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By Alvin Cheng-Hin Lim

The China-Pakistan Economic Corridor One Year On

May. 19, 2016  |     |  0 comments


It has just been over a year since Chinese President Xi Jinping announced the China-Pakistan Economic Corridor (CPEC) during his inaugural state visit to Pakistan in April 2015. What has been the progress of the construction of the megaproject since then? Zhang Baozhong, the chairman of China Overseas Ports, the company that will run the Pakistani port of Gwadar, stated in late April 2016 that Gwadar will commence full operations by the end of 2016. Gwadar is essential to CPEC as it will connect CPEC with shipping on the Arabian Sea; and being close to the Straits of Hormuz, will serve as a strategic gateway for Middle Eastern oil shipments to be transported overland to China via CPEC’s planned oil pipelines. Logistics will be transformed by CPEC, as container ships that today have to make the “the nearly 13,000 km sea voyage from Tianjin to the Persian Gulf through the Strait of Malacca and around India” can be replaced by cheaper container trucks that make “a mere 2,000 km road journey from Kashgar to Gwadar” (Lim, 2015; “Gwadar Port,” 2016; “China-Pakistan,” 2016).


Infrastructure that will connect Gwadar with the Chinese city of Kashgar in Xinjiang include highways and railways. Progress has been made this past year on the highway network. A 335 km section of the Karakoram Highway between the Sino-Pakistani border city of Khunjerab to Raikot has been upgraded, and a 59 km section of the Hazara Motorway between Burhan and Havelian is expected to be completed by the end of 2017 (Siddiqui, 2016). Pakistan’s Prime Minister Nawaz Sharif is scheduled to visit Dera Ismael Khan on May 17, 2016 to inaugurate the CPEC Western Route. The initial phase of the Western Route — which when completed will connect Havelian with Gwadar — consists of a 285 km highway between Hakla and Yarik, including “eleven interchanges, nineteen flyovers, fifteen bridges, seventy-four underpasses, two hundred fifty-nine culverts, and three major bridges” (“PM to inaugurate,” 2016; “PM to open,” 2016). For the CPEC Eastern Route, construction work is expected to begin soon as China’s State Council has just approved a 4.2 billion USD concessionary loan package for a 120 km section of the Karakoram Highway II between Thakot and Havelian, and a 392 km section of the Lahore-Karachi Motorway between Multan and Sukkur (“Pakistan, China,” 2016). Apart from the construction of highways, CPEC’s transportation infrastructure also includes the construction of rail lines, dry ports, as well as the Gwadar airport, the construction of which is scheduled to commence in the middle of 2016. Energy infrastructure — including hydropower dams — and industrial zones will also be constructed under the CPEC framework. By 2030, when projects under the third and final phase of CPEC are scheduled to be completed, the populations living in the currently underdeveloped communities in the CPEC region are expected to enjoy the economic benefits of industrial development provided by the new infrastructure (Yousafzai, 2016; “CPEC to Benefit,” 2016).


In terms of regional economic integration, CPEC has attracted interest from Iran and the countries of Central Asia (Daud, 2016; “Central Asian states,” 2015). The 2015 accessions of Afghanistan and Kazakhstan to the World Trade Organization, and regional trade agreements like the quadrilateral transit trade agreement between China, Kyrgyzstan, Kazakhstan, and Pakistan, have facilitated regional integration through trade, and CPEC is envisioned to accelerate this process of economic integration and transform Pakistan into a Central and South Asian economic hub. Indeed, despite reservations from India, which we shall shortly see, CPEC promises to serve as “a bridge between three engines of growth, China, South Asia and Central Asia, thus giving a stimulus to a deep regional economic integration and creating a trading bloc of 3 billion people, nearly half of the planet” (“Pakistan striving,” 2015). Pakistan’s Commerce Minister Khurram Dastagir notes that should the economic promise of CPEC come to fruition, this will offer significant progress for global development:


