i
CHINA-PAKISTAN ECONOMIC CORRIDOR: IMPACT ON
INDO-PAK RELATIONS
By
Umar Farooq
PhD in South Asian Studies
Session 2013-2018
Roll No. 04
Supervisor
Dr. Naheed S. Goraya
CENTRE FOR SOUTH ASIAN STUDIES
UNIVERSITY OF THE PUNJAB, LAHORE
ii
CENTRE FOR SOUTH ASIAN STUDIES
This thesis is submitted in partial fulfillment of the requirements for the award
of
Degree
Ph.D in
CHINA-PAKISTAN ECONOMIC CORRIDOR: IMPACT ON
INDO-PAK RELATIONS
Supervisor Submitted by
DR. NAHEED S. GORAYA UMAR FAROOQ
H.E.C. Nominee Roll No. 04
Centre for South Asian Studies Ph.D
University of the Punjab, Lahore. Session:- 2013-2018
Centre for South Asian Studies
University of the Punjab
Lahore.
iii
DEDICATED To
I dedicate this research work to my family for their unconditional support in my educational
exertion.
iv
DECLARATION
I hereby declare that this thesis is the result of my individual research and I have not
submitted this thesis concurrently to any other university or institute for any degree
whatsoever.
________ __________________
Dated Signature of Deponent
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CONTENTS
Sr. No. Page No.
List Of Maps Xi
List Of Tables Xiii
List Of Figures Xiv
List Of Abbreviations Xvi
Acknowledgements Xx
Abstract Xxi
CHAPTER 1 Page No.
INTRODUCTION 01-25
1.1 Introduction 01
1.2 Indo-Pak Historical Ties 03
1.3 CPEC: A Corridor of Connectivity 06
1.3.1 Upgradation of Transport Infrastructure 11
1.3.2 Energy shortage 11
1.4 Indian Reservations on CPEC 12
1.5 Research Questions 14
1.6 Objectives of the Study 14
1.7 Limitations of the Research 15
1.8 Justification and Likely Benefits 15
1.9 Hypothesis 16
1.10 Thesis Overview 16
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1.11 Methodology 18
1.11.1 Population Sampling 18
1.11.2 Primary Data Collection Process 19
1.11.3 Secondary Data Collection Process 20
1.12 Work Plan 20
CHAPTER 2
LITERATURE REVIEW 26-45
2.1 Literature Review 26
CHAPTER 3
HISTORICAL NARRATIVES OF INDO-PAK
TIES AND THE REGIONAL TRADE
46-106
3.1 Sub-continent during Muslim Rule 46
3.2 Sub-continent in Colonial era 47
3.3 The Partition of Sub-continent 49
3.3.1 The Shadow of Kashmir on Indo-Pak Relations 51
3.3.2 Indus Water Treaty 54
3.4 Kashmir Freedom Struggle and Role of Pakistan 54
3.5 The Plight of Indian Muslims 57
3.6 Indian Role in Afghanistan and Baluchistan
Insurgency
58
3.7 Economic and political framework of South Asian
Countries
60
3.8 India-Pakistan Economic Relations 63
3.9 Trade under SAFTA (Indo Pak Relations in
Regional Perspective)
65
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3.10 Indo-Pak Inborn Rivalry vs. Sino-Pak Enduring
Partnership
67
3.11 China’s Past, Present and Future in Global
perspective
69
3.11.1 Ancient China 69
3.11.2 Relationship Regime Shift from Politics to
Economics
71
3.12 Regional Alliances in the post-Cold War 72
3.12.1 China’s Trajectory of ‘Opening Up’ 72
3.12.2 The “Made in China 2025” Plan 80
3.12.3 China’s Foreign Direct Investment (FDI) 81
3.12.4 Economic Integration: A Conceptual Framework 83
3.13 China’s Political & Economic Status in the World
and its Relations with India and Pakistan
85
3.13.1 Pak-China Trade Relations 89
3.14 History of Economic Trade Routes 90
3.14.1 Economic Corridor in Regional Settings 93
3.15 China and British India Political Ties
95
3.15.1 China and India after Partition 95
3.15.2 China’s stance on Kashmir 96
3.16 Role of China in political and economic
positioning in Indo-Pak relation
98
CHAPTER 4
CPEC: A GLOBAL GAME CHANGER 107-174
4.1 China’s Belt and Road Initiative (BRI) 107
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4.1.1 Physical Infrastructure 112
1.1.2 Silk Road Economic Belt (SREB) 119
4.1.3 Maritime Silk Road (MSR) 119
4.1.4 The New Eurasia Land Bridge (NELB) 121
4.1.5 The China-Mongolia-Russia Economic Corridor
(CMREC)
123
4.1.6 China-Central Asia-West Asia Economic Corridor
(CCWAEC)
125
4.1.7 China-Indo-China Peninsular Economic Corridor
(CICPEC)
125
4.1.8 China-Pakistan Economic Corridor (CPEC) 128
4.1.9 Bangladesh-China-India-Myanmar Economic
Corridor (BCIMEC)
130
4.2 Multiple Perceptions on Developing BRI 132
4.3 CPEC: Forging A Common Destiny 134
4.3.1 Special Economic Zones (SEZs) 139
4.3.2 Roadway Projects 139
4.3.3 Western Alignment 141
4.3.4 Eastern Alignment 144
4.3.5 The Central Route 148
4.4 Karakorum Highway 148
4.5 Railway Projects 150
4.5.1 Main Line-1 150
4.5.2 Main Line-2 152
4.5.3 Main Line-3 152
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4.6 Orange Line Train (OLT) 153
4.7 Khunjerab Railway 155
4.8 CPEC Energy Sector Projects 155
4.8.1 Renewable Energy Projects 156
4.8.2 Coal 157
4.8.3 Liquefied Natural Gas (LNG) Projects 157
4.8.4 Early Harvest Energy Projects 159
4.9 Gwadar Port: A Flagship Project of CPEC 160
4.9.1 Gwadar & Sea Politics 160
4.9.2 Gwadar: The Crux of CPEC 161
4.9.3 Geographical Location of Gwadar Port 162
4.9.4 Significance of the Gwadar Port 163
4.9.5 Construction of Gwadar Port 166
4.9.6 Gwadar vs. Chabahar 166
4.9.7 Operationalization of Gwadar 169
CHAPTER 5
GEOPOLITICAL IMPLICATIONS,
REGIONAL CONSTRAINTS AND BENEFITS
OF CPEC
175-190
5.1 Geo-political Implications of CPEC 175
5.2 Regional Constraints to CPEC 177
5.2.1 Afghanistan Factor 177
5.2.2 Indian Concerns for CPEC 178
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5.2.3 Iranian Concern 181
5.3 Security Challenges to CPEC 181
5.3.1 Political Constraints 183
5.4 Benefits of CPEC to Pakistan 183
5.4.1 CPEC: Significance for China 185
5.4.2 Impact of CPEC on Regional and Extra-regional
level
186
CHAPTER 6
SURVEY RESULTS 191-195
6.1 Population and Sample Size 191
6.2 Interview Schedule 192
CHAPTER 7
SUMMARY, CONCLUSIONS &
RECOMMENDATIONS
196-202
7.1 Conclusion 196
7.2 The thesis tries to explain that 200
7.3 Recommendations 200
BIBLIOGRAPHY 203-213
ANNEXURE 214-261
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LIST OF MAPS
SR NO PAGE #
1 Mughal Empire 48
2 India, China and Pakistan’s Claim over Kashmir Territory 52
3 The Silk Road 92
4 China-India Disputed Territory 97
5 Silk Road Route 114
6 The New Eurasia Land Bridge Economic Corridor 122
7 The China-Mongolia-Russia Economic Corridor 124
8 China-Central Asia-West Asia Economic Corridor 126
9 China-Indochina Peninsular Economic Corridor 127
10 China-Pakistan Economic Corridor 129
11 Bangladesh-China-India-Myanmar Economic Corridor (BCIMEC) 131
12 Southern, Northern and Central Corridors of CPEC 136
13 List of Projects in CPEC 138
14 Highway Network of CPEC 140
15 Western Alignment of CPEC 142
16 Eastern Alignment of CPEC 145
17 Central Alignment of CPEC 149
18 Main Line-1, Main Line-2 & Main Line-3 151
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19 Orange Line Train 154
20 Gwadar vs. Chabahar port 168
21 Indian Claim on CPEC passing from Kashmir Disputed Territory 179
xiii
LIST OF TABLES
SR NO PAGE #
1 Profession wise Distribution of Population 192
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LIST OF FIGURES
SR NO PAGE #
1 Religious Composition in 1947 & Muslim Hindu-Sikh Claims for
Territory
50
2 South Asian Countries GDP and World Rankings 2016 (US$ Millions) 61
3 Indo-Pak Trade Statistics (US $ thousand) 62
4 Region wise World GDP Breakup 2016 (US$ Million) 65
5 Pakistan Trade with SAARC and the World (US$ thousands) 66
6 China’s Growth Trajectory 75
7 China’s Opening Up Reforms 77
8 Chinese Real GDP Growth: 1979-2017 (per cent) 80
9 China’s outward and inward FDI during 2010-2016, by value (US $ bn) 82
10 Economic Corridor 84
11 China’s Region-wise Investment US$ Billion (2017) 86
12 China’s HDI Growth 88
13 China’s Foreign Trade (US$ thousands) 89
14 ASEAN and SAARC Export to World 95
15 China’s Belt and Road Initiative 109
16 Corridors in Belt and Road Initiative 115
17 Container Port Traffic of European Union and South Asia 116
18 Regions Included in Silk Road Economic Corridor and Maritime Silk 118
xv
Road
19 Projects included in Eastern Alignment of CPEC 146
20 Trade Corridors and Regional Connectivity 193
21 Shadow of Indo-Pak Relations on CPEC 194
22 Trajectory of China, India and Pakistan Relations 195
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LIST OF ABBREVIATIONS
AIB Asian Infrastructure Investment Bank
ADB Asian Development Bank
CPEC China-Pakistan Economic Corridor
COPHC China Overseas Port Holding Company
FTA Free Trade Agreement
UNSC United Nations Security Council
FDI Foreign Direct Investment
GB Gilgit-Baltistan
IP Pakistan-Iran Gas Pipeline
KP Khyber Pakhtunkhawa
MSR Maritime Silk Road
NSR New Silk Road
OBOR One Belt One Road
xvii
PSA Port Singapore Authority
RCD Regional Cooperation for Development
SEZs Special Economic Zones
SCO Shangai Cooperation Organization
SPA Singapore Port Authority
USA United States of America
UNO United Nations Organizations
LNGs Liquefied Natural Gas
SSD Special Security Division
ASEAN Association of Southeast Asian Nations
GDP Gross Domestic Product
SAARC South Asian Association of Regional Cooperation
SAFTA South Asian Free Trade Arrangement
SAPTA South Asian Preferential Trading Arrangement
xviii
EU European Union
PRC People’s Republic of China
MGDs Millennium Development Goals
IMF International Monetary Fund
BRICS Brazil, Russia, India, China and South Africa
WTO World Trade Organization
HDI Human Development Index
MoUs Memorandum of Understandings
EHP Early Harvest Program
TRM Tariff Reduction Modalities
SREB Silk Road Economic Belt
BCIMEC Bangladesh-China-India-Myanmar Economic Corridor
TPP Trans-Pacific Partnership
FTZs Free Trade Zones
xix
NDRC National Development and Reform Commission
FWO Frontier Works Organization
TAP Trans Afghan Gas Pipeline
CARs Central Asian Republics
BRI Belt and Road Initiative
OLT Orange Line Train
IOR Indian Ocean Region
EEU Eurasian Economic Union
SLOCs Sea Lines of Communications
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ACKNOWLEDGEMENT
First of all, I would like to bow my head before Allah for providing me the chance to
advance my educational career at a prestigious institution like Centre for South Asian Studies
University of the Punjab, Lahore and granting me strength to complete this research work.
Secondly, I express my profound gratitude to my thesis advisor, Dr. Naheed S. Goraya, Assistant
Professor, Centre for South Asian Studies, University of the Punjab, for enlightening me with
conceptive and invaluable evaluation, swift response and untiring patience throughout the
process.
Then, I am highly indebted to the faculty of Centre for South Asian Studies, University of
the Punjab, Lahore for their encyclopedic guidance, invaluable contribution, as well as warm-
hearted and constant guidance that ultimately enabled me to complete this thesis. Also, I owe a
lot of gratitude to the staff members at the Centre for South Asian Studies, University of the
Punjab who helped me in data collection and all other technical support etc.
Last but not the least, my deepest thanks to my family for their unconditional and
continued support in times of pressure for bearing all my burdens. My especial thanks to my
children, who always lift my spirit and are a source of constant inspiration.
Umar Farooq
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ABSTRACT
Despite having divergent social, political and cultural systems and ideologies, China and
Pakistan have maintained enduring and cordial relations after materialization of both States
diplomatic relations in 1950. Nevertheless, close friendly ties with china is the main pillar of
Pakistan’s foreign policy. Form diplomatic relations to military assistance, strategic relations and
economic partnership, all are the prominent features of Sino-Pak friendship. Due to its
physiography at the junction of South, West and Central Asia and Western China, Pakistan is a
country located in the region that is vitally important for world trade. The China-Pakistan
Economic Corridor (CPEC), the current joint venture in the history of China and Pakistan’s
economic relations, is a part of ‘One Belt One Road’ (OBOR) Project. It aims to connect western
China’s Kashgar region with Gwadar port in Pakistan through upgrading roads, railways,
highways and metros. It is intended to rapidly modernize Pakistan’s infrastructure and strengthen
its economy by the construction of modern transportation networks, numerous energy projects,
and special economic zones. Through CPEC, China will be able to trade with South Asia, West
Asia, the Middle East and North Africa through a much shorter route. It will not only prove as a
game changer for Pakistan and China but also for the entire region and at trans-regional level.
Furthermore, China’s massive role and involvement at diplomatic, economic and military levels
have to be explored through historically strong US-Pak ties and the provision of economic aid to
Pakistan. On the other hand, China’s increased involvement, as a regional economic power and
its multi-billion dollar ventures in Pakistan in particular and South Asia in general, poses a grave
challenge to India’s deep seated interest and influence in the region. However, in this
geopolitical scenario, India tilted towards the U.S. that is revealed in its growing cooperation and
civil nuclear deal with the U.S in the recent years.
CHAPTER NO 01
INTRODUCTION
1.1 Introduction
The China-Pakistan relations are time-tested and considered as a role-model for bilateral
relations in the international community. The history of these relations shows that both the
countries have supported each other in both normal and abnormal situations at the regional
and international forums (Weidong, 2014). Their friendship is considered “deeper than sea,
sweeter than honey, higher than Himalaya and stronger than steel.” (Hiro, 2015) Despite
having different beliefs and cultural systems, Pak-China relations are an epitome of
enduring partnership. Pakistan recognized the People’s Republic of China in 1949. From
then onwards, the “all-weather strategic partnership” has shaped the glorious journey of
almost seven decades that continues to strengthen more and more. Since the beginning of
diplomatic relations in 1951, relationship between Pakistan and China has been formed at
multidimensional levels. China and Pakistan have helped each other at political,
diplomatic, commercial, technical, economic and military areas etc. at mutual, regional and
multilateral level.
Since the independence of China, Pakistan has maintained exemplary political and
economic partnership during the military and political regimes that show depth and
stability. The Chinese foreign policy has always attached priority to Pakistan’s interests
viz-a-viz other countries. China has also received the same treatment from Pakistan in all
affairs (Shahzad, 2011). Being an all-weather friend, China has proved its unmatchable
strong relations with Pakistan at several occasions when other allies withdrew their support
2
at hard times i.e. the post-Afghan-Soviet War in 1990 (Afridi, 2010). The strong
relationship between both countries is based on mutual cooperation, respect for
sovereignty and trust (Communiques, 2003). It is a natural phenomenon that the history
shapes the future. The relations of between both Pakistan and China are the best example
of this fact because now both the countries are strategic partners of each other in almost all
areas and the partnership will prove to be vital after the functionalization of CPEC. Both
are proven all-weather friends.
The foundation of the Sino-Pak relations was laid down when Pakistan recognized the
People’s Republic of China in 1949 and became a first Muslim and third non-Communist
country which welcomed China among the comity of nations (Aneja, 2006). Since that day
these relations are getting stronger and both countries have entered and singed a number of
economic, social, trade and defence related agreements. It is a known fact that Pakistan
established diplomatic relations with China just after its independence and became a bridge
between China and the rest of the world. Many Western countries including United Sates
of America sought Pakistan’s help to establish relations with China. Pakistan arranged a
secret visit of Henry Kissinger, Foreign Secretary of United States of America (USA) in
1971 which was followed by Nixon’s 1972 visit in Beijing (Burr, 2002). Pakistan has
helped China in receiving its due position in the United Nations Organization (UNO) and
opened its air corridor for China to connect it with the rest of the world (Jinping, 2015).
Pakistan also supported China’s stance on Taiwan, Xinjiang, and Tibet. The ties between
both the countries served interest of each other in a beneficial manner and, resultantly, they
are now set to explore new horizons of strategic cooperation for development and
prosperity. The Sino-Pak relations are for development and stability in the region because
3
both the countries believe in maintaining regional peace and prosperity that will lead
towards regional development. Moreover, both countries do not have any hidden agenda
for any other country (Bingguo, 2012).
In the present geo-political scenario, the Sino-Pak relations have deep impact on regional
and international politics. Some countries like India and USA perceive the alliance as a
threat to their interests while some others try to follow it as a role-model of their bilateral
relations. There are many motives and interests behind the evergreen Sino-Pak relations.
India-Pakistan enduring rivalry could be a core binding element of the strong Sino-Pak
relations. The aggressive Indian policies to dominate the whole region cultivated the strong
Sino-Pak ties as India is working to play the role of a mini-superpower in the region by
influencing its small neighbouring countries. (Kataria & Naveed, 2014)
1.2 Indo-Pak Historical Ties
The relations between India and Pakistan carry a historical baggage. After the partition,
Pakistan faced many problems due to India’s hostile attitude. India created many hurdles to
make Pakistan a failed state as it believed and still believes in Akhand Bharat (Madhav,
2015). A huge number of people migrated across both sides of the frontier. Pakistan had to
settle the refugees with meagre resources. The partition created many other issues like
water head-works, distribution of resources and forced annexation of the majority Muslim
states in India etc. The core issue is the occupation of Kashmir State by Indian forces
which was a gross violation of the partition’s parameters set by the British for division of
the subcontinent. The occupation of Kashmir sparked a war between India and Pakistan in
1948 (Afridi & Bajoria, 2010). The United Nations Security Council (UNSC) intervened in
4
the situation on request by India and asked both the countries for a ceasefire. It was
declared that the people of Kashmir would decide their annexation through plebiscite under
the UNO, which is still awaited due to Indian obduracy. These issues bred a sense of
insecurity and a threat to Pakistan from India which nurtured Pakistan’s inclination
towards China.
