CPEC: Road to the future?

Updated Nov 15, 2016 11:24am


Your Name:

Recipient Email:

Workers set up a billboard welcoming President Xi Jinping to Pakistan ahead of his visit in 2015 | AFP
Workers set up a billboard welcoming President Xi Jinping to Pakistan ahead of his visit in 2015 | AFP

What exactly is the China–Pakistan Economic Corridor (CPEC)? Despite the vast numbers of articles, conferences, government statements, and – increasingly – projects on the ground, there are still major gaps in the perception and understanding about the initiative. Typically, this is attributed to a lack of transparency. Although many details have been released, there remain a number of unknown elements, not least about the aspects of financing. Journalists digging around individual projects do not always get much traction with the Chinese firms involved, and there is still a level of political sensitivity around the entire scheme that makes it difficult to conduct a full warts-and-all assessment of its economic merits. However, there are confusing elements about the entire framing of the initiative that will not be dispelled simply by opening the books.

In the coming years, all sides would benefit from making the initiative a demystified and markedly less sensationalised topic.

The first is the headline figure attached to CPEC – 46 billion dollars – a number that has seemingly been preserved in aspic since it was first touted during President Xi Jinping’s visit to Pakistan 18 months ago, save only for periodic suggestions of upward revisions by Pakistan’s Planning Commission. In practice, some of the calculations that fed into this were not too far from back-of-an-envelope estimates, with the bulk of the details to be worked out after the fact. Chinese officials have consistently been more cautious, tending to lay emphasis on the projects that are actually in the process of implementation – which appear to add up to between 10 billion dollars and 14 billion dollars – rather than totalling up those that are still in the process of negotiation. CPEC is a work-in-progress rather than a single mega-package, and many of the medium-term projects, such as industrial zones, will be contingent on making a success of the energy and infrastructure plans in its first phase.

Development of Gwadar Port holds a pivotal role in the execution of CPEC | AFP
Development of Gwadar Port holds a pivotal role in the execution of CPEC | AFP

The second is the very concept of a ‘corridor’. This inevitably evokes images of a transit route, and with it all manner of geopolitical speculation about Chinese access to the “warm waters of the Indian ocean”. In reality, the cross-border dimensions of the plans are a very modest part of the present scheme. There are some road upgrades and fibre optics, but pipelines and railways to Xinjiang and the like are still in the zone of speculation. Given the physical obstacles, it is entirely conceivable that land routes to China will never assume any great commercial significance. There is good reason that the bulk of the projects in each proposed phase are largely intra-Pakistan in nature. The value of CPEC for China will come from its impact on Pakistan’s economy as a whole, the strategic benefits that ensue from that, the commercial benefits its firms derive from the investments themselves and from the growth of the Pakistani market.

CPEC is a work-in-progress rather than a single mega-package.

The notion of the corridor has had problematic repercussions. There has been excessive political infighting over the “route” — which is not the most salient issue about the economic value of CPEC for the provinces. And it has also played into the level of hostility with which the initiative has been greeted by India, where CPEC has been seen in largely geopolitical and security terms than the more prosaic nature of the projects themselves barely merit. ‘China increasing its investments in Pakistani energy and infrastructure projects’ is not a credible agenda item for a summit meeting between Narendra Modi and Xi Jinping or for upping the ante in Balochistan, but the heady cocktail of Gwadar, Kashmir and strategic trans-shipment routes has proved too potent to resist for India. The Sino-Pakistani military relationship evidently remains a long-term challenge for India and territorial disputes remain unresolved, but CPEC is not at the nub of either issue.

