论文总字数：89351字

摘 要

Chapter 1 Introduction 1

1.1 What is CPEC? 1

1.2 Description of CPEC Route 1

1.3 Impact of CPEC in general 2

1.4 Layout of the thesis 2

1.5 Research Question 3

1.6 Research Design 3

1.6.1 Material 3

1.6.2 Approach 3

1.6.3 Data collection 3

1.6.4 Data analysis 3

1.6.5 Data interpretation 4

Chapter 2 Literature Review 5

2.1 CPEC and Relationship between Pakistan and China 5

2.2 Perspectives for China 6

2.2.1 Belt and Road , and CPEC 6

2.2.2 Gwadar Factor 7

2.2.3 The Distance Factor 7

2.2.4 The Malacca Issue 8

2.2.5 Industrialization of Xinjiang 8

2.3 Perspectives for Pakistan 9

2.3.1 Transit Corridor 11

2.3.2 Energy is the priority 12

2.3.3 Development of Gwadar 15

2.4 Challenges 16

2.4.1 Security Issues 16

2.4.2 The Political Instability 18

Chapter 3 Effect of the CPEC on the convenience of the overseas trade route of china 20

3.1 Methodology 20

3.1.1 First Part 20

3.1.2 Second Part 22

3.1.3 Third Part 23

3.2 TRADING VOLUME WITH SELECTED DESTINATION COUNTRIES 23

3.3 Shipping Cost and Transit time 23

3.3.1 Current route shipping cost and transit time Calculation 24

3.3.2 CR (China Road) cost 24

3.3.3 CR (China Road) Transit time 25

3.3.4 Current route Shipping cost 26

3.3.5 Current route transit time 27

3.4 CPEC route shipping cost and transit time calculation 28

3.4.1 PR (Pakistan Road) cost 28

3.4.2 PR (Pakistan Road) Transit time 29

3.4.3 CPEC route shipping cost 30

3.4.4 CPEC route transit time 30

Chapter 4 Findings,Recommendation,Conclusion and Discussion 32

4.1 Impact on imports amp; export in term of shipping cost and delivery time 32

4.2 Comparison of current route shipping cost and delivery time with CPEC 33

4.2.1 Comparison of Shipping Cost 33

4.2.2 Compare of transit time 34

4.3 Distance Comparison 35

4.3.1 Current route distance

4.3.2 CPEC route distance 36

4.3.3 Comparison of distance 36

4.4 DISCUSSION AND CONCLUSION 37

4.4.1 The importance of Gwadar in the project 37

4.4.2 Securing Balochistan from internal and external threats 38

4.4.3 Localizing the CPEC in Balochistan 38

4.4.4 All routes should be given equal importance 38

4.4.5 This project can give birth to many other opportunities 39

4.4.6 A showcase of maturity by the political parties in Pakistan 39

4.4.7 Pakistan should keep its national interest on top 39

4.4.8 Energy projects should be completed as soon as possible 39

4.5 Conclusion 39

Reference 42

Acknowledgements

I would like to take this opportunity to express my gratitude to all the people who have ever helped me in this paper.

My sincere and hearty thanks and appreciations go firstly to my supervisor, Wang Weilin, whose encouragement and suggestions have given me so remarkable insights into linguistic studies. I am extremely grateful for his valuable academic instructions during my study. The work would not have been possible without his patient guidance, continuous encouragement and generous support. It has been a great privilege and joy to study under his guidance and supervision. Furthermore, it is my honor to benefit a lot from his personalities and diligence, which I will treasure in my whole life.

Special thanks go to Hassan, a graduate student, who has imparted to me so much valuable knowledge and given me guidance, assistance and concern in every aspect of my study. I also appreciate his academic advice and emotional support for the preparation of my thesis.

I would like to thank all the other teachers for their enlightenment, knowledge, encouragement and help throughout my study at Nanjing Tech University.

Finally, my gratitude is given to my dear friends and fellow students, who have accompanied me throughout the four years at the university.