In comparison to the Sino-Pak relations, the Sino-India diplomatic relations did not
become stable in the past and both the countries fought a small war on border demarcation.
Also, the Sino-Indian border is a witness to continuous skirmishes between armed forces
of both the countries at many border points. But after the visit of Indian Premier
Manmohan Singh (January 2008) both the countries are trying to normalize their relations.
USA supported India and supplied arms and ammunition to India during the Sino-Indian
war in 1962 (Nagpal, 2014). After the Cold War, India and USA made a coalition to
counter China (Chatterjee, 2011). India has planned to play a role of regional superpower
with support of USA. USA is also supporting India to counter the Chinese influence in the
South Asian region by providing financial and military assistance. The Indian presence and
diplomatic position over South China Sea with the furtive support of its Western allies is
another irritant for China. India joined a ‘Quadrilateral Security Dialogue’ and participated
in ‘Malabar Exercise’ to challenge Chinese claims on South China Sea (Singh, 2015). But
despite the Indian hostilities Chinese are strengthening economic ties with India. Chinese
are working for investment in Indian infrastructure and telecommunication sectors. They
are promoting cultural ties as well. They are now cooperating in many areas especially in
bilateral trade which was around $60 billion in 2014 which is in favour of China (Rossow,
2015). Both countries tried to promote their mutual trade up to $100 billion US in 2015.
5
Recently, India became a member of SCO in Ufa (July, 2015) with the support of China.
India is also a member of the Asian Infrastructure Development Bank (AIDB). Regardless
of some improvement in the bilateral relations, China has some serious conflicting issues
with India. The Indian stance on status of Tibet and Arunachal Pradesh are serious issues
for normalization of ties between two neighbours (Arpi, 2014).
In this backdrop, diplomatic relations between Pakistan and China have been established in
1950 that deepened after the Bandung Conference in 1955, boundary issues were resolved
in 1963, military assistance began in 1966, a strategic alliance was formed in 1972 and
economic co-operation began in 1979. Shortly after her inception, China adopted a closed-
door policy. The cordiale entente between Pakistan and China began following the
demarcation of border in 1963 between them that was initially aimed at countering Indian
hegemony and US regional influence. The strategic liaison between them is necessary for
the security in order to enhance China’s standing against India, to counter the US regional
influence and strategic U.S.-Indo liaison, the Indo-U.S. nuclear deal, and to restrain India’s
assertive aspirations to become a regional power in order to sustain the balance of power
strategy. The development of China’s ‘String of Pearls’ strategy is the reflection of the
same aspiration that China wants to establish and exert its geopolitical influence by
magnifying its presence over main communication choke points in the Indian Ocean
region.
With mutual understanding, China and Pakistan have decided to enter a new era of mutual
cooperation for local and regional development. They have planned to develop the
centuries’ Old Silk Road into a modern transportation and communication route under,
‘One Belt-One Road (OBOR) Initiative’. China and Pakistan are implementing the
6
Initiative for economic and social development of the region under the banner of “China
Pakistan Economic Corridor (CPEC)”. Originally CPEC is part of greater Chinese plan for
regional cooperation and connectivity (Zaki, 2015). The Sino-India relations have never
been criticized by Pakistan although India has always showed reservations over the Sino-
Pak cooperation and consider it a threat (Ehsan, 2014).
1.3 CPEC: A Corridor of Connectivity
CPEC is a package of infrastructure, energy, telecommunication and agriculture
enhancement related projects. The total estimated cost of the CPEC is $46 billion. The
CPEC will connect Pakistani’s deep sea Gwadar Port with the Chinese city of Kashgar
through a network of roads, railways and pipelines. Existing roads and rail networks will
also be improved besides new networks along the Eastern and Western side of the whole
country. Many economic and industrial zones will also be established along the route of
CPEC (Siddiqui, 2015). Chinese Plan to build OBOR is consisted of three routes that are
southern, central and northern route of which CPEC is sited on southern route
(Zimmerman, 2015). Previously, the CPEC was just a notion but in 2015, it has turned into
reality. It is a 3000 km long trade and energy route connecting China’s north western
Xinjiang region to Gwadar, southern coastal cities in Pakistan further giving access to
Persian Gulf. Regional connectivity places higher position on Pakistan’s development
strategy as it is geo-strategically sited in a region that offers the prospect to connect South,
West and Central Asia. However, the agreement on regional connectivity was signed in
2015, as it was high on the agendas of Sino-Pak cooperation (Hussain, 2017).
7
The CPEC is a symbol of continuity of the perpetual Sino-Pak relations. In the past, both
countries completed all their ventures and CEPC is an under-construction developmental
project that will reach its fruition in future. The CPEC project is being anticipated to bring
about an economic revolution in Pakistan. It is believed and anticipated by China and
Pakistan that CPEC will bring social and economic development in Balochistan as well
(Iqbal, 2015). Pakistan hopes that after the completion of CPEC its GDP will grow at 15
per cent in 2030 (Pirzada, 2016). Some projects are under construction and others are at the
feasibility stage. Both the countries have planned to complete CPEC phase-wise. Some
projects will be completed in three years under ‘Early Harvest Programme’. It is perceived
that after the completion of CPEC, Pakistan’s strategic as well as economic importance in
the world will be heightened. Becoming a doorway to the world’s largest oil importer the
economic conditions of Pakistan will be supportive for social development because of the
transit operations. With the infrastructure development and electricity generation projects,
numerous industrial opportunities will emerge. This will increase productivity and reduce
cost of doing business in the agriculture, manufacturing and services sectors. Pakistani
products will be competitive in the international market. The Foreign Direct Investment
(FDI) flow will be improved. All social and economic indicators will be improved like
employment opportunities, standard of education and quality of life etc. This development
will also enable the Pakistani public and government to tackle the menace of terrorism.
Last but not the least Pakistan will emerge as a trading and cultural hub in the region
(Rakisits, 2015).
Due to this strategic and financial importance of CPEC, Pakistan is committed to complete
it within the stipulated timeframe. The Pakistan government has established a Secretariat in
8
the Ministry of Planning and Development for the in-time completion of CPEC. A separate
body has also been created to provide foolproof security to the CPEC workers to complete
all projects in time (Haider, 2015).
The CPEC will connect the southern city of Kashgar, China with the Gwadar port in
Pakistan. It is the shortest and safest route for Chinese imports and exports. The Chinese
products will reach the Middle East and Africa besides European countries. Being the
world’s top oil-importer, China will satisfy its energy requirements from the Middle East
through the Gwadar Port and the gas pipeline. China can import raw materials in less time
and low cost from African countries bypassing the Strait of the Malacca route which has
security issues for China. The CPEC will be an alternative route for Chinese trade in case
of any clash in South China Sea where many countries are challenging Chinese presence
under USA led coalition (Shim, 2015).
Although it is being perceived by China and Pakistan that CPEC will increase economic
activities in the region. However, there are some serious reservations about route and
sequence of the CPEC projects. Some political parties and provincial governments have
emphasized that the federal government should follow the mutually-agreed schedule of
CPEC projects. The federal government has assured that the original plan will be followed.
Some local elements in Baluchistan fear that the CPEC will deprive them of their resources
and therefore they have demanded to be included in the decision-making of the CPEC
projects. The CPEC has no solid objections except a few about the schedule of its
complication. All stakeholders are demanding transparency, due diligence of all projects
and participation in implementation for larger public interests (Tasneem, 2015).
9
The CPEC will connect the Middle East, Africa and South East Asia with South Asia. It
will connect Iran, Afghanistan and Central Asian States. What’s more, it will serve as the
most viable trading entry point to the landlocked Central Asian States (Brohi, 2015). The
CPCE is for not only Pakistan but also for the whole region. This is why it is called a fate-
and-game-changer project (Malik, 2015). The Asian Development Bank (ADB)
commented on the CPEC and termed it a source of economic assimilation for regional
countreis. The proposed infrastructure will enhance connectivity among developed and less
developed areas of the region by creating new markets and trading hubs. New
opportunities will emerge to use available resources in more productive manner. (Brunner
& Hans-In 2015, Chinese president Xi made a visit to Pakistan and signed an agreement
worth $46 billion (Mustafa & Zafar, 2017). The ex-President Zardari also perused the
development of CPEC dynamically. Fortunately, the PML-N government captured the
opportunity and took the lead towards commencing the booming mega venture furthering
Pakistan’s economic enhancement in future (Ramay, 2016). The worth of the CPEC that
was $ 46 billion has now increased and estimated at $ 62 billion. The increase in the outlay
is owing to the additional investment of China in Pakistan’s railways and for the rail-based
mass-transit project in Karachi, Peshawar and Quetta (Hussain, June 2017). The
construction of CPEC is based on short and long-term plans initiating from 2015-2030. Till
2020, the short term plans are planned to be completed. Till 2025, the medium term plans
are considered to be accomplished. By 2030, the long range plans are likely to be
completed. The CPEC plan is also in line with Pakistan’s Vision 2025 (Long Term Plan
for China-Pakistan Economic Corridor (2017-2030), n.d). For the ‘early harvest’ project,
10
an amount of $28 billion is allocated with an additional $18 billion for energy projects and
$ 10 billion for the up gradation of transportation infrastructure.
On April 19, 2015, on the eve of Chinese president’s Xi Jinping’s first state visit to
Pakistan, he wrote in an editorial that “this will be my first state visit to Pakistan, but I feel
as if I am going to visit the home of my own.” (Hussain, 2017)
The CPEC is an axis of growth and a developmental belt that will bring mutual benefits,
common prosperity and collaborative efforts. It is an economic and developmental project
not only for Pakistan and China but also for the entire region.
The historical Silk Road between Pakistan and China at the north of Pakistan was the route
from where all the trade activities were carried out. So it can be said that CPEC is a
modernized transformation of Old Silk Route. The CPEC is not just a road for Pakistan
and China, it is actually the foundation stone of economic growth of the entire region
which will connect the economic regions and will bring economic prosperity (Mustafa &
Zafar, 2017).
The CPEC plan includes communication and infrastructure development plans, energy
generation projects, Industrial development and development of Gwadar port projects that
in future will enhance security, prosperity and socio-economic development of the regions
aligned to it. Vandewalle (2015) noted that the trade volume between Pakistan and China
that has been $ 1 billion in 1998 has become $ 15.15 billion in 2015 with the
announcement of CPEC. The idea of building up roads, railways and other transport
infrastructure is in the pipeline that won’t only improve connectivity within the country but
in the region as well. This connectivity will prove to be a game changer in future. Daniel
Markey and James West (2016) noted that the multi-billion investment project aims at
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closer and deep rooted regional cooperation on sustainable basis to safe guard not only
Chinese interests globally but also solve economic and strategic issues of Pakistan.
(Hussain, 2017).
CPEC will provide China access to shorter route towards Europe, Middle East, Central
Asian States and Persian Gulf region. In order to attain security, China is focusing on
economic boom of its own restive Xinjiang region. The corridor is deemed as a sign of
indomitable friendship between Pakistan and China. The high level of mutual cooperation
and convergence of strategic interests will improve Pakistan’s energy starved economy as
well as country’s internal security if the projects are materialized as envisioned.
1.3.1 Upgradation of Transport Infrastructure
Under the umbrella of CPEC, upgradation of Pakistan’s transport infrastructure is a
significant feature. This will allow transporting services and goods to various provincial
and financial centers that opens up Pakistan to China’s market and lets China to trade its
goods to Pakistan’s domestic markets. Under the CPEC arrangement, transportation
infrastructure that have lagged far behind, as railway and road infrastructure are planned to
be revamped. The $11 billion investment (or 23.91 percent of the $46 billion total) will
allow both Pakistan and China to glean benefits from an improved transportation
infrastructure with Pakistan (Rifaat & Maini, 2016).
1.3.2 Energy shortage
A large share of CPEC deals with energy sector. The assured financing of billions of
dollars in infrastructure development and power generation sector is greeted in a country
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that is having acute need of foreign investment to enhance its fledgling economy. A total
of $ 33 billion investment will be spent on energy-resource development, including gas
and electricity generation through natural resources such as coal. It is also proposed that a
further of $ 2.5 billion is granted for constructing the pipeline for the transportation of
liquefied natural gas (LNGs) from Iran to the cities of Nawabshah in Sindh province and
Gwadar in Baluchistan province as Pakistan is an energy deficit country. This will prove to
be vital for country’s economy. It is anticipated that an additional 10,000 MW of
electricity will be added into national grid that will help overcome energy shortage and will
give a major boost to Pakistan’s economy.
In order to reap the maximum benefits of Chinese investment in Pakistan and put the
country’s economy on a sustainable growth trajectory are the major challenges for
Pakistan. China is granting funds for CPEC through soft loans, commercial loans, private
equity investment and grants.
1.4 Indian Reservations on CPEC
Following its tradition, the Indian government has strongly protested against the CPEC. In
2015, Indian Prime Minister Narandra Modi, during his visit to China, opposed the CPEC.
The Chinese government put aside the Indian opposition and showed her determination for
completion of CPEC. The Chinese government resolved its support for CPEC and said that
the CPEC will, play a role of bridge and impetus for regional integration among South and
East Asian countries. The Indian leaders also opposed the CPEC development on many
international forums. Indians are scared of Pakistan’s progress and prosperity due to the
partition-oriented hostility. The under-construction CPEC mega venture will go through
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the disputed areas of Jammu & Kashmir between India and Pakistan. India claimed that
Gilgit-Baltistan is part of the Jammu & Kashmir therefore China should not traverse the
CPEC. They perceive Chinese presence and influence in the region as a threat to their
motives of becoming regional superpower” (Ramachandran, 2015). India planned to halt
the progress of CPEC by engaging China in South China Sea with its naval activities
(Syed, 2015). India deemed that the CPEC will challenge the Indian hegemonic goals in
the region and balance of power structure. China and Pakistan stated that Indian concerns
are baseless and unfounded. Both the countries stated that the infrastructure of CPEC could
be used by India for her trade with Afghanistan and the Central Asian States which is the
old desire of India (Ranjan, 2015).
China is an emerging economic power of the world and it is investing heavily in
developing countries to position itself as a major power in the international community
(Jacques, 2006). Most of the developing countries around the world are seeking and getting
Chinese investment. Within three years it will become the world’s largest economy with
growth rate of 9%. India cannot undermine the Chinese development and remains deprived
of Chinese cooperation in economy and other areas because in this new era of mutual
cooperation no country can survive alone. It needs Chinese investment and cooperation
(Hashmi, 2015). This Chinese cooperation will have a greater impact on Indo-Pak
relations. Pakistan is already a close ally of China and a major recipient of Chinese
investment. Therefore, China will urge and facilitate both countries to resolve their
outstanding issues through negotiations to continue its ties with both countries. Keeping in
view the Chinese position in the region, it is presumed that Chinese investment will
14
improve the Indo-Pak relations and CPEC will become a balancing factor between Indo-
Pak relations to save Chinese interests in the region (Raja, 2015).
1.5 Research Questions
1. How the CPEC will be beneficial and a game changer for Pakistan and the region
in terms of peace and stability?
2. How China will play its role in sustaining peace between India and Pakistan to
yield full benefits of CPEC?
3. How the CPEC will change Pakistan’s economic conditions?
4. Is the CPEC a threat or an opportunity for India?
1.6 Objectives of the Study
To understand the geo-political importance of the CPEC concerning trajectory of
the Sino-Pak relationship;
To examine the problems and challenges faced by Pakistan in the completion of
CPEC;
To analyze the impact of the CPEC on the Indo-Pak relations;
To analyze how China can maintain peace in the region in presence of Sino-Indian
enduring hostilities;
To analyze how the CPEC will facilitate the Indo-Pak negotiations in settling all
outstanding issues.
15
1.7 Limitations of the Research
The significant limitations of this research are following:
Although military is a strong stakeholder in the entire CPEC project but the
opinion of military will not be incorporated in this study and the civil-military
relationship in the context of CPEC concerning Indo-Pak relationship will not
be discussed;
The researcher has no rapport with Indian, Chinese officials, politicians,
parliamentarians, citizens and economists, therefore, their point of view will be
lacking in this research, however, the books, articles and reports etc. of Chinese
and Indian authors will be included to broaden the scope for further research.
The study would offer an anticipatory view of the impact of CPEC on the Indo-
Pak relationship in isolation of other possible global/regional intervening
factors, solely.
1.8 Justification and Likely Benefits
Pakistan is facing many internal and external challenges which are inter-related. Internally,
terrorism and poor economic conditions are increasing poverty and unemployment. On the
external front, the Indian aggression and bigotry is a threat to the security and stability of
Pakistan. Pakistan can overcome all issues and face challenges by improving its economic
and security situation. The CPEC is the ever-biggest planned investment of China in an
ally country (Wajahat, 2015). It is an assumption that the successful completion of the
CPEC will address the economic problems of Pakistan. India is trying to disrupt the
progress of CPEC by supporting insurgency along the CPEC route.
16
The proposed study will examine an overall impact of CPEC on Pakistan’s strategic and
security position. It will also highlight how the CPEC can evolve Pakistan into a trading
hub in the region. It will also be discussed that how CPEC will safeguard Pakistan from
Indian hostilities and besides a source of settlement for all outstanding issue between both
countries. It will also help to understand the role of China in keeping peace and stability
for South Asian region and to protect Pakistan and its stakes in the region.
1.9 Hypothesis
“The higher the level of cooperation between Pakistan and China on CPEC, the higher the
likeness for geo-political conflict mitigation between India and Pakistan.”
There are two variables involved in the above-mentioned hypothesis, level of cooperation
as independent variable while the conflict mitigation is a dependent variable. So it can also
be said that the conflict mitigation is an outcome of the cause, conflict mitigation. It is
evident that level of cooperation between China and Pakistan will increase geo-political
conflict mitigation between India and Pakistan therefore it would be positive to argue that
the relationship between these two variables is directly proportional.
Level of China-Pakistan Cooperation ∞ Likeness for geo-political conflict
mitigation between India and Pakistan.
1.10 Thesis Overview
The thesis is comprised of five chapters. Chapter I sets the foundation of research work;
the introduction, historical overview of triangular Sino-India-Pakistan relations, CPEC: A
17
Corridor of Connectivity, research questions to be answered in the latter part of this
research study and hypotheses.
The second chapter presents a vast Review of Literature that tries to cover almost aspects
in the initiation, development and successful completion of the Pak-Sino friendship that is
touching its new heights in the recent multi-billion dollar CPEC project.
The third section of the thesis has three sub sections. In the first section of the thesis the
past events of Indo-Pak relations in the sub-continent, the baggage of the events of the
parturition, the disputes and issues emerged in the post-partition era affecting the trade
relations between two independent regional states; India and Pakistan have been discussed.