CPEC was on the agenda during Indian Prime Minister Modi's meeting with President Jinping at the G20 Summit earlier this year | AFP
CPEC was on the agenda during Indian Prime Minister Modi's meeting with President Jinping at the G20 Summit earlier this year | AFP

In the coming years, all sides would benefit from making the initiative a demystified and markedly less sensationalised topic. The more useful debates to have are about interest rates on loans, returns on investment, the energy mix, energy pricing, education and training, bureaucratic capacity and a host of other questions that are standard fare in well-informed policy circles — but clearly less appealing fare for strategists than new regional blocs, covert action and vital security threats. As things stand, the hyperbole will hurt CPEC’s prospects. From the Chinese side, this was intended to be the politically non-contentious element of Sino-Pakistani cooperation, both domestically and internationally. Beijing has no intention of backing away from the plans. The financing is there and political commitment is strong. But CPEC is a challenging enough proposition as it is, without adding needless complications. If the initiative is really going to become a ‘game changer’, the best bet now is for it to become as boring as possible.

This article was originally published in the Herald's October 2016 issue. To read more subscribe to the Herald in print.

The writer is a senior transatlantic fellow at the German Marshall Fund of the United States, and author of “The China-Pakistan Axis: Asia’s New Geopolitics”.

LARGE_RECTANGLE_BOTTOM - /1029551/Dawn_ASA_Unit_670x280

Comments (45) Closed

AZAAD Oct 13, 2016 09:29pm

CPEC is a very good project. Does not need to be so politicized.

It wont make Pakistan rich overnight, or bring the Chinese any closer to endorsing Pakistan on Kashmir, but it is a very useful project.

If the Iranians, the Indians and the Afghans join in, it will bring prosperity for all.

bilal-atlanta Oct 14, 2016 02:42am

@AZAAD indians can not join in due to "no peace" between the two people (pak & india). Pak doesn't need to worry about the welfare of the world. China and Pak already offered Iran to join in and that is wise since they have very large energy resources that can help both Pakistan and China. for Afghanistan, that is a country that has caused Pakistan lots of issues at all times. Hence the only wise strategy was what they did, an attempt to ask Iran to join in.

Satyameva Jayate Oct 14, 2016 03:05am

CPEC at best will be a Transit Route for China. It will still be much smaller transit route than Suez and Panama Canals. How rich did those routes make Egypt ana Panama? Two facts about Goods Transportation needs to be borne in mind. 1. Road transportation is 10 Times costlier than water transportation. 2. 80% of China's International Business Activity is close to the its ports near its eastern seaboard - far far away from Xinjiang. 3. CPEC will have nor direct link to the One Belt One Road route.

Hi Oct 14, 2016 08:24am


taimoor khan Oct 14, 2016 08:36am

Pakistan's bright and secure future lies in total political,economic and cultural integration with Chinese mainland similar to Hong Kong.

lals Oct 14, 2016 09:01am

CPEC means Pakistan will be soon slave of China. Nothing comes for free and china is paying most money but once CPEC becomes active, china will have full control and might pay pakistan just 10% and keep 90% with itself. China is going to bully pakistan. I am indian but feel wish pakistan should have done such project alone and from benefit of it, should have done something good for their country. Now don't tell me pakistan does not have money. If you need money just look into an account of your politicians. That's where entire money lies.

Shyam Oct 14, 2016 09:05am

Flag on display explains it all.

TRON Oct 14, 2016 09:12am

CPEC is a tiny part of China's dream project "One Road One Belt". It will sure to help Pakistan some extent in future but not in the way political hype is created for CPEC. China is happy for free publicity. Joining CPEC by other countries is a pure propaganda, as only Afghanistan may get some benefits if joins. Forget about UAE or KSA, even Iran and India will gain nothing.

Mohajir Oct 14, 2016 09:19am

CPEC will put Pakistan in a debt trap that will take generations to repay, if at all Pakistan chooses or is able to pay.

Chinese firms are getting lucrative contracts, Chinese workers are getting work and all the money paid to them is being added to Pakistan's debt.

Siddhartha Oct 14, 2016 09:23am

@Azzad. Agreed. I think poverty is the main enemy of this subcontinent and removal of this should solve 90% of the problem.

Imran Oct 14, 2016 09:25am

The much talked/debated contents of CPEC is more a hype than reality. Though Chinese are investing heavily in Pakistan but those investments will never make immediate benefits for Pakistan. The reality is that Chinese are just creating the basic infrastructure needed for their transpiration to pass through Pakistan to reach Gwadar port. Anything more than this speculated/talked about is just a hype rather than a reality.

