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The Importance of China-Pakistan Economic Corridor from Regional

Development Perspective

Conference Paper · April 2018

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 Innovation Management and Education Excellence through Vision 2020

The Importance of China-Pakistan Economic

Corridor from Regional Development Perspective
Muhammad Ibrar, Harbin Institute of Technology, Harbin, China. ibrarshabjani@yahoo.com

Jianing Mi, Harbin Institute of Technology, Harbin, China, mijianing@126.com

Mansoor Mumtaz, Harbin Institute of Technology, Harbin, China, mansoorsmro@gmail.com

Muhammad Rafiq, Harbin Institute of Technology, Harbin, China, rafiq109@yahoo.com

Niaz Hussain Buriro, Shah Abdul Latif University, Shahdad kot Qambar Campus, Pakistan,
niazburiro01@gmail.com

Abstract
In this age of making continual growth, economic Corridors are an important need for the development
of any country. As compared to other regional countries, China is more reliable and all time partner of
Pakistan without any doubts. Economic Corridor from Gwadar to Kashgar through rail and road
connections would be the great source of change and development in the region. Furthermore, it will
provide the best and the shortest supply route to China as well as land locked countries of the central
Asia. China Pakistan economic corridor (CPEC) provides a unique opportunity for Pakistan to bolster its
strategic and economic position coupled with many socio-economic benefits. The current study explores
China-Pakistan relations and the importance of CPEC from regional development perspective i.e CPEC
from Pakistan perspective, from China perspective, from South Asia perspective and Global perspective.
The method used in this study is based on a literature review and an analysis of OBOR’s strength,
weakness, opportunities and challenges for the CPEC. This study finds out that regional development
will boost economy by giving rise to new industry and business as well as by creating thousands of direct
and indirect employment opportunities. Finally, this corridor is not only the road to economic prosperity
of Pakistan and China; it can be termed as future of the world.

Keywords: Belt and Road Initiatives, China Pakistan Economic Corridor, Pakistan perspectives, China
perspectives, South Asia perspectives, Global perspectives.

Introduction
From ancient times structural development of any society is remains major point to be focused, because
structural development within society or among societies needs heinous investment which involves risks
of failures. In such development public and private stakeholders play pivotal role from beginning of the
idea development and implementation and for the successful commercialization of the idea (Flyvbjerg,
2014). Where there is heinous investment involves in the development sector the rate of risk and failure
also discussed, not because of failure but to reduce the tendency of the risks which may cause
redundancies in the implementation of the idea in form of project. When any idea is implemented in form
of the project, it encapsulated with certain limitations which are as important as the idea of the project,
these limitation include the time, budget and process of the implementation of the idea (Arango &
González Quiñones, 2009). Therefore, in this research a very peculiar type of project is discussed which
is recently become buzzword for the millions of people. This project is known by the name CPEC-
China-Pakistan economic corridor, in this research CPEC project is discussed from important and

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necessary point of views that results whopping development for both of the countries namely; the China
and the Pakistan.

China being world’s leader in the use of petroleum products is facing neck breaking overhead costs while
importing oil and petroleum products using Shanghai’s sea route. Therefore, to avoid economic
stagnation the China wants to increase revue and earrings by focusing cost reduction policies on the basis
of mutual benefits with Pakistan (Boyce, 2017). In the South Asia, Pakistan is lagging behind in various
important fields of daily life which cannot be ignored by any mean like, technology, social development,
educational development as well as structural development (Ahmad, Asmi, Ali, Rahman, & Abbas,
2017). Such developments are unavoidable because, these developments decrease the rate of poverty,
unemployment and built an economically strong society (Ibrar, Mi, & Rafiq, 2016). In the fields of
science and technology Pakistan is facing serious problems other than nuclear technology, but, still
Pakistan is energy hungry nation (Idrees, 2015). On the other hand the China as second largest economy
owes surplus revenue after economic boom of 2012, china is eager to invest in other developing countries
to maintain the surplus revenues (Beckley, 2012).

CPEC is being called as the game changer mega project to be started and completed in the modern of the
South Asian countries because; it will connect Asia with the European countries. Quick scope of CPEC
can be measured as it generates 4 million jobs directly for the local communities of the China and the
Pakistan, which appears to improve the economic conditions of the people. Through CPEC, heavy
industrial works in both countries not only provide jobs to communities but, CPEC also improves social
infrastructural conditions of the China and the Pakistan.

The CPEC has received a lot of national and international attention since its announcement in 2013. Due
to the amount of investment and the scale of the project, CPEC has considered the largest project
Pakistan has seen and with its economic and political implication, it is considered to be a game changer
for the region (Ibrar, Mi, Rafiq, & Karn, 2016).

