China Pakistan Economic Corridor (CPEC)

This is a guest blog written by Shrikant. I thank him for sharing his views!

Background: CPEC

CPEC refers to a large number of infrastructural projects in Pakistan with an objective to link China’s Xinjiang province to Gwadar deep sea port close to Pakistan’s border with Iran. It is supposed to be an extension of the ‘Chinese Silk Road Initiative’. It is a part of China’s 13th 5 year plan.

Major Proposed Developments

  • Chinese firms will invest $46 billion in the project over 6 years with $33 billion in energy projects and $13 billion in infrastructure.
  • Energy infrastructure will be constructed by private consortia to help alleviate Pakistan’s chronic energy shortages.
  • It includes a vast network of highways between Xinjiang and Gwadar.
  • Pakistan’s railway network will be upgraded to permit travel at speeds up to 160 km/hr. The network is proposed to be extended to eventually connect to China’s Southern Xinjiang Railway in Kashgar.
  • Oil & Gas Pipeline. A network of pipelines to transport liquefied natural gas and oil will also be laid between Gwadar and Nawabshah to eventually transport gas from Iran.
  • A 44$ million optical fibre cable between China and Pakistan will also be laid.

 

What will Pakistan gain?

  • The investment projects in Pakistan will give boost to Pakistani economy in a large way. It is estimated that it will create 7 lakh jobs upto 2030 and increase GDP by 2.5%.
  • $15 billion worth of coal, wind, solar and hydro energy projects will be activated by 2017 and add 10,000 MW. Another 16,000 MW addition is expected by 2021. This will reduce energy shortage and promote industry.
  • Being on a big economic axis it will promote trade and boost economic growth.
  • It will benefit from cheaper oil and gas.
  • It will benefit from improved telephonic/ internet connectivity.

What will China gain?

 

  • The CPEC is part of China’s larger transnational ‘One belt One road’ initiative whose two arms are the land based new silk road and 21st century maritime silk road, using which China aims to create a silk road economic belt spread over a large patch of Asia and Eastern Europe.
  • The CPEC will provide China land access to Indian ocean cutting the 13000 km sea voyage from Tianjin to the Persian Gulf through the Strait of Malacca and around India to a mere 2000 km road journey from Kashgar to Gwadar.
  • Gawadar lies close to the Strait of Hormuz which is an oil shipping lane. It will open up an energy and trade corridor from the Gulf Region across Pakistan to Western China that could also be used by the Chinese Navy.
  • The development of Kashgar will reduce the isolation of the restive Xinjiang province, deepen its engagement with the rest of China and raise its potential for tourism and investment. Central Asian republics are keen to connect their infrastructure network to the CPEC, which will allow them access to the Indian Ocean.
  • For Chinese companies, the CPEC will provide investment opportunities for years to come. They will be able to operate the projects as profit making entities.

India’s Dilemma about CPEC?

Responding to a query in the Lok Sabha in December 2014, Minister for External Affairs Sushma Swaraj noted:
“Government has seen reports with regard to China and Pakistan being involved in infrastructure building activities in Pakistan Occupied Kashmir (POK), including construction of China-Pakistan Economic Corridor. Government has conveyed its concerns to China about their activities in Pakistan Occupied Kashmir, and asked them to cease such activities.”

India’s High Commissioner to Pakistan, noted:

“India has no worry over the construction of Pakistan-China Economic Corridor as an economically strong Pakistan would bring stability in the region.”

The statements are contradictory. India has as yet not articulated a clear response to the project. India’s dilemma is due to the following reasons:

  • The origin of the CPEC could be traced to the Border Agreement of 1963, considered a milestone in China-Pakistan relations. The agreement ceded the 5000 plus square mile Trans Karakoram Tract to China and served as a precursor to the Karakoram Highway, conceived later as a strategic link defining China and Pakistan’s ‘all-weather friendship’. The then Defence Minister of India, Krishna Menon, elaborately enunciated India’s position on the issue at the UN, condemning the agreement as illegitimate. Besides, India lodged an “emphatic protest” to China and conveyed its concerns in a letter of protest.Decades down the line, while India’s policy orientation and broader claim on Gilgit Baltistan remains unchanged, its stance on Chinese investments in the Karakoram Highway, and Chinese efforts to leverage this territorial link to build a strategic corridor, is perceived to be weakening over time.
  • Participating in the project would require a major alteration in India’s policy.Overlooking the territorial dimension could be interpreted as a massive climb-down from its stated position. It may even be construed as acquiescing to the China-Pakistan alliance in the region and beyond. Thus, the CPEC poses a policy challenge to India on how best to strike a precarious balance between securing its strategic/territorial interests without at the same time being confrontational.
  • Domestically, there has been, till now, no serious political or public debate on how India should approach the issue. Charting a policy course is essential since China has, of late, through stray remarks extended an invitation for India to participate in the ‘Silk Route’ project. The onus now lies on India to respond to such overtures. India has to take a call on whether it would like to be a party to the CPEC, sit on the fence, or convey its concerns more emphatically in a bid to discourage China.

 

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