Why China needs CPEC?

Hammad Zamurrad |

A little over one year after entering its implementation phase in 2016, CPEC is making a remarkable progress and appears to be an economic panacea for both Pakistan and China. It is discussed mostly in the context of Pakistan, its beneficial impact on Chinese economy is less understood. While, the first hefty consignment of Chinese goods departs Gwadar seaport in Baluchistan, the World Bank improved estimates for Pakistan’s growth rate upwards to 5.2 percent for fiscal year 2017 from formerly projected 5 percent as Pakistan’s GDP recuperates at a sturdy pace.

With an official launch in April 2015, CPEC swiftly gained the reputation of a game changer in the region and attained nationalistic fervor within Pakistani society, media, and political discourse.

CPEC denotes a central component of its Belt and Road initiative that targets to boost economic progress through regional integration whilst reinforcing its prominence as a major peaceful global power.

The $62 billion venture epitomizes the principal project of belt and road initiative, envisaged by President Xi for the economic amalgamation of Eurasia through a sprawling web of highways, railways, docks, factories, power plants and wind farms.

Read more: How is the government confusing all of us on CPEC?

The Pakistani Perspective

CPEC is considered as a representation of an invincible rapport that Pakistan relishes with China. The two-pronged liaison has traditionally been trademarked by a convergence of high-level of joint political association and tactical partnership. This corridor scheme, however, now postulates a source of modern footing for potential synergy between their national development plans and anticipates to foster the long-standing camaraderie

into multilateral economic cooperation, realize reciprocal benefits and accomplish win-win outcomes.

The recent project progress update announced by official CPEC website affirms an optimistic newscast for Pakistani economy. Various energy assignments, such as Port Qasim and Sahiwal Coal-Fired Power Plants, are virtually complete and their first unit of 1320 MW is projected to generate electricity by summer 2018.

Pakistan’s economy has mercilessly been hit owing to an energy predicament and vicious insurgence flung by Pakistani Taliban in 2007. By various cautious estimates, whilst the rampant power cuts alone have cost Pakistan up to 4 percent of GDP and became a major source of unemployment, the country has borne some $123 billion of losses on account of lives, economic prospects and devastation to its already feeble infrastructure since it became the vanguard ally of United States in ‘war on terror’ – after 9/11.

The colossal flight of capital exacerbated by such manifestations and a subsequent famine of foreign direct investment impelled successive administrations in Islamabad to rely on the International Monetary Fund for economic constancy. The CPEC finance – which parallels about 20 percent of annual Pakistani GDP- can, if properly utilized, overhaul its tenuous economic milieu. Besides brooding interactions with other regional powers in the past, United States too has materialized as an arduous and transactional partner that specified Pakistan with the military sustenance and aid-focused agenda essentially to counter terrorism.

The East Turkestan Islamic Party (ETIP) is one such faction that is purported to enflame lethal violence in Xinjiang – home to Turkic speaking neglected and impoverished Uyghur Muslim minority.

But, instead of aiming principally at economic growth, which would have change the overall context, it relentlessly stipulated more action against militant safe havens and the ‘Haqqani network’ allegedly operating from within Pakistan. Inversely, China has resolutely lauded Pakistan’s efforts against terrorism and emerged as a benevolent, enduring and reliable investor that could potentially wax its waned energy sector, alleviate crippled infrastructure and boost faltering economy without engaging in diplomatic bullying.

Read more: Pakistan asks US not to see CPEC from the Indian lens

China’s Outlook from CPEC

CPEC is fundamental to Chinese economic and energy reassurance as it links China directly with the Indian Ocean and caters relaxed access to the Middle East from the warm waters of Gwadar seaport. The corridor plan reduces China’s current reliance upon the South China Sea that is fast becoming a disputed space between several regional and international powers and can be clogged at any point by contending players in the Asia-Pacific territory.

With roughly 250 miles away from the Straits of Hormuz and under Chinese authority, Gwadar seaport is economically pivotal for China to transport its 80 percent energy supplies from West Asia and shrinks its present maritime haulage from some 7,500 miles to 1,865 miles.

CPEC is fundamental to Chinese economic and energy reassurance as it links China directly with the Indian Ocean and caters relaxed access to the Middle East from the warm waters of Gwadar seaport.

As a flagship endeavor of Belt and Road initiative, CPEC embodies an economic blueprint that seeks to craft fresh markets for China’s goods and technology particularly at a time when its economy is braking and to assist relocate surplus steel and cement capability by moving plants abroad to less advanced states.

Equally, Beijing envisions that the initiative will enhance economies of its underdeveloped periphery regions such as Xinjiang Province by coupling with Pakistan and other adjacent countries. Moreover, its development impact helps China’s categorical position on ‘One China Policy’  provides antidote to secessionist activities and local terrorism, which are critical threats to its national safety.

The East Turkestan Islamic Party (ETIP) is one such faction that is purported to enflame lethal violence in Xinjiang – home to Turkic speaking neglected and impoverished Uyghur Muslim minority. Drawing upon the perpetual inequality and alienation from central government, the ETIP warrants ferocious use of force to accomplish Xinjiang’s emancipation from Mainland China as the group has a record of unleashing fatal attacks against Beijing.

Read more: Why is India doing propaganda against CPEC?

Notably, the World Bank cites social and economic inclusion as one of the paramount preventive courses against radicalism. Such assertion resonates well with China’s development strategy, which contends that economic activity and job creation can hamper terrorism. To that end, rather than engaging militarily, China thus aims to tackle these perils through investment ventures and discerns economic prosperity through regional connectivity a cure to not only its own but regional security misgivings.

The colossal flight of capital exacerbated by such manifestations and a subsequent famine of foreign direct investment impelled successive administrations in Islamabad to rely on the International Monetary Fund for economic constancy. The CPEC finance – which parallels about 20 percent of annual Pakistani GDP –

The recent project progress update announced by official CPEC websites affirms an optimistic newscast for Pakistani economy. Various energy assignments, such as Port Qasim and Sahiwal Coal-Fired Power Plants, are virtually complete and their first unit of 1320 MW is projected to generate electricity by the summer of 2018.

Likewise, numerous segments of Peshawar-Karachi Motorway and Karakorum Highway Phase II – a network of highways that will connect Pak-China border in the north with the coastline in the south – are set to culminate in April 2018. According to the Planning Commission of Pakistan, 17 ‘early harvest’ projects have so far produced 30,000 new jobs for locals and further intend to spawn over 700,000 direct jobs and amplify up to 2.5 points to the annual economic growth by 2030.

Read more: US is not against CPEC: An Indian view?

The $62 billion venture epitomizes the principal project of Belt and Road initiative, envisaged by President Xi for the economic amalgamation of Eurasia through a sprawling web of highways, railways, docks, factories, power plants and wind farms.

Ultimately for China, CPEC denotes a central component of its Belt and Road initiative that targets to boost economic progress through regional integration whilst reinforcing its prominence as a major peaceful global power. With an age-old energy starved terror-ridden economy, China replaces the United States as the new staunch ally for Pakistan that pledges its economic stability through corridor project.

While some may critically interpret the rising Chinese role in Pakistan that may have grim repercussions, in the long run, the country’s shrinking tax net with less than 1 percent Pakistanis paying direct taxes depicts CPEC to be the only game in town – at least, for now.

The writer is a London based Chartered Accountant who recently concluded Master’s in International Political Economy at King’s College London and International Relations from the University of Surrey. Tweets @hammadzamurrad. The views expressed in this article are the author’s own and do not necessarily reflect Global Village Space’s editorial policy.