CPEC megaproject development include the infrastructural development and renovation of major
railroads development, highways and motorways development and renovation, hospital and national
health system renovation, ICT and national broadband betterment (Ibrar, Mi, & Rafiq, 2016). In the
CPEC project renovation for energy capabilities improvement include the creation and renovation of
dams, wind plants, petrol and gas extraction in various areas of Pakistan. CPEC will increase high level
additions of new aircrafts, containers and cruise ships, as well as heavy logistics system to be run by
companies like Amazon and Maersk.

Considering the heavy infrastructural development of the China, from 2005 to 2008 entire world is agape
because, the China developed its railroad system in these just three years is beyond the imaginations of
the developed world. When it comes to comparison, the rail road which Europe developed in two to three
decades, the China did this development in three from 2005 to 2008, therefore, “the biggest investment
boom in the history, economists claim it heaviest investment in the development sector by any country.

My assumption is that this corridor will improve the living standard of Pakistani people as well as it will
create more job opportunities and with improvement of communication channels the economy of
Pakistan will boost. Economic corridor is not only the road to economic prosperity of Pakistan; it can be
termed as future of the world.

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CPEC and China Pakistan Relations

On May 21st, 1951 Pakistan and China formally established diplomatic relations. Since then, Pakistan
was kindly called the sworn friend of China. Since the establishment of bilateral diplomatic ties over 60
years China and Pakistan people have been kept friendly relations with mutual help which can be
regarded as model of the good neighborly and friendly relations in the world.

Pakistan and China has long history of economic and social relationships from the start when Pakistan
recognized it and become the first Muslim and third non-communist country to do so. China always gives
economic assistance to Pakistan because of their friendly and all-weather friendship. There is huge
Chinese investment which is likely to invest in the development of infrastructure, roads, highways, ports,
and energy and communication sectors. From the beginning leaders are sincere with each other because
both states are very important for each other development and prosperity. Pakistan is important for China
because it can give easy, safe and short access to Middle East, Europe and Africa through Gawadar World
deep sea port for import and exports. On the other hand China always gives defense and economic
assistance to Pakistan.

Pakistan and China are remained fast friends after the creation of Pakistan when china and India having
had war in 1960s, Pakistan also stood with china on the moral grounds. Both countries have long
friendship ties because both of them have strong histories of ancient cultures of peace and hospitability.
Therefore, when Pakistan and India were at wars in 1965 and 1970, the china supported Pakistan as well.
Today, Pakistan’s local market is full of Chinese products as and China has played a pivotal role in the
development of Pakistan.

Pakistan and China claim to have an “all-weather” friendship. Their geographic closeness enhances geo-
economic importance to their overall relationship. To enhance the profits of their shared border, the two
sides in 1982 completed the legendary Karakorum Highway (KKH), linking Pakistan’s Hasan Abdal, a
town near Islamabad to China’s Kashgar, via the Khunjerab Pass. During the 2000s, the highway was
modernized and expanded to make it operational for all types of traffic, year round. An inland network of
roads connects Hassan Abdal with Pakistan’s Gwadar and Karachi ports in the south of Pakistan.

In twenty first century, China-Pakistan relations entered in new phase of cooperation and development
when the new chief executive of Pakistan, he focused to develop relations with China. In January 2000,
Chief executive of Pakistan visited China after few months after he came of power and discussed the
problems related US sanctions on Pakistan’s nuclear policy and democracy related issues. He also talked
to enrich Pakistan-China trade and economic relations. Chinese Premier stated military government in
Pakistan would not affect Pakistan-China relations and stated “In our nation-building endeavors, our two
nations have supported each other and have carried out fruit full cooperation”. President of Pakistan
stated that “Pakistan considers China as its most reliable and time tested friend”.

For last three decades Pakistan has been suffering in almost all spans of daily life due to internal
mismanagement and irregularities. For economy like Pakistan it’s very important to grow for its survival
as nation and maintain the growth because the population of the Pakistan is drastically increasing day by
day and challenges are also going worse by nature to meet the global human index of development (Ibrar,
Mi, Rafiq, et al., 2016). Technically to face these challenges Pakistani premiers are remained under
strong pressure because the challenges like poverty, lawlessness and mismanagement are increasing
internal problems for Pakistan. Therefore, premieres and policy makers realized the importance of
geographical location of Pakistan in the global map and now this geographical location is being utilized
for the welfare and wellbeing of the Pakistan and the region.

The idea of developing economic corridor which was visualized by Chinese Premier during his visit to
Pakistan on May 2013, found a proper shape. The proposed economic corridor will connect the north-

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western Chinese province of Xinjiang with the Pakistani port of Gwadar through a network of roads
measuring around 3000 kms (1,800 miles), providing Pakistan its much-needed economic infrastructure,
especially power-generation plants (Ibrar, Mi, & Rafiq, 2016).

