Current Affairs

Sino-Pak Relations Altaf Sheikh (PAS)

& CPEC
 Sino-Pak at Glance

❖ All-weather
❖ Time-tested
❖ Deeper than Atlantic
❖ Higher than Himalayas
❖ Sweeter than Honey
❖ Strategic and stronger than steel
 Background
❖ More than 2,000 years ago, Chinese Monks used to travel to South Asia practicing
and preaching Buddhism.
❖ Pakistan was first Muslim country to recognise Peoples Republic of China in 1950.
❖ 1st Official Delegation visited in China in January, 1950.
❖ Shared rivalry with India (1962 Sino-India War, 1965 Pak-India War)
❖ In 1963, Trans-Karakoram Tract ceded to China
❖ In the 1970s, Pak facilitated secret talks between US Secretary of State Henry
Kissinger and Chinese Premier Zhou Enlai that paved way for US recognition of
People’s Republic of China in 1979.
❖ FTA Signed in 2006
❖ Support each other’s stance at International Forum
 Military Relations
❖ China is a major supplier of Military hardware
❖ MBT-2000 (Al-Khalid) tank
❖ Joint Ventures - JF-17 aircraft.
❖ China’s support instrumental in Pakistan’s nuclear program
(Agreement signed in 1986)
❖ Joint Military exercises/cooperation
❖ Setting up of Pakistan Aeronautical Complex, Kamra.
❖ Nuclear Power Plant (CHASSNUP-1) in Chasma, Punjab
 Economic Relations
❖ 2001 to 2014, Pak is 2nd largest recipient of Chinese
assistance totalling $135 billion.
❖ Haier Group, China Mobile (Paktel),
❖ Metallurgical Construction Group (Saindak Copper
Mines)
❖ Gwadar Port
❖ Saindak Copper Mines
❖ CPEC !
Current Affairs

CPEC Altaf Sheikh (PAS)

 Content
❖ China’s Belt and Road Initiative (BRI)
❖ CPEC Overview
❖ Connectivity
❖ CPEC Project Types & Financing
❖ CPEC Plus
❖ Opportunities
❖ Challenges
❖ Recommendations
China’s Belt & Road Initiative (BRI)
❖ A trillion dollar development strategy
❖ Globalist approach amid anti-globalism trends
❖ Trade, Economic and Cultural exchanges
❖ Forging new strategic partnerships and alliances
❖ Aiming to reshape the security and economic architecture of the world by shifting the global power
❖ BRI may be viewed as:
❖ Massive Infrastructure
❖ Global Investment Strategy (add US$2.5 trillion over next decade)
❖ Debt and Environmental Trap
❖ Political Powerplay (65 countries in Asia and Europe)
❖ Global Institution
 What is CPEC?
❖ 15 year program scheduled for completion in 2030
❖ Initiated in 2013 and formally launched in April, 2015 in
a visit by President Xi to Islamabad
❖ $46 billion worth series of energy and infrastructure
projects (currently at US$54 bn)
❖ Joint Cooperation Committee (JCC) chaired by Min. of
Planning, Pak, and Vice Chairman of China’s National
Devt. & Reforms Commission
Institutional Framework of CPEC
 Connectivity
❖ Inter-Countries and Inter-Provincial and Inter-Cities
❖ Some of the infrastructure projects connect Uighur (Xinjiang) to
Gwadar (Balochistan)
❖ Distance by land is far less than distance by sea.
❖ Gwadar Port - Belt and Road Initiative (BRI)
❖ Foundation stone laid in 2002, first phase completed in 2007
❖ Singapore Port Authority (SPA) given operations in 2007
❖ China Overseas Port Holding Company given control in 2013.
❖ Gwadar International Airport
 CPEC Project Types

1%
Infrastructure

35%
Education, Public Health
and Telecommunication

64%
Energy

Energy Infrastructure
Education, Public Health and Telecommunicaiton
 CPEC Projects Financing
FDI Concessional Loans Commercial Loans Grants
Title

