• Home
• /
• World

Building a Symbiotic Relationship between China and Pakistan

The rising interest and share of Chinese investments in Pakistan is proving beneficial for both countries and the region

Read more...

China and Pakistan have been close allies through the years and with the announcement of the China-Pakistan Economic Corridor (CPEC), expectations are high. The CPEC has the power to greatly enhance the economic advancement of various areas in Pakistan, while China stands to gain considerably, starting with the creation of a vital passageway for exports through the region.
The CPEC was launched as part of the 'One Belt, One Road' initiative that will connect Asia and Europe. China and Pakistan signed a Memorandum of Understanding on CPEC on July 5, 2013. The agreement was signed during Pakistan's Prime Minister Nawaz Sharif's visit to China. During the Chinese President Xi Jinping's visit to Pakistan in April this year, the countries signed 51 agreements and pacts in order to develop CPEC.
China has invested up to  $46 billion into building this economic corridor to Pakistan, boosting development for both the countries. Plans for the CPEC include work on a number of projects stretching up to 3,000 kilometres and consisting of a network of roads, railways and maritime ports. According to reports, there have been discussions of setting up oil and gas pipelines, as well as alternative power sources. It is estimated that the CPEC will bring around 3,000 megawatts of coal, wind and solar power to Pakistan and is key to further developing the country.
The CPEC will be connected from the Xinjiang region in western China to the Gwadar Port in southern Pakistan, running through the Baluchistan province and Lahore. The corridor will transform the lives of local people and greatly boost the development of the region. Once developed, Gwadar would be the shortest link to Europe, Africa and Middle East, making it easier for China to reach out to the world.
Officials on both sides are quite optimistic about the economic corridor, as they believe it will spur a string of investments in the region. Plus, it enables job creation, which is an extremely important factor in Pakistan's development. Pakistan has prepared plans to construct three corridors to facilitate the development - the western alignment, the central alignment and the eastern alignment, and will construct these in consultation with the Chinese authorities.
Also, the Pakistan Medical Association (PMA) supports a 'medical corridor' where more healthcare facilities and scientific research institutes will be built and attract a share of the global medical tourism industry.
For China, CPEC would be a significant asset for their long-term economic expansion. Further, supporting the economic development of neighbouring countries will boost China's financial standing, increase their purchases of Chinese goods, and help the country build more regional partnerships. Although still in its initial stages, CPEC can provide greater connectivity, a boost of economic activity and give great geopolitical significance.
Some of the planned projects for CPEC reportedly include a  $44 million fibre optic cable that will add 10,400 megawatts to Pakistan's energy grid through coal, nuclear and renewable energy projects. It also includes some major upgrades to Pakistan's transport infrastructure, such as improving the Karakorum Highway, the Karachi-Lahore Motorway and developing the Gwadar Port East Bay Expressway Project and the Gwadar International Airport.
Signalling a positive change, the International Monetary Fund (IMF) recently forecast Pakistan's economy to increase to 4.5 per cent this year, thanks to the macroeconomic stability, low global oil prices, planned improvements in the domestic energy supply and investment related to CPEC.

Gwadar Port

Gwadar is located about 533 kilometres from Karachi, 120 kilometres from Iran's border and about 380 kilometres northeast of Oman across the Arabian Sea thereby making it a strategic location.
As part of the CPEC, China has financed and facilitated construction of the Gwadar port and has won the right to operate it for 40 years. State-run Chinese firm, the China Overseas Port Holding Company (COPHC), currently operates Gwadar.
Pakistan's Frontier Works Organisation (FWO), a military administrative staff corps, is carrying out construction of the Gwadar Port. They are working towards building roads, railways, airports and manufacturing hubs on the Pakistan side in order to boost bilateral trade. Once completed, Chinese companies can open factories in the corridor to lower their manufacturing as well as labour costs. As of recent reports, the FWO has completed 502 kilometres, in less than one-and-a-half years, of the 870-kilometre road connecting Gwadar with the western alignment of CPEC. Reports suggest that the port will be operational in the next few years, as the infrastructure construction is almost complete.
FWO officials were quoted saying that the rugged mountainous terrain and the remoteness of the region, along with harsh weather and security concerns were some of the major challenges they faced during the project. According to the reports, Gwadar will also start building a container terminal measuring 1,200 metres and a 300-metre-long cargo terminal that can harbour four berths.
Gwadar is strategically located on the western end of Baluchistan coast on the opposite end of the Gulf of Oman, which is an important route for oil tankers bound for western countries. Since outflow of goods from western China and Central Asia reaching Gwadar will pass through this overland trade route, Pakistan could earn millions of dollars a year in terms of port and cargo handling charges and freight charges for import cargoes and export goods. Reports state that the port is also expected to generate billions of dollars in revenues and will be able to create at least two million jobs.
Reportedly, China plans to further invest $1.62 billion on the development of the Gwadar port, and might include projects such as the construction of an eastern expressway linking the harbour and coastline, an international airport, breakwater and nine other projects that are expected to be complete in the next three to five years.