“Mind you these also include half of world’s extreme poor. The deepening of economic integration will lower trade costs, essential for ending poverty. Trade is a critical enabler of growth, opening up opportunities of new and better work for the poor.” (“Pakistan striving,” 2015)


Security Concerns


Security threats to CPEC may have expanded over the past year. Pakistan’s security apparatus has recently highlighted a threat from India’s and Afghanistan’s intelligence services “to encourage and assist Baloch violence against the CPEC” (Lee, 2016a). In March 2016, Pakistani security forces arrested an alleged Indian spy in Balochistan, a province with major CPEC projects, including the port of Gwadar (Johnson, 2016). The following month, General Raheel Sharif, Pakistan’s Chief of Army Staff, identified India’s intelligence agency RAW (Research and Analysis Wing) as being “blatantly involved in destabilizing” Pakistan and CPEC (Yousuf, 2016).



M. K. Narayanan, a former Indian National Security Adviser, states bluntly that CPEC poses a “major threat” to India.



One reason for the alleged Indian interference is the section of CPEC which extends through Gilgit Baltistan to the Sino-Pakistani border. This is disputed territory which India identifies as Pakistan-occupied Kashmir (PoK). Indeed, India’s Minister of State for External Affairs V. K. Singh recently stated that CPEC will extend “through a territory which belongs to India” (“Raised concerns,” 2016). (Pakistan’s Finance Minister Ishaq Dar has rebutted such claims, stating that CPEC will only extend through Pakistani territory (Kiani, 2015).) This has drawn the attention of anti-Chinese nationalists in India who see this as an attack by China on Indian interests (Lee, 2016b). Some, for example, see China as a “a reliable ally” of Pakistan’s that “has always come to Pakistan’s aid when India has seemed on the ascendant,” and that its planned CPEC projects in Gilgit Baltistan will legitimize what India has identified as “Pakistan’s illegal occupation of these areas” (Pant, 2016). These are not fringe views. M. K. Narayanan, a former Indian National Security Adviser, states bluntly that CPEC poses a “major threat” to India, and that China’s “One Belt One Road” global development strategy, of which CPEC is a showpiece megaproject, could have “the most degrading impact” on Sino-Indian relations (“Raised concerns,” 2016).


To counter what they see as China’s geostrategic advancements through its CPEC initiative, some Indian strategists recommend the military capture of Gilgit Baltistan and the rest of PoK, especially since this territorial seizure would “provide India a direct land link to Afghanistan and thence to the Central Asian Republics, both of which are increasingly falling into the Chinese sphere of economic and political influence” (Kalyanaraman, 2016). Of course, should a war between India and Pakistan over Kashmir break out, China would find itself dangerously entangled in a likely nuclear exchange between India and Pakistan. Worrisomely, India is not the only geostrategic threat to CPEC. As Peter Lee recounts:


“On the other hand, you have diehard separatists in Balochistan, PoK, Xinjiang, and Tibet eager to make it fail. You’ve got a pool of resentful Islamist extremists near the route of the CPEC in Pakistan, Xinjiang, Afghanistan, and Uzbekistan. You have China hawks in India and the United States who would be happy to see the CPEC turn into quagmire for the PRC.” (Lee, 2016a)


As CPEC progresses past its first year of construction, its Pakistani and Chinese overseers will have to ensure that their security and intelligence apparatuses remain alert to these and all other possible threats to the megaproject.


References


Central Asian states keen to benefit from CPEC, says Mamnoon. (2015, October 13). Dawn. Retrieved from http://www.dawn.com/news/1212635


China-Pakistan Economic Corridor: Pakistan’s road of high hopes. (2016, April 18). The Indian Express. Retrieved from http://indianexpress.com/article/explained/cpec-pakistan-china-nawaz-sharif-xi-jinping-2758111/


CPEC to benefit 3b people thru enhanced connectivity. (2016, April 25). Pakistan Observer. Retrieved from http://pakobserver.net/2016/04/25/cpec-to-benefit-3b-people-thru-enhanced-connectivity/


