• Type:
  • Genre:
  • Duration:
  • Average Rating:

Karachi

Is the China-Pakistan Economic Corridor (CPEC) Failing?

The China-Pakistan Economic Corridor, or CPEC, is a massive infrastructural project announced for the first  time in 2013. It is part of the broader “One Belt, One Road” initiative, launched in the same year and also called OBOR. However, the CPEC has recently received several setbacks that are raising doubts over its completion. So, what is the future of the project?

Why the CPEC?

The CPEC is one of the six “Economic Corridors” that China is creating in cooperation with other countries in the context of the OBOR initiative to improve transportation, intensify trade and boost the respective economies with the broader aim of extending China’s economic and political presence across the globe and ultimately reaching the vast European market. The CPEC should pass through Pakistan to connect China’s landlocked Xinjiang province with the Arabian Sea; and it pursues multiple objectives.

First, Xinjiang hosts significant natural resources but is economically poor and affected by discontent among the local Uighur population. With the CPEC and other region-focused projects, China wants to develop the area so to improve its living conditions, exploit its economic assets and make of it a crossroad for East-West trade.

Second, the PRC wants to open an alternative access to the ocean. Today, cargos sailing to and from Europe as well as oil tankers from the Middle East need to pass through Malacca and other straits, which are extremely vulnerable chokepoints that could easily be blocked by the US Navy in case of war. This would be catastrophic for the PRC, which consequently wants to have an access to the sea that avoids these exposed passages.

Third, the CPEC will foster relations with Pakistan. The two countries are already primary partners, and the project will create closer ties by increasing economic interdependency and by improving the living conditions of locals. A solid bilateral partnership is also mutually beneficial considering their relations with India. Especially for Pakistan, having China as an ally is extremely useful to keep India at bay; but the contrary it is also true, even though Beijing tries to downplay the existing problems with New Delhi.

The CPEC in practice

To reach these strategic objectives, China plans to build a series of infrastructures in Pakistan. By now, it has already invested at least 60 billion US dollars in the initiative; which includes motorways, railways, ports, electric power plants, pipelines and more. Several Special Economic Zones will also be established. All these projects will be connected one with the other to some degree, with the aim to create economic prosperity and link Xinjiang with Pakistan’s southern shores.

A particular relevance has been given to Gwadar, located in south-western Pakistan along the coast next to Iran. It will be the endpoint of the CPEC, and one of its main centres. In particular, Gwadar’s harbour is being expanded and upgraded: it will be transformed into a “smart port” surrounded by a Special Economic Zone that will host a large industrial area. It will be served by a new international airport, several facilities to improve the local living conditions, and it will be linked with the rest of the country and with China by road and train. The port became partially operational in November 2016, when a joint Sino-Pakistani truck convoy successfully travelled from north to south across Pakistan and reached Gwadar where the containers were shipped to overseas destinations. Yet, the remaining projects are still under construction.

As far as other components are concerned, nine of them are already operational. These include a coal-powered electricity generation plant in Karachi and a similar one in the Punjab region, several windfarms and the Quaid-e-Azam solar park, one of the largest in the world. Other thirteen facilities are being completed and are scheduled to become soon operational.

Yet, there have been some setbacks as well. Combined with Pakistan’s shaky financial condition, this has raised doubts over the general tenure of the CPEC project.

The problems of CPEC

The first aspect to consider is that Pakistan’s political and financial situation is not very promising for the future of the CPEC.

Former Prime Minister Nawaz Sharif was a supporter of the project, but in August 2018 he was substituted by Mr. Imran Khan, who on the contrary has criticized the initiative out of concerns over corruption and lack of transparency. He also complained that the billions of dollars that China is investing in the country bring little benefit to Pakistani workers, as the facilities are almost entirely build by Chinese nationals. This does not mean that he has rejected the CPEC, but he is certainly less enthusiast than his predecessor. In addition, Pakistan is crossing troubled waters in financial terms. According to The Express Tribune, a Pakistani newspaper, the country’s owes 40 billion to China. This has raised the alarm over a “debt trap”; meaning that China may exploit its financial leverage on Pakistan to exert political influence. In this regard, it is true that Pakistan’s net public debt is estimated at 67.6% of the GDP, that its external debt amounted to 82 billion dollars at the end of 2017, and that the federal government must face a chronic penury of foreign currency; which is a problem when having to repay external debts.

Therefore, there are doubts about Pakistan’s financial tenure in the immediate future. The country received various loans from the IMF in the past, but it has rejected the latest 8-billion-dollar bailout plan. Instead, Mr. Khan’s government preferred to demand financial aid to a few “friendly countries”, notably Saudi Arabia, the United Arab Emirates and China. This has already brought some fruits. An agreement has been reached between Islamabad and Abu Dhabi for a support package worth 6.2 billion dollars, with 3 billion scheduled to be sent shortly. Similarly, Saudi Arabia’s Prince bin Salman will soon sign a deal for building a 10-billion-dollar oil refinery in Gwadar, thus adding further significance to the port city. Cooperation in other sector will also be discussed.

