Economic Policy

The China-Pakistan Economic Corridor (CPEC): Consolidating Ties with South Asia

The China-Pakistan Economic Corridor (CPEC), a cornerstone of the One Belt One Road Initiative, aims to consolidate power in South Asia through the strategic alliance between the two nations. Security Analyst Andrea Rodriguez provides a primer on the various aspects of CPEC and the role it plays in asserting Chinese soft power in the region.

By: ANDREA GARCIA RODRIGUEZ

In October 2017, Xi Jinping was elevated to the level of the two most powerful leaders of contemporary China: Mao Zedong and Deng Xiaoping. Mao Zedong laid the foundations of the contemporary Chinese conception of statehood, created the infrastructure and the moral authority in which history would be interpreted henceforth, and appeared as a father to the Chinese people. The latter, Deng Xiaoping, created a pathway for modernization opening China to the world while keeping the country engaged in creating the image of a “future China” under the ordinances of Mao’s thought. What makes Xi Jinping different and, thus, the reason why he deserved to be included in the Statutes of the Chinese Communist Party is the projection of China as a key player in the international arena by China’s use of soft power; that is, by persuasion without force or coercion.

The new “One Belt, One Road” (Chinese yi dai yi lu, 一带一路 ) initiative – which is to become the legacy of Xi – has opened a new way to expand China’s influence in the world by creating a single corridor across the Eurasian continent both by land and by sea. As the Chinese President stated in 2014 at the Conference of the China-Arab States Cooperation Forum:

“The “One Belt and One Road,” namely the Silk Road Economic Belt and the Maritime Silk Road of the 21st Century, represent paths towards mutual benefit which will bring about closer economic integration among the countries involved, promote development of their infrastructure and institutional innovation, create new economic and employment growth areas, and enhance their capacity to achieve endogenous growth and to protect themselves against risks”.

Under this umbrella, the Islamic Republic of Pakistan plays a pivotal role in linking Central Asia to China as well as being a direct neighbor and opponent to New Delhi. A strong partnership with the government in Islamabad is a primary objective of the OBOR. Should stability in Pakistan be granted, the chances of achieving success for the New Silk Road would be high.

Apart from stability, Chinese enhanced cooperation with Pakistan would also mean a large  industrial surplus of steel in investments, as well as other construction and energy-related items that are being accumulated in Chinese warehouses. Consequently, Pakistan would serve as the Surplus Recycling Mechanism (SRM) of China’s production excess.

THE CHINA-PAKISTAN ECONOMIC CORRIDOR AS ONE OF THE MANY BRANCHES OF THE OBOR

The New Silk Road consists of six different land corridors that aim to facilitate the trade of goods and efficient allocation of resources across Eurasia. Source: HKTDC Research.
The New Silk Road consists of six different land corridors that aim to facilitate the trade of goods and efficient allocation of resources across Eurasia. Source: HKTDC Research.

 

One Belt, One Road aims to unite the people and trade routes of the largest land mass of the planet with one protagonist: the People’s Republic of China. Given that creating a single route, as the title claims, would be difficult, Xi Jingping’s strategy relies on the creation of sub-routes and corridors that acting in parallel would echo the goals set by Beijing; “Divide et impera”, as Julius Caesar would affirm.

In order to create the conditions for the development of such an ambitious plan in the South Asia Region, the CPEC initiative aims to remedy the main risks affecting Pakistan’s territory, which could pose a problem to the advancement of the New Silk Road (i.e., energy shortcuts and the poor conditions of roads and rail tracks, as well as security and political instability).

However, these are not the only issues affecting the well-being of Pakistan. Water supplies are inadequate for a big portion of the population, wherein the water is constantly exposed to natural hazards such as extreme heat, landslides and floods. The issues endangering the development of Pakistan are rooted in the endemic corruption of the government caused by the feudal political culture, where powerful families are traditionally the ones who maintain autonomy. The Berlin-based corruption watchdog Transparency International places Pakistan at 116/176 in its Corruption Perception Index in 2016. Additionally, overpopulation in Pakistan has led to an increase in the density of population in major cities, which has risen by 400% since 1961, partially owing to conservative religious beliefs and poor contraception policies.

CPEC’s core objective is to deepen the economic connection of both countries through a large-scale investment by China in energy, highway and port infrastructure. The preliminary agreed amount of $46 billion in April 2015 during Mr. Jinping’s visit to Pakistan has been expanded to $62 billion, showing the profound commitment of both parties. The initiative entered the implementation phase in May 2016, which has continued to progress since.