Abstract

The work of this thesis primarily revolves around the importance of CPEC and its Effect on the Convenience of the Overseas Trade Route of China. China needs a short, safe and inexpensive trading route to European and Middle Eastern countries. The aim of the study is to verify if CPEC is a viable solution to the need. The study analyzes the impact of China Pakistan Economic Corridor (CPEC), the prespective of China and Pakistan on CPEC, the importance of CPEC for China and Pakistan and on trade in terms of the shipping costs and transit time. In the modern era, organizations want to reduce the shipping costs and transit time to maximize profit and ensure timely delivery of product. The focal point of the thesis is to study the importance of CPEC and its impact on import and export in terms of costs and transit time. Besides, this study compares existing route with proposed route. The research methodology used in the study follows qualitative and descriptive approach. In this study, dry port Kashgar (western China) has been taken as origin and three ports of each European and Middle Eastern countries are taken as destinations. The destination ports which have been selected in this study are key trading players with the port of origin. The selected European ports (Hamburg, Le Havre and Rotterdam) share huge trading volume with China. The selected Middle Eastern ports (Jeddah, Kuwait and Oman) fulfil Chinese energy requirements. In the first step, the variables (transit time and shipping cost) of 40-foot container are calculated when transported using current route. In the second step, the same variables are calculated using proposed route (CPEC). In the third step, both variables are compared for current and proposed route. Although it’s difficult to calculate the exact future road transportation cost (in case of CPEC), so this study considers average value of current road transportation cost. The results show that shipping costs will drop drastically if proposed route is used. The shipping costs between Kashgar and destination ports can decrease by 36% for European ports, 50% for Jeddah and Kuwait and 68% for Oman. Also, the transit time will decrease by 10-11 days for European ports, 11-13 days for Jeddah, 15-18 days for Kuwait and 10 days for Oman.

Keywords: CPEC, Bamp;R, Trade, Shipping, Delivery time.

中文摘要

本文的工作主要围绕中巴经济走廊的重要性及其对我国对外贸易通道便捷性的影响展开。中国需要一条通往欧洲和中东国家的更短、更安全、成本更低的贸易路线。本研究的目的是验证CPEC是否是解决这一需求的可行方案。研究分析了中巴经济走廊(CPEC)对中巴经济走廊的影响，中巴两国对中巴经济走廊的看法，中巴经济走廊对中巴两国的重要性，以及在运输成本和过境时间方面对贸易的影响。目前企业希望通过降低运输成本和运输时间来实现利润最大化，确保产品的及时交付。本文的重点是研究中巴经济走廊的重要性及其在成本和运输时间方面对进出口的影响。此外，本研究亦将现有路线与所建议的路线进行比较。本研究采用定性和描述性的研究方法，以喀什(中国西部)港口为起点，以欧洲和中东各国各三个港口为目的地。本研究选择的目的港是与原产港进行交易的关键交易主体。选定的欧洲港口(汉堡、勒阿弗尔和鹿特丹)与中国有着可观的贸易量。选定的中东港口(吉达、科威特和阿曼)满足中国的能源需求。在第一步中，当使用当前路线运输时，计算40英尺集装箱的变量(运输时间和运输成本)。在第二步中，使用建议的路由(CPEC)计算相同的变量。在第三步中，对当前路由和建议路由的两个变量进行比较。虽然在CPEC的情况下，很难计算出未来道路运输成本的确切数值，因此本研究考虑了当前道路运输成本的平均值。结果表明，如果采用该路线，运输成本将大幅下降。喀什和目的港之间的航运成本，欧洲港口可降低36%，吉达和科威特可降低50%，阿曼可降低68%。此外，欧洲港口的过境时间将减少10至11天，吉达将减少11至13天，科威特将减少15至18天，阿曼将减少10天。