The second part of the thesis tries to explain China’s Opening up Trajectory to Market
Reforms and to become a second largest economy in the world after U.S. China’s Foreign
Direct Investment aimed at regional connectivity and economic integration and
interdependence by developing Economic Corridors. The third portion of this research
expounded China’s politico-economic positioning in Indo-Pak relations, pattern of China-
Pak economic, trade relations and financial details.
The fourth Chapter of this thesis detailed China’s Belt and Road Initiative that is consisted
of Silk Road Economic Belt (SREB) and Maritime Silk Road (MSR) and its physical
infrastructure. The second portion of the thesis focuses on The CPEC: A Chunk of BRI, its
physiography, Special Economic Zones, CPEC Roadway Projects, Railway Infrastructure
of CPEC and CPEC Energy Sector Projects and timelines of the fruition of various
projects. The third section of this thesis throws light on Gwadar Port: A Flagship Project of
CPEC, its location, and benefits in the region at large and to Pakistan and China in
particular.
18
The fifth chapter of this research study the significance and likely benefits and challenges
and implications for Pakistan and China in particular, and regional neighbors in general.
Political conflicts, security threats and India factor that put the success of CPEC at risk.
The sixth section highlights the results of survey and seventh chapter of this research work
is based on summary, conclusion and policy recommendations.
1.11 Methodology
It is clear from the above discussion that the issue does not only carry a great level of
international political and economic significance but also regional and local. On the
international account the importance of the CPEC concerning the Sino-Pak and Indo-Pak
relationship cannot be denied. However, at the local level concerns of provinces and
regions demand a great discussion and negotiation. Besides, social impact cannot be
neglected also as CPEC will pass from the entire country and will produce opportunities
not only to local people, but the current thesis keeps its focus narrowed to examine the
Indo-Pak relationship. The sensitive and holistic nature of the topic requires a diverse deal
of data.
1.11.1 Population Sampling
In order to collect thick descriptive but diverse data, the researcher intends to collect a
representative sample of all key stakeholders will be selected which includes
parliamentarians, economists, concerned bureaucrats and common citizens. In this regard,
purposive sampling technique will be used to draw the sample. The researcher will review
the newspapers and reports on the CPEC in order to mark the names of parliamentarians,
19
politicians and economists as the potential interviewees. Moreover, the researcher has an
intention to incorporate the opinion of the citizens concerned. For this reason, the
researcher has planned to exploit ‘twitter’. The tweets under the trend ‘CPEC’ will be
analyzed and the people who posted more than three tweets will be contacted for the
interview. In order to collect the primary data, the researcher aims at collecting a sample of
90 respondents, (in total), which includes a list of 30 parliamentarians/politician from
different political parties and regions, 30 economists/academia, fifteen people from
bureaucracy and fifteen citizens concerned.
1.11.2 Primary Data Collection Process
The qualitative research ontology is considered appropriate for the analysis of concepts and
themes derived from an exploration of social funds and simultaneously, an in-depth
understanding of certain issues is also desirable. Also, qualitative research offers a better
understanding of social reality and gives meaning to the social process, actions,
perceptions, behaviour and structural patterns (Bow, 2005). In order to dwell on the topic,
a qualitative research is designed and the primary data will be collected through interviews
since it offers a complete picture of the research topic. Besides, an in-depth investigation
offers a comprehensive and quality contextual understanding of a certain phenomenon,
interviewee‘s thoughts, behaviours, perceptions, expectations and history (Guion etal,
2011). For this an in-depth and open-ended study, an interview guide will be instrumented
and interviews of 10 parliamentarians, 10 economists, five bureaucrats and five citizens
will be conducted. In order to further penetrate into the issue, social media accounts of
CPEC will also utilized to gather the (re) views of people from all around the world.
20
Furthermore, relevant literature, reports, articles, journals, newspapers will be reviewed for
secondary data collection.
1.11.3 Secondary Data Collection Process
For the purpose to collect secondary data, the researcher will rely on the prominent news
stories published in the elite newspapers (both English and Urdu) of Pakistan, position
papers and reports of national and international think tanks and tweets under the ‘#CPEC’
on ‘twitter’. The secondary data collection will be continuing process to extract data from
multiple sources throughout the thesis cycle.
1.12 Work Plan
Following is the time frame of present research:
Sr.
No.
Phase Duration
1 Review of related literature and instruments
construction
Two and a half months
2 Data Collection 4 months
3 Data Analysis 4 months
4 Report writing and dissertation submission 6 months
21
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CHAPTER NO 02
LITERATURE REVIEW
2.1 Literature Review
Ghulam Ali (2017) in ‘China-Pakistan Relations: A Historical Analysis’ explores that
despite socio-political, cultural and ideological differences, after the Bandung Conference
in 1955, China and Pakistan have maintained cooperative and durable ties. However,
China’s partnership with other countries, both large states (USA and USSR) and smaller
states (Albania, Vietnam, Algeria and North Korea) have seen the shift from wax to wane.
The author has observed the Sino-Pak ties can be traced back in the heyday of Sino-Indian
rivalry. As the most existing studies examine the theory “the enemy of my enemy is my
friend” has been guiding the ties. Since, India is the common enemy of both these
countries that holds together these two countries in an enduring partnership.
Kausor Takreem (2017) in, ‘Chinese Trade Through Gwadar Port (CPEC)’, annunciates
that as a result of globalization, enhancement in the transportation ways, international trade
has become a key to economic development of any country. Sea routes provide the
efficient and economical mode of transportation. Above 90 per cent of the international
trade is transmitted through sea. Also, trade volume in the Indian Ocean region has
magnified to a great extent. Pakistan as a maritime nation is having a long coastal line of
around 960 km. it is also moving forward to materialize its vision to become a pivot of
economic activities. Gwadar can be offered as a gateway or a nucleus of enhanced trade
activities in the region, as it is proximate to Middle East, Persian Gulf, and Sea Lines of
Communication (SLOC). On the one hand, the port will change Pakistan into a nucleus of
27
commercial activities between Central Asia, the energy rich Gulf, China and Afghanistan.
On the other hand, Gwadar, as a naval base, will offer Pakistan Navy with strategic depth
along its coastline. Moreover, the port will allow China to diversify its crude oil import
routes and enhance its presence and involvement in the Indian Ocean region.
Hussain (2015) in “Politico-Strategic and Economic Importance of Gwadar Port, Pakistan”
explicated that Pakistan as maritime state has not been able to utilize the sea and its
resources. Years of negligence have disadvantaged the progress of its maritime sector.
Resultantly, it has damaged both economic development and national security. However,
the sea trade is considered the pillar of country’s economy. The building up of Gwadar
port and the Gwadar city on the mouth of the oil rich Persian Gulf offers an economical
route to the flow of natural resources of Central Asia to the world along the easy access to
the growing consumer markets of Asia. Pakistan’s desire to develop Gwadar is to link the
East and West will transform its national economy and will prove to be a fate changer for
this region as well. The Gwadar port project is in its initial stages and its very success
depends wholly on strategies pursued by Pakistan.
Xiguang, (2016) in “Building a New Civilisation along the One Belt One Road Initiative”
appeared in China-Pakistan Economic Corridor A Game Changer proposes that ‘One Belt
One Road’ (OBOR) initiative aimed at connecting a number of diverse nations and peoples
across and along the ancient Silk Road along with their cultural similarities and
dissimilarities are promoting cohesion among them. However, with the ancient and
historical context, President Xi Jinping proposed the idea of BRI, injecting new blood to
the ancient concept of carrying a number of Eurasian peoples under the development
phenomenon and shared destiny.
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Youkang (2016) in “Analysis of the Interplay between the China Pakistan Economic
Corridor and One Belt One Road” asserts that as China-Pak friendship is reputed as “a role
model in interstate relations”, it has been decided to implement CPEC on the basis of
“1+4” cooperation pattern: development of Gwadar Port, energy generation, building
transportation infrastructure and the growth of industry. With the initiation of this project,
both China and Pakistan are in win-win outcomes. CPEC has been a significant symbol
and indicative reference point in the process of constructing BRI.
Chandra (2016) in a book, entitled “China-Pakistan Relations Implication for India” goes
on to describe that China’s adversarial relations with India has been one of the most
significant factors in its all-weather friendship with China. The intimate friendship
between them is not a novel phenomenon but the two has developed the friendly tie when
China’s global profile was not so much developed was isolated that is currently
discernable. They both perceive as a common threat. Pakistan played the role of a
facilitator in establishing contact between China and USA leading to the recognition of
PRC by the U.S. Pakistan also endorsed China’s stand on Tibet, Taiwan and Hong Kong
issues and supported ‘One China Policy’. In turn China supported Pakistan militarily,
diplomatically, and foremost economically and most recently in developing Pakistan’s
infrastructure.
Upadayay (2015) in ‘Sino-Pak Nexus and Implications for India’ observed that at the
outset, Sino-Pak ties were based on their common security concerns. Both countries were
engaged into war since their inception. Pakistan and India were thrice engage into overt
war along with varied confrontations. Pakistan aligned with the U.S but U.S left Pakistan
29
at the hour of crisis in 1965. At that time, China supported Pakistan. Similarly, China had a
border war with India in 1962. This common threat bounded both the states strongly. In the
decades of 1980 and 1990, improvement in ties between India and China was observed.
Pakistan observed the melting in the ice in the relationship between India and China as
impediment but despite a thaw between India and China, the fundamentals of China and
Pakistan relations remained strong. The author was of the view that the motivating factor
for enhanced Pak-China partnership was India’s tilt towards U.S. Currently, China’s
emergence and its potential to challenge the superpower prompted the U.S. to intensify its
strategic ties with India to counterweight China in the region. China perceived it as an
encirclement strategy of the U.S. that further strengthened its partnership with Pakistan. In
the year 2005, China and Pakistan signed a treaty of Friendship, Cooperation and Good-
neighbourly relations. The 2008 civil nuclear deal between India and the U.S. called for the
further strengthening the Sino-Pak ties.
Ramay (2016) noted that by developing CPEC joint venture, Pakistan has become one of
the beneficiaries of Chinese dream to expand its periphery of influence, consolidate its
global presence and secure its future supply routes of energy and trade goods. What’s
more, it will overcome Pakistan’s socio-economic and energy shortfall. So that Pakistan
should remain focused on the development path of the country and provincialism should
not be given the chance to hijack the development agenda by any stakeholder, including
the federal government.
Hussain (2016) in ‘Pakistan and a World in Disorder A Grand Strategy for the Twenty-
First Century’ wrote, over the past three decades, China’s phenomenal economic progress
has positioned it as the 2nd largest economy in the world in nominal dollar terms after
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surpassing Japan in 2010 and if the current trends are projected in future, it will probable
outdo the US economy by 2027 by emerging the biggest economic power in the world.
Huge military power will be a momentous development of twenty-first century and has
transformed the global and regional environment. By developing CPEC will provide China
access to Persian Gulf and Arabian Sea. In April 2015, during President Xi Jinping’s visit
to Pakistan, Pakistan and China decided to increase the level of trade to $20 billion in next
three years per annum that was earlier $15 billion. Moreover, both the states are agreed to
raise Pak-China liaison to the ‘All-Weather Strategic Partnership’ by enriching the Pak-
China Community of Shared Destiny, to safeguard the continuity of Pak-China alliance
from generation to generation.
In a research work entitled, “Strengthening Geo-Strategic Bond of Pakistan and China
through Geo-Economic Configuration”, Javaid and Javaid (2016) very comprehensively
detailed that initially Pakistan and China evolved around geo-strategic context but after the
cold war more and more dimensions added into bilateral ties. China came to view as
regional economic power. Pakistan aligned itself with China owing to the reasons that she
has a long history of tense relations with her immediate neighbor India and fought more
than a decade and a half war on terror dragged Pakistan’s economy to an alarming state.
The strategic rapport between China and Pakistan that was intended to offset India’s
growing influence and interest in the region and US design has now discovered new
avenues of cooperation. CPEC is considered as another breakthrough in the development
of Pak-China cordiale entente that will prove to be a fate changer. In future, Pakistan can
be developed into a hub of trade and commerce by establishing various trade and economic
zones and road and railway infrastructure that is in the pipeline. The construction of
31
Gwadar port will allow China to have a strategic foothold on Indian Ocean region and the
Arabian Sea in order to look India’s nautical activities in the region.
As CPEC is “One Corridor, Multiple Passages”, project that will be materialized in
numerous phases in more than a 15 years’ period. The controversy over CPEC routes is far
from subsiding. Recently, the political parties from K-P and Baluchistan have raised the
ante and have indicted the leadership for overlooking the smaller provinces in the multi-
billion-dollar venture. The fact is that in late 2013 or early 2014, the government has been
firm to modify the corridor route. This is proven by the 2014-15 federal PSDP in which the
government had kept Rs. 49 billion for the CPEC that will be spent on the eastern route.
The federal government allotted a nominal amount for the western route in the 2015-16
PSDP when in 2015 it confronted with increasing political pressures. The western route is
given significance on eastern route.
The western route is a two-lane road. The eastern route is a high-speed six-lane modern
motorway with controlled-access design and its pavement design is markedly superior to
that of the western route (Kakar, 2016 January 21).
In an article titled “China – Pakistan Future Prospects and their Strategic Compulsions” the
author discusses that the growing relations between the US and India in the region are
compelling factor for China and Pakistan to help each other in all areas to face the Indian
hegemonic goals. Pakistan has proved itself a permanent strategic partner of China. The
writer concludes that Afghanistan’s situation, the India-US relations and Pakistan’s
security and energy problems will shape the Sino-Pak relations in future (Javaid, 2015).
32
In a research paper, “The China Factor in the India-Pakistan Conflict” the author explains
the dynamics of China-Pakistan relations keeping in view the Indian concerns viz-a-viz the
US’ interests in the region. He underlines that China will support Pakistan in case of any
dispute between India and Pakistan to counter the US influence in the region (Mailk,
2002).
The role of development in conflict resolution is highlighted in the India-Pakistan conflict
perspective in a research article, “India-Pakistan Conflict over Kashmir: Peace through
Development Cooperation.” The writer suggests that the Two Nation Theory-based enmity
between the two neighbours could only be normalised through mutual development which
ultimately will settle the core issue of Kashmir including all the outstanding issues. He
argues that both the countries should develop the State of Jammu and Kashmir and then
work together to resolve it amicably (Harshe, 2005).
A paper analyzed the depth of China-Pakistan relations in the regional context and
revealed that China always favoured Pakistan in all issues on regional and international
forums despite pressure. The paper, “Pakistan China Strategic Engagements in the
Regional Stability Syndrome of South Asia”, unlocked all aspects along with prospects of
China and Pakistan relations. The author discusses that the Chinese support for Pakistan
has an in-depth strategic importance for both the countries to counter Indian as well as the
US influence in the region. The author concludes that China will develop the area for wide-
raging trade and supply benefits by taking all neighbours especially Pakistan (Hussain,
2014).
The writer describes in an article that the importance of the deep sea Gawadar Port is vital
for the whole region owing to its geostrategic location. It is sited on the junction of the
33
world’s most oil transportation route and near the world’s busiest port of Dubai. Its
proximity makes it the best option of trade not for Pakistan but also for China and other
regional countries. It provides the shortest route to China via Arabian Sea. The port will
turn Pakistan into a trade nucleus and play a vital role (Naseem, 2014).
The development of the Gawadar Port is the best alternative for China and Pakistan if India
intends to disturb the sea supplies. The development of the port will also challenge the
self-proclaimed supremacy of the Indian hegemony. The port will become a joint naval
base for China and Pakistan to safeguard their interests in the region. The port also helps to
achieve the objectives of Shanghai Cooperation Council. The cooperation between China
and Pakistan will divert the Indian attention into two sides which will ensure peace in the
region in case of war (Khan & Ahmed, 2015).
In ‘The China-Pakistan Axis: Asia’s New Geo-politics’, the writer explains the nature of
the Sino-Pak relations in context of regional and international geopolitical perspective and
its impact on the world. The bilateral relations are stable and strong, despite variance in
ideology from the day one because of their common rival, India. The author also highlights
the threats faced by China and Pakistan in the post-NATO Afghanistan and Taliban
Insurgency (Small, 2015).
In ‘The China-Pakistan Economic Corridor: India’s Options,’ the writer highlighted that
Pakistan and China are working to connect their less-developed areas through the CPEC
for better economic development. The proposed CPEC will connect Kashgar in China’s
Xinxiang Uygur Autonomous Region with Pakistani Gawadar Port which is located in
Balochistan. The CPEC has greater opportunities for India because it is part of China’s
transnational ‘One Belt One Road’ initiative. He suggests that India should use the CPEC
34
to extend its trade and economic activities. He also counted many other opportunities
which India can avail through CPEC (Ranjan, 2015).
In a research paper ‘China-Pakistan Economic Corridor: Assessment of Potential Threats
and Constraints’, Safdar Sial (2014) discussed the possible future threats and benefits. The
author states the current volume of China and Pakistan trade with regards to the CPEC and
hopes that it will enhance when the CPEC will be completed. The CPEC will open up new
opportunities of development not only for Pakistan but also for the whole region. He
concludes that the CPEC endeavor is likely to benefit the people of states in South Asia,
contributes towards maintaining regional peace and stability and economic integration as
well (Sial, 2014).
In a research paper, the author narrates the CPEC has many benefits for Pakistan and
China. The CPEC will connect China with oil rich Persian Gulf market and reduce 10,000
miles’ distance between China and the Gulf. The CPEC will be an alternative route for
China’s 4 trillion foreign trade and 7 million barrels of daily oil imports which passes
through a reliable friend country. He concludes that after the CPEC investment Pakistan’s
GDP may increase 15% which will shrink the economic gap between India and Pakistan.
Moreover, China will protect Pakistan’s security interests after the CPEC to protect her
own economic interests (Ashraf, 2015).
In an editorial ‘AIIP Visit,’ the writer explains that the Chinese investment in Pakistan has
geo-strategic importance for the region and thus the whole world. It will open up new
trading channels for the regional trading countries. India can change its stance on the
CPEC and join the corridor with Pakistan and China and only China can make it possible
(The Dawn, 2015).
35
Dr. Bhattacharjeee (2014) investigates the China Pakistan Economic Details with Indian
political, economic and social paradigms keeping in view the regional and international
relations. The author mentions the CPEC project which will open a short trade route
between Xinjiang, a north-western province of China and Gwadar port in Pakistan.
