China is investing 500 billion U.S Dollars in different countries on building infrastructure and developing industrial and business projects. Pakistan is just one country among many where China is building infrastructure projects, the latest and the biggest one is termed as the China-Pakistan Economic Corridor. (CPEC).
China is investing 60 billion Dollars in Africa on infrastructure and developmental projects. China has pledged 30 billion Dollars in deals and investment in the United Kingdom. Agreements between Chinese government and the UK were signed during the state visit of the Chinese President Xi Jinping to the UK in Fall 2015.
The British public and media do not view China favorably but Prime Minister David Cameron’s government is very excited because Chinese investment will create nearly 4000 new jobs in the UK.
China is also investing heavily in infrastructure projects in Russia. Moscow and Beijing are developing mega projects to link the Eurasian Economic Union with the Silk Road Economic Belt, another project is a high-speed railroad between Moscow and Kazan, also planned is a highway from Kazakhstan to Europe. These are among many projects which China is funding.
China will invest many billion Dollars in energy and other sectors in Russia. China has built several oil and gas pipelines in Central Asia. China’s annual trade with five Central Asian states has exceeded 50 billion Dollars. Russia and China mutual trade has decreased due to low oil prices but China plans to increase its trade with Russia to 200 billion Dollars per year by 2020.
China is expanding its influence and investment in the EU as well. U.S companies are eager for Chinese investment. From Singapore to Bangladesh the at one end of the world to Latin America at the other, China has given new meanings to diplomacy and international relations. More than 30,000 Chinese companies and businesses are operating abroad and 400 million Chinese nationals are expected to visit or work in other countries. Despite economic slowdown, Chinese growth and expansion plans remain very ambitious.
Pakistan is China’s old and trusted friend but at a time when the whole world is courting China, some in Pakistan have started China bashing. We often wrongly assume as if Pakistan is the center of the world. It is not. Our relations with China are extremely important but also sensitive.
The CPEC is an international investment of tremendous strategic significance for China. One should be absolutely clear that from the Chinese perspective the CPEC is not a charity project. The main purpose of the CPEC is not the uplift or development of certain areas or people of Pakistan. China needs the CPEC for secure and stable energy supplies, also the CPEC will provide China a shorter access to the Indian Ocean.
Although, China will be the major beneficiary of the CPEC, however, it is not economic lifeline for China but for Pakistan, it is. The CPEC can help in the economic revival of Pakistan. Therefore, unnecessary controversies over CPEC are not in our interest. I believe that even if he wants, Prime Minister Nawaz Sharif cannot dictate China on the CPEC route etc. It is simple: China is investing the money thus she has the bigger say in deciding which route and location are suitable for CPEC projects. Security is China’s main concern. China would not mind spending more money on slightly longer routes if those routes are safer. China has the means and sources to assess that.
The use of Pakhtun VS Punjabi or Baluch VS Pujabi politics over an international project may not be helpful. China is pushing for peace in Afghanistan because peace and security in FATA, Khyber Pakhtunkhwa and Baluchistan are linked to Afghanistan.
Pak-China alliance is already an odd one where one partner (Pakistan) claims to be the only Islamic ideological state in the world and the other strategic partner (China) is a socialist state.
Visionary Zulfiqar Ali Bhutto had laid the foundations of this unusual but special relationship between China and Pakistan in the 1960s. There is nothing common between China and Pakistan other than common strategic interests.
Defense, for example, is the strongest area of cooperation between China and Pakistan. China is Pakistan’s main arms supplier. It has been helping Pakistan in developing nuclear power projects and both the countries have signed agreements for developing civil nuclear technologies. China has also helped Pakistan in missile technology; as a result, Pakistan has an advanced missile program. China is also assisting in the development of Pakistan Navy. Both the countries have jointly built fighter jets. The cooperation also continues in joint space research and other spheres.
On the economic front China has built big infrastructure projects such as the Karakorum Highway (KKH) that connects China with Pakistan through the tallest mountains of the world. Chinese companies are engaged in constructing roads, dams, power stations, mineral exploration and other projects throughout Pakistan. But the CPEC is the biggest of all the Chinese investments in Pakistan under which China will invest around USD 46 billion in developing a 3000-long-corridor that will connect Arabian seaport of Gwadar in southwest Pakistan to western Chinese city of Kashgar in Xinjiang Province.
The CPEC will include energy projects, highways, rail network, oil and gas pipelines, fiber optic communication lines, establishment of economic & industrial zones, storage facilities and development of Gwadar port and city. The CPEC is combination of large infrastructure projects that will have tremendous economic and geopolitical significance for the South & Central Asian and Middle Eastern regions.