In regard to China, the situation is more complex. Bilateral relations remain good, but there are growing concerns about the completion of the CPEC; at least in all of its parts. In the context of its troubled financial situation, Pakistan has recently announced its withdrawal from the Rahim Yar Khan power station, on the basis that electricity production capability is already sufficient and that consequently the project would not be economically viable. Yet, this may be a political excuse to hide the real problem, namely that there are not the funds for it. In addition, there are delays in the construction of the smart port in Gwadar. In this regard, Chinese companies have allegedly warned that Pakistan will need to pay to cover the additional costs caused by this postponement.

These events have created much speculation about the completion of the CPEC as a whole, especially in India, where major newspapers like the Times of India have reported such news. As a matter of fact, there is a sensible degree of strategic rivalry between Beijing and New Delhi, who perceives its northern neighbour and its close ties with Islamabad as a potential threat. On its part, China has responded to the recent events along a double line. State-sponsored media like the Global Times have soon published articles where they reassure about the solidity of the Sino-Pakistani partnership and about the determination of both sides to end the works on the CPEC. At the same time, they have accused other countries of being “jealous” and of having “aggressive intentions”. It is clear that the message was a response to the news about the recent setbacks of the CPEC project reported by Indian media. By explicitly addressing the recent reports by Indian news channels, the Global Times has also downplayed the entity of Pakistan’s China-owned debt and have suggested third parties not to meddle in the issue; all while affirming that India will also benefit from the CPEC. According to such Chinese articles, which cite the PRC’s embassy in Pakistan as a source for the figures, Islamabad does not owe 40 billion dollars to Beijing. Instead, they claim the debt only amounts to 6 just over billion, including interests.

Apart from this, the security aspect should also be mentioned. The CPEC crosses territories where terrorist and separatist groups are present. Some of them do not see China favourably, and this represents a non-negligible threat to the project. In fact, some attacks have already taken place against Chinese objectives. In August 2018, a suicide bombing injured some Chinese engineers. In November, a secessionist movement called Balochistan Liberation Army targeted the Chinese consulate in Karachi. By now, none of these events has seriously hampered the CPEC, but this may be the beginning of a trend that could hamper the project in the long term.

Conclusion: what about the future?

With such contradictory reports, it is difficult to assess the future of the CPEC and the real entity of the China-laid “debt trap” looming over Pakistan. What is sure is that Islamabad has indeed some financial problems, and that this may negatively impact the project. The recent cancellation of the Rahim Yar Khan power plant and the delays over Gwadar’s smart port suggest that there may already be complications in this sense. Yet, unless Pakistan enters in a serious financial crisis or faces a collapse of the state, it seems that the project will be competed at least in part. That said, the other certain thing is that the CPEC and China’s presence in Pakistan is not viewed positively by India, and in geopolitical terms this is probably the most relevant aspect.

Will Gwadar be the Next Dubai?

Will Gwadar be the next Dubai?

The Gwadar port in Pakistan is going through a historical economic transformation. But what will it look like after it’s done? Is it going through a similar journey as Dubai’s?

Want to learn more?
Visit: http://www.chinapakinvestment.com

Or

Enquire now: http://oneinvestments.co.uk/ipclaunch/

Why the GWADAR PORT in Pakistan is changing the world’s geo-political landscape

Why a fishing town in Pakistan is changing the world’s geo-political landscape!

A small fishing town in the South-West of Pakistan, Gwadar is the gateway city of China’s $62 Billion China Pakistan Economic Corridor.

A deep sea port strategically located in the Indian Ocean at the opening of the Strait of Hormuz.

Pakistan leased Gwadar Port to China in 2015 as part of a $62 Billion deal.

China also acquired 22,000 acres of land adjoining the port in Gwadar which has been declared a Special Economic Zone.

A 1224 Kilometre highway is being built from China ending in Gwadar emulating the ancient Silk Road

Gwadar will link the Silk Road on land with the Maritime Silk Road

The new Silk Road reduces shipping times for Chinese goods to the Middle-East, Africa and Europe by up to 80%.

Gwadar is being developed under the model of China’s Shenzhen through the establishment of Special Economic Zones.

Shenzhen was amongst the fastest growing cities in the world growing from a population of 30,000 in 1979 to 10 Million in 2017 with a GDP of $294 Billion!

Zhang Baozhong, the Chairman of China Overseas Port Holding Company said “China plan to spend $4.5 billion on developing Gwadar.”

In November 2016 the first cargo travelled the Silk Road from Kashgar in China to Gwadar and shipped out from Gwadar to the Middle-East and Africa.

Currently there are some 2000 Chinese personnel in Gwadar this number is projected to grow up to 500,000 by 2023.

There is a geo-political shift happening in the world and Gwadar is at the heart of this.