NAVIK Oct 14, 2016 09:28am

India never objected CPEC.. Only concerned about the small part of CPEC which goes through disputed territory. Pakistan would have easily addressed India's concern by investing Pakistan's money on that small part which pass through Kashmir..

Sam Oct 14, 2016 09:47am

CPEC will bring prosperity to the People of Pakistan. That is why all the Advisories of Pakistan are so against it. If your enemy is the biggest critic of your plans then execute those plans first.

sanjeev Oct 14, 2016 10:05am

Land routes are several times costlier than ocean routes. Since India or Iran do not need to export any thing using CPEC, basically it is being build by China to utilize excess idle capital lying with them. In the past they had built ghost cities for the same purpose. Now they are aiming to get good returns on their investment. China cannot afford to export any thing through this route incurring very heavy transport costs compared to ocean routes. So CPEC will be useless for India, Iran and useful only for China that too not for exports but for getting good ROI. Ultimately Pakistan will be left holding the burden because they have to return the capital with interest and marked up profits to China.

PakSal Oct 14, 2016 10:05am

India having access to warm waters of Arabian sea already has nothing to gain from CPEC. However Afghanistan, China, Russia and central asian countries can use it to the fullest. This corridor passes through GB which will bring prosperity to GB as well as Azad Kashmir.

VermaG Oct 14, 2016 10:08am

would have been better if more Pakistan labour were employed.

R.Kannan Oct 14, 2016 10:09am

Is the writer so naive to believe that a security threat to India does not exist ? The energy part of the corridor is clearly overpriced (every article I have read suggests the number is atleast twice the actual cost in other parts of the world and China does not have the knowhow for low calorific value coal). The corridor's alignment has been changed to shift it close to the India Pakistan border and LOC. China has only about 5% of its population in its eastern part and this part is not industrialised. The only aspect of the CPEC that is clear is its potential anti India ganging up of Pakistan and China.

amir_indian Oct 14, 2016 10:48am

India don't want CPEC because - 1) When Afghan President Mohammed Ashraf Ghani visited India last month, officials said, he specifically raised the possibility of developing Afghanistan's eastern river system. 2) India and Russia are expected to ink defence deals worth billions of dollars during the meeting in Goa on Saturday between Prime Minister Narendra Modi and President Vladimir Putin, on the sidelines of the BRICS summit. They include the procurement from Russia of four stealth frigates and five units of the S-400 anti-aircraft system, and the announcement of a joint venture for the manufacture of 200 Kamov-226T helicopters in India.

KT Oct 14, 2016 10:59am

All routes should be properly defined with proper plan Train Tracks should be defined if they are double or quadruple may be hexatruple also highway and service road routes should be well setup with space for cables pipes and fencing walls to protect any kind of intrusion to route. Most important those countries who are interested in joining CPEC like Afghanistan and Tajikistan with them long term agreement must be made so that CPEC can be routed from their land.

Khan Oct 14, 2016 11:03am

@Shyam you nailed it

pk Oct 14, 2016 11:06am

Beware..this is how the flag of pakistan will look like in future! Remember Tibet!!

Rizwan Oct 14, 2016 11:13am

@lals China is not paying any money as a grant/aid. China is not USA. All money is in the form of state gauranteed loans to be paid by tax payers with full interest back to China. All electricity generated will have to be purchased at a pre-set higher price. We have already started seeing our electricity bills jump by certain percentage being charged in the name of CPEC. Land route especially one with mountains is more expensive than sea route. One wonders what is the purpose of CPEC for Pakistan? It may have strategic value for China.

Prem Oct 14, 2016 11:35am

I think CPEC will benefit Pakistan only when pakistan becomes a manufacturing hub. Pakistan again should develop good relationship with the neighboring countries. They have to wipe out all talibans. A lot of work to do and I wish Pakistan comes out of this terrorism and be a strong country.

haqster Oct 14, 2016 11:41am

Prosperity for Pakistanis will only come if we invest in our people. We are 133rd in the Human Development Index (horrible) and can only progress if we properly educate, train and provide healthcare and nutrition to our people.