World powers and players are watching and analyzing the impacts of the CPEC. Indeed the enormity and impact of the CPEC has ranged bells in world power centers. From Washington to Brussels and New Delhi the launch of the CPEC is viewed with skepticism and concern.
Why China is investing in the CPEC Project?
China has embarked upon the ambitious and expensive investment plan for a number of reasons.
1: The CPEC is part of China’s “New Silk Road” strategy to build a corridor connecting Western China with the Middle East and Africa. The CPEC will provide China the shortest trade and supply route to the Middle East and Africa. China has made huge investments in the region, particularly in Africa where hundreds and thousands of Chinese companies and workers are based.
2: China will have direct access to the Indian Ocean and thus to more trade with Asia, Africa and Europe.
3: The Chinese economy is showing signs of a slowdown due to decrease in the demand for Chinese products in international markets. China seems to be changing its strategy. Besides exports, now the focus will also turn to increase domestic consumption because only exports cannot sustain the desired economic growth. To facilitate domestic consumers China needs reduction in transport costs of energy and goods. With the CPEC costs and time both will reduce dramatically.
4: The United States is challenging China in the South China Sea by rejecting Chinese territorial claims and forming anti-China alliances with countries in the South China Sea region. This is part of President Barack Obama’s ‘Pivot to Asia’ strategy, which is China containment policy. China fears that in case of a war or confrontation with the U.S, sea trade routes could be blocked therefore having an alternate trade route is a very important strategic goal for China. The CPEC serves that purpose perfectly well.
5: Pakistan has leased Gwadar Port to China for 40 years. China is developing the deep seaport into one of the most modern and advanced seaports. Gwadar will have huge storage and cargo handling facilities and many shipyards. The Port will compete the Persian Gulf seaports of Abdu Dahbi, Dubai, Doha and other ports in the region.
6: China is keen to have closer trade and economic links with Central Asian states. China hopes that the CPEC would bring Central Asia closer to China as the Central Asian states would also use the Chinese-controlled strategic trade and economic link to the sea and wider international markets.
7: One of the main aims of this huge foreign investment is to uplift the economic conditions in Xinjiang Province that is home to 10 million Uighur people who are Muslims. The political situation in Xinjiang Province has been unstable for years due to religious and ethnic tensions. China believes that some Uighur people have joined terrorists groups operating from Afghanistan and Pakistan. The CPEC will create jobs and economic opportunities for local people who have lost hope and are joining terrorist ranks.
What Pakistan will gain from the CPEC?
For Pakistan, the CPEC is a once in lifetime kind of opportunity not to be missed. The country faces serious economic challenges. It has limited resources and rapidly increasing population. From Pakistan’s standpoint, the CPEC has the following benefits.
1: It is the first ever planned and funded infrastructure and economic development project that will dramatically establish and improve countrywide network of strategic highways, railway lines and telecommunication system and energy projects. Pakistan needs a modern communication system to boost its economy.
2: More than 60 percent of Pakistan’s 200 million people are under the age of 30. The majority are unemployed and worried about their future. The CPEC can create thousands of new jobs in construction, transport and trade sectors. Once the Corridor will be operational new jobs will be created in the economic and industrial zones along the Corridor route. Thousands of people will get employment in security of the CPEC as well.
3: The CPEC will take Pakistan-China relation to the next level of a closer strategic alliance with shared and security and economic interests. The Pakistani military is the main player in forging this alliance.
4: Pakistan thinks that the CPEC will give it an edge against India and the CPEC will also become a bridge that will also connect Pakistan to Central Asia.
Estimated costs of different CPEC projects
A big chunk of the money from China will come in form very low interest or even interest free loans. Out of the 46 billion Dollars around 11 billion Dollars will be given at 1.6% interest rate for several infrastructure projects under the CPEC. The Chinese Government will pay this money through Exim Bank of China. The Chinese will provide nearly eight billion Dollars on 0% interest rate for several projects in Gwadar port. These projects include construction of the Eastbay Expressway project, breakwaters in Gwadar, berths, a state of the art hospital and a coal power plant in the new port. Pakistan will only repay the principle on these loans.
Subsidized loans of 44,000,000 Dollars will be used on a 1300-kilometer-long Optic Fiber Project that will connect the both countries.
China is building Gwadar International Airport. The estimated cost of the project is 230,000,000 Dollars but the Government of Pakistan will not payback this amount to China. China will also provide loans for Orange Line rails service and Lahore Metro service.