关键词: 中巴经济走廊 一带一路 贸易 运输 交货时间

Chapter 1 Introduction

Pakistan is a developing country; the CPEC is a great opportunity to boost the economic development of Pakistan. China-Pakistan Economic Corridor (CPEC) is one major part of the the Belt and Road (Bamp;R) initiative proposed by the Chairman of the People’s Republic of China Xi Jinping with roots in the great ancient and medieval Silk Roads, however, in the context of the 21st Century. Besides the land routes between the Gwadar deep sea port of Gwadar, Pakistan to Kashgar in Western China (farther through China constructed rail-road infrastructure connecting with Central Asia and Russia) it also includes a major chapter of sea-based Maritime Silk Route that will be easily and cost-effectively connecting China through Gwadar to the broader Indian Ocean, the Gulf states and East Africa, all the way to Mediterranean via Red Sea, thus with north Africa and Europe ,It firstly announced by the Chairman Xi Jinping during his visit to Kazkhastan and Indonesia in 2013. The new transit and trade facilities will not only upgrade and expand the existing Pakistani infrastructure, but it will also provide China with an alternate transit and trade route in a cost effective manner to more regions on the earth.

1.1 What is CPEC?

The China Pakistan economic corridor (CPEC) is being developed as part of strategic partnership between the government of Pakistan and China. CPEC was announced during the visit of Pakistani premier to China in July 2013. China Pakistan economic (CPEC) corridor is a long term plan having a time frame of 2014 – 2030.

1.2 Description of CPEC Route

CPEC is a game changer in Asia. It includes road and infrastructure projects that are about 3,000-km network of highways, railways and pipelines linking Kashgar Dry port in northwest China’s Xinjiang and southwest Pakistan’s Gwadar Port and provide short-est link to Indian and Arabian Ocean. The distance between Kashagar dry port (china) and shanghai sea port (China) is about 5,153 km which is currently used by China for moving its goods from Kashgar to Shanghai port. On the other hand, distance from Kashgar dry Port (China) to Gwadar seaport (Pakistan) is about 2,800 Km, which is al-most half of the current route. CPEC is the one part of silk route belt that was proposed by Chinese President Xi Jinping in 2013, aimed at reviving the ancient trade routes that span Asia, Africa and Europe. (BY Imp, 2015). Pakistan’s Minister of Planning Ahsan Iqbal said that CPEC is not merely a project between two countries, but it is more than that. The project will be beneficial for other countries as well apart from Pakistan and China. Pakistan has decades of mismanagement, bad governance and a low socio-economic infrastructure, but Pakistan does enjoy a strategic location. (Muhammad Dame Fazil, 2015). Pakistan has a transit of economy. Pakistan has a border with land locked country Afghanistan so Afghanistan will be doing its trade through Pakistan to other countries. China is world fastest growing economy which enjoys 9% GDP rate. China is developing CPEC because its own seaport is 5,153 Km away from western China, however, seaport of Gwadar is only about 2800 Km away. Pakistan’s geological position is also the gateway for central Asia and offers central Asian state (Afghanistan, Kyrgyzstan, Kazakhstan, Tajikistan, Turkmenistan, and Uzbekistan) a shortest route of 2600 km as compare to Iran 4500 km and Turkey 5000 km. China Pakistan Economic Corridor is the network of roads, highways and railways that connect the Kashgar dry Port of China with Gwadar sea port of Pakistan. Total length of the route from Gwadar to Khunjerab is 2688 Km. The length includes the area of mountain, rolling and flat. For the CPEC, 2 to 6 lanes have been proposed and each lane is 3.65 meter wide. Design speed for the CPEC route is about from 70 km/h to 120 km/h. The proposed road map of CPEC and different phases of highways shown in the following map. Basically this corridor consists of three routes.

1. Western Route

2. Central Route

3. Eastern route 1.3 Impact of CPEC in general Chinese president during his visit to Pakistan in April 2015 signed MOU and agreement of projects which having a worth of USD 46 Billion. This investment plan is a part of the Chinese master plan called “One belt, One Road”. One belt one road is the plan network of road, rail, oil and gas pipeline that connects China to south and central Asia.