In 2015, President of China visited Pakistan. He mentioned that the people of Pakistan said, China
Pakistan friendship is higher than mountains, Deeper than sea, and sweeter than honey. Chinese people
call the people of Pakistan close friends, Good neighbors, trusted partners, and good brothers. We should
encourage the young generation of the two countries more and more.

CPEC from Pakistan Perspectives

From Xinjiang, western China to Gwadar port south of the Pakistan, about 46 billion US dollars are
being invested through the CPEC megaproject, which is equivalent to roughly 20 per cent of Pakistan's
annual GDP, and will improve almost all sectors of daily life in Pakistan ranges from infrastructural
development, energy development to communication development and this is 3000 kilometers
development in Pakistan starts from northern areas Khunjaerab to Gwadar (Ibrar, Mi, Rafiq, et al., 2016).

Current energy deficit in Pakistan deprived the nation from day to day economical enhancement almost
in all sectors, therefore, it is claimed that Pakistan is become an energy hungry nation (Rafiq, Javed,
Khan, & Ahmed, 2012; Rehman, Karim, Rafiq, & Mansoor, 2012; Rehman, Mansoor, Rafiq, & Rashid,
2011). Through CPEC there will be addition of 17000 megawatt of electricity to the nation electricity
girds in various cities and areas with the investment of 34 US billion dollars. The remaining amount of
46 US million dollars will be used to the establishment, development and renovation of Gwadar port and
nearby areas, which includes the establishment and spread of fiber optic system for the betterment of
communication between both countries (Ibrar, Mi, Rafiq, et al., 2016).

From the practical point of view, the results of this research study can be proved helpful for both
countries to decide, up-to what level the participation is needed from the community and the amount of
information to be disseminated so as to get support of the community. The findings have both the
theoretical and the practical implications. Firstly, the model used proposed in this study for analysis has
created of sophisticated ingredients like the conceptual difference between attitude and support.
Secondly, the proposed model of this research study shows that, the interrelationship between perceived
impact of mega projects and community support and this interrelation between these factors need
mediating role of the community attitude.

CPEC has provided incentives for Pakistan's in different sectors through its rich economic interests and
opportunities. Recently, CPEC has provided more than 60,000 jobs to the local people of Pakistan since
2015 and will generate more than 800,000 new opportunities in different areas by 2030. Additionally
regarding development point of view, twenty-one energy projects under the CPEC plan will doubled
Pakistan's current electricity production and will produce 16,400 megawatt of electricity when
completed.

CPEC from China Perspective

Historical study on China and Pakistan friendship curtails that, in 1970s in Pakistan the development of
Karakorum highway by china gave birth to the CPEC which realized long ago. This Karakorum Highway
is part of previously known as silk route between china, which starts from the Chinese bordered area
Khujerab pass to district Hazara in Pakistan. In 2010, China realizing the importance of Karakorum
Highway declared that Kashgar and Khujerab transit routes with Pakistan important transit routes for
economic cooperation between both countries. The silk route was already ancient transit route between
China and Pakistan, through which both countries helped and supported each other for long centuries and

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remain exchanging the local lore and cultures through the silk route. Recently named CPEC route
between China and Pakistan is remained very important transit and exchange route among Pakistan,
Central Asia and China.

China will easy double the power of production and manufacturing of goods and services after the start
of CPEC because Chinese economy is staging and needs drastic innovative changes to avoid the
stagnation of the economic growth and revenue earnings. The CPEC route will help the China to cut and
reduce the heinous costs of travelling and carriage of products because CPEC route is about 3000 km
starts from Khunjerab to the Gwadar south west of Pakistan. As well as, currently the China is active and
leading consumer of oil of Persian Gulf, which geographically is about 250 km away from Gwadar Port
of Pakistan. The CPEC will shorten the route for China's energy imports from the Middle East by about
12 thousand keilmeters as well as link China's underdeveloped far-western region to Pakistan's Gwadar
deep-sea port on the Arabian Sea via Pakistan occupied Kashmir through a huge and complex network of
railways, roads, energy schemes, business zones, and pipelines.

CPEC from South Asia Perspective

South Asia is documented as a region that is marred by instability, conflict and economic
underdevelopment. When opportunities of cooperation leading to development are sought, logically, it
strengthens the visions for a stronger and stable region. The CPEC brought forth the hopes of such
stability for Pakistan and South Asia in the forthcoming years. CPEC is win-win mega project for the
China and the Pakistan because; Pakistan’s geographical location in the Asia makes this project more
important. CPEC in other words, Pakistan is surrounded by oil and petrol either it is gulf region or central
Asian countries. Therefore, CPEC will bring all regional countries in a circle where economic, social and
technological support will be easily available at any time. As major portion of transport of CPEC is
covered by railroad we can say regional cooperation among Asian countries up to Russia will fasten
political and diplomatic relations. Currently, majority of Asian countries are fighting with poverty and
terrorism, therefore, China and Russian technologically help backward economies in this region to tackle
these problems and both countries will provide sustainable solutions to tackle with regional terrorism and
social backwardness (Ibrar, Mi, Rafiq, et al., 2016).