In the realm of energy, several coal-fired power plants have been completed, while many other projects are already in progress. Large investments in renewable and clean energy sources are especially notable in this regard, as more than the 60% of the proposals approved are either hydropower stations, wind farms or solar parks. With respect to transportation infrastructure, the Peshawar-Karachi highway is expected to be operational by April 2018. There are more than a 1,000 kilometers separating the two cities, a distance of over 20 hours by car that is predicted to be cut in half. Yet, it is the coastal city of Gwadar that is especially significant for CPEC.

GWADAR, PEARL OF THE ARABIAN SEA

Gwadar is a small city in South Pakistan that is situated in the peninsula facing the Omani Gulf on the shores of the Arabian Sea. Its geography makes it a strategic location for both Pakistan and China. In 2013, when the corridor plans were first laid out by Chinese Prime Minister Li Keqiang, the idea was to connect Xinjiang province (north-west China) with this small city’s port.

Under the OBOR framework, the development of Gwadar is key to connecting South Asia with Africa and the Middle East, and imperative for the development of the Maritime Silk Road. With a population of 263,514, Gwadar is the 11th most populated district of the Balochistan administrative division, making it one of the least populated areas.

The plans proposed by China for the development of the Gwadar district are very ambitious and encompass transportation and trade infrastructure, as well as development and conditioning for the future.

Transportation and trade opportunities are the inherent added value of the city of Gwadar. By its unique geographic placement, Gwadar presents itself as one of the most important components for maritime trade with every country and region located west of Pakistan. The East Bay expressway was inaugurated in November 2016, making it one of the top achievements of the China-Pakistan Economic Corridor since the implementation phase started. The construction of a new international airport and smart port are ongoing as well as the establishment of a Free Zone.

Therefore, for these advancements to be permanent, the Chinese government has augured the need to create a non-industrial infrastructure.  Accordingly, Beijing has promised to design Gwadar University by assembling professionals from Chinese academia through a partnership with Chinese universities in marine and maritime related subjects.

 

Pakistan’s PM Abbasi and Kong Xuanyou, Assistant Foreign Minister of the People’s Republic of China talk during the 7th Joint Meeting of the China-Pakistan Economic Corridor. Source: Geo via Radio Pak.  Islamabad (November 21st, 2017)
Pakistan’s PM Abbasi and Kong Xuanyou, Assistant Foreign Minister of the People’s Republic of China talk during the 7th Joint Meeting of the China-Pakistan Economic Corridor. Source: Geo via Radio Pak.  Islamabad (November 21st, 2017)

 

Being that CPEC is an enormous effort for both parties, several coordination events have been set by the government of Beijing and Islamabad since the beginning of the initial planning phase. The final coordination event brought together the Joint Coordination Committee (JCC) in Pakistan’s capital city.. The main achievement of the meeting was initiating Special Economic Zones in Rashakai, Dhabeji, Bostan, Allama Iqbal, Islamabad, Port Qasim, Mirpur, Mohmand and Moqpondass, totaling 9, and bringing encouraging the private sector to invest in the large-scale process which aims to expand its focus to social sectors.

PAKISTAN IN 2017 AND BEYOND

In 2013, Pakistan was ready to receive foreign aid in the form of large-scale investments to tackle its internal problems and to project the country forward. However, little progress has been made. Whether the CPEC will become a game-changer for Pakistan still remains unknown. The impact of CPEC can be viewed as a double-edged sword, where on one hand it aims to provide a tool for modernization and thus, improves the country’s infrastructure and ensures stability by creating a solid base for evolution. On the other hand, given the reputation of Chinese investments in areas within the African continent, for example, the population is resilient towards this apparent philanthropic aid. Echoing Xi Jingping’s thought, mutual benefit and cooperation will indeed create positive results. Still, this leaves a lot of uncertainty for Pakistan’s future.

Andrea G. Rodriguez is an international security analyst. She holds a B.A. in International Relations from the Complutense University of Madrid. She has been part of several mobility programs, including at Charles University in Prague, where she studied Geopolitics and International Security, and at the National Taiwan University, where she focused on Asian security issues.

Please note that opinions expressed in this article are solely those of our contributors, not of Political Insights, which takes no institutional positions.

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