Chinese and Pakistani companies will jointly construct 15.5 billion Dollars energy projects that also include several renewable energy projects. By 2030, China will be world leader in renewable energy.
Transport infrastructure
Under the CPEC the Karakoram Highway (KKH), which was built by China between 1959 and 1979, will be further upgraded to enhance its capacity. Several new tunnels, bridges and bypass roads will be added to the KKH. The KKH will connect with the new road that will connect Abbotabad with the main Motorway. Interestingly, the United Kingdom will also provide Pakistan 121.6 million Dollars grant for the construction of the new road named E-35 expressway.
The E-35 expressway will be connected to the existing Peshawar-Islamabad Motorway (M1) near Burhan. This will be a connecting point to Islamabad-Lahore Motorway or M2. Another major road is 1152-kilometer-long Karachi-Lahore six lane Motorway. The British Government will provide 90.7 million Dollars for a part of this project.
Under the CPEC nearly 1000 kilometers secondary roads will be constructed in Baluchistan Province. Reportedly, some of those roads are already completed already.
One of the most important highway of the CPEC will be 870- kilometer-long Gwadar-Ratodero Motorway that will connect Gwadar with northern Pakistan.
Another important part of the CPEC is its Western alignment, a shorter and alternative route to the Eastern route via Islamabad and Lahore. The Western Route will be a four-lane highway, which will pass through Khyber Pakhtunkhwa and Baluchistan provinces, not far from the Pak-Afghan border.
The up-gradation of Pakistan’s existing railway system is also part of the CPEC project. Around five billion Dollars are allocated for the reconstruction of the of Karachi–Peshawar main railway line. Gwadar Port will be connected to the country’s main railway system that will eventually extend to western China. (Data from several sources and interviews).
Security of the CPEC
Due to violent conflicts and opposition to the CPEC, Pakistan and China are taking extraordinary security measures for all the CPEC projects, structures and personnel engaged in construction/developmental works, and those who will work after its completion. There will be four-layer security arrangements for the 3000-kilometer-long CEPC and the Gwadar port.
According to news reports, approximately 32,000 security personnel will protect around 15,000 Chinese workers busy in building some 210 small and mega projects in Pakistan.
One Pakistani newspaper has claimed that China will send 500 of its security specialists to train newly recruited Pakistani security personnel. Higher security will be provided in Baluchistan where militant Bloch nationalists have been opposing the project. Ten thousand security guards will guard all the routes and installations in Baluchistan. Around 9000 security guards from different forces will protect various projects of the CPEC in Punjab Province.
A serving Major General of the Army will head a newly created special
security force with 12,000 personnel will be responsible for the security of the CPEC says the news report.
The National Database and Registration Authority (NADRA) of Pakistan is developing new procedures for ensuring security of Chinese nationals. Under the new system, Nadra will maintain the record of Chinese nationals residing in or visiting Pakistan.
Opposition to CPEC
The China Pakistan Economic Corridor faces opposition at national and international level due to a number of reasons.
International
The CPEC is not just an economic project. It has huge strategic implications. Through this project a major foreign power will have footprints in Pakistan to pursue and protect its geostrategic and economic interests. Nevertheless, in this region several players are competing for influence. For example:
India
India is skeptical of the CPEC. Indian Prime Minister openly criticized the CPEC project saying it poses threat to Indian interest as it passes very close to the Indian border and in the disputed areas of Kashmir and Gilgit-Baltistan. India has also lodged official protest with China against the CPEC. India always criticized China for supporting Pakistan at international forums over disputed issues and due to China’s deep military cooperation with Pakistan.
India fears that the CPEC will provide Pakistan and China an strategic edge against India. India and China are among the biggest energy consumers. Both are competing for energy markets. The CPEC will give China access to the Middle Eastern and Central Asian energy resources. India also eyes Central Asia as source of energy and market for its products.
To counter the CPEC, India has approached Iran for developing the Iranian port of Chabahar on the Arabian Sea few miles north of Gwadar Port. India hopes that through Chabahar seaport, it will get access to the oil and gas resources in Iran and the Central Asian states. Reportedly, India has given 85 million Dollars for the development of Chabahar Port.
India, Iran and Afghanistan have signed an agreement for sending Indian goods from Charbahar to Central Asia and Afghanistan at subsidized tariff rates.