Gwadar is a deep sea port located in Baluchistan where the Chinese both planned and
funded trade routes, Silk Road Economic Belt and 21st century Maritime Silk Road that
will link each other. Chinese are investing in CPEC to strengthen economy of Pakistan as
well as Afghanistan because the economic stability of both countries is directly related
with security of Xinjiang automations region. The central CPEC projects e.g. road, rail,
pipelines and fiber optic facilities will pass through the region of Azad Kashmir which is a
disputed territory between Pakistan and India. On the basis of this issue India has some
serious reservation on CPEC. China puts aside the Indian concerns on CPEC. India
speculates Chinese regional integration as a threat for its interests. India takes Chinese
investment as a mean to expand its influence in other regions. Chinese need new markets
for their products and supplies. The Chinese government creates employment opportunities
for their own population through investment as unemployment rate is increasing in China
on an alarming rate. But the Chinese Foreign policy pretends in media that China is
investing in developing countries for their social and economic development. In the same
way China is investing in Pakistan to satisfy its own energy needs by reducing shipment
time and by avoiding South China Sea route which is becoming a tension zone due to
Chinese claims on South China Sea.
Wagner (2016) explicated the China’s activities in Pakistan in detail. He undertakes
internal and external threats which can affect the under-construction CPEC. The researcher
36
also counts some bright and destructive consequences of CPEC on Indo-Pak relations.
Certainly, the speed of economic development will accelerate in Pakistan due to huge
Chinese investment which will ensure more resources for all sectors and organizations
including military. In sample terms there are more money to build up Pakistani armed
forces. Armed forces will equip their units with more modern arsenal to counter India. This
situation will press India to start an arms race in the region to upset balance the power
structure. No doubt India is spending a huge amount to buy arms. India fears that China
will use Pakistani soil to gain strategic upper hand in the region. On the other the
economic benefits of CPEC can fascinate Indian policy makers to participate in it although
the status of Gilgit-Baltistan is also a concern for India as all roads will pass through this
region.
Cohen (2013) ‘Shooting for a Century: The India-Pakistan Conundrum’ studies the
relations of India and Pakistan in historical perspective. He discusses the reasons behind
creation of Pakistan. How did Congress leaders’ behavior and attitude realize the Indian
Muslims that they were a minority and would be ruled by Hindu majority? Keeping in
view all the ground realities they demanded for a separate homeland as they feared that
after British Rule they would face Hindus dominance in subcontinent. At the time of
partition, a huge number of people traveled either side of the boundary of new independent
states. The partition was witness of a blood bath of refugees in religious riots. India and
Pakistan blamed each other for the massacres. These religious riots shaped the Pakistan-
India relations as nobody in both countries is ready to forget the sad events of partition.
The conflict of Kashmir is also a major irritant between two countries. The writer terms
this conflict as a symbol of enmity between two neighbors. All efforts of retaining peace
37
between two nations are eclipsed by the rigid elements in the wake of Kashmir conflict.
The whole region is hostage of contention of both countries and paying huge cost as
regional trade linkages and development cooperation is not rising as compared to other
regional blocks. The world powers are pursing both countries to resolve their all
outstanding issues through dialogue. Both have good relations with world’s leading
countries. But Pakistan has an edge on India in its relationship with China. No doubt China
is an emerging super power and encompassing its influence in global affairs through trade
and investment. The writer hopes that China will play a positive role to maintain peace in
the region to save its own interests. China will urge both countries to refrain from hostility
and settle their issue amicably for the development of region.
Mariam Ahmed (2015, December 09-10) in an international conference held at GC
University Lahore presented a paper, ‘China Pakistan Economic Corridor A test of good
governance in Pakistan’, in which she stated that it is ostensible that CPEC will bring
positive improvement and modification in all spheres of life in Pakistan. Pakistani people
and institutions will learn a lot of new things from Chinese companies by following
existing and new rules and regulations. Rules and procedures ensure transparency, improve
governance and complete projects within given time frame and allocated budget. It is
witnessed that poor governance turns projects into failures. CPEC is facing many issues in
Pakistan like poor governance. The presenter relates the outcomes of CPEC with good
governance. She opines that CPEC is a test case of good governance in Pakistan because
many projects of CPEC will build on Built, Own and Transfer mode under Public Private
Partnership. In the past projects made under this mode did not deliver as planned. She
suggests that government should enhance its contract management and projects
38
management teams more skillful to gain maximum benefits of CPEC especially in energy
and infrastructure projects. The fruitful and early functioning of projects will change the
socio-economic status of Pakistan in the world.
Kazmi (2016, December 09-10) in a conference held at GC University, Lahore presented a
paper entitled, ‘The China Pakistan Economic Corridor and Sino-Pak-India Nexus’ counts
the possibilities of cooperation among India, Pakistan and China due to CPEC as it will
open many opportunities of development in the region. She terms the CPEC as a practical
example of Chinese five Principles of Coexistence. The size of investment is equal to the
well-known US propelled Marshal Plan for the revival of Europe after World War II
(Check Marsahl Plan date and year). USA has chalked out strategy named Asia pivot to
counter China’s emerging role in Asia Pacific region. India is the main operative of USA
in the region to save its interests. USA will use India to challenge Chinese expansion of
trade along with development. USA and her western allies are ready to support India to
attain most modern nuclear technologies by easing in mandatory international regulations.
At the same time India is sustaining its relations with China. China wants to establish good
relations with all its neighbors but will not allow anyone to disrupt its regional economic
development plan. The writer speculates that China will not tolerate Indian interference in
CPEC. China can offer India to join CPEC. The writer concludes that India will not isolate
itself in the region and will not disrupt CPEC despite reservation as it cannot afford
Chinese annoyance.
Raman (2017 May 24) examined the importance of Pakistan for China as compared to
India in all bilateral and international issues. He narrates the situation of South Asia after
the Atomic tests of India and Pakistan in 1998. China condemned the atomic blasts of both
39
countries. China agreed with USA that both would persuade India and Pakistan to stop
further atomic tests and to sign CTBT and NPT. China termed the blast as a design for
hegemonic goals in region and quest for new political status in international community.
India satisfied the US’ concerns regarding advancement of nuclear technology with
Chinese threats to its security. India declared that its nuclear test is for peace and security
in the region and a balancing factor for Chinese supremacy.
While highlighting the depth of China-Pakistan relations, he unveiled discussion of USA
and China policy makers regarding Pakistan. He quoted words of a Chinese official about
Pakistan’s nuclear programme, that Pakistan's security was as important to China as
Israel's was to the US.
The writer summaries that Pakistan is more important than India for China as China
considers Pakistan as an indispensable regional and international partner which implying
that China would not compromise on its relations with Pakistan.
Naveed Yousaf etal. (2017) in an article ‘Pakistan-Centric Foreign Policy of India’
reiterated that since independence, India is following Pakistan’s centric foreign policy. The
fundamental objective of India’s foreign policy has aimed to encircle Pakistan at its
frontiers and isolating Pakistan in the comity of nations. India’s relations with Pakistan’s
neighboring countries Afghanistan and Iran have remained significant throughout the
history but since 9/11 it has taken geo-strategic measures to strengthen its ties in order to
create unease for Pakistan. India has also cultivated its partnership with the United States
and other powerful countries of the region. Currently, India has mended fences with
Beijing to boost trade activities and diminish the significance of Pak-China friendship.
Though China-India relations are now moving from estrangement towards engagement yet
40
Pakistan has remained China’s close ally throughout the course of history. In order to
unlock China’s western region, under the aegis of CPEC, China is vibrantly cooperating to
develop Gwadar port. China and Pakistan both are ready to reap its benefits that will
satiate China’s political, strategic, security and economic interests in the region as well as
Pakistan’s economic growth will take boost and its security and strategic environment will
become safer. In past, growing disagreement with India drove China towards Pakistan’s
court. By giving practical shape to CPEC plan, India has to face two front threat, from
China and Pakistan. China has earlier supported Pakistan with nuclear and missile
technologies. Animosity between India and Pakistan has given way to four wars (in 1948,
1965, 1971 and 1999) and other skirmishes.
Safdar Sial (2014) detailed that recently China has emerged as Pakistan’s major trading
partners both in terms of imports and exports and economic cooperation has been
improved to a greater extent between both the countries. Owing to this the volume of
bilateral trade has been boosted up from US$ 4.1 billion in the year 2006-07 to US$ 9.2
billion in 2012-13 showing an increase of 124 per cent that will further boost after the
operationalization of CPEC. In order to further strengthen trade and connectivity, China
has planned to develop three main corridors through southern, central and northern
Xinjiang connecting China with Europe, Russia and Pakistan. Also, China’s increased
effort to develop Bangladesh-India-China-Myanmar (BCIM) corridor that would provide
China’s landlocked Yunnan province access to Bay of Bengal. The researcher observed
that CPEC is a comprehensive developmental programme that won’t only physically
connect China’s Xinjiang region to Gwadar in Baluchistan but additionally it will establish
several economic zones along the corridor. The researcher also provided a thorough
41
analysis of its geostrategic significance, internal political instability of Pakistan and
potential security related threats and constraints impeding the operationalization of CPEC
project in order to realize its full benefits.
Kiran (2012) in a research article, ‘China’s Containment Syndrome: Revisiting the Issue
from Pakistani Perspective’ detailed that the world is moving towards multi-polarity with
China’s coming up as a balancing regional and global power, the focus has shifted from
West to East. China-Pakistan relations stood the test of time throughout the history since
the establishment of Peoples Republic China in 1949. The researcher asserts that in order
to counter Indian threat, China established close relations with Pakistan. Among all
challenges, both the countries have survived and strengthened their ties. In the post 9/11
scenario, the world swayed towards economic, political and military cooperation. China’s
policy to strengthen Pakistan is to offset Indian interest and influence in the region.
Developing the Gwadar port is considered an emblem to protect their economic interests.
From the above review of the literature, it can be concluded that CPEC arrangements
would impact substantially on Pakistan’s infrastructure socio-economically, through the
generation of employment, benefits in productive capabilities, lessen the travel time and
convenient mobility, etc. and for China it will make access possible in the South Asian
region and will enable China to outreach to the Arabian Sea and the Persian Gulf region
near the Strait of Hormuz.
42
Referneces
Ali, G. (2017). China-Pakistan Relations A Historical Analysis. Pakistan; Oxford
University Press.
Ahmed, M. (2015, December 09-10). China Pakistan Economic Corridor A test of good
governance in Pakistan. International Conference on CPEC. GCU conference,
Lahore.
Ashraf, S. (2015, June 25). The China – Pakistan Economic Corridor: India’s Dual
Dilemma . Retrieved from Chinausfocus: http://www.chinausfocus.com/finance-
economy/the-china-pakistan-economic-corridor-indias-dual-dilemma/.
Bhattacharjeee, Dr. D. (2014). China Pakistan Economic Corridor. Indian Council of
World Affairs. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2608927.
Chandra, D. S. (2016). China Pkaistan Relations Implications for India. India; Vij Books
India Pvt Ltd.
Cohen, S. P. (2013). Shooting for a Century: The India-Pakistan Conundrum. Brooking
Institution Press; Washington, D.C.
Harshe, R. (2005). India-Pakistan Conflict over Kashmir: Peace through Development
Cooperation. Sage Journals, 47-60.
Husain, J. (2016). Pakistan and a World in Disorder A Grand Strategy for the Twenty-First
Century. USA; Palgrave Macmillan.
Hussain, S. (2015). Politico-Strategic and Economic Importance of Gwadar Port,Pakistan.
Omniscriptum Gmbh & Company Kg.
43
Hussain, S. A. (2014). Pakistan China Strategic Engagements in the Regional Stability
Syndrome 0f South Asia. Journal of Research Society of Pakistan, Vol. 51, No. 2,,
129-147.
Javaid, U. (2015). China – Pakistan Future Prospects and their Strategic Compulsions .
Journal of Political Studies, 253-264.
Javaid, U. & Javaid, R. (2016). “Strengthening Geo-Strategic Bond of Pakistan and China
through Geo-economic Configuration”. Pakistan Economic and Social Review.
Vol. 54.1.
Kakar, R. (2016, January 21). Making sense of the CPEC controversy. THE EXPRESS
TRIBUNE.
Kiran A. (2012). China’s Containment Syndrome: Revisiting the Issue from Pakistani
Perspective’. ISSRA Papers. http://www.ndu.edu.pk/issra/issra_pub/articles/issra-
paper/ISSRA_ Papers_Vol4_IssueI_2012/06-China's-Containment-Afifa.pdf
Kzami, A. A. (2016, December 09-10) China Pakistan Economic Corridor and Sino Pak
India US Nexus. GCU conference.
Malik, D. A. (2015, 6 5). A Corridor of Success. Retrieved from Institute of Strategic
Studies: http://issi.org.pk/?p=4077
Naseem, N. (2014). Geopolitical Value of Gwadar for the Region (Mainly for Pakistan,
China and Region). South Asian Studies, 519-530.
Sial, S. ( 2014, July-December). China-Pakistan Economic Corridor: Assessment of
Potential Threats and Constraints. Conflict and Peace Studies, pp. 11-40.
Small, A. (2015). The China-Pakistan Axis: Asia’s New Geopolitics. London: Oxford
University Press.
44
Ramay, S.A. (2016). China Pakistan Economic Corridor A Chinese Dream Being
Materialized Through Pakistan. Sustainable Development Policy Institute (SDPI).
https://sdpi.org/publications/files/China-Pakistan-Economic-Corridor-(Shakeel-
Ahmad-Ramay).pdf
Raman, (2017 May 24). For all the chest-thumping, India cannot win a war against
Pakistan. Quartz India. https://qz.com/990579/for-all-the-chest-thumping-india-
cannot-win-a-war-against-pakistan/
Ranjan, A. (2015, 5). The China-Pakistan Economic Corridor: India’s Options. Institue of
Chinese Studies-Occasional paper.
Takreem, K. (2017). Chinese Trade Through Gwadar Port (CPEC). New Delhi; Kalinga
Publication.
The Dawn. (2015, October 10). AIIB visit.
Upadayay (2015). Sino-Pak Nexus and Implications for India. M.D. Col. 2015, India Vij
Books India Pvt. Ltd.
Wagner, C. (2016). The Effects of the China-Pakistan Economic Corridor on India-
Pakistan Relations. Stiftung Wissenchaft und Politic. https://www.swp-
berlin.org/en/publication/effects-of-the-china-pakistan-economic-corridor-on-india-
pakistan-relations/
Xiguang, L. (2016) “Building a New Civilisation along the One Belt One Road Initiative”.
China-Pakistan Economic Corridor A Game Changer. Khan, M. M etal.
(eds.) The Institute of Strategic Studies Islamabad.
Youkang, D. (2016). “Analysis of the Interplay between the China Pakistan Economic
Corridor and One Belt One Road”. China-Pakistan Economic Corridor A Game
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Changer. Khan, M. M etal. (eds.) The Institute of Strategic Studies Islamabad.
Yousaf , N. etal., (2017). Pakistan-Centric Foreign Policy of India . Journal of Research
Society of Pakistan. Vol. 54.1. pp. 139-151.
46
CHAPTER NO 03
Historical Narratives of Indo-Pak Ties and the
Regional Trade
3.1 Sub-continent during Muslim Rule
Historically in the sub-continent, Muslims ruled the major part of India almost eight
hundred years. They established new institutions and tried to organize a harmonized
society keeping in view the local culture. They promoted art, literature, judicial system,
roads and established an organized army. Generally, the Muslims rulers ruled the
subcontinent with justice and protected the rights of people of all beliefs except a few
kings. The Hindus were in majority being native inhabitants in sub-continent but a larger
number of followers of Buddhism were also there. The Hindus were divided in a strict
caste based class system. The upper class was sacred and entitled to enjoy religious
authority in all spheres of life. The others were bound to serve them. Some were traders
and some protect the religious class as army. The others were considered untouchables.
When the Muslims conquered the vast areas of sub-continent the lower classes of Hindus
were impressed by the kind treatment of Muslims and a large number of lower class of
Hindus embraced Islam. As per some critics, there were many reasons of conversion of
Hindus in Islam including fear, torture and greed but the main reason of that conversion
was the caste system of Hindu society besides fair treatment of Muslims. In a short time, a
vast majority of untouchables turned into Muslims population which played a significant
role in Sub-continent politics and power structure in coming future.
47
The Muslims reign enjoyed many dynasties including Mughals who were last Muslims
rulers of India. The Mughals almost unified the whole India in one empire and introduced
many new reforms in society. A common Hindu and Muslim culture was flourished in art,
music, poetry, literature and architecture etc.
3.2 Sub-continent in Colonial era
No doubt it is a fact that the Indian sub-continent is very rich in spices, agriculture and
terrain diversity. There are mighty rivers, mountain ranges, vast plain fields, deserts,
forests and coastline. Before 200 years it was full of all natural resources which attracted
many Europeans towards this land and they send many expeditions to explore sub-
continent. The French and British succeeded to establish strong business ties with the local
traders and rulers. But after a long tussle the British overcame all other European nations
and solely made the sub-continent their colony. In 1857, the British captured the whole
India and toppled the Mughal rule.
48
Map No 01 Mughal Empire
Source: http://gatesofvienna.net/2013/02/make-way-for-mughalistan/
49
The British occupied the Sub-Continent for nine decades as a colony. In the beginning of
twentieth century they introduced political reforms in British India to empower the local
Indian population politically. The local population attempted many a times to get freedom
from the British rule. In the beginning, Hindus and Muslims struggled together. The
leaders of political and religious parties of Muslims and Hindus joined hands against the
British. They started many movements to organize local people against foreign rule. In the
meantime, political parties divided on the basis of ‘Two Nation Theory’ as Muslims
thought that there were two main communities in India that are Hindus and Muslims. The
Muslims felt that they would become a victim of Hindu majority because they experienced
on many occasions in social and political life when Hindu leaders sidelined the Muslims’
interests during negotiation with the British. The Muslims of India voiced for a separate
country for them but Hindus insisted on united India. After a long political struggle, the
British India was divided into two free nations, India and Pakistan.
3.3 The Partition of Sub-continent
The partition of British India fulfilled the demand of the Muslims for a separate homeland.
At that time, it was believed that two new nations would become good neighbors but
violence at the time of partition was terrible. The tragic events of the partition which killed
more than one million people and made 15 million homeless, designed the future relations
of both new countries. (William 2015, June 29) The partition has become a symbol and
reference in the history of both countries. Although the partition resolved many problems
of Hindus and Muslims but new border disputes emerged after it. The unjustified division
of borders made two newly states; the bitter enemies. The division was made in favour of
50
India and areas of Muslims majority were handed over to India by the Sir Redcliff who
was assigned to delimit the boundaries of new states. The unfair and wrong division was
made under the influence of the British Viceroy Lord Mountbatten and Congress leaders
(Bhaumic, 2015). The division gave many economic and political advantages to India over
Pakistan. Millions of people were displaced on both sides which resulted in many deep-
rooted social and emotional problems between people of two countries. The real picture of
postcolonial relations of India and Pakistan was drawn by Ayesha Jalal, a prominent
historian of Pakistan. She declares that partition is an unforgotten sad incident of South
Asia which will influence the fate of public and governments of India and Pakistan forever.
