CPEC: An Economic Catalyst or Prohibitor

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China Pakistan Economic Corridor (CPEC) has become a subject of an increasing number of conferences, talk shows, Op-Ed pieces, articles, etc.  The interest it has sparked is not limited to Pakistan but has spilled over across the border and into far distant places. The main hot topic is the discussion of the opportunities offered by the China-Pakistan Economic Corridor (CPEC) as well as the challenges. The opportunities consist of socio-economic development in Pakistan as well geostrategic significance for China in creating new markets for Chinese companies. Pakistan can reap the benefits in the energy, communication, transportation, infrastructure, industrial and special economic zones (Sez) projects being constructed under CPEC which would help the country to tackle barriers hindering its economic development. In the energy sector, to overcome the power crises a total of 21 projects have been identified and planned which would help tackle the problem of load shedding in the country. The transport and communication network would also be upgraded, which would increase inter-provincial connectivity across Pakistan and would reduce travel time and financial costs. A total of 9 Special Economic Zones (Sez) would be built which would increase the process of industrialization that would enable the country to produce more internationally competitive products resulting in contraction of the trade balance. China has a great opportunity of utilizing Pakistan’s geographical position to accomplish its geoeconomics and strategic objectives. Xinjiang’s connectivity with Gwadar would help China to deepen communication and cooperation with Central, South, and West Asian countries and make it key transportation, trade, logistics, culture, science and education center in its Belt and Road Initiative. As Kashgar to Gwadar is just 2000km, thus, the distance for shipments would be significantly reduced, thereby reducing both cost and time for transportation, which would help less developed regions of western China to reap the significant dividend. On the other hand, constraints in the implementation of projects under CPEC are also there. Pakistan’s fragile security situation, weakened economy, relations with its neighbors specifically Indo-Pak and crisis in Afghanistan, lack of transparency of CPEC investments, political instability, long term financial implications with particular focus on its potential to be debt trapped, concerns by the business community, environmental repercussions of coal-based energy stations, war on terror, inter-provincial fighting, sense of deprivation of Baluchistan residents and concerns regarding military being the major beneficiary of CPEC poses serious constraints in the implementation of CPEC projects. Besides its implications for South Asia, BRI in the form of CPEC and the accompanying visible Chinese footprint in the region could have wider geopolitical implications beyond South Asia, particularly for the Indo-Pacific region. Australia, India, Japan and the US (QUAD) could reestablish as growing Chinese influence could function as a catalyst to revive and reinvigorate the forum, which could also have additional geopolitical implications for other countries in the larger Indo-Pacific region. It can be concluded that, on the one hand, CPEC offers an opportunity to Pakistan to overcome the chronic problem of underinvestment in key productive sectors and resolve issues related to the acute energy crisis, poor transport infrastructure and low industrial development. On the other hand, if Pakistan continues to depend too much on foreign loans and does not adopt concrete policy measures to improve the governance situation and increase domestic resource mobilization and revenue generation, it will find it hard to smoothly fulfill future financial obligations payable on account of CPEC. For China too, CPEC has ‘win-win’ potential, as the corridor would diversify its trade and energy supply routes through Pakistan. Specifically, less developed regions of western China could reap significant dividends from CPEC, as these territories would get access to the sea via a relatively shorter route through mainland Pakistan. Lastly, we can say there are also some serious challenges to the successful implementation of CPEC projects, ranging from the internal security situation to external mistrust, and from possible acts of sabotage to governance issues. To overcome these challenges, initiatives, such as the formation of a special force by the Pakistani government for the security of CPEC projects are worthwhile. However, this is largely focused on one dimension of the security challenges faced by the corridor. In the broader context, there is a need for more transparency, sharing of information and mutual dialogue and discussion; not only about the overall economic package that CPEC entails but also about China’s motivations, both economic and geostrategic. Making the project a truly win-win proposition for all stakeholders, maintaining peace and stability internally and externally.

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