1.4 Layout of the thesis

This thesis consists of 4 chapters.In Chapter 1 we will include Research background, previous research situation, purpose and significance of our research, and the contents and methods used in the research, Chapter 2 Prespective of China and Pakistan and the challenges for CPEC, Chapter 3 Methodology and Chapter 4 to clarify the effect of CPEC on the convenience of the overseas trade route of China , finding , recommendation and conclusion.

1.5 Research Question

The research questions of the study

Is there any positive or negative impact on imports and exports in term of shipping costs and delivery/transit time?

Which route is efficient in terms of shipping costs and delivery/transit time?

1.6 Research Design

Research design includes the detailed information about the data amp; its source, research approach employed, technique used for data analysis and interpretation of data to answer the research questions.

1.6.1 Material

Material in the secondary data that has been taken from different sources including Internet, articles, newspaper and books. Primary data, such as shipping cost and current delivery time, has been taken from shipping lines and freight forwarders. Both current and proposed routes are based on road and sea. Sea transportation cost is taken from different shipping companies and road transportation cost is calculated using data gathered from Internet and freight forwarders.

1.6.2 Approach

The primary data (shipping cost) has been collected from shipping companies and freight forwarders via email. The sea transit time is taken from live vessels schedule of CMA line’s website. The distance of the road route is retrieved using Google maps.

1.6.3 Data collection

Primary data: It is collected from shipping companies including CMA-CGM, MSC, China shipping, Hapag Lloyd and freight forwarders including AW logistics and Combined freight.

Secondary data: It is collected from Internet (including Google maps), research publications, newspapers and books.

1.6.4 Data analysis

Qualitative and descriptive research approach is used to answer the research questions of the thesis. A comparative analysis has been done for both current and proposed routes. Variables like total distance, shipping costs and transit time have been used in the comparative studies.

1.6.5 Data interpretation

Chapter 2 Literature Review

2.1 CPEC and Relationship between Pakistan and China

Of the fourteen countries bordering China, relations with Pakistan are the friendliest. The two countries established relations in 1951, when Pakistan was the first Islamic country to recognize the PRC (People's Republic of China). Since then, the closeness of the two countries has manifested in the form of bilateral interactions In the relationship’s relatively short history, the two countries have supported each other in areas ranging from nuclear weaponry to diplomatic assistance .As is the case with most bilateral agreements in today’s world, there is more to CPEC than the stated goal of improving socioeconomic conditions in Pakistan. If implemented correctly, CPEC would deliver a much-needed kick to the Pakistani economy. CPEC aims to link the deep-water port of Gwadar, on the southwest coast of Pakistan, to Chinas Xinjiang region in the West of the country, through a series of transport routes, energy infrastructure, and communication networks.The project would create new transport infrastructure which would improve the country’s links with Asia, Europe and Africa, reduce investment and trade barriers, create a sound business environment that would attract foreign businesses, and lift millions of Pakistanis out of poverty. South Asian geopolitics is often in a state of flux, with Pakistan having to adapt their domestic and foreign policy accordingly. The country has identified increased India-US cooperation as an attempt to counter the China-Pakistan relationship. For many years now, Pakistan has viewed the US as an unreliable ally and has attempted to decrease their dependence on US defense and economic support by aligning with China. China’s investment of US$57 billion in CPEC has already eclipsed US investment in Pakistan during the period of 2009-2015, which amounted to a relatively small sum of US$5 billion. The announcement of CPEC is also timely, with the new US president, Donald Trump, stating he wants to foster better relations It is hoped that CPEC would boost the connectivity of provinces such as Xinjiang, attracting both domestic and foreign companies to set up new operations in the region. Pakistan could act as a “transit facility”, providing western Chinese provinces with access to Central Asian markets and the Indian Ocean. Furthermore, CPEC has the potential to make a country that has become the world’s second largest importer of oil, energy secure. With imported oil accounting for 54.8% of the country’s supply, CPEC could reduce the distance travelled by oil being imported from the Persian Gulf and East Africa significantly while also reducing the time taken by approximately 20 days.As is the case with Pakistan, China is looking to develop and consolidate its military and economic influence in Asia, the Indian Ocean, and East Africa. China is not only building economic agreements, but creating institutions through which countries participating in the Bamp;R project can further align themselves with Chinese ideology.

