Scope of CPEC:

CPEC is an important project in order to achieve cooperation in different fields including, trade,
education, energy, defense, science and technology. Pakistan and china bilateral trade has been
started in 1963 to free trade agreement in 2006 and now the CPEC project. Cost for China: CPEC
is not just a highway but a chain of commutations channels including roads, railways, oil and gas
pipe lines and fiber optic link. A major portion of the plan consists of 2700 kilometer highway
from port of Gawadar in Pakistan to Kashgar in China. The corridor may easily be connected to
India, Iran and Afghanistan. The revival and reconstruction of Karakorum Highway is also included
in the plan. Some economic hubs will also be established along the route which will accelerate
economic activities in Pakistan.
CPEC project is considered as the game changer, therefore a careful cost-benefit analysis is
required to assess for which country it can be considered as game changer. The parameter for
the game changer for any country is that how much profitable businesses can be generated and
how much additional savings can be possible. CPEC project is started
Objective: To analyze the cost and benefit of the CPEC project for Pakistan and China
Benefit to China: China spend around $18 million on import of oil from Middle East through
Strait of Malacca, covering 9,912 miles every day. This corridor will reduce the distance to 3,626
miles, directly from Kashghar to Gawadar. It will reduce the cost down to one-third.
Another benefit to China is that, it export majority of their products to Western countries.
Through this economic corridor, the time and cost will be much reduced by exporting to
Western countries.
Cost for China: Threat to human capital through extremism and terrorism is the major cost of
China while implementing this project in Pakistan.
Benefit to Pakistan: New infrastructure e.g. Karachi-Multan-Lahore Motorway, will be
constructed that will connect most of the country parts with each other. The amount kept aside
for infrastructure is about $11 million.
New foreign investments will be initiated resulting in new jobs and employment opportunities.
China has promised to invest $35 billion in energy sector of Pakistan which is the major obstacle
in Pakistan industrial growth and development.
Cost for Pakistan: 10 % cost of the project will come from the Public Sector Development
Program and 90% of the cost as credit financing through the government of China.
The project will be protected by Pakistan Army at its own cost.
However, China is one of Pakistan’s largest trading partners; the two-way trade exceeded $16
billion last year, marking an annual growth of 12.57%. By using efficiently the project, both
countries can be better off without affecting each other.