Daud, K. (2016, April 16). Iran ready to become part of China Pakistan Economic Corridor. Daily Pakistan. Retrieved from http://en.dailypakistan.com.pk/headline/iran-ready-to-become-part-of-cpec/


Gwadar Port will be operating fully by end of this year, says Zhang Baozhong. (2016, April 23). INP. Retrieved from http://nation.com.pk/national/23-Apr-2016/gwadar-port-will-be-operating-fully-by-end-of-this-year-says-zhang-baozhong


Johnson, K. (2016, April 13). Pakistan army chief accuses India of undermining China investment corridor. Reuters. Retrieved from http://in.reuters.com/article/pakistan-india-port-idINKCN0XA13X


Kalyanaraman, S. (2016, May 3). Rethinking India’s approach towards Pakistan-occupied Kashmir. Institute for Defence Studies and Analyses. Retrieved from http://idsa.in/idsacomments/rethinking-indias-approach-towards-pakistan-occupied-kashmir_skalyanaraman_030516


Kiani, K. (2015, June 3). 3bn people to benefit from CPEC: Dar. Dawn. Retrieved from http://www.dawn.com/news/1185842


Lee, P. (2016a, May 11). SCS for South China Sea aren’t the scariest letters in the world … they’re CPEC. Asia Times. Retrieved from http://atimes.com/2016/05/csc-for-south-china-sea-arent-the-scariest-letters-in-the-world-theyre-cpec/


Lee, P. (2016b, May 11). The world’s most dangerous letters are not SCS … They’re CPEC. China Matters. Retrieved from http://chinamatters.blogspot.sg/2016/05/the-worlds-most-dangerous-letters-are.html


Lim, A. C. H. (2015, May 7). ‘Iron Brothers’: Sino-Pakistani relations and the China-Pakistan Economic Corridor. Eurasia Review. Retrieved from http://www.eurasiareview.com/07052015-iron-brothers-sino-pakistani-relations-and-the-china-pakistan-economic-corridor-analysis/


Pakistan, China ink agreements worth $4.2b. (2016, May 4). The Express Tribune. Retrieved from http://tribune.com.pk/story/1096762/cpec-eastern-alignment-pakistan-china-ink-agreements-worth-4-2b/


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Pant, H. V. (2016, April 15). The China-Pakistan axis gains momentum and could pull India into a war on two fronts. Daily Mail. Retrieved from http://www.dailymail.co.uk/indiahome/article-3542499/The-China-Pakistan-axis-gains-momentum-pull-India-war-two-fronts.html


PM to inaugurate CPEC Western Route on Tuesday. (2016, May 15). Pakistan Observer. Retrieved from http://pakobserver.net/2016/05/15/pm-to-inaugurate-cpec-western-route-on-tuesday/


PM to open CPEC DIK route soon. (2016, March 11). Pakistan Observer. Retrieved from http://pakobserver.net/2016/03/11/pm-to-open-cpec-dik-route-soon/


Raised concerns over China-Pak Economic Corridor: V K Singh. (2016, May 7). IANS. Retrieved from http://www.business-standard.com/article/news-ians/raised-concerns-over-china-pakistan-economic-corridor-vk-singh-116050700580_1.html


Siddiqui, S. R. (2016, May 6). NHA Striving to expand, modernize road network as per PM’s vision. Business Recorder. Retrieved from http://www.brecorder.com/top-news/front-top/294272-nha-striving-to-expand-modernize-raod-network-as-per-pms-vision.html


Yousafzai, F. (2016, May 11). Pakistan asks China to include 4 industrial zones in CPEC. The Nation. Retrieved from http://nation.com.pk/newspaper-picks/11-May-2016/pakistan-asks-china-to-include-4-industrial-zones-in-cpec


Yousuf, K. (2016, April 12). RAW is blatantly destabilising CPEC, says General Raheel. Express Tribune. Retrieved from http://tribune.com.pk/story/1083453/raw-is-blatantly-destabilising-cpec-says-general-raheel/

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