CPEC is a big challenge to China’s neighborhood diplomacy of amity, mutual benefit, sincerity, and
inclusiveness in relations with India. China and Pakistan need to decrease Indian fears about the CPEC in
order to escape fueling a proxy tussle in the restive province of Baluchistan in southwest Pakistan, which
is critical for the success of CPEC. In relation to the Belt and Road Initiative, Chinese objective would be
to win Indian cooperation or at least a neutral stance.

Active exchanges in different regions are improving the image for South Asian countries economies. It
looks the CPEC initiative has played an important role in encouraging economic integration. Countries
that have given a cool response to the one belt one road initiative may be bystanders to South Asia’s
rejuvenation. This should be known by India.

CPEC from Global Perspective

China and Pakistan economic corridor is megaproject, it will take several years to start and
implementations will also take and go through several sophisticated processes.

The process started by Chinese government unveiled the official action plan1 for the Belt and the process
started by Chinese government unveiled the official action plan 1 for the Belt and Road Initiative (BRI).
The BRI will connect the “China plus 64 countries”. Furthermore, BRI aims to connect China with Asia,
Africa and Europe along with five distinct routes refers to as “the Silk Road Economic Belt”. The Silk

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Road Economic Belt currently focuses on seven different corridors (see Fig 1):

1) New Eurasian Land Bridge (Connecting Western China to Europe);

2) China–Mongolia–Russia Corridor (Connecting from Northern China to Eastern Russia);
3) China–Central Asia–Western Asia Corridor (Connecting from Western China to Turkey);
4) China–Indochina Peninsula Corridor (Connecting from Southern China to Singapore);
5) China–Myanmar–Bangladesh–India Corridor (Connecting from Southern China to India);
6) China–Pakistan Corridor (Connecting from Southwest China to Pakistan);
7) Maritime Silk Road (Connecting from the Chinese coast/South China down to Singapore and across to
Mediterranean through Indian Ocean, Arabian Sea, and Red Sea).

In this point of view it is inevitable to avoid here the importance of social, economic, sociocultural,
political and environmental development, and all these factors will affect the development of both
nations as well as neighbors as well. In presence of several human development indicators, in this
research study these five indicators are chosen because, people from both countries need extravagant
development in these fields of daily life.

Fig. 1: The Belt Road and Initiatives (BRI) – Source http://www.hktdc.com

Therefore, in this research study global aspects of sustainable development are taken into account to
check the standards set globally for human as well as structural development. The structural development
standards which are set by the United Nations Organization are worthy to mention here, because, these
standards improvise the scales to calculate the impacts of the China and Pakistan Economic Corridor
mega project in perspective of the Pakistan as well as the China. These standards are also helpful to
calculate the contra impacts of the mega project for both of the countries as well as for people of both of
the countries (Ibrar, Mi, Mussawar, & Rafiq, 2017; Javed, Rafiq, Ahmed, & Khan, 2012; Rafiq et al.,
2012; Rafiq, Wu, Yun-hua, & Dminik, 2016; Rehman et al., 2011).

Human capital as the single most strategic component of development, several economies in the world
have identified that development comes through the development of people (Rafiq & Wu, 2017; Wu,

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Rafiq, & Chin, 2017). The case of Singapore is a good example of this. Singapore is a small country with
no natural resources that became a developed country because they developed their human resources.

CPEC Comparison to Other Economic Corridors

The economic corridor related idea has been executed in different regions of the world, including the
Europe as well as Americas. From all these successful examples, some of them also have been found in
developing countries in Asia. One study conducted by the Mekong Institute, Thailand revealed that the
Southern Economic Corridor’s (SEC) successfully impact on attitudes of Cambodia local community
(Phyrum K, Sothy V, & S., 2007). Additionally, this study found that after this corridor, the living
standard of Cambodia local community was also increased through improved education, healthcare, and
as well as advancement in public service facilities. This African corridor is clear example that how the
corridor is important. Because this transport corridor can not only facilitate trade and regional integration
but also increase the economic conditions of catchment regions. On the other hand, from CPEC
perspective South-East Asia is one of the best economically integrated regions in the world in terms of
low barriers to trade and investment. So, from CPEC perspective Asia can become a transit region
between East and West, and further advance its role as provider of commodities in both directions.

Conclusion
CPEC is a game changer for the region not only Pakistan and China will get benefits but all other
countries will benefit as well. This corridor is not only the road to economic prosperity of Pakistan and
China; it can be termed as future of the world. The ultimate outcomes of One Belt, One Road Initiative
are: facilities connectivity, policy co-ordination, financial integration, unimpeded trade and people-to-
people contacts.

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