2.2 Perspectives for China

Understanding why China is willing to invest in Pakistan to such an extent requires us to consider what China will gain from this project. China and Pakistan share an ‘all-weather friendship’, and Prime Minister Nawaz Sharif once said that the Pak-China relation is “higher than Himalaya Mountains, deeper than oceans, sweeter than honey and stronger than steel”.4 However, if China is willing to invest in such a big scale, the reason behind it is not emotional rather based on strategic and economic interests. The FDI of $45.6 billion will be given to Pakistan as a commercial loan, which will be given back with fixed interest rates. Firstly, understanding the ‘One Belt, One Road’ initiative and how it is linked with CPEC is important. Second, why Gwadar is important for China, the distance factor; then the problems at Strait of Malacca may have pushed China to look for another and a safer route; and lastly, China is taking these measures to give sea access to its landlocked province of Xinjiang. These reasons can be considered as why China is keen for the success of CPEC.

2.2.1 Belt and Road , and CPEC

China has a plan of reviving the historic trade routes, as President Xi Jinping looks forward to connect China once again with Caspian region and European states on one hand and South Asia and Middle East on the other. Having a plan of creating three corridors: central, northern and southern which will pass through Xinjiang, it will connect China to Russia and former soviet-states, Europe, and Pakistan.5 CPEC is an integral and inevitable part of China’s One Belt and One Road plan. When the Chinese Premier, Li Keqiang, visited Pakistan in 2013, he initiated the CPEC project. Later on, when Prime Minister Nawaz Shareef took the office, he paid a visit to Beijing to further discuss the historical project. Last year, President Xi Jinping visited Pakistan, and declared that China will make a foreign investment of $46 billion in Pakistan for China-Pakistan Economic Corridor, focusing on strengthening the energy sector of Pakistan, and it is expected that these projects will be completed by 2018-2020.6 Energy sector is not the only priority here, since there will be a construction of railway tracks, and roads which will connect China’s landlocked provinces to the coastal area of Gwadar. It is believed that Gwadar sea-port and a transport link between Gwadar and Kashgar is ‘absolutely necessary’ for CPEC, otherwise ‘no other economic activity’ can be possible.

2.2.2 Gwadar Factor

Gwadar is the most prominent piece of the puzzle, and it is believed that CPEC will make ‘Gwadar on the matrix of intense geo-strategic competition’.8 Without 5 CPEC: Pakistan’s Way to Success.Gwadar, it is hard to imagine China investing in Pakistan on such an extent and because of it; China energy supply will be much faster since it will provide a shorter route compared to a 12,900km route via sea. Access to Arabian Sea through Pakistan will not just benefit China, but it will be also a chance for landlocked countries in Central Asia to benefit from the corridor as well. CPEC will boost the regional connectivity in Pakistan since the route will pass through every province of Pakistan, which also means the underdeveloped areas of Punjab, Sindh, Khyber Pakhtunkhwa, Baluchistan, and FATA will have a chance to be developed rapidly and play vital role for the emerging economy of the country. However, the main point here is that Gwadar will be the one end of the Corridor and will give China’s western provinces a gateway to the sea.

2.2.3 The Distance Factor

It can be easily accepted that one of the major factors for China in the CPEC deal is the distance factor. Even though, CPEC is considered as a project which will be mutually beneficial for both states, economically and politically. However, it is believed that the project will be ‘more advantageous for Beijing’. Pakistan will be playing the role of a ‘corridor’ only, and it can be said that without Gwadar, there will be a no point for the CPEC to exist in the first place. To understand, how Gwadar port will help China minimizing the distance, the table below will give a thorough understanding of how it is beneficial.