Don’t forget to subscribe to our YouTube Channel

We’re also currently running a crowdfunding campaign to help our operation produce more and better videos. You may donate what you towards our project here – http://www.crowdfunder.co.uk/kj-vids

Support our content by becoming a KJ Patreon
https://www.patreon.com/kjvids

Website – www.kjvids.co.uk
Facebook – www.facebook.com/KJVids
Twitter – www.twitter.com/kjvids2016
Instagram – https://www.instagram.com/kjvidsofficial

All Rights Reserved. Contact info@kjvids.co.uk if you are interested in licensing our content, advertising or working with us in other ways.

Pakistan Protests in Pictures

A policeman takes a picture of a car burned during clashes near the Faizabad junction in Islamabad, Pakistan November 26, 2017. REUTERS/Caren Firouz

Pakistani police officers beat a protester during a clash in Islamabad, Pakistan. AP

A demonstrator detained by a policeman gestures near the Faizabad junction in Islamabad, Pakistan. [Caren Firouz/Reuters]

Police retrieve their motorcycles which were burned during clashes with protesters near the Faizabad junction in Islamabad, Pakistan November 26, 2017. REUTERS/Caren Firouz – RC11A631CD10

Supporters of religous group ”Tehrik Labayk Ya Rasool Allah” shout slogans to protest the crackdown by Police on their group’s supporters in Islamabad, in Lahore. [Rabat Dar/EPA-EFE]

A protester walks near burning tents during clashes with police at Faizabad junction in Islamabad, Pakistan November 25, 2017. REUTERS/Stringer – RC1DC6445490

Supporters of the Tehreek-e-Labaik Pakistan, an Islamist political party, chant slogans as they walk to join the sit-in protest in Karachi, Pakistan November 25, 2017. REUTERS/Akhtar Soomro – RC12F79D3520

Pakistani police officers beat a protester during a clash in Islamabad, Pakistan, Saturday, Nov. 25, 2017. Pakistani police have launched an operation to clear an intersection linking capital Islamabad with the garrison city of Rawalpindi where an Islamist group’s supporters have camped out for the last 20 days. (AP Photo/Anjum Naveed)

Pakistani protesters gather next to burning police vehicles after setting on fire them during a clash in Islamabad, Pakistan, Saturday, Nov. 25, 2017. Pakistani police have launched an operation to clear an intersection linking capital Islamabad with the garrison city of Rawalpindi where an Islamist group’s supporters have camped out for the last 20 days. (AP Photo/Anjum Naveed)

Protests began after a reference to the prophet Mohamed was omitted from a constitutional bill in parliament AFP/Getty Images

Six people are believed to have died in the protests and hundreds were injured, including police. AFP/Getty Images

Rangers stand guard at a flashpoint with protesters near the Faizabad junction in Islamabad on November 26, 2017. PHOTO: REUTERS

Protesters hurled back a tear-gas canister fired by the police during clashes near Islamabad, Pakistan, on Saturday. Anjum Naveed/Associated Press

At least 8,000 police officers in riot gear and a paramilitary police force begun trying to clear out then protesters from the main interchange near Islamabad. Anjum Naveed/Associated Press

The police fired rubber bullets to disperse protesters. Officials took television news off the air to prevent live coverage from inflaming religious sentiments. Anjum Naveed/Associated Press

A protester near burning tents. The protests spread to other Pakistani cities in response to then confrontation in the capital. Reuters.

copyright picture-alliance/abaca from dw.com

copyright picture-alliance/abaca from dw.com

copyright picture-alliance/abaca from dw.com

A protester pours water on a tear gas shell fired by police during a clash in Islamabad, Pakistan, on Saturday. (Anjum Naveed/Associated Press)

Protest against increasing power cuts in Pakistan during Ramadan

Read original article on Reuters or read some of the key points below;

  1. Protesters in the southern port city of Karachi set tires ablaze on Tuesday after power cuts disrupted a traditional pre-dawn meal during the holy month of Ramadan. Technical breakdowns in the past week have boosted the frequency and length of blackouts, sparking anger during the blistering late summer months.
  2. A transmission line had tripped due to high humidity, K-Electric said on social network Twitter, adding that the load shedding would persist for two to three weeks more. Some protesters then tried to attack and set fire to the office of the main power provider, K-Electric.
  3. Prime Minister Nawaz Sharif came to power four years ago promising to end scheduled blackouts – known as “load shedding” – that have plagued daily life for years, hobbling the economy and deterring foreign investment.
  4. Sharif called an emergency meeting of a cabinet energy panel on Tuesday to discuss the power outages. In a statement, the prime minister’s office said the meeting focused on “urgent measures” to reduce power cuts during Ramadan, which coincides this year with summer temperatures forecast in some regions at around 40 degrees Celsius (104°F).
  5. On Monday, two demonstrators were killed in another protest against electricity shortages in the northwestern province of Khyber Pakhtunkhwa, reportedly when police fired to disperse crowds.
Scroll to top