The havoc of displacement still haunts the people of both sides (Jalal, 2013).
Fig No 01 Religious Composition in 1947 & Muslim Hindu-Sikh Claims
for Territory
Source: http://pakgeotagging.blogspot.com/2014/10/partition-of-punjab-in-1947.html
51
The border issues and violence of partition entangled both countries into rivalry, whereas
both have common history, tradition, culture, language, and heritage etc. The list of
disputes between both neighboring countries is very long. With the passage of time some
issues were resolved but some are still unresolved including, Kashmir, Junagrah, Sir
Creek, Siachin, and distribution of river water between both the countries etc.
3.3.1 The Shadow of Kashmir on Indo-Pak Relations
Kashmir is the core issue and flashpoint between India and Pakistan since partition. The
geographic location of Kashmir has strategic importance for both countries and also for
China. The unfair division of boundaries provides a topographical link to India with
Kashmir. Now, the region of Kashmir is occupied by three countries, China, India and
Pakistan. All three countries have their claims on the Kashmir with their own reasons as all
three are linked with each other through this region.
52
Map No 02 India, China and Pakistan’s Claim over Kashmir
Territory
Source: https://sajadbangash.wordpress.com/2015/02/14/kashmir-the-paradise-on-earth-indian-atrocities/
53
The case of Pakistan is based upon the principles of partition set by the British government
for division of British India. At the time of partition, it was outlined that princely states
would decide their fate for annexation with India and Pakistan. The Hindu ruler of
Kashmir annexed the State with India against the majority Muslims population’s demand
which was 77 percent of total population. According to Indian claims, the Muslim
population started armed struggled against the Hindu ruler and established their own
government on a vast area with the covert support of Pakistan.
India and Pakistan have fought four major wars (1948, 1956, 1971 and 1999) followed by
many small border clashes; in 1971 war Kashmir was perhaps a periphery issue. The issue
of Kashmir is high on the agendas of United Nations. On the request of India, the UN
Security Council passed a resolution and emphasized that the people of Kashmir would
decide their annexation either India or Pakistan by a free and fair plebiscite under United
Nations supervision.
Pakistan again and again voiced for freedom of Kashmir as per UN resolution but India is
reluctant. As both countries are nuclear states since 1998. The war between Pakistan and
India can lead to a disaster in South Asia and even in whole Asia. Despite many efforts,
Kashmir remains a permanent threat to regional and international peace. Almost fate of
1.6 billion people of South Asia is hanging with this issue. Both countries blamed each
other for tense relations. India termed the freedom struggle of Kashmiri people as terrorism
and blames that Pakistan supports the Kashmir unrest through border infiltration but
Pakistan denied it.
Pakistan stresses the peaceful settlement of Kashmir issue through international arbitration
and invited UN intervention and assistance in this regard. India always denied the
54
mediation of international community in Kashmir conflict. India always declares the
territory of Kashmir as its integral part on the basis of a resolution of Kashmir constituent
assembly which endorsed the application of ruler of Kashmir for annexation with India.
Therefore, India denied Kashmir as an issue between two countries and not ready for talks
with Pakistan. Indian position on Kashmir has been changing since 1948. The first premier
of India Mr. Jawaharlal Nehru promised for a negotiated peaceful determination of
Kashmir under UN resolutions. But with the passage of time the successive governments
changed their mind and denied their commitments. The Indian occupation of Kashmir
agitated the local population and they started a freedom movement against Indian rule
which have been gone through many phases.
3.3.2 Indus Water Treaty
Indus Water Treaty, 1960 under the auspices of World Bank for equitable distribution of
water was envisioned to use the Indus Basin water resources between two states peaceably
as most of the water channels pass through the Indian held territory of Kashmir. India has
constructed many water reservoirs in Indian held Kashmir which Pakistan termed as breach
of Indus Water Treaty. Pakistan objected the construction of dams and has sought World
Bank mediation variously to implement the treaty in its true letter and spirit.
3.4 Kashmir Freedom Struggle and Role of Pakistan
The people of Kashmir are struggling for their freedom since partition and India is trying
to suppress this movement by using violent means. India has positioned above one million
troops in Kashmir for this purpose (DAWN, November 30, 2016). India has held many
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elections in Kashmir under Indian constitution and termed the elections as a referendum.
The Indian constitution has given a special status to the State of Jammu of Kashmir
through Article 370. This article has a special provision for the people of Kashmir which
empowers them that their territory is not permanent part of India and they will decide it on
a viable time.
Pakistan always supported Kashmir movement. Pakistan considers it an unfinished agenda
of the British India and persuaded to settle it in accordance to UN resolutions. The 1965
war was due to both countries’ claim on Kashmir issue that was ended on international
mediation followed by Tashkent agreement where both countries pledged to resolve their
all issues including Kashmir through dialogue. Both countries again sit together in Simla
at the end of 1971 war in which East Pakistan became Bangladesh with Indian overt and
covert support. The role of India in forming Bangladesh was acknowledged by Indian
Prime Minister Narendra Modi in a meeting with Bangladeshi Prime Minister (The Indian
Express, June 9, 2015). In Simla both countries pledged to settle all outstanding issues
through negotiations in peaceful manner.
Kashmiri people were struggling for freedom even before partition. They tried to solve this
issue by peaceful means. They waited for a long time and in 1987 they started an armed
struggle against the Indian forces. India blamed Pakistan for this insurgency and deputed
more than a million armed forces personnel to counter the struggle. Indian youth took part
in the armed struggle and many came to Pakistan for arms and training. Some local
Pakistani elements supported the Kashmiri freedom fighters with arms and training. India
had used repressive state apparatus to terminate freedom movement it is still going on
instead of Indian brutalities. There are thousands of unknown graves in Kashmir and a
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large number of Kashmiris are gone missing. India turned the valley of Kashmir from
earthly paradise into a living hell.
The Kashmiri freedom struggle is witness of serious human rights violations. Indian forces
massacred thousands of the innocent Kashmiri people who voiced for right of self-
determination. The local and international humanitarian organizations reported that since
January 1987 to July 2017, some 94,767 Kashmiris were killed and 142,179 were in Indian
penitentiary and torture camps. Indian forces have not even spared Kashmiri women and
almost raped almost 11,011. Their atrocities have widowed almost 22850 women and an
unspecified number of half-widows with their half-orphans. The whole Kashmir is like a
penitentiary for Kashmiris and they are facing Indian forces outrages on daily basis. The
Indian armed forces have special powers under a special law which makes them uncalled
for and with impunity for their brutal actions.
Being a stakeholder in Kashmir agenda and having social, religious and cultural relations,
Pakistan voiced for independence of Kashmiris from India at multilateral forums. The
dispute of Kashmir is still high on the agendas of UNO since 1948.
Pakistan always challenged the Indian dominance and vowed for relations on equal
grounds. A major share of resources of both countries is used for defense purposes. Indian
spending on purchase of arms is too much which shows its hegemonic goals in the region.
Ostensibly, Pakistan and India vow to normalize their relations with peaceful means. But
whenever peace process was started India stops the process by imposing conditions.
Pakistan wants to settle Kashmir issue including all other outstanding issues but India
stressed to sideline the Kashmir issue. Pakistan has attempted many a times to convince
India for meaningful dialogue even through backdoor diplomacy but all in vain.
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Due to the core issue of Kashmir, Indo-Pak relations cannot be normalaized in other areas
of mutual interests. Although both countries have common culture, heritage and languages
but movement across borders is very limited.
3.5 The Plight of Indian Muslims
Abhorrence and hate with Muslims is a historical phenomenon in India (Hiro, 2015) that
counts the reasons of Hindu-Muslim antagonism by highlighting basic differences between
two communities. He opines that Muslims believe on one God but Hindus on multiple
gods, Muslims believe in life after death but Hindus believe in reincarnation. Muslims
believe that all humans are equal but Hindus believe on caste system. Although, 200
million Muslims are nationals of India but the social and economic conditions of Indian
Muslims are pathetic. The same is the case with other minorities in India. Indian Muslims
faced many communal riots in which thousands were killed and millions displaced.
Demolition of famous Babri Mosque and genocide of Muslims in Gujarat show the real
situation of Indian minorities. Overall condition of all minorities in India is disgusting. In
the past, the state of the minorities was not satisfactory but the new wave of Hundvata
harassed all minorities of the India. They are killed and slaughtered in organized
communal riots across the India. The latest census of India counted the Indian Muslims
14.2 percent of total population. But they are living in a state of complete chaos. Socially
they are marginalized, politically isolated, and economically backward. Their share in
every sphere of life is negligible. The youth of Indian Muslims are unemployed due to
their faith. Although they are 14.2 percent of the total population but only 33 percent are
employed in National work force as compared to Hindus 41 percent and other communities
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(Ghosh, February 26, 2016). They have less opportunities of economic freedom and fair
competition in public as well as private sectors. The reports of commissions and
committees, constituted by Indian government highlighted the discriminatory status of
Indian Muslims and recommended many policy changes for the wellbeing of Indian
Muslims but all in vain.
Pakistan used to highlight the miseries of Muslims in India on international forum and
India considered it interference in its national issues. The nature of Indo-Pak relations is
more emotional and social than economic and political. The humiliated treatment of Indian
government with minorities and Muslims population is a major concern for the people of
Pakistan. China also supports Pakistan in its efforts to unearth India’s brutal treatment with
minority population.
3.6 Indian Role in Afghanistan and Baluchistan Insurgency
Afghanistan is a landlocked country and heavily dependent on its neighbors for external
affairs and trade. The country is blessed with a neighbor like Pakistan which has sacrificed
its resources for Afghanistan. The Pakistan turned itself a safe haven for Afghanistan
during the invasion of USSR in 1979. Pakistan led the world in curtailing Soviet influence
whereas India welcomed the Red forces in Afghanistan.
The people of Afghanistan started freedom movement to expel the Red forces and
Pakistan was their base camp. It hosted more than 5 million Afghan refugees during the
Afghan War and faced its consequences. The wrath of Afghan war jolted the entire
Pakistani society with social and cultural changes. After the end of Afghan war Pakistan
played a vital role in reconstruction of warn torn country with meager resources as the US
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left the Mujahideeen unattended. Although the USA was the main stakeholder in Afghan
War but it did not pay any heed to stabilize the country which resulted in emergence of war
lords in Afghanistan. A civil war was started among different factions which ended with a
Talban controlled government in Kabul that was later toppled down by USA after 9/11
terror attacks.
Again Pakistan joined the USA led alliance’s war on terror. Pakistan has faced a huge
human and economic loss by joining war on terror. The United States declared the
Mujahideen factions trained during Afghan war as terrorists. As the US launched operation
"Enduring Freedom" in Afghanistan, they crossed the long porous border and started
terrorist activities in Pakistan. As Pakistani forces, in order to curtail their activities started
surgical and combing, started operations across the country in general and North West
region in particular. Some of them killed, arrested and other run away in Afghanistan. On
other side the Afghan based groups are fighting against USA backed Afghan government.
Afghanistan and USA alliance blamed that Pakistan is supporting Afghan government
opponent groups providing bases and logistics. Pakistan denied all allegations and showed
its words by actions.
A series of operations was conducted by Pakistani Armed forces and cleaned its areas
from those elements which were blamed and pointed out in attacks in Afghanistan and
Pakistan. The Pakistani Army and general public sacrificed a lot in these operations.
Pakistan has successfully established its writ in its own territory.
After army operations, Pakistani banned terrorist groups joined the Afghan based groups.
India started a proxy war against Pakistan with terrorist elements based in Afghanistan.
Some Pakistani Talban splinter groups and Bloch separatist elements joined hands with
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Indian and Afghan agencies. These agencies have provided arms and financial support to
these armed groups to destabilize Pakistan. The hired groups are responsible of attacks of
military and civilian target killings and sabotage activities across the Pakistan.
Pakistan has unearthed a big terrorist network nested by Indian spy agency and captures an
on duty Indian navy officer, who helped to foiled out terrorist elements in Baluchistan and
Karachi. The arrest of Indian officer is a proof of direct Indian role in destabilizing
Pakistan.
3.7 Economic and political framework of South Asian Countries
The South Asia is comprised of seven sovereign states which are full of economic
resources ranging from human capital, minerals, and fertile land, diverse terrain rich in
natural habitat and shores of Indian Ocean. Its location in the modern world considers it a
door to Central Asia and South East Asia. It is situated on the world’s most oil supplying
maritime route. The countries of the South Asia are well linked with other world
economically and politically except with each other. This part of world has witnessed the
fall of British of Empire during partition of India followed by collapse of Soviet Union
after Soviet invasion in Afghanistan. The breakup of East Pakistan with Indian immersion
is another acrimonious event of South Asia along with other irritants. These three incidents
designed the political and economic framework of South Asian countries.
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Fig No 02 South Asian Countries GDP and World Rankings 2016 (US$
Millions)
Source: (World Bank)
India being a big country among other South Asian countries devised its political strategy
against its neighbors specially, Pakistan. Already both have historical enmity which
became more hostile when both joined opposite blocs in Cold War. India supported Soviet
Union and Pakistan joined USA led Alliance in Afghan War. The civil war of Afghanistan
again placed both countries on opposite sides. Both are arch rivals in regional and
international politics. Each blames the other for its internal glitches. Pakistan strongly
believes that India is using Afghan soil against Pakistan. The continuous Afghan war has
changed the political design of the South Asian region. India is fearful about its security
because of Afghan conflict as India experienced many happenings in past structured by
Talban regime. Afghan government preferred India over Pakistan at many occasions as
both blamed that Pakistan is fanning extremism in the region by supporting Afghan Talban
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and Kashmir freedom movement. Pakistan denied all allegations and accused India and
Afghanistan for supporting insurgency in Baluchistan.
This trilateral political bitterness and suspicion upset the whole South Asian region. The
other countries of South Asia are hostages of Indo-Pak conflict and the region is
dispossessed of harnessing its true geo-strategic strength. India’s dominating attitude with
small neighbors is a threat for their security. The sense of insecurity impulses small
countries to seek help from powerful countries. Pakistan is the only country which always
openly struggled against Indian dominance and made alliances with big countries to
safeguard its political and economic interests.
Fig No 03 Indo-Pak Trade Statistics (US $ thousand)
Source (World Bank)
India is attached with Pakistan, Bangladesh, Nepal and Bhutan besides China. Maldives
and Sri Lanka have maritime boundaries with India. Only Afghanistan has no direct land
or sea connection with India. As mentioned earlier, all countries of South Asia formed a
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common platform SAARC, for collective social and economic development. But due to
political differences of India and Pakistan, SAARC has been failed in materializing its
objectives (Chan, 2017 March 31). India which is a major political and economic player in
South Asia has influence on all South Asian countries except Pakistan. It was experienced
that the majority of SAARC member countries refused to participate in 19th SAARC
Summit in Islamabad, Pakistan under the influence of India. Resultantly, the Summit was
postponed. On the other hand, the whole region of South Asia is on verge of nuclear war
because India and Pakistan have nuclear arsenals. Both spend a major chunk of their
annual budgets on acquiring more and more nuclear weapons. The whole situation needs a
major breakthrough which normalizes tense relations of both countries so that South Asia
should prosper and can contribute its unique role in world peace because of its geo-
strategic location.
3.8 India-Pakistan Economic Relations
The economic relations between India and Pakistan are very limited. Trade is the main
indicator which describes the depth of bilateral economic relations between two countries
and regions. In 1947, India was a key trading partner of Pakistan and its share in Pakistani
trade was 70 percent. (Acharya, 2012). The trade history of Pakistan with India is not
positive. Pakistan gradually reduced imports from India and trade remains nominal.
With the passage of time, Pakistan established economic relations with other countries and
made pacts with western block to safeguard its political and trade interests. After wars of
1965 and 1971, trade relations between the two reached at the lowest level. The ice was
started to melt in 1982, when Pakistan allowed private companies to import a limited
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number of items from India. During the course of time, the list was broaden. After getting
membership of WTO by both countries, the trade volume was slightly increased. But most
of the trade was channeled through informal trade because of restrictions and hidden
berries although being a member of WTO, India granted ‘Most Favored Nation’ status to
Pakistan. But Pakistan is still following positive list approach. Pakistan claimed that India
imposed non-tariff barriers on Pakistani products. Analysis of current bilateral trade shows
that trade is in favor of India.
As India and Pakistan are two dominant and largest states in SAARC region, both have the
potential for inter-regional trade. The trade relation between them remains minimal as
compared to their respective global trade volume. Both of the countries do not fall in the
list of top ten trading partners of each other. Owing to the historical political fractious ties
affected the mutual trade. The trade openness for South Asia was 65 per cent in 2003 that
is much lower as compared to other regions. Trade openness of ASEAN countries
averaged 144 per cent. Moreover, South Asian region remains one of the least integrated
regions in the world. Intraregional trade amounts to only 1 per cent of South Asian total
GDP in 2003 as compared to 3.5 per cent to 4 per cent of regional GDP in Latin America,
Sub-Saharan Africa, and East Asia and 9 per cent of regional GDP in Europe and Central
Asia.
By improving trade relations, India and Pakistan can resolve the political tensions that
have bedeviled the ties of overall Indo-Pak relations for over seven decades.
As India is always pushing back against the BRI, its geopolitical thinking is revealed. India
intends to construct its own connectivity network appears to be a strategy to
counterbalance the CPEC that is the flagship connectivity initiative of BRI and specially to
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bypass Pakistan which it considered has prohibited India from transportation of any goods
through its terrain owing to their edgy relationship (Jiamei, 2017). However, Indo-Pak
trade has come a long way since the turn of the century. Official trade volumes have
increased from a mere $309.8 million in 2003 to almost $2 billion by 2016. Trade through
third countries like UAE, Singapore, and Iran or other channels are estimated to be around
$2 billion. Bilateral trade has mostly favored India. Pakistan’s trade balance with India has
worsened to $1.3 billion in 2016 from $142 million in 2003 (Nelson, 2017 November 6).
Fig No 04 Region wise World GDP Breakup 2016 (US$ Million)
Source (World Bank)
3.9 Trade under SAFTA (Indo Pak Relations in Regional Perspective)
Although, Pakistan and India are key members of South Asian Association of Regional
Cooperation (SAARC) which was formed to enhance regional connectivity and economic
development. SAARC cannot achieve its real objectives due to Indo-Pak tense relations.
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This is one of the least integrated areas of the world because Pakistan and India are the
main economies of this region and their enduring nature of issues with a history of
partition, wars and other conflicts and clashes hold all regional development. After the
introduction of SAFTA, a regional trade facilitation regime hosted by SAARC trade
between two countries increased slightly.