Table 2.1 Saving in terms of Distances (via Shanghai vs. Gwadar)

It can be understood with the help of the table that from Central China to Middle East, China will be saving 7580 miles, and more than 10,000 miles from Western China to Middle East. These numbers may look small on paper, but they are certainly huge figures, which can make a huge difference in the field of trading. Through this, China will face a huge cut in cost and will be saving a lot of fuel as well, but the biggest factor here is time. The time saved will allow China to trade even more, and also they will have more money in hand to do further investments.

2.2.4 The Malacca Issue

China is the world’s second largest consumer and importer of oil in the world, and more than 80% of its oil and 30% of natural gas imports passes through the Strait of Malacca.11 There are few reasons why China is seeking for an alternative route; it is believed that one of them is piracy, and the other is geo-political conflict. Strait of Malacca is called the ‘world’s new piracy hotspot’, and around 1/3 of shipping trade passes through this roughly 800km narrow route, and any act of piracy would cost China a big hole in their pockets. Another thing to notice is the geo-political concerns, that if a state or a non-state actor takes control of the strait, and decides a blocked of the trade, it will affect China massively by giving a huge blow to its economy and the energy sector.12 Hence, through Gwadar, China will have a shorter and safer access to the Arabian Sea, and they will be able to transfer a big share of their oil import through that route, but at the end it really depends on how much of it Pakistan can handle.

2.2.5 Industrialization of Xinjiang

If a person analyzes the map of China, it can be concluded that most of its industrialized and developed region is its Eastern region, and without any doubt it is because of China sharing a coast with East China Sea through which they gain access to Pacific and Indian Ocean. History tells us that the cities which were known as economical and trading hub of the world i.e. London, Amsterdam, Istanbul, New York etc; had a huge advantage of sharing their borders with open sea. Today there is Shanghai, Dubai, California, Hong Kong, Singapore; all of them are famous cities of their respective countries and play a huge role in the economy sector. The reason to mention all this to shed some light on other parts of China, which are less industrialized and urbanized, and the obvious reason behind it is that it is landlocked and far away from the east coast.

After observing the map, another benefit of CPEC can be understood.The Xinjiang province shares its border with Pakistan from the North, and the route which will go all the way from Gwadar to Kashagar. What is happening here is that China’s western provinces, especially Xinjiang, which is a “less-developed western part of China”,13 will have an access to the Arabian Sea through CPEC. Also, if the project goes through well and sound, Kashgar will see a rapid expansion.

Kashgar is destined to grow exponentially after the operationalization of the SEZ in the city. If the development of Shenzhen, the city that pioneered the concept of SEZs, could provide us with an insight into the growth patterns of SEZs, we could expect Kashgar to grow at the rate of over 20 percent per annum, because Shenzhen grew at the astounding rate of 25.8 percent from 1979 to 2009, and a 4,176 times increase in 30 years.14

One of the main reasons why CPEC, or Gwadar to be precise, is important for China is that it will connect “it’s less developed western part with Persian Gulf and beyond for trade”.15 Hence, if the project goes through, it means urbanization and industrialization for the Xinjiang on a huge scale. If it will grow like Shenzen, the boost to Chinese economy can be extraordinary.

It is possible that there are more perspectives for China hidden in this project, but it can be said that these three points are on top of the priority list. The bottom line is that it will give China energy security and will allow the economic super power to further process.

2.3 Perspectives for Pakistan

The question that is usually raised is that is there any benefit for Pakistan in this whole project, or China is just using Pakistan here for its own economic success? People who are raising these questions are certainly lacking research on CPEC project. Even though, as said before, it might be ‘more’ beneficial for China, but that does not mean Pakistan will have no advantage in it whatsoever. Anyone who knows the history and struggle of Pakistan knows that what a big opportunity this is for Pakistan. Pakistan’s economy is primarily based on its agriculture sector, and relies on few other factors. Since the rise of terrorism in Pakistan, this posed a huge threat to the security of Pakistan and along with it, the failing energy sector of Pakistan which became a huge issue for the industrial development of Pakistan. This led to a decrease in foreign direct investment as well, but with CPEC, a huge increase of 38.8% was witnessed in Net FDI. With $46 billion, it is the biggest FDI ever in Pakistan, and it has a potential to change the future of Pakistan for good. Most of the investment from CPEC will go to the energy sector of Pakistan, which is discussed in detail below, commenting on where the money will be invested. The graph below gives an illustration of the Chinese interest in Pakistan, and how the current investment is the largest ever made.

