Select excerpt from Belt & Road: China Pakistan Economic Corridor
As a follow-up to our February 2021 initial report on the People’s Republic of China’s Belt & Road Initiative (BRI), the Sourceree SHIELD Team has spent months preparing a comprehensive report on the BRI’s flagship, the China Pakistan Economic Corridor (CPEC). The report provides in depth information on CPEC projects, including planned costs, management structure, and countries involved in the effort.
The China Pakistan Economic Corridor (CPEC) is a portion of one of the six major corridors of China’s flagship Belt and Road Initiative (BRI). Formally launched in April 2015, CPEC is a bilateral relationship between the governments of China and Pakistan. In this relationship, Pakistan receives funding and support for infrastructure development – which includes telecommunications, ports, highways, pipelines, energy production, and railways – to aid in modernization and economic growth. In turn, China will gain a valuable ally in Central Asia, access to strategic locations, and infrastructure for purposes of trade and the ability to grow their global influence. CPEC was created under a 1+4 Cooperation Structure – the Economic Corridor as the “1” at the center, with the Gwadar Port, Energy, Infrastructure, and Industrialization forming the remaining components.
The CPEC was originally budgeted to cost $47 Billion, yet it has received approximately $62 Billion in funding. Most of which comes from the Chinese Government via state-owned entities. Of the $62 Billion, only $28 Billion (comprising a total of 51 projects) have reached the contracting phase. The rest remain muddled in negotiations.
The graphs below show the value of the Pakistani Rupee (as measured against the US dollar) prior to and since the announcement of the CPEC. While inflation has caused the value to drop since 2010, it has taken a steeper fall since 2015, when the CPEC agreement was formally signed.
China’s goal is to implement the full CPEC as quickly as possible, to serve as a model for the greater BRI. Success in Pakistan will likely speed along further success in other regions, but failure could be disastrous for Pakistan’s economy and the rest of the planned BRI corridors.
Security and Stability
The United States’ troop withdrawal from neighboring Afghanistan provides China an opportunity to exert diplomatic influence across the region in concert with its economic support and investments. The Afghan Taliban, Pakistani Taliban, and the Islamic State each have varied responses to China’s economic and political overtures in Afghanistan and Pakistan, ranging from emphatic support to violent opposition. Terrorism will likely remain a substantial threat for the foreseeable future and will have a major impact on CPEC efforts. If Pakistan is unable to contain the violent extremism that plagues the underdeveloped areas, then the instability may be too chaotic for Chinese projects to continue. Gwadar Port, which is one of the centerpieces of the CPEC, lies in Baluchistan Province, which is historically rich in resources, but is the least developed province. Largely due to the presence of Taliban fighters in what is considered a “lawless, chaotic, and poorly governed, run-down place.” The Baloch people view CPEC as both a foreign occupation of their homeland and a further attempt by their Punjabi neighbors to seize control of their natural resources. In the end, the cost of security may outweigh the potential benefits of CPEC, and China could turn to a more favorable route, such as through Iran.
Why should you care about the CPEC?
As China and the United States compete to be the most influential nation both politically and economically, the location of the CPEC has taken center stage. South and Central Asia are rich in natural resources and the United States is on the cusp of its deadline to withdraw from its nearly 20-year engagement in Afghanistan. Any significant shift in the balance of power between Pakistan and India could further destabilize the entire region, even to the point of direct military conflict – especially if China attempts to utilize Gwadar Port for the People’s Liberation Army Navy (PLA-N).
Belt & Road: China Pakistan Economic Corridor
Full Report Includes
- The China Pakistan Economic Corridor is a flag ship project for the sprawling Belt and Road Initiative that touches billions of people and numerous continents.
- The corridor has received substantial investment and attention from China since inception, but has faced challenges in recent years.
- Pakistan and its geographic location will play a huge role in the great Belt and Road Initiative. However, it's volatile neighbors will have an impact on the success or failure of this project.
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