All you wanted to know about China-Pakistan Economic Corridor bl-premium-article-image

Nalinakanthi V Updated - January 16, 2018 at 09:33 PM.

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The Uri attack which heightened the geopolitical tensions between India and Pakistan has brought the China’s ambitious One Belt One Road (OBOR) initiative under focus. China’s OBOR initiative envisages linking China with the rest of Eurasia and promoting economic cooperation among these countries and was unveiled in September-October 2013.

An extension of OBOR is the China-Pakistan Economic Corridor (CPEC) which was conceived in 2014.

What is it?

CPEC is clutch of projects valued at $51 billion project which aims at rapidly expanding and upgrading Pakistan’s infrastructure and strengthening the economic ties between the People’s Republic of China (China) and Pakistan. It includes building roads, laying railway lines and pipelines to carry oil and gas.

CPEC eventually aims at linking the city of Gwadar in South Western Pakistan to China’s North Western region Xinjiang through a vast network of highways and railways.

The proposed project will be financed by heavily-subsidised loans, that will be disbursed to the Government of Pakistan by Chinese banking giants such as Exim Bank of China, China Development Bank, and the Industrial and Commercial Bank of China.

Why is it important?

The CPEC, once completed is expected to cut short the trade route for China’s oil imports by 6000 miles. It is expected to open up a brand-new strategic gateway for China to tap into African, West Asian and South Asian trade.

The CPEC is expected to give the flagging Pakistan economy a shot in the arm too. About 90 per cent of the total outlay for this project will be funded by the consortium of Chinese banks and the balance 10 per cent by Pakistan. Reports claim that this project will likely add about 7 lakh direct jobs between 2015 and 2030 and add about 2-2.5 percentage points to the Pakistani GDP.

Why should I care?

If the corridor opens up a major new global trade route, not just Pakistan and China, but also India which is quite strategically located on the corridor, may see positive spillover effects from burgeoning trade with West Asia or Africa.

But economics aside, it is the geopolitical ramifications of the deal that has military analysts worried.

CPEC establishes a symbiotic relationship between China and Pakistan and political analysts worry that this may have ramifications for the geopolitical situation in Kashmir, especially as the CPEC corridor passes straight through disputed Pakistan-occupied Kashmir (PoK). The worry is if the high economic stakes in the project will allow China to remain neutral if the Kashmir dispute escalates.

Post the Uri attack by Pakistan-based militant outfits last month, China expressed concerns over the impact of the growing tensions between India and China on the CPEC.

The bottomline

There’s little that India can do about the CPEC. But to look at the bright side, a more economically stable Pakistan may be quite good for India, as both countries can then look to de-escalate tensions across the border and talk trade.

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Published on October 24, 2016 16:36