China and Pakistan have notified plans to enter into China and Pakistan Economic Corridor (CPEC) that paves the way for one of the six corridors that comprise the ambitious Belt and Road Initiatives (BRI). The CPEC is an array of projects — some agreed, some still under negotiations — comprises a network of 3,000 km of highways, train lines, energy pipelines, and fiber optic cables, while others are being negotiated. The topic of discussion between politicians and ordinary citizens has been CPEC in the last few years.
Prime Minister Sharif of Pakistan called the CPEC a game-changer and improved the infrastructure in Pakistan, reduced its outages, created tens of thousands of jobs, and fostered economic growth.
Khan reiterates his commitment to rapidly complete the CPEC project in a meeting with Pakistani Chinese Ambassador Nong Rong, which, according to the Prime Minister’s Office and Chinese Embassy, will provide tremendous opportunities for economic growth, and further development in the region and beyond.
For Pakistan, the CPEC is more than just a ‘road’ or a ‘corridor,’ because Pakistan has a CPEC to drive future growth. An energy infrastructure under CPEC to alleviate chronic energy shortages in Pakistan will be required to develop approximately three times the estimated $12 billion roads and rail network cost.
Khan said that Pakistan hopes to gain insights into China’s poverty reduction and urbanization experience and also reaffirmed Pakistan’s profound commitment to further strengthening and expanding bilateral ties, stressing the importance of the long-tested all-weather strategically cooperation partnership between the two countries.
CPEC became the month’s true flavor. In Islamabad and Beijing, it generates constant media attention and government declarations. Fellow experts are asking questions about the geopolitical consequences of this huge project and the true motivations behind Beijing’s efforts to invest so heavily throughout Pakistan.
Firstly, generating more electricity and harvesting new indigenous energy resources (most of which coal and renewables) can ultimately reduce Pakistan’s high reliance on imported Middle East oil and gas. This isn’t a minor matter, given that 90% of Pakistan’s fuel consumption and imported crude oil and finished petroleum products satisfy 80% of the domestic oil demand are imported from petroleum products.
Second, Iran might be a great winner. Tehran wanted to build a natural gas pipeline with Islamabad for a long time, but financial limitations prevented its portion from being built by Pakistan. But China has shown willingness under the CPEC rubric to finance it. In addition to this, given the focus of CPEC on more energy generation in Pakistan, Pakistan can reduce oil and gas imports from Iran’s bitter regional rival Saudi Arabia.
Oil and gas products represent the second-largest source of imports from Pakistan and are trailing only China, representing 90% of Pakistan’s total import bill from Saudi Arabia. If such a large proportion of energy sales were deprived, that would have a disturbing economic impact on the Riyadh region — and particularly in today’s low oil price era. This is all of Tehran’s net advantage.
In intensifying rivalries between Saudi Arabia and Iran, CPEC and the wider China-Pakistan-India energy geopolitical networks could be attracted. Cross-border strikes have been carried out against Iran by anti-Iranian militants based in the province of Baluchistan Pakistan, the site of many envisaged CPEC projects, including Gwadar port (separatist insurgents seeking to overthrow the Pakistani state are also based in Baluchistan).
In Old Lahore, OLMT is the busiest way of transport in one of Lahore’s busiest neighborhoods, cutting right through the congested buildings.
Involved Chinese companies
The research also highlighted companies that participate in various CPEC projects. There is a portfolio of nine companies. The companies are state-owned Chinese enterprises that have in the past undertaken in China and other country’s infrastructure projects. The main contributor to the portfolio is China State Construction Engineering, which is financed by about $3 trillion. The following are the details of these firms.
- China Communication Construction
- China Gezhouba Group
- China Machinery Engineering
- China Power International Holding
- China Railway China North Industries Group
- China State Construction Engineering
- China Three Gorges South Asia Investment
- Huaneng Shandong Ruyi
- Power China Resources
This year will be crucial for Pakistan’s CPEC development and will give Pakistan a clearer picture of its economic development in the next fiscal year. Write to us at Pakdial to ask any questions about CPEC. Also, continue to look for the latest news on Pakistan’s economy on Pakistan’s biggest property blog.