fresh economic zone working group would be
created soon after the upcoming visit to link all the four provinces, AJK, Fata and Gilgit-Baltistan to
expand benefits of the initiative across the country.58
Economic Development
China Pakistan Economic Corridor will help build a robust and stable economy in Pakistan and will
create a significant opportunity for Pakistan to revive its industry and advance its economic interests. It
will also help in overcoming the psychological barriers to flows of foreign investment from other sources.
Despite its restrictive economic regime, over 150 private equity funds, foreign and domestic, are active in
India. Only three or four such funds are dedicated to investing government, with the participation of the
private sector, to encourage foreign direct investment in Pakistan is indispensable.59Finance Minister
Ishaq Dar said war phobia can also be defeated through economic CPEC: Challenges and Opportunities
for Pakistan 163 development. Peace and prosperity can be achieved with economic advancement.60 This
project will go beyond regional ambits to bring about enormous changes not only to the national
economies of the benefiting states but also to the economics of the people at the grassroots level.
Balanced environment in South Asia
CPEC is the crown jewel in the new Pakistan economic paradigm because Pakistan has the opportunity
to act independently of the western influence especially the US influence as it has proved of late, an
irritant factor. CPEC Project will also bring an opportunity to Pakistan for normalization of ties with
India, Iran and Afghanistan which will keep balance, strengthen prospects of peace and improve socio-
economic status of the people of the region.
Removal of poverty
CPEC is a game changer project which will lift millions of Pakistanis out of poverty and misery. The
project embraces the construction of textile garment, industrial park projects, construction of dams, the
installation of nuclear reactors and creating networks of road, railway line which will generate
employment and people will also take ownership of these projects. 61Fully equipped hospitals, technical
and vocational training institutes, water supply and distribution in undeveloped areas will also improve
the quality of life of people.
Peace and prosperity in Provinces
CPEC is not only the name of road, port and railway system but a multi-dollars mega project which will
bring peace and prosperity in all the provinces of Pakistan. The chairman of the Gwadar port, Dostain
Khan Jamaldini said that the CPEC would not only benefit Balochistan but also prove beneficial for the
country’s three other provinces. 164 Pakistan Vision Vol. 16 No. 2 Economist Dr Shahid Hassan said
CPEC would bring more prosperity in the whole country and would reduce unemployment in the country.
Functioning of Gwadar port will bring an economic revolution and business activities will get a much
needed boost.