If Pakistan wishes to be an economic success, it is important for it to realize its geo-strategic potential, which was mentioned earlier regarding Gwadar being the most important piece of the puzzle. For instance, Port of Jebel Ali is the busiest port in Middle East, expecting to deliver around 22.1 million TEU1 by 2018.18 Dubai, like its neighboring state Abu Dhabi, is not rich with natural resource like oil. Dubai’s success obviously lies in tourism, but it benefits a lot from its Port of Jebel Ali which has made Dubai the gateway to Middle East and beyond. Hence, Gwadar’s real strength lies in being a transit route or a corridor , which is something Jebel Ali is not. How Pakistan will further benefit from its strategic location, it can be started by looking into the benefits that will be awarded by the route.

Figure 2.1 FDI Flows To Pakistan

Data-Source:website, URLhttps://www.ceicdata.com/en/indicator/pakistan/foreign-direct-investment

2.3.1 Transit Corridor

Here we stress a lot on the understanding of CPEC; in which Pakistan is working as a corridor for China, providing it energy security, faster and cheaper trade, and benefitting itself with the rebirth of the energy sector which will further lead to an increase in FDI and industrial development of Pakistan. The map below shows the Highway Routes of CPEC, and also the power projects which will take place in different parts of Pakistan. There will be three routes:

central, western and eastern; and all of them will be connected to northern route which will go from Karakoram highway to Kashgar, China. Both China and Pakistan have decided to construct the eastern route first and it earned some criticism as well which will be addressed later in the report.19 Western and Central routes are still part of the plan and will be constructed over the time. Upgrading the existing railway tracks and laying down 1,200km of new track is part of the CPEC project as well.

Figure 2.2 CPEC Route in Pakistan

There will be an oil pipeline as well, which will go all the way from Gwadar to Kashgar, with the capacity of carrying one million barrels of oil per day. However, it will be just 17% of China’s oil import, the project will begin next year and hopefully it will be completed by 2021. China is further planning to make Gwadar into an industrial city, since they will be storing oil here by constructing refineries making it an ‘oil city’.21 Also, 27 Special Economic Zones (SEZ) will be developed throughout Pakistan, and this is how the Government of Pakistan defines SEZ:

“Special Economic Zone (SEZ) is a blanket term for various types of specialized zones with specific types of enterprises operating in a well-defined geographic area where certain economic activities are promoted by a set of policy measures that are not generally applicable to the rest of the country. Successful SEZs offer immediate access to high-quality infrastructure, uninterruptible power supply, clearly titled land, public facilities, and support services. In addition, streamlined regulatory enforcement, simpler business and establishment rules, expedited customs administration, and other special administrative and approval procedures are also offered in such zones”.

In other words, CPEC will give birth to 27 industrial cities in Pakistan, which will give Pakistan’s struggling economy a helping hand. The SEZs are not centralized to just one province, instead there are more SEZs created in provinces which are still stuck in pre-developmental stages. Khyber Pakhtunkhwa will have the highest number of economic zones, eight, compared to three in Sindh, and one each in Islamabad and Gilgit-Baltistan. Punjab and Baluchistan will have seven, and the first SEZ will be constructed in Gwadar. It will spread on an area of 3,000 acres and expected to be operational by the end of next year. It will be developed by China, and it is part of the Chinese idea of creating an ‘oil city’. (Dawn) With the development of SEZs, this will also promote the existing industrial sector of Pakistan.