Otherwise CPEC will be a highway that will just go "by" the masses...

Sudhanshu Swami Oct 14, 2016 11:45am

If I had old coal plants, spare money and friendly politicians then I would also Invest in that country. I could be agree on guaranteed return of less than 18% instead of upto 27%. I will make road and industry even if I dont use that road. And I get tax free zones as well as all beneficial positions are appointed by me. No doubt that this will hep Pakistan, it will create jobs too, but burden of loan repayment will be on shoulders of rest of people.

dshuman Oct 14, 2016 11:58am

@NAVIK CPEC is just a ROAD , we in India are building more road then this , it is funny to see how you boast on it you can not even built road for your self ? I'm not sure how it will be cost efficient for china to use road transport ...for long route if go by ticket price the air route comes cheaper forget the ocean route which is WAY cheaper and almost backbone of entire world export.

Ahmed Oct 14, 2016 12:13pm

Mutual benefit thing is not clear. Knowing China, they won't invest a penny in Pakistan unless it brings double benefit to them. We really need to be cautious. Their support for Pakistan is only till we are returning the favor.

Chinese work with Sri Lanka is well known and their dominance in South China Sea with Vietnam / Japan / Korea is very clear. Just to avoid India, falling into the hands of Chinese doesn't seem like a great option. Russians can still be trusted!!

Salma Oct 14, 2016 01:08pm

@Satyameva Jayate, 1. CPEC funding contributed to 13 energy projects which will give us 13000 MW of additional electricity in 2018. 2. CPEC will develop a new port and with that a new city creating thousands of jobs. 3. Gwader will replace Dubai as a refilling port for most of the vessels travelling in the Arabian sea. 4. Chinese companies plan to invest heavily in 18 industrial parks along the route and will setup their production and warehouses at these spots. 4. Even if China only uses the route to fetch oil from Iran and middle east, the transit fees are calculated to be enough for paying back the loans. 5. China's priority is to reach its customers in much lesser time than today even if it costs more to transport by road and rail. If it was not the case, why would they build a long road and train link of 6500 km from Urumqi, Xinjiang to Spain. CPEC saves the 35 days. 6. CPEC is a huge defense cooperation project too.

Salma Oct 14, 2016 01:11pm

@lals why would India be the biggest borrower in the world then? WHy don't they invest their own money too as they have it in reserves.

XYZ Oct 14, 2016 01:45pm

@taimoor khan Interesting... I wonder why Hong Kong is trying to run away from China then???

Tughral Oct 14, 2016 02:33pm

The author is right on target.CPEC was supposed to be a very non controversial collaboration between two great friends.The infrastructure, industry, energy sector development will help Pak bring prosperity to its people and the Chinese will reap the rewards in terms of return on their investment.So how did it become controversial and who made it so?A global power does not want China to extend its influence towards West Pak,Iran,Central Asia,Gulf region.A regional power does not want to see development in Pak.Result is the souring of relations of Pak with the global power in question and the regional power's mass scale propaganda portraying CPEC as military bloc against its sovereignty and supposedly passing through its land.At the same time bringing international attention to the insurgency in Baluchistan and trying to portray a small scale rebel movement as a national freedom movement along the same lines as Kashmir.So how do you make it boring when they are trying to do the opposite?

Zafar Oct 14, 2016 04:29pm

Congratulation to the people of Punjab for this Grand Project. Surely Punjab will benefit the most as is evident by the route and we the people of balochistan will be left with the dry land to scratch for a living as always .........

Genesis Oct 14, 2016 05:19pm

No it is the obsession of both nations with Kashmir and both nations are paying a high price for their short sighted policy,If only they can sit and talk and push Kashmir to the back burner for the next ten years or even longer you can see remarkable progress in both nations.

