China-Pakistan Economic Corridor (CPEC)

The China – Pakistan Economic Corridor (known as CPEC for short) is a collection of infrastructure projects that are currently under construction throughout Pakistan. It is part of the greater One Belt One Road (OBOR) initiative launched by the Chinese government Initially valued at $46 billion, it is now worth $62 billion as of 2017.

The project intention of CPEC is to rapidly upgrade Pakistan’s important infrastructure and strengthen its economy by the construction of energy projects, special economic zones, ports and transportation networks.

The article will talk about the CPEC’s history, its expansion, latest developments and India’s stand against it. Aspirants should know that the topic ‘CPEC’ is important for IAS Exam – Prelims, Mains (GS-II) and Interview.

What is the history behind CPEC?

Since the 1950s, plans were made for an economic corridor stretching from the Chinese heartland to Pakistan’s ports on the Arabian Sea. Ever since the completion of the Gwadar port in 2006, Chinese interests in that particular region has been rekindled.

The expansion of the port was temporarily halted due to political instability in Pakistan and the fall of General Parvez Musharraf and outbreak of the Waziristan war in North-west Pakistan.

In 2013, President Asif Ali Zardari and Premier Li Keqiang decided to further enhance mutual connectivity by signing a series of MOU’s on economic cooperation. These MOU’s were part of a long term plan on the formation of the Chinese-Pakistan Economic Corridor, that would initially be a part of Silk Road Economic Belt as well. Further, plans were discussed by Prime Minister Nawaz Sharif met with Premier Li Kequiang in China to discuss further plans, which resulted in the full scope of the project being announced.

The launch of CPEC was officially announced when China and Pakistan signed an agreement to commence work on the $46 billion agreement, which is 20% of Pakistan’s annual GDP.

CPEC will be a part of the 21st Century Maritime Silk Road upon completion of the Gwadar port.

What are the latest developments regarding CPEC?

  1. On 12 August 2015 in the city of Karamay, China and Pakistan signed 20 more agreements worth $1.6 billion to further augment the scale and scope of CPEC. Details of the plan are opaque but are said to mainly focus on increasing energy generation capacity. As part of the agreement, Pakistan and China have agreed to co-operate in the field of space research.
  2. In November 2016, China announced an additional $8.5 billion investment in Pakistan with $4.5 billion allocated to upgrade Pakistan’s main railway line from Karachi to Peshawar including tracks, speed and signalling, and $4 billion toward an LNG terminal and transmission lines to help alleviate energy shortages. It is speculated that
  3. In February 2017, the Egyptian Ambassador to Pakistan expressed interest in CPEC cooperation. In January 2017, Chief Minister Pervez Khattak of Khyber Pakhtunkhwa stated that he had received assurances from Chinese investment companies that they would invest up to $20 billion for projects.
  4. As of September 2017, more than $14 billion worth of projects were under construction. In March 2018, Pakistan announced that following the completion of under-construction energy projects, future CPEC energy projects would be geared towards hydropower projects.

What are the concerns regarding CPEC?

CPEC is viewed by many of its critics as an exercise in neo-imperialism, particularly through credit-imperialism. Further concerns are as follows:

  1. Several media outlets in Pakistan have criticised the project’s finances as being shrouded in mystery, while one of them going as far to suggest that article suggested that “there are far too much secrecy and far too little transparency”.
  2. The trade imbalance is also an issue as Chinese exports through the Karakoram Highway have entered the domestic Pakistani market, and are cheaper due to the relatively higher cost of production in Pakistan.
  3. Some Baloch nationalists have opposed the large-scale development projects envisioned by CPEC, fearing that such developments in the province would eventually result in local residents “losing control” over natural resources. Others have alleged that CPEC is a “conspiracy” meant to stimulate the settlement of migrants from other regions of Pakistan in order to render ethnic Baloch a minority in the province.
  4. The local’s residents where these projects are based have concerns that their wellbeing and benefits will be subverted in order to meet the demands of the corridor.

What is India’s objection stance regarding CPEC?

The Government of India, which shares tense relations with Pakistan, objects to the CPEC project as upgrade works to the Karakoram Highway are taking place in Gilgit Baltistan; a territory that India claims as its own.

In May 2016, India’s Minister of State and External Affairs, Vijay Kumar Singh raised concerns regarding CPEC. Despite Indian objections, China and Pakistan initiated works on the $44 million Pakistan-China Fiber Optic Project on 19 May 2016 which will require passage through Gilgit-Baltistan; the same region for which India expressed concerns to China. Former Indian National Security Advisor M. K. Narayanan also in May 2016 stated “CPEC must be viewed as a major threat. Both countries [China and Pakistan] have a common intention to undermine India`s position in the region.”

Despite objections, segments of the Indian public, as exemplified by former Indian Ambassador Melkulangara Bhadrakumar, regard the project as in India’s interest vis-à-vis Central Asia, and warn that India might “lose heavily” were India to remain opposed and isolated from the project.

The above details would be of help to candidates preparing for UPSC 2020 exams from the perspective of mains examination.

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