USA reaction to the CPEC
The U.S fears that the CPEC may jeopardize China containment plans—Pivot to Asia and others. The U.S has tried to pressure Pakistan not to go ahead with the CPEC but has ignored the U.S concerns.
The Middle East is likely to remain central to the United States’ Geo-strategic interests with or without oil. Thus, China’s direct access to the Middle East poses a challenge to the U.S strategic interests. The CPEC will further enhance cooperation among the member countries of the Shanghai Cooperation Organization (SCO).
EU reaction to the CPEC
A surprise negative reaction to the CPEC came from the EU. According to media reports, in November 2015, Vice President of the European Parliament, Ryszard Czarnecki, expressed his concern at China’s involvement in Pakistan administrated Kashmir and Gilgit Baltistan, in multiple infrastructure projects from dams to highways and ports.
Mr Czarnecki claimed that Chinese involvement in an area already fraught with tension is unhelpful. He added that the business practices of some Chinese companies are dangerous. He also mentioned that there should be a mechanism setup to investigate the adverse effects of the presence of the Chinese army in Pakistani Kashmir and Gilgit Baltistan.
A member of the European Parliament Alberto Cirio, denounced China for its military presence in Pakistani Kashmir and Gilgit-Baltistan, accusing them of creating a divide among the Shia and Sunnis in the region. He also questioned Pakistan for allowing the Chinese army in when Pakistan has always opposed the presence of western forces in the region.
Opposition to the CPEC within Pakistan
Since the military is fully behind the project, all major political parties and politicians are supporting the CPEC. However, there are few objections on the route of the CPEC, particularly in the smaller provinces of Pakistan.
Politicians and parliamentarians in Khyber Pakhtunkhwa and Baluchistan provinces, for example, have been criticizing the federal government for altering the route of the CPEC by ignoring the shorter Western Route that would pass through Khyber Pakhtunkhwa and Baluchistan provinces.
Prime Minister Nawaz Sharif organized an All Parties Conference on 28 May, 2015 to discuss the issue. The Conference unanimously decided in favor of constructing a western alignment (route) of the CPEC that will lead from Attock city to D I Khan in Khyber Pakhtunkhwa and to Zhob, Qilla Saifullah, Pishin and Quetta in Baluchistan—all Pakhtun areas.
Despite the government’s assurance of constructing the four-lane highway (Western Route), controversy and suspicions over this issue continues in Khyber Pakhtunkhwa and Baluchistan. The provincial government of the PTI, the Jamaat-e-Islami and the Qaumi Watan Party (QWP) have been criticizing the central government for undermining interests of Khyber Pakhtunkhwa Province by diverting the CPEC route.
Another major Pakhtun nationalist party, the Awami National Party (ANP) also has reservations but it also understands that opposition to the CPEC may jeopardize or delay the project and its economic benefits.
Pakistan’s main opposition party, the Pakistan People’s Party (PPP) says that the most CPEC projects are concentrated in Punjab Province, which is home province of Prime Minister Nawaz Sharif.
Political parties of Khyber Pakhtunkhwa and Baluchistan are demanding construction of motorways, economic and industrial zones, oil and gas pipelines and fiber optic lines through their respective provinces. The issue has roots in the long history of mistrust between the Center and smaller provinces.
Resistance to the CPEC
The reaction to the CPEC project in parts of Baluchistan Province is different. Some political parties complain that the federal government has not launched enough projects under the CPEC in Baluchistan Province. However, few groups oppose the CPEC out rightly. Nationalist groups such as the Baloch Liberation Front (BLF) and The Baloch Liberation Army (BLA), who have been fighting the state of Pakistan, have attacked different CPEC projects.
Wikileaks had disclosed in one of its cables that a Pakistani security agency suspected, “India and the UAE (reportedly due to opposition to construction of the Gwadar port) were supporting groups opposed to the CPEC.
There is no doubt that the CPEC will have significant geopolitical and economic impacts. It can affect current sphere of influence of some powers in the region. It will give a strategic edge to China in the South & Central Asian region while Pakistan will get economic dividends in form of infrastructure development and economic boost. The flip-side, however, is that increased Chinese penetration and activity in Pakistan may raise issues/concerns among local populations. We are witnessing that in Khyber Pakhtunkhwa and Baluchistan provinces. The dissatisfaction if not addressed may help those forces/powers which see the CPEC a threat to their strategic interests.
Note: Thanks for reading. The information and data used in the above journalistic piece is gathered from several sources and face to face interviews.
By Shiraz Paracha
The author is a communications professional, PR, public affairs expert, journalist, and journalism professor.