Fig No 05 Pakistan Trade with SAARC and the World (US$ thousands)
Source: Trademap.org
Pakistan wished to resolve all its outstanding issues with India but India stopped the
process of negotiations by putting conditions. Since 1947, Pakistan tried to engage India to
discuss all issues for peaceful settlement. Many rounds of talks including Confidence
Building Measures approach was followed by both countries. Apart from Takshand and
Simla leaders of both countries met on many occasions and showed their determination to
settle all the enduring issues of disagreement. They signed Lahore Declaration in 1999. But
the attempts were failed all of sudden due to the terrorist incidents of Indian Parliament
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attack (2001), Mumbai Attacks (2008) and Pathankot attack (2016) that always stopped the
proceedings of a negotiated settlement between both the countries. India hastily blamed
Pakistani based organizations behind all attacks and discontinued dialogue process after
every attack. However, Pakistan denied all the allegations that caused a war like situation
in the region which is a permanent threat to regional peace and stability. Both countries are
nuclear powers and their rivalry makes South Asia a nuclear flash point. The region of
South Asia is one of the least integrated regions in terms of trade, tourism and travelling.
3.10 Indo-Pak Inborn Rivalry vs. Sino-Pak Enduring Partnership
India-Pakistan rivalry remains a constant factor in Sino-Pak cordiale entente. It is believed
that China and Pakistan’s recognition to each other was established on geopolitical
consideration. Both the countries got their sovereign status in precarious scenario and
required allies, especially the immediate neighbouring countries. Both the countries came
into being with the hostile historical environment. Pakistan emerged after the bloody
partition of subcontinent India, Hindu-Muslim bitterness, territorial claims, water issue and
other claims that was followed by India-Pakistan war in 1948 and separation of East and
West Pakistan in 1971.
In 1949, China got its sovereign status, facing internal strife due to a long civil war. China
aligned itself with Soviet Union by signing a security pact in 1950. At that time, China did
not have many allies, thus it immediately developed diplomatic relations with Pakistan.
Vertzberger (1985) wrote about China’s policy to develop diplomatic relations with
Pakistan and counted motives behind this policy. He states that China knows the
importance of Pakistan’s geographical location and its influence in the Muslims World.
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Pakistan’s tendency towards Western countreis block and Indian assertive policies in the
region pursed China to maintain warm relations with Pakistan because Pakistan can be a
bridge between China and the Muslim world and also can curtail the Indian domination
role in the region.
In the geostrategic perspective too, the India factor is guiding the enduring ties between the
two. It was regarded as a shared security concern leading towards mutually supportive
policies.
Currently, China and Pakistan have expanded their cooperation in almost all conceivable
areas and has developed a degree of ‘trust’ and ‘reliability’ in their ties. They both have
acquired a significant place in each other’s foreign policy. Pakistan is an important state in
China’s Central, South and West Asian strategy; and complements China’s modernization
of its western regions. In past, China has become the most reliable arms supplier, defence
technology along with diplomatic and economic support. Also, trade was major reason to
expand relations with PRC. As the history witnessed that the trade ties between Pakistan
and India was nominal especially at the hour of crisis. Pakistan found China as a suitable
alternative and switched towards China. Now the CPEC, which is in the pipeline, can serve
both the countries geostrategic interests through geo-economic configuration. Given the
nature between both the states as reliability and durability, this initiative is deemed as vital.
As China is stepping out with its engagements in the South Asian region and promotes
connectivity and economic integration through its ‘One Belt One Road’ initiative. India
has also outreached in the South Asian region, stressing infrastructural development,
people-to-people contact, and a “lift all boats” approach to help India’s neighbors to gain
benefit from its own rise (Anderson & Ayres, 2015 August 3).
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Due to political tensions and high transportation outlays, the region of South Asia is one of
the least integrated regions in the world. The South Asian Association for Regional
Cooperation (SAARC) agreements, the South Asian Preferential Trading Arrangement
(SAPTA), and the South Asian Free Trade Arrangement (SAFTA) are futile to minimize
trade barriers.
The deep-seated enmity and rancor between the two immediate states; India and Pakistan,
punctuated by four wars and several border clashes have stood in the way of broader
regional trade expansion, reducing the flow of goods to merely trickle across the Indo-Pak
frontier. Most of the SAARC countries depended heavily on developed countries as export
destinations, and increased importing goods from China. With exception to China’s
extensive economic ties with Pakistan, China’s mounting influence on South Asian
region is rather a novel phenomenon. Recently, China’s economic commitment to
Pakistan—a declared package of $46 billion in infrastructure development and
assistance that is currently a 62 billion mega initiative—thus signifies a strengthening
of, but not a strategic transformation in, an enduring relationship going back five
decades. Their current mutual trade volume exceeds $16 billion.
3.11 China’s Past, Present and Future in Global perspective
3.11.1 Ancient China
The history of China begins in 1500 B.C. It is the world’s oldest civilization which is rich
in almost every area of life. It was flourished along the yellow river and Yangtze River.
Although China is famous from ancient times to date due to its many distinctions but trade
is the main focus of China. The glory and wealth of China was admired by the ancient
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world. Once the Queen Elizabeth I of England wrote a letter to the Chinese Emperor in
July 16, 1556 and asked for the secret of Chinese trade and prosperity (Chung, 1976). The
region of China was rich in agricultural, minerals, crafts and architecture. It was the source
of silk, spices and raw materials for world. Chinese products reached to the Central Asia,
Europe and Africa through well know Silk route and sea.
The Chinese rulers believed that Chinese nation was more civilized than the rest of the
world. Keeping that in view, at times they discouraged foreign trade. On some occasions
they fixed very strict rules for foreign trade. The other nations of the world wanted to do
trade with China but they faced many problems. There were many conflicts in history over
Chinese trade but opium wars were very significant in Chinese trade history. The European
nations especially the British wanted to get the edge on Chinese trade which was in favour
of China. The East India Company supplied opium grown in India and other colonies to
Chinese markets to balance the trade deficit. After judging the effect of opium on Chinese
population, Chinese rulers banned the opium trade. The ban caused a huge financial loss to
British East India Company which was unbearable for the Company. In 1839, the
Company attached the Chinese ports and defeated the Chinese forces. The war lasted for
four years and ended in 1942. The war was called Frist Opium war that was followed by an
agreement which enabled the British to attain many trade concessions. The Second Opium
War was started in 1856 and ended in 1860 and fetched more trade concessions to the
British. In 1820, the economy of China was the largest contributor in GDP of world
(Eckart, June 23, 2016). These wars played a decisive role in modern Chinese history and
started an internal movement which led a rebellion and resulted in Republic of China in
1912. The political process was continued within China for better government and
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governing system which shaped the modern day China in 1949. The role of Chinese
Communist Party (CCP) was central in creation of modern China. The CCP is still running
the affairs of country through a systematic approach.
3.11.2 Relationship Regime Shift from Politics to Economics
After the end of Cold War an era of economic development was started. Economic
interests dominated the political relations in the international politics. In Cold War period
the world was divided on the basis of political blocs backed by Soviet Union and United
States. Member counties of each bloc traded with each other. Rulers of small countries of
each bloc did trade for political incentives from bloc leader to prolong their rule. There was
a clear-cut distinction on trade destination on the direction of each bloc, leading to power.
The leaders of each bloc made their supporters dependent on their supplies. They imported
raw materials from their followers and exported finished items to them. Most of supplied
items were in the form of aid and subsidies. In a study, Berger et al., (2010) analyzed the
impact of the Cold War era on international trade with the help of declassified data of CIA.
The study was conducted on the nature of CIA interventions in other countries. Almost all
countries who were towing the line of USA in the Cold War were importing markets of
American products. CIA influenced monarchies, democratic and dictators to formulate
trade policies which paved the way for American exports in their local markets. They all
were rewarded in form of grants and loans. During the Cold War USA and USSR
pretended that they were helping their allied countries for their development and stability
but both got political and financial benefits from them.
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3.12 Regional Alliances in the post-Cold War
At the end of the Cold War the world realized the need of fair trade on the basis of
competiveness and competition rather than on the basis of political alliances. The third
world countries were exploited during colonization as well as in the Cold War period
(Bergsten, 2017). They have experienced the subjective treatment of rich countries,
therefore a sense of regional cooperation was evolved on the basis of mutual economic
interests. They started to engage their neighbors in political and financial matters. Regional
organizations were formed to normalize relations among member countries. These
organizations played a fundamental role in promotion of regional cooperation and trade.
Member states of regional organizations put aside their differences and focused on regional
development and connectivity. EU and ASEAN are good examples of regional economic
cooperation in modern world. The share of both regional groups in total world trade is
remarkable. EU and ASEAN share in world exports is 32.8 % and 7.4 % correspondingly
(www.trademap.org). Tyagi (2015) finds out that South Asian countries have not trade
related infrastructure and facilities. The lack of connectivity make this part of the world
lest integrated area in the World. The South Asian region is witness of only five percent
regional trade. The total trade of South Asian region is equal to only one percent of its total
GDP.
3.12.1 China’s Trajectory of ‘Opening Up’
China’s trajectory of development initiated from ‘scarce commodity country’ to one with
excessive resources. China after her inception adopted a closed door policy. The world has
seen China’s trajectory of spectacular victory in a very minimal period of four decades. In
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1949, the newly established state of People’s Republic China (PRC) planned and carried
out economic developmental policies by gradually reforming the country according to
market principles, leading to an average economic growth rate of about 4 per cent from
1953 to 1978 that was highest in the developing world at that time. Until 1978, China
hardly existed for world economy. Its minimal growth structure has been overlooked by
global economic power. Tennakoon (2012) asserted that since 1978, China perused the
strategy of gradual transitioning to open its economy for the outer world to attract
investment. China steadily adopt market based policies to shrink its public sector control
over economic activities. Free trade and liberal tariff regimes were introduced to win trust
of international investment which turned China into a hub of economic development.
During the leadership of Mao Zedong, Chinese economy stagnated due to economic
downturns; the Great Leap Forward leading to a massive famine and the reported casualties
of more than 45 million people) and the Cultural Revolution from 1966 to 1976 (which
caused extensive political disarray and greatly disrupted the economy). Deng Xiaoping
began economic reforms after he and his reformist allies ousted the Gang of Four Maoist
faction. Foreign investment in China began in Kuomintang era. Deng created a series of
special economic zones for foreign investment that were relatively free of the bureaucratic
regulations and interventions that hampered economic growth in order to attract foreign
capital by exempting them from taxes and regulations.
China opened the doors of its market for foreign investors, grew at an unprecedented pace
and altered itself from poor and inward looking economy to become a modernized,
industrial and one of the stronger economies in the world.
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Opening up of China and economic reforms coincided with Soviet Union disintegration.
This has designed China to discover her economic space in Central Asian region, however,
the newly emancipated states of Central Asia were also concerned about their economic
development.
Under the leadership of Mao Zedong, prior to economic reforms, China maintained a
centrally planned economy in which country’s economic productivity was directed and
controlled by the state which set output goals, regulated the prices and allotted resources
for the economy. At that time, private enterprises and foreign investment firms were
largely barred. The economy became stagnated by these moves. In order to allocate
country’s resources, there were no market configurations. Since initiating market reforms
in 1978 by breaking the Soviet style economic policies, China’s economy saw a shift from
a centrally planned economy to a market based economy and has undergone a rapid social
and economic development (The World Bank, 2017 Mar 28). Beginning in 1978, China’s
economic reforms including market principles were executed in two stages. In the late
1970s and early 1980s, the initial stage of these reforms involved the opening up of the
country to foreign investment, decollectivizing the agriculture, allowing the entrepreneurs
to do business. The second stage began in the late 1980s and 1990s involved the
privatization, contracting out much state owned industry and lifting the prices control. A
major key to success is the trade liberalization in China.
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Fig No 06 China’s Growth Trajectory
Fig 3.5 is made by the researcher.
In the previous three decades, astonishing growth has been witnessed by China. It has been
transformed from rural-agrarian economy into a modern-industrial economy and then to a
market-based economy.
Lin (2003) observed that the economists of the China are familiar only with those factors
which supported the marvelous progress of China because China followed central
controlled persistent economic policies with little variation over the years. They
experimented a fix set of modest indigenous economic theories which can explain
economic policies, easily. Therefore modern Economics is considered a new branch of
knowledge in China.
Adam Smith claimed, “China had long been one of the richest, that is, one of the most
fertile, the best cultivated, most industrious, most prosperous and most urbanized countries
in the world” (Smith, 2007). The world has witnessed China’s transitioning form one of
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the world’s poorest countries to its second largest economy (Yueh, 2015, December 09).
Recently, the shift from a largely agrarian society to an industrial powerhouse increased
the production and wages and allowing China to emerge as the world’s second largest
economy (Hirst, 2015 July 30). From 1949 to 2016, China’s economy has been sharply
increased by 4 to 10 per cent annually. In the 1980s, its real GDP grew at an average rate
of 9.8 per cent, in 1990s, 9.9 per cent and in the decade of 2000s it has been 10.3 per cent
but it has been slowed during 2010-2015 that is 8.0 per cent. China has maintained a
double-digit or near double-digit economic growth through reformation of monetary and
economic policies.
The World Bank (1997) stated, in the post-1978 economic growth, the global economic
factors included: trade global economy, foreign advice, foreign investment, foreign loans,
trade opportunities, export-led development opportunities, export processing zones,
investment and assistance by Chinese from Hong Kong and other parts of ‘greater China,
along with the instances of successful export-led economic development by Japan and by
the four Asian tigers; Taiwan, Hong Kong, Singapore and South Korea (Thomas, 2006).
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Fig No 07 China’s Opening Up Reforms
Fig 3.6 is made by the researcher.
For decades, China was regarded as a ‘sleeping giant’ that has now awakened and playing
a significant role not in geo-strategic and geo-political arena not only in South Asian
region but also in the whole world. President Xi Jinping’s predecessor Xiaoping followed a
conservative foreign policy based on the principle of “hide your strength, bide your time,
never take the lead”.
As of now, China has maintained its economic boom, the premier Xi conceives a robust
and assertive foreign policy and aspires to make China “a strong and powerful” state.
In just one generation, China has achieved what other countries took centuries to
accomplish. For instance, Britain in the 18th century took 155 years to double its per capita
income, US and Germany in the 19th century took about 6 decades to double their per
capita income, Japan in 20th century took 33 years. The 21st century is considered China’s
century. It later took 12 years to double its per capita income, the country with a
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population exceeding the combined population of Africa and Latin America, China’s
achievement is the most impressive development of our times. China has put a daunting
challenge that no other country in the upcoming decades or centuries would come near
China’s achievement enabling 1.34 billion people to move from middle-income into the
high-income bracket against the backdrop of global economic and financial crisis (Khan,
2016, x).
In the 21st century, China’s rise is deemed as a greatest game changer as compared to any
other global phenomenon. It is regarded as the most significant development of the
century. Nothing would influence the world even remotely closer to this epoch making
historical development. China has renewed its relative national power profile of destitute
and stagnated economy towards higher level of growth. Due to its large population, size,
economic resources, location, hinterland, rich social capital and universal worldview, “the
Asian Century” is in fact the “Century of the Chinese”. Notable Chinese scholar Martin
Jacques writes, “The rise of China will change the world in the most profound ways.”
(Jacques, 2011)
Currently, China is aspiring and making efforts to expand its economic influence at global
level and this aspiration is revealed through implementation of China’s ‘One Belt, One
Road’ venture to invest and build infrastructure to connect Asia, Europe and Africa etc. In
order to save its industries facing overcapacity, China is reaching out to find new overseas
markets, influence other states to adopt China’s economic model (Morrison, 2018 Feb 5).
Since, China is expanding ‘soft power’ in various countries, it may contribute in Chinese
endeavor of inter-regional connectivity, on the other hand, the United States has strategic
and economic interests in all parts of the world that have implications on the global
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system. China the second largest economy is growing very faster than the U.S., the largest
economy. In the offing, it will surpass the U.S. in terms of aggregate GDP in the next few
decades (Shatz, 2016). As per the World Bank 2017 report noted, China has experienced
"the fastest sustained expansion by a major economy in history – and has lifted more than
800 million people out of poverty". Currently, it has been speculated that China will
shortly surpass the US as the largest economy of the world.
With the size of China’s GDP on PPP basis of $17.9 trillion and per capita income of over
$13,300, in 2014, it became the second largest economy followed by United States. In
2010, China surpassed Japan in its economic growth. China is the world’s largest exporter,
second largest importer as well as the largest manufacturer and user of automobiles
surpassing the US in 2011.
In 1997 to 2013, China’s real GDP grew from $177 billion to $ 8.227 trillion and the real
GDP per capita increased from $ 183 to a slight above than $ 8,000. By 2015, China has
reached all the Millennium Development Goals (MDGs). Although, China’s GDP growth
has showed a gradual slow down since 2012. In China’s 12th Five-Year Plan (2011-2015),
the growth target was 7 per cent that in 13th Five-Year Plan (2016-2020) has slowed down
to 6.5 per cent reflecting the rebalancing of economy. China’s objective is to focus on the
quality of growth meanwhile maintaining the goal to realize “a moderately prosperous”
society by 2010 (doubling GDP for 2010-2020) (The World Bank in China, 2017 March
28). However, by 2020, the International Monetary Fund (IMF) projected to fall the GDP
growth to 5.8 per cent.
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Fig No 08 Chinese Real GDP Growth: 1979-2017 (per cent)
Source: https://www.everycrsreport.com/reports/RL33534.html
As the innovation in economic planning is the key priority, China has made some
initiatives as “Made in China 2025” that is deemed as a grave challenge by Europe, Japan
and the global trading system (Morrison, 2018 Feb 5). As it is well known that the large-
scale capital investment leads towards rapid economic growth.
3.12.2 The “Made in China 2025” Plan
The “Made in China 2025” strategy is designed to implement the up gradation of China’s
manufacturing sector. Apart from central-level funding, the local authorities will also
enhance fiscal support for “Made in China 2025” projects with more than 10 Billion Yuan
anticipated to be spent by local governments nationwide from 2016 to 2020. “Gradually,
China aspires to exchange foreign with Chinese technology. China’s ambitious proposal is
to develop one of the world’s most competitive and advanced economies with the help of
innovative manufacturing technologies (smart manufacturing). China’s industrial master
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plan ‘Made in China 2025’ aims to turn the country into a ‘manufacturing superpower’
over the coming decades. This industrial policy will challenge the economic primacy of the
current leading economies and international corporations. The strategy targets virtually all
high-tech industries that strongly contribute to economic growth in advanced economies:
automotive, aviation, machinery, robotics, high-tech maritime and railway equipment,
energy-saving vehicles, medical devices and information technology to name only a few.
Countries in which these high-tech industries contribute a large share of economic growth
are most vulnerable to China’s plans” (Wübbeke, 2016).