Genesis Oct 14, 2016 05:20pm

@VermaG They have not done it in Africa..why would they do it in Pakistan

Milind Oct 14, 2016 07:10pm

India will never ever accept to be a part of any project where the size of its flag is so much smaller than the other country. Reflects what the other country really thinks of you and in this case is actually making it clear that you are nothing but a commodity for them The one thing India has consistently shown is it doesnt really care for favors. . Use and throw. CPEC is a legal corruption system for benefit of China and Pak politicians and endorsed by Pakistani citizens. What an irony!!

Rizwan Oct 14, 2016 08:01pm

@Ahmed Well said but the boys in Islamabad and Rawalpindi think otherwise. Anyway, who cares for the common people? Army simply wants that it's budget should not be curtailed.

sam Oct 14, 2016 08:20pm

40 billion $ are waiting to be sucked up in foreign banks by corrupt to the core forces.If I name them this remark will never get published. As Hassan Nisar has rightly observed, a thousand CPECS can not benefit Pakistan as long as greed and corruption is king. That goes for India too if after Modi, corruption crawls back.

Ahmad Oct 15, 2016 01:18am

What we know about CPEC is that it is actually CLEC, China Lahore Economic Corridor

J Hazra Oct 15, 2016 03:36am

Haze & Mist, that is the trade mark of mysterious China. Pakistan is going to bleed heavily to see this project through. China is always the blood sucker and land hungry country.

Chetan Chandra Oct 15, 2016 08:49am

@Satyameva Jayate Correct !Connecting via land has been a costly affair as far as the commercial viability is concerned. All the transportation cost will lead to the increase of the product cost to and from China.Yes the Chinese will get a short way to travel and to reach Central Asia.The Chinese have not conceived the idea of roping in of the other nations,which they could have done.The Chinese are pushing Pakistan into debt in perpetuity,which Pakistan would never be able to close.

Chetan Chandra Oct 15, 2016 08:56am

@Sam Here lies the problem,where the people just want to go against their adversary and in haste do not take care of the feasibility or the concerns pertaining to their people itself.And in this a third party takes all the benefit.Merely pushing the things is not going to resolve the issues.

Satyameva Jayate Oct 15, 2016 09:21am

@Salma - Ms., all this that you have mentioned is nowhere mentioned in the Chinese media or official sources. Despite repeated requests by the Pakistan Media, Pakistan government has refused to make public all details about CPEC.

Satyameva Jayate Oct 15, 2016 09:25am

@Salma - Re: "why would India be the biggest borrower in the world then?" - India IS NOT "the biggest borrower in the world" please do a simple internet search.

SKChadha Oct 15, 2016 03:49pm

China’s Belt and Road initiative from authentic source are at: beltandroad(dot)hktdc(dot)com/en/about-the-belt-and-road-initiative/about-the-belt-and-road-initiative(dot)aspx .

China's proposals about Bangladesh-China-India-Myanmar Economic Corridor (CBIM) was discussed during Li's visit to India in May, 2013 and its extension from Kolkata to Gujarat and also upto Karachi. In same tour Pakistan mooted concept of CPEC basically for its Kashmir agenda? Financially and in normal trade ties Gujarat and Karachi Port links are more suitable for China to connect itself with Arabian Sea? China’s main industrial hubs are on its eastern coast and OBOR through BCIM passes via four nations and their better industrial zones. This route connected with rail links for economically transportation of goods both ways. It is also better connected both ways from Middle East and Africa for many nations. CPEC has no such offering even for China alone?

vagvala Oct 16, 2016 05:09am

Look at the flag- Seem to reflect submissive and slave mentality. Doesn't it? Why have red color around Pakistani flag and red even stepping over to the left side of it? Think about it. Common have self respect. We have been through sucking up to westerners for decades now. Do we need to now suck up to others too? Respect doesn't come from sucking up but by standing your own ground. The very design of this flag stands right in the face of it. By the way before any rants start, yes I am Indian and I see Pakistanis truly as my equal cousins no less. In fact I see all humans no matter the color, race, caste and other nonsense we created for ourselves are all equal and have potential to be great. If any, our both nations peoples are from the oldest civilization, very capable people just lack self confidence and discipline and constantly fighting to pull each other down. Once we both stop playing these games and get real about building our nations to true developed nations.