2.3.2 Energy is the priority

From the total budget of $46 billion, $35 billion dollars will be spent on the energy sector of Pakistan, while the $11 billion is reserved for the infrastructure. Currently, Pakistan faces a massive energy shortfall of 4,500 Mega Watt (MW). However, it is expected that with the support of projects under the umbrella of CPEC, energy shortfall will be overcome since Pakistan might be able to produce 10,400 MW of electricity by March 2018, and overall the CPEC project is believed to produce a total of 16,400 MW by the time all projects are finished. Energy sector of Pakistan is often criticized and is considered as a reason behind the failure of industry in Pakistan, and also why other foreign investors hesitate to build or shift their industry here. But hopefully, the energy produced by all these projects will be enough to overcome the shortfall, which will allow the industries to thrive, and Pakistan would be able to welcome more foreign investment. The table below analyzes the ‘priority’ energy projects in details.

Table 2.2 Energy Projects, (project information collected from CPEC website)

These are the priority projects and some of them are already underway, expected to be completed by the end of the year. Pakistan faces a huge energy deficit, costing 2% GDP per year and with Pakistan’s ever growing population, there is an essential need of such a project, which can resolve the energy crisis and provide a brighter future to the young generation of Pakistan. Even before CPEC, China invested $10 billion in nuclear energy, when Prime Minister Nawaz Sharif inaugurated the construction of Kanupp-II and Kanupp-III in August 2015, with its ground breaking being done in 2013.26 Both nuclear power plants will add a combined energy of 2,200 MW to the energy sector, and it is expected to be completed by 2021-2022.

2.3.3 Development of Gwadar

Gwadar was discussed before regarding how important it is for China, and also the benefits of its strategic location. The table below gives an idea on its value, and tells how and where China is planning to invest around $793 million.

Table 2.3 (Data collected from CPEC website)

It can be understood that China wants a socio-economic development in Gwadar, and the rise of Gwadar will lead to stability in Baluchistan. The construction of a hospital with $100million does not sound like a joke and such infrastructural necessities are very important for development of any city. China is also constructing, along with Oman and Pakistan, the Gwadar International Airport as well, and it is expected that it will be constructed by the end of 2016. The new airport will work as a hub for air-cargo as well; also it will make it easier for people in Pakistan and around the globe to travel to Gwadar.

Hence, developments in Gwadar will definitely flourish the economy of Pakistan since employment opportunities will be created, transit-fee will be collected, and truck industry in Pakistan will further expand across the country. Pakistan will be benefiting big time from this mega-project which will lead to development of Baluchistan through Gwadar, an economical link between all the provinces of Pakistan, solving the energy crisis, thriving as an economic corridor, and become a stable economic power in the region.

2.4 Challenges

After understanding the advantages of CPEC, and realizing how important it will be for Pakistan. It will be naive not to address the challenges that will be faced throughout, since good things are never easy to achieve. One of the many reasons Pakistan failed to keep it up with the rest of the world is because of the internal problems it has. We believe that Pakistan is facing challenges in security, conflict between provinces, political instability, and relations with the neighbouring Countries.

2.4.1 Security Issues

Over the 69yrs history of Pakistan, the thing that damaged the nation the most on almost every ground is terrorism. After 9/11, a total of 438 suicide attacks took place in Pakistan, killing more than 6,500 people all over the country. This figure may look easy on eyes, but it is the major destabilizing factor behind Pakistan. Baluchistan plays a major role for CPEC since Gwadar is situated there, but a separatist factor has been noted in Baluchistan. Recently, an agent of Indian intelligence agency RAW was arrested in Baluchistan, who revealed that RAW supports the separatist movement in Baluchistan. The Home Minister of Baluchistan, Sarfaraz Bugti said that:

Kul Yadav Bhushan, a commander-ranked officer in Indian Navy was working for RAW and was in contact with Baloch separatists and terrorists fueling sectarian violence in Pakistan and Baluchistan.

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