3.12.3 China’s Foreign Direct Investment (FDI)
In China’s globalization strategy, outward foreign direct investment is a novel feature.
China’s local firms seek to invest in both advancing and advanced countries. In 2011
reportedly, it was considered that there was mounting investment by capital rich China’s
firms in promising firms in the U.S. Such financing proposed access to expertise in
marketing and distribution potentially expedient in developing local Chinese market. China
contributed a total of $161.03bn during 2009-2013 in outward FDI that helps creating
almost 300,000 employments. The largest regional recipient of China’s outward FDI was
Western Europe with Germany receiving the maximum FDI projects for any country
globally.
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Fig No 09 China’s outward and inward FDI during 2010-2016, by value
(US $ bn)
Source: http://www.chinagoabroad.com/en/guide/china-go-abroad-5th-issue-sound-risk-management-builds-
a-solid-foundation-for-chinese-enterprises-to-navigate-the-global-landscape
Recently, China’s outbound FDI has been mounting and as per new government strategies
on which forms of investments are permitted to have set the stage for momentous moves in
the international economy. In the years since the global financial crisis, Chinese state-
owned and private enterprises have extended their foreign presence. Chinese outbound
FDI, in 2007, accounted for roughly 4 per cent of total flows and the figure contains the
international financial center of Hong Kong. Each year since 2009, China’s outbound FDI
flows have accounted for more than 10 per cent of the global total that hits approximately
17 per cent in 2016. Chinaese firms are heavily financing in infrastructure building; the up
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to the minute instance is BRI that is aimed at constructing varied transportation
connections all through the Asia, the Middle East, Europe, and Africa that accounts for
roughly two-thirds of all global trade that will contour the future global economy.
3.12.4 Economic Integration: A Conceptual Framework
Import and export are core activates of any economy. Not a single country in the world
which produces all required commodities. Therefore all countries are interdependent and
sell and buy products and commodities under certain trade rules and regulation. The wheel
of trade balance the production of world and push the economic cycle. Without trade
economic development of any country is impossible because without exports of extra items
and import of limited necessities progress of world will stop (Zaman, 2017). Regional
trade is prerequisite of economic progress of a certain region which can be attained by
fixing common economic objectives. Relaxation of Tariff and non-tariff barriers within
region accelerates speed to reach regional common cooperation.
Although, in past varied attempts have been made to integrate the various European
economies until the twentieth century, there were no custom unions formed. Political
obstacles can be singled out the major causes of the failure to materialize these projects.
After the end of Second World War, enormous increase in the interest in areas of economic
integration has been witnessed.
Owing to the enormous competition, a country can attain optimal advantage from its
purchasing and vending in the world by means of having sufficient know-how of trade
statistics. Foreign Trade Statistics are also requisite for proposing the economic
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development plans, establishing commercial strategies, conducting trade consultations,
creating bilateral, regional and international preparations for the advancement of trade.
Balassa (1973).During the seventh decade of the last century, Hungarian Economist, Béla
Balassa put forth the theory of Economic Integration which expounded that ultimately
economic dependence between the countries will grow into political dependence hence
there will be “Political Unions” of the nations based on wide spread economic integration.
The economic interests and inter-dependence will bring the nations closer and it will lead
to political integration as well.
The Economic Integration is of various forms and of different degrees that are free trade
zones, a common market, an economic union and a custom union. In free trade zones, the
tariff rates between the integrated economies are eliminated.
Fig No 10 Economic Corridor
Fig 3.9 made by the author.
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In the concept of economic integration, economic as well as political reasons are involved.
The integration of economies increases trade opportunities among the member states of
economic unions that rests on the expected productivity benefits from the integration
process. It is also popular globally. In ASEAN, NAFTA, SACN, the European Union, and
the Eurasian Economic Community; and proposed for intercontinental economic blocks,
the phenomenon has now realized in continental economic blocs such as the
Comprehensive Economic Partnership for East Asia and the Transatlantic Free Trade Area.
3.13 China’s Political & Economic Status in the World and its Relations
with India and Pakistan
China is the world’s second largest economy and its share in global economy is 14.8
percent (Zhiming, 2017-10-10). It is the most populous country of the world. China has
become a trading and manufacturing hub of the world. Its tremendous economic
development makes it an emerging power on globe. It is the world’s largest exporter and
2nd largest importer. Its GDP growth is phenomenal which was 13.6 in 2007 and then
grew almost at the rate of 8 percent till 2014 (Eckart, 23 Jun 2016). China sustained its
growth rate with promotion of culture of science and technology. It is widely
acknowledged that China is progressing towards a high tech economy by investing a huge
amount in science and technology. Basu, Foland & Holdridge (2017) studies China’s
development in technology and matched it with USA and Europeans patterns. They
conclude that China will leave behind current technology champions in next 20 years
because China is the only country which is investing in Research and Development
activities more than any other country of the world. They further confirm that in some
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areas of technology innovation, China has more advanced information than traditional
modern manufacturing economies. Its per capita income has jumped higher after 1978
industrial reforms. The per capita income was 155 US$ in 1978 which reached up to 15500
US$ in 2016. This incredible growth trend sensitized the whole world to cooperate with
China in international affairs. The US$ 3.23 trillion foreign reserves of China are the
largest in the world (Neely, 2016). These resources enable China to participate in
International development assistance programmes. China is a major contributor in
development programme in the world. Sub-Saharan African countries are the 2nd largest
recipient of Chinese Foreign Direct Investment (FDI) and financial programmes. The total
Chinese overseas investment in different countries is almost 1.6 trillion US $.
(http://www.aei.org/china-global-investment-tracker/)
Fig No 11 China’s Region-wise Investment US$ Billion (2017)
Source: http://www.aei.org/china-global-investment-tracker/
87
The Chinese investment in poor countries is improving the lives of millions of people.
China invests not only in industry but also in health, education, roads, railways and other
social development related infrastructure. The growth of Chinese investment is bringing
regions and countries together in combating poverty and ignorance. China is successfully
realizing its millennium development goals and sharing its development experience with
other developing nations.
China is active permanent member of UN Security Council and works to maintain global
peace along with other members. China voiced for issues related to international peace,
security, climate change and terrorism. China is also a member of many international
organizations e.g. Shanghai Cooperation Organization (SCO), BRICS and WTO. Keeping
in view of its role in international development, China established Asian Infrastructure
Investment Bank (AIIB) to provide financial resources for infrastructure development in
partner countries. China launched a worldwide mega infrastructure construction project
One Belt One Road (OBOR), to bring closer the different regions of the world.
China adopted a multi-pronged strategy to develop its people and their living standards.
China chalked out continuous economic and social policies with holistic approach. The
growth of China in all development indicators is positive and in some cases it is beyond
the expectations. China freed more than 800 million people from poverty trap which is a
historical change in the world. China has improved its rankings in Human Development
Index gradually from low income country to middle income country in a short while.
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Fig No 12 China’s HDI Growth
Source: http://hdr.undp.org/en/countries/profiles/CHN
Trade is the key of success for China. China always stressed trade as a tool of enhancing
relations with other countries. Chinese products are economical and with guarantee of
contiguous supply chain. China has established a complete system of trade transactions
across the globe. The trade base association strategy of China got almost all markets of the
world ranging from high tech goods to hand crafts and low end items. The total trade of
China in 2016 is 2097.6 US$ billions whereas its imports remains at 1587.9 US$ billions.
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Fig No 13 China’s Foreign Trade (US$ thousands)
Source: trademap.org
3.13.1 Pak-China Trade Relations
Pakistan has opened a window for China to the outside world. China and Pakistan entered
into diplomatic relations in 1950 and have signed various agreements to date. The ties have
incrementally progressing form strength to strength. The first bilateral trade agreement
between them was signed in 1963. However, with the initiation of new millennium, both
Pakistan and China signed six Memorandum of Understandings (MoUs) in 2001 and
agreed to develop the Gwadar port in 2002. In 2004, both the countries signed seven
agreements in areas of trade, communication and energy sector. Later in 2005, both the
countries signed 21 MoUs in defense, energy, infrastructure and social sector etc. In 2006,
a Free Trade Agreement was concluded between Pakistan and China that entered into
effect in 2007 aimed at promoting bilateral trade, opening up for the market access on
mutual level (Kamal & Malik, 2017). With the signing of Early Harvest Program (EHP),
which became operational in 2006, China-Pakistan bilateral trade relations further piled on.
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Later in 2009, both countries signed FDI. Trade volume between both the countries was
$13 billion that has touched $420 billion by 2015 when both signed 51 MoUs to
developing infrastructure, energy and Gwadar etc. Both sides eliminated tariffs on almost
36 per cent of the total tariff lines through Tariff Reduction Modalities (TRM) during the
first three years of implementation of Phase-I (ended in 2012). The second phase started in
2013, aimed at lowering tariff rates and normalizing trade procedures. However, this phase
of trade concessions is continued until now (Kamal & Malik, 2017).
With a share of 7.7 per cent in Pakistan’s total exports, China is placed as the 2nd largest
export destination of Pakistan followed by the U.S. with 16.7 per cent. However,
Pakistan’s exports to China are greatly concerted in rice and cotton that are accounted for
75 per cent of Pakistan’s total exports to China (Kamal & Malik, 2017).
3.14 History of Economic Trade Routes
Economic and trade activities are considered engines of growth throughout the history.
Trade is a basic economic component of all civilizations and societies. In past trade
brought all major countries and kingdoms close together. Trade of specific goods from
specific regions through specific routes change the shape of the world. There are many
famous trade routes, spice route, incense route and Silk route. These routes connected the
Asia, Africa and Europe. These routes are witnessed of transmission of cultures,
languages, religions, goods and services (Starkey, 2016 Sep 20).
The Silk route is one of the oldest trade routes in the world. The route was stretched
between continents through land and sea. The countries along the Silk route developed
political as well as economic relations. The Roman and Byzantine empires traded with
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China through Silk route. Chinese products and culture had a deep rooted impact on the
culture of both empires. The Silk Road also influenced the local and international
commerce of the Indian subcontinent, Central Asia, Europe, Africa and today’s Middle
East. The long lasting and incredible Silk Road economic, political and social role in the
whole world evolution persuaded the policy makers of China to initiate Silk Road like
economic links to cope up with modern development challenges. The concept of economic
corridors could be modern from of ancient Silk Road. The economic corridors are designed
with holistic approach of development of all stakeholders. Socio-economic development of
all corridor associates partners is the core objective of any economic corridor. Arnold
(2007) summaries the objectives of corridors on the basis of its geographical boundaries
and endorses that regional economic collaboration is the objective of an international
corridor.
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Map No 03 The Silk Road
Source: https://www.britannica.com/topic/Silk-Road-trade-route
93
3.14.1 Economic Corridor in Regional Settings
Economic development is the core of all modern development strategies. Trade is a key
element of economic development. International trade development got momentum after
better political and economic relations among the countries of a region. These relations
ensure trade facilitation and liberalization which further boost the economic activities. This
process ultimately pushes socio-economic improvement in the region (Asian Development
Bank 1998). Economic Corridors are the best manifestation of regional cooperation among
bordering countries to achieve shared economic goals. It facilitates the economic activities
in a defined area with road networks and infrastructure. The process of regional
integration is going on smoothly in many regions. The EU an ASEAN are the best working
examples of regional trade and cooperation. The cooperation among regional countries has
provided tremendous opportunities of employment, economical and speedy means of
transportation and free movement of goods and services.
The case of South Asia is totally different in terms of regional partnership. South Asia is
comprised of 24.8 percent of world total population and covered 3.4 percent area of world.
But it is the one of the least integrated regions of the world. All economic and political
theories become failed in South Asia because of its complex political background. Amir
(2016 Aug 29) deliberates the role of economic corridors in regional integration and counts
advantages of corridors in easing market access and regional trade. He elaborates that how
regional trade reduces the chances of conflict among regional trade partners. He recounts
the example of “Economic Opportunity Cost Hypothesis” which narrates that
economically connected countries does not fight with each other as destruction of one
country directly or indirectly impacts the other partner countries’ economic activities.
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India and Pakistan are the major economies in the South Asia and both are the key
members of SAARC. Promotion of regional trade is a key milestone in SAARC agenda.
The Intra-SAARC trade volume depicts the pathetic picture of regional cooperation among
member states. The other member countries are hostage of Indo-Pak rivalry. The volume
of Intra-SAARC trade is minor in total trade of SAARC countries. The ASEAN intra trade
is remarkably high although this region is home to 8.6 per cent population of the world
(http://www.worldometers.info/world-population/southern-asia-population/). Intra ASEAN
trade is 24 percent (http://asean.org/storage/2016/11/Table18_as-of-6-dec-2016.pdf) as
compared to Intra SAARC trade which is only 5 percent of total trade (The Potential of
Intra-regional Trade for South Asia, 2016 May 24: The World Bank)
The intra-regional trade boosts the regional trade with the world specifically exports. The
logic is simple as regional countries trade goods and services of those items and expertise
in which they have potential in short time and less cost. The receiving country adds the
value in raw materials and exports to the other destinations. The SAARC and ASEAN
exports to the world are too much different in volume. This shows that regional trade also
boosts the international trade.
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Fig No 14 ASEAN and SAARC Export to World
Source: trademap.org
3.15 China and British India Political Ties
China and Sub-continent India have centuries old cultural, religious and economic
relations before 2000 B.C. The famous Silk Road was not the only source of trade but it
also became a medium in preaching Buddhism. China is also a victim of colonization and
imperialism like India. Almost at the same time, European occupied the resources and land
of both regions. Both regions were a source of wealth and manpower for the British.
During the British rule in India, China fought two opium wars with East India Company.
Both countries resources were used in First and Second World Wars.
3.15.1 China and India after Partition
After the World War II, India got freedom from the British rule. At that time China was in
an internal political struggle which was finished in 1949 with the successful revolution.
China emerged as a Communist state on the map of the world. The new Chinese
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government started negotiations to settle its border issues with its neighbors. Pakistan and
China settled the boundaries amicably.
The border of China and India was demarcated during the British Raj through McMahon
line. India claimed that it inherited the British legacy therefore boundaries of the British
India must be recognized. Meanwhile, India occupied the State of Jammu and Kashmir
with the help of armed forces. China rejected the Indian proclamations and challenged the
un-demarcated borders. China exercised its sovereignty over the area of Aksai Chin and
built a road passing that area to connect Xinjiang and Tibet. On eastern side, China
stressed its ownership on the state of Hamanchal Pradesh.
3.15.2 China’s stance on Kashmir
Kashmir is not the only issue between India and Pakistan but also it is disputed area
between China and India. China also claims some area of Kashmir as its historical part.
After the independence, Pakistan settled its boundary issue with China amicably. But India
did not mark its boundary with China. China and India have fought a war in 1962 on the
dispute. Forces of both countries faced each other occasionally. The latest Dolkham
standoff highlighted the fragility of Sino-India relations which was ended with withdrawal
of Indian forces from its positions. India resisted the Chinese claims and both countries’
relations are overshadowed by these border disputes but in recent times the relations have
been improved. China won the war and pulled back its forces on previous positions. With
the passage of time, China sustained its positions and started normalization process in its
relations with India.
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Map No 04 China-India Disputed Territory
Source: https://www.clearias.com/india-china-border-disputes/
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3.16 Role of China in political and economic positioning in Indo-Pak
relation
India and Pakistan both recognized the People’s Republic of China after its creation as a
Communist state. At that time the world was divided into Russian and American political
blocs. India trailed neutral stance and joined the Non Alignment Movement (NAM) and
pretend that it would not involve in the US and USSR led Cold war. Nehru indicated that
India, being a big country with rich culture and traditions could lead the newly formed
nations in international politics (The Agony of ‘Annadata’ and repression by government,
2017 July16). China also joined the movement but Mao Zedong termed the movement
only a show off without any impact (Cook, 2014). Notwithstanding of a founding member
of NAM, India followed a ‘Forward Policy’ to deal with its neighbors especially China. In
the beginning both countries’ relations were stable and a term, “Hindi Chinee Bhai Bhai”
(the Chinese and Indians are brothers) was used to describe the relationship. But the
Forward Policy of Nehru cultivated the Sino-Indian War in 1962. Neville Maxwell briefly
investigates the pros and cons of Sino-Indian War and opined that India provoked the war
as China tried its best to avoid any armed conflict with India. The war shaped the future
relations of both countries. India won defeat by choice as Nehru underestimated the
resilience of China’s policies of self-defense. The defeat shaped the future Sino-Indian
relations. After the war, the close partnership of USSR and India became another obstacle
in Sino-Indian relations. The ties were becoming normal in 1988 when Premier of India
Mr. Rajiv Gandhi visited Beijing. Over the years both countries established economic
relations but politically they are still at logger’s head on many issues. Whereas, Pakistan
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enjoys cordial relations with China. Both the countries shield each other interests at
multilateral forums by supporting each other’s positions.
Being an emerging economic and political power, China has fulfilled its responsibilities
relating to its neighbors. China does not interfere in internal issues of any country since
1950 when Zhou envisioned the policy of non-interference. In South Asia, China
participated in regional integration process by investing in bordering countries
(http://www.bbc.com/news/world-asia-china-24100629).
India and Pakistan are partners of China in many economic sectors. China is being
considered as an economic engine in the world. Pakistan realized the potential of China
well in time than India and promoted its ties with China on solid grounds. Pakistan won
Chinese support on international issues as well as in solving national problems. The
strengthened ties defended from any attempt against Pakistan by India and USA. USA and
India became close after the failure of USA’s policy in Afghanistan. USA and its backed
government have been failed in Afghanistan even after 17 years of war against Talban. The
failure of USA led policy attracted other banned extremists in Afghanistan around the
world. The whole region is in the state of insecurity. The so called Islamic State is
flourishing in Afghanistan rapidly. USA blamed the Pakistan for its failure and demanded
that Pakistan should do more by curbing Talban factions on its side. Pakistan rejected all
demands and allegations by USA. Pakistan stressed the negotiations to end war in
Afghanistan and offered its assistance to start negotiations process.
USA has planned to handover its role to India in the region and Afghanistan. China
protected Pakistani interests and stressed those Pakistani losses and efforts on war against
terror must be acknowledged. India is struggling hard to become regional power with the
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support of USA. USA wants to contain Chinese Influence in the region as it considered
China as a threat to its supremacy in international affairs. USA is pampering India to face
China. This tussle has started a new geo-strategic repositioning campaign in South Asia.
India also joined the USA led alliance against China’s sovereignty over South China Sea.
USA has many issues with China including trade, environment, intellectual property and
China’s role in North Korean nuclear capability etc.
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CHAPTER NO 04
CPEC: A GLOBAL GAME CHANGER
4.1 China’s Belt and Road Initiative (BRI)
There is an ancient Chinese proverb, ‘If you want to be rich, you must first build roads’,
this does not include building up roads, railways, communication networks or revamping
ports only but developing the entire geographical infrastructure for collective economic
boom. Chinese infrastructure is state of the art. The Chinese firms have leased entire
localities, neighbourhoods, industrial zones, airports and seaports etc. China wants to
enhance the economic capacity of its neighbouring states while exhibiting its capability to
act as responsible economic and political power in the world. By developing infrastructure
connectivity, China’s Belt and Road Initiative (BRI) aims at improving economic ties with
South Asian region.
Since initiating China’s peaceful rise policy and opening up market reforms and
modernization policy, China has proactively supported its immediate South Asian regional
states’ economic development through infrastructure development (Raffaele, 2016). More
than 2000 years ago, Zhang Qian, Chinese imperial envoy established Silk Road that is a
network of trade routes linking China to Central Asia and the Arab world (Jinchen, 2016).
The BRI venture is consisted of restructuring the ancient Silk Road trade routes that
previously echoed ‘peace and cooperation, openness and inclusiveness, mutual learning
and benefits’. The Chinese government, in March 2015 issued a white paper on the Belt
and Road Initiative called ‘Vision and Actions’ on Jointly Building Silk Road Economic
Belt and 21st Century Maritime Silk Road. China’s much vaunted ‘Belt and Road
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Initiative’ (BRI) also known as ‘One Belt, One Road’ (OBOR) is The Silk Road Economic
Belt (SREB) and the 21st century Maritime Silk Road (MSR) (Ming, 2018 Feb 15). It
focuses on connectivity, cooperation, trade, infrastructure development and investment
with its regional neighboring states and with regions of Asia, Africa, Europe and beyond
(Swaine, 2015). This initiative will boost China’s economy and soft power image. The BRI
has been viewed as Chinese plan to finance and build infrastructure project across Eurasia.
In his opening speech of “Belt and Road” forum, Chinese president Xi Jinping vowed to
spend $113 billion and urged other countries of the world to join hands in this mega
venture in pursuit of globalization (Huang, 2017 May 15). BRI is a civilization that is
geographical assortment of different cultural systems. The initiative inclusive as well as
harmonious. It promoters the connectivity of various civilizations, promotes cohesion
among different cultures, people-to-people contact and the doctrine of seeking common
ground while subsiding differences and drawing on each other's strengths. However, all the
states coexist harmoniously for common prosperity. The Economist highlights the
benefits of CPEC for China and wrote that OBOR is an opportunity to use surplus
industrial and human resources for enhancement of trade and bilateral relations beyond
boundaries. This approach will keep the pace of Chinese production lines because more
than 85 percent projects under OBOR initiative are being executing by Chinese companies
which are consuming almost all materials made by Chinese companies under Chinese
engineers by Chinese labors (Hiro, 2018 February 6).
Kennedy & Parker (2015) discussed the global effects of CPEC and opined that B&R
projects are indicator of Chinese strategy of trade centric development. The trade based
development will change the whole structure of international politics. The conventional
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powers like USA and Europe will feel insecure because balance of trade, flow of
investment tilt towards China. This trend causes strategic implications for China.
Fig No 15 China’s Belt and Road Initiative
Fig. 4.1: is made by the researcher.
In the history of foreign investment and infrastructure development, the BRI is considered
as one of the largest infrastructural and investment mega initiatives that encompasses more
than 68 countries, equivalent to 65 per cent of the world’s total population and 40 per cent
of global GDP.
President Xi hailed the initiative as the “project of century” setting the example of China’s
globalization program, filling the void left by the US under Trump’s “America First”
policy (Huang, 2017 May 15). While claiming the title of globalist-in-chief in 2016,
Chinese President Xi promoted the idea of “community of shared future for mankind” vs.
“you-know-who’s America First policies!” China is promoting the ambitious BRI multi-
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dollar initiative which integrates more than 65 nations around the world. Furthermore,
Chinese government is sponsoring Chinese language teaching programs initiated in dozens
of countries. In future economically, Washington is losing out to Beijing (Hiro, 2018 Feb
6).
Wu Jianmin observes three “togethers” to accomplish BRI initiative. Wu envisages the
first ‘together’ that parties involved in the initiative are cooperating for mutual benefits.
The second ‘together’ emphasizes the aim of realization of projects on the basis of
common interest. The third ‘together’ accentuates the harvest on the basis of equal
allocations.
Declaring his support for the initiative at the ‘Belt and Road Forum for International
Cooperation’, the Secretary General of the UN (2017) proclaimed that “Building the road
is the first step towards prosperity” (Guterres, 2017 May 14). Owing to huge cost
requirement, currently China is financing and bearing the burden of huge cost.
Besides considerable trade volume involving China and its key trading allies along with
the significant economic development, China is gradually emerging a significant provider
of Overseas Direct Investment (ODI). Over six decades, China has become one of the
world’s largest recipients of FDI absorbing a total utilized FDI of more than $1 trillion
between 1979 and 2010. Currently, China holds $3.2 trillion in foreign reserves and many
Chinese enterprises; both public and private are motivated to go abroad and make
investments (Raffaele, 2016). Jiang Zemin first gave the idea of “going out” policy through
laying the basis for international economic imitative by integration of economies as the
BRI venture. For this endeavor, the financing will come from varied sources that are: Silk
Road Fund, the Asia Infrastructure and Investment Bank (AIIB), and the BRICS New
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Development Bank. Moreover, the China-ASEAN Interbank Association and SCO
Interbank Association will render finances.
Over the last three decades, China has built up an impressive repute as the ‘world’s
factory’ (Cai, March 2017). Owing to the fact that industries are experiencing
overcapacities, China is invigorating economic development in the poor regions of the
world. Additionally, China has initiated other financial initiatives such as it has announced
the establishment of a $100 billion “New Development Bank” along with India, Russia,
Brazil and South Africa. Fifty-seven nations joined the initiative to launch The Asian
Infrastructure Investment Bank (AIIB) as founding members, aimed at funding
infrastructure projects in Asia.
As of 2017, a variety of estimates stated that BRI is one of the largest initiatives in the
history, encompassing more than 68 countries, almost 65 per cent of world population and
40 per cent of global GDP. It has the potential to benefit the entire world and lift millions
of people out of poverty (Griffiths, 2017 May 12).
In 2013, Chinese President Xi addressed to a meeting of almost 70 national leaders and
heads of international organizations in China. Additionally, he promised $113 billion in
extra financing and encouraged countries across the globe to join hands in this mega
venture.
President Xi clearly stated that “We have no intention to form a small group detrimental to
stability. What we hope to create is a big family of harmonious coexistence.” (Hiro, 2018
Feb. 8) Following the B&R spirit of shared destiny, China also invited USA and India in
the meeting but both preferred to stay away. Commenting about the meeting the U.S.
Defense Secretary James Mattis shared American stance about B&R project and disliked
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the idea of OBOR and asserted that this world have many belts and roads and not a single
country could lead the whole world by offering OBOR. .” (Hiro, 2018 Feb. 6) But these
days, the U.S. is offering neither belts nor roads to anyone.
The construction of OBOR will help China realize its most pressing economic challenges
that are: integrating regional neighbouring economies for collective development, boosting
Chinese economy and addressing the problem of over-capacity.
It is deemed that OBOR is another way for China to address the issue of excess capacity by
exporting excess industrial products such as steel and cement. Rather than dumping
China’s excess capacities, China aspires to export its excess capacities that are deemed
crucial for its industrial boom. In 2015, the ambitious vision of a ‘new Silk Road’ initiated
its life modestly in the bowels of China’s commerce ministry as an export initiative.
One more thing that is interrupting the implementation and development of OBOR is the
lack of trust between China and a number of OBOR countries such as India.
Subrahmanyam Jaishankar, India’s Foreign Secretary has said that OBOR is a unilateral
initiative and India won’t commit to buy-in, devoid of any significant consultation. Nearly
two-third of OBOR countries has a sovereign credit below investable grade. Pakistan
security is unstable and Chinese companies as well as personnel are working in Pakistan.
4.1.1 Physical Infrastructure
The geographical structure of BRI is consisted on six corridors, and the maritime silk road
that are: “New Eurasian Land Bridge that runs from Western China to Western Russia
through Kazakhstan, China–Mongolia–Russia Corridor that passes from Northern China to
Eastern Russia, China–Central Asia–West Asia Corridor, that goes from Western China to
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Turkey, China–Indochina Peninsula Corridor that stretches from Southern China to
Singapore, China–Myanmar–Bangladesh–India Corridor that expands from Southern
China to Myanmar, China–Pakistan Corridor, running from South-Western China to
Pakistan and Maritime Silk Road, running from the Chinese Coast through Singapore to
the Mediterranean.” (Centre for Global & Strategic Studies, 2017)
Energy generation facilities will be core projects of all proposed corridors besides
industrial estates and export processing units. All corridors will be linked together with
railway lines, roads networks, ports, pipelines on the basis of shared information
technology channels. This will not only serve for connectivity and boost the productivity
of countries along the silk route but mutual cooperation along with the circle of friendship
will be strengthened and expanded.
Biliang Hu etal. (2017) stated, the BRI framework that is commonly abbreviated as ‘5+1’
refers to cooperation between five countries of Eurasian Economic Union (EEU) - Russia,
Belarus, Kyrgyzstan, Kazakhstan, Armenia - and China. This initiative will help deepen
China’s link with emerging entity of the EEU that was officially launched in 2015. Chinese
direct investment in EEU counties has observed a continued increase over the years rising
from only US$97 million in 2003 to US$22.8 billion in 2015—an increase of 235 times.
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Map No 05 Silk Road Route
Source: https://cache.pakistantoday.com.pk/ob.png
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The CPEC is flagship project of China’s Belt and Road Initiative. The initiative is taken by
China to strengthen its trade relations in the world through shared infrastructure of roads,
rail networks, pipelines and ports. The OBOR structure was constructed on six corridors to
expedite trade related activities. These corridors are planned to connect China with almost
65 countries through rail, roads and sea. The land route connects China with Europe
through Central Asia and Russia. It will also connect China with Middle East and China
through South Asia via Indian Ocean. The South China Sea will work as maritime route
through South Pacific Ocean.
Fig No 16 Corridors in Belt and Road Initiative
Fig. 4.2 is made by the author.
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The South Asian region is the backbone of OBOR initiative. There are two planned
corridors one is China-Myanmar-Bangladesh-India Corridor and the other one is CPEC.
The both corridors are termed key projects of the whole initiative. Negotiations are
underway to start the first one corridor under BCIM forum but the speedy implementation
has been taken on CPEC.
CPEC will become a bridge between South Asia and Central Asian States which are land
locked but have a great potential of trade. The Central Asian states have huge reserves of
oil and gas which can be supplied to South Asia and South East Asian countries if proper
infrastructure available. CPEC will provide adequate means of communication and
transportation for trade of gas, oil and goods. The current status of trade related facilities in
South Asia is not satisfactory as compared to other regions which are well integrated and
connected with each other. The figure below shows that volume of containerized traffic on
ports of South Asia and Europe is too much diverse.
Fig No 17 Container Port Traffic of European Union and South Asia
Source: trademap.org
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The transportation of trade goods required suitable infrastructure for easy and speedy
movements. But the trade related infrastructure is not up to the mark in South Asian region
for regional trade. The World Bank concluded in a report that Indian trade with Brazil is 20
per cent inexpensive as compared to Pakistan (The Potential of Intra-regional Trade for
South Asia, 2016 May 24: The World Bank).
The BRI focuses on five main goals that are: the initiative aims at encouraging states to
jointly work and cooperate. Secondly, it intends to enhance people-to-people bonds,
dealings between different enterprises and deepens cultural integration. It is designed to
boost monetary and financial integration. Cross-border trade and investment are made
easier for promoting economic integration. Finally, it facilitates connection between states
on the “Belt and Road” by upgrading and developing ports, eliminating barriers and
renovating road infrastructure etc. Through the development of railways, highways, fibre-
optic lines among countries along the BRI. The aim behind building a BRI is to:
“Embracing the trend towards a multipolar world, economic
globalization, cultural diversity and greater IT application, is
designed to uphold the global free trade regime and open
world economy in the spirit of open regional
cooperation…The Belt and Road Initiative aims to promote
the connectivity of Asian, European and African continents
and their adjacent seas, establish and strengthen partnerships
among the countries along the Belt and Road, set up all-
dimensional, multi-tiered and composite connectivity
networks, and realize diversified, independent, balanced and
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sustainable development in these countries.”
https://www.hoover.org/sites/default/files/research/docs/clm
47ms.pdf
Furthermore, this connectivity is projected at integration of markets, boost investment
opportunities, creating placement opportunities, developing people-to-people contacts,
cultural integration that will help bring prosperity, peace and harmony.
No doubt there are many reasons of less regional trade in South Asia but inadequate trade
related facilities is also a major reason. South Asian countries can boost their internal trade
and trade with other regional blocs especially with Central Asian States by improving their
road and rail networks. The connectivity and improvement of infrastructure is an uphill
task among South Asian countries due to many political differences. Above all, South
Asian countries are not economically strong to initiate such mega projects which require
investment as well as mutual trust.
Fig No 18 Regions Included in Silk Road Economic Corridor and Maritime Silk Road
Fig 4.4 is made by the researcher.
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4.1.2 Silk Road Economic Belt (SREB)
In 2013, Chinese leader Xi made a visit to Kazakhstan and Southeast Asia, where he put
forth the initiative to construct the Silk Road Economic Belt. Also, one month later in
Indonesia, Xi proposed the equivalent idea of 21st century Maritime Silk Road in order to
connect China’s eastern ports to Europe through Southeast Asia. The belt integrates
countries sited in original Silk Road throughout Central Asia, West Asia, the Middle East,
and Europe. This venture calls for integration of the region into a cohesive economic
region through strengthening cultural ties, expanding trade and raising infrastructure. Many
states that are a part of SREB are also partners of Chinese-led Asian Infrastructure
Investment Bank (AIIB). Three belts are proposed that are south, north and central. The
North Belt passes through Central Asia and Russia to Europe. The Central Belt runs
through Central Asia, West Asia to the Persian Gulf and the Mediterranean. The South
Belt stretches from China to Southeast Asia, South Asia, to the Indian Ocean through
Pakistan. This initiative has also entered regions as far as New Zealand, Britain and even
the Arctic.
The Silk Road Economic Belt has many projects for South Asian countries and CPEC is
one of them. The CPEC will open new markets of regional and international trade for
South Asian countries. It will link whole South Asia via roads and rail networks.
4.1.3 Maritime Silk Road (MSR)
The 21st century Maritime Silk Road (MSR) is aimed at financing and promoting
cooperation between region of Southeast Asia, Oceania, and North Africa by means of
numerous nearby water bodies; the South Pacific Ocean, the South China Sea, and the
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wider Indian Ocean region. It is substantial for China to protect its international maritime
trade routes. Gwadar will offer various routes for the transportation of goods and oil
form Middle East to China bypassing the Strait of Malacca and South China Sea. These
two appears to connect together Asia, Europe, Middle East and parts of Africa. Against the
milieu of regional “infrastructure gap”, CPEC aims at developing diplomacy with
immediate states and more strategic use of economics as part of China’s diplomatic toolkit.
It helps strengthen the regional economic integration as well as boost cross-border trade
and financial flows among Eurasian states and the world outside and further strengthen
patterns of trade, investment and infrastructure building. “Furthermore, with the
construction of ports in Arabian Sea and Indian Ocean region as the foothold along the 21st
century MSR-the Gwadar port project in Pakistan’s southwestern region, Hambantota port
in Sri Lanka, Chittagong port in Bangladesh and the Kyayukpyu port in Myanmar and the
development of CPEC in Pakistan, China will enter into a ‘two oceans’ era, the Pacific and
the Indian Ocean region” (Xiguang, 2016).
Chinese strategy of “opening up to both East and the West” along with the BRI venture
will redefine China as the centre of Central Asian states. With the initiative, China will no
longer stand on Pacific shores of Shanghai, Hong Kong and Shenzen but it will reach on
peaks of Karakorum, Himalayas, Pamir and Tianshan. Adjacent to these mountains, there
exists great civilizational zones where the Persian, Indian, Russian, Turkic, Arab and the
Chinese cultures have coexisted for centuries.
The MSR is anticipated to extend China’s capability to project its mounting naval presence
and influence abroad. However, China’s growing participation in developing regional
information technology infrastructure could create new conduit for China to exert its
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sphere of influence in the region. Kennedy and Parker (2015) also asserted that China may
face a failure in achieving its objectives of economic integreation through OBOR. Because
partner countreis economies are not in a position to repay the Chinese loans as per
schedule. This will hurt Chinese plans in two ways. Delay in repayments hamper the local
Chinese companies businesses. The low volume of business will slow down the Chinese
economy against the projected growth. On the other side the borrowers will try to get rid of
Chinese loans from other sources and can join opponent side of China. It seems that
China’s development philosophy that build it and they will come may face failure as it has
failed in China already.
4.1.4 The New Eurasia Land Bridge (NELB)
The New Eurasia Land Bridge Corridor is an international railway line that runs from
Lianyungang, China through Alashankou in Xinjiang to Rotterdam, Holland. China’s
segment of the line is consisted of the Lanzhou-Lianyungang Railway and the Lanzhou-
Xinjiang Railway and extends through eastern, central and western China. Then, the track
passes through Kazakhstan, Russia, Belarus and Poland, reaching at various coastal ports
in Europe. According to the plans, it is 11,800 km long line and will serve 30 countries.
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Map No 06 The New Eurasia Land Bridge Economic Corridor
Source: https://www.lehmanbrown.com/wp-content/uploads/2017/08/The-Belt-and-Road-
Initiative.pdf
123
Along with this corridor, China has initiated an international freight rail course that links
Chongqing to Duisburg (Germany); a direct freight train runs between Wuhan and Mělník
and Pardubice (Czech Republic); a freight rail route from Chengdu to Lodz (Poland); and a
freight rail route from Zhengzhou to Hamburg (Germany). These all new railway lines
offer rail-to-rail cargo transportation and the accessibility of “one declaration, one
inspection, one cargo release” for any freight conveyed.
4.1.5 The China-Mongolia-Russia Economic Corridor (CMREC)
Since long, China, Magnolia and Russia have established various economic ties and
cooperation by way of frontier trade. In 2014, the three countries’ heads met at Shanghai
Cooperation Organization (SCO), there they agreed to reach an agreement in building
tripartite cooperation on the basis of China-Russia, China-Mongolia and Russia-Mongolia
mutual ties. The agreed China’s SREB, the reconstruction of Russia’s Eurasian Land
Bridge along with the anticipated development of Mongolia’s Steppe Road. China-Russia-
Mongolia Economic Corridor is going to be launched.
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Map No 07 The China-Mongolia-Russia Economic Corridor
Source: https://www.lehmanbrown.com/wp-content/