1%
6%

25%

67%
 CPEC Phases
❖ Phase - I: Short Term Projects to be completed by 2020
❖ Economic Stimulus
❖ eliminate power shortages
❖ address infrastructure deficiencies
❖ Phase - II: Medium Term Projects to be completed by 2025
❖ Boost Exports
❖ Special Economic Zones
❖ Phase - III: Long Term Projects to be completed by 2030
❖ Construction of Rail Network
❖ Construction of Energy Pipelines
Thar Coal Power Project 2 x 330 MW Wind Farm Jhampir, Sindh - 50 MW
Port Qasim 2 x 660 Thar Coal Power
Quaid-e-Azam Solar Park, Bahawalpur (900 MW)
Sukkur - Multan Motorway (M-5)
 CPEC Plus

❖ CPEC + Kingdom of Saudi Arabia (KSA)

❖ Committed US$20 billion worth investment
❖ Multiple Sectors including Energy, Agriculture,
Culture, Information and Tourism
❖ Central Asian Republics (CARs)
❖ Iran and Afghanistan
 Opportunities
❖ Supply of uninterrupted energy/power (21 energy projects will add 16400 MW)
❖ Boost Industrial Productivity (current loss of 7% of GDP due to energy shortfall)
❖ Job creation (400,000 - ILO), (800,000 MoP&D, GoP)
❖ Rapid, equitable, and sustained macroeconomic growth
❖ Reduction in trade deficit (import bill)
❖ 4% of China’s Trade routed through CPEC by 2020 - approx. $158 bn
❖ Opportunity to decisively overcome insurgency in Balochistan by extending
economic rights and privileges to the locals.
❖ Improving the competitiveness of value-added exports
❖ Ameliorate poverty - End conflict through prosperity
❖ Contribute in achieving some of the Sustainable Development Goals
(SDGs) related to infrastructure, transportation and environment.
❖ Economic empowerment - less reliance on aid/debt
❖ Attract more Foreign Direct Investment (FDI)
❖ Geopolitically, Post-Trump US has focused on withdrawing from
Afghanistan. Pakistan has greater role to play.
❖ With Sino-centric strong partnership, Pakistan can decrease its
vulnerability to non-military coercive action such as sanctions, etc.
❖ Better Infrastructure - Growth in tourism
❖ Cultural/Religious Tourism - Buddhists Sites (Temples/
Monasteries) in Mardan, Taxila and Peshawar.
 Challenges

❖ Political Instability leading to inconsistent policies

❖ Parliamentary Committee controversy (Senate v NA)
❖ Unanimous support for CPEC but divided over
equitable distribution and control over projects.
❖ Controversy over eastern v. Western route
❖ Change in demographics - influx of economic migrants
 Challenges

❖ Lack of Consensus among federating units

❖ Lack of Transparency
❖ Province-specific projects (Orange Line Metro)
❖ The Balochistan Question?
❖ Civil-Military Relations
❖ Ability to Payback Loans
 Recommendations
❖ Political Leadership Consensus
❖ Controversies may be sorted out at CCI level.
❖ A broader CPEC Authority to ensure smooth progress
❖ Led by PM, all CMs as members inc. GB.
❖ China’s Track Record: 9.4% delivery of the committed aid. (RAND Study, 2013)
❖ Ensure Transparency
❖ Ensure equitable distribution of benefits/progress, prioritising the underdeveloped regions
❖ Acc: to World Bank, Success rate of SEZ is only 23%. Right kind of incentives can make difference
❖ Local contractors, labour both technical and non-technical be given preference
❖ Capacity building of government agencies involved in CPEC
❖ Consistency of policies and value addition through complimentary projects
❖ Should not let China interfere in domestic politics
 References & Further Readings

❖ http://cpec.gov.pk/
❖ http://www.cpecinfo.com
❖ https://cpec-centre.pk/
❖ https://www.crisisgroup.org/asia/south-asia/pakistan/297-
china-pakistan-economic-corridor-opportunities-and-risks
❖ https://pide.org.pk/psde/pdf/AGM32/papers/
Cost%20and%20Benefit%20Analysis%20of%20the%20Four%20Ro
uts%20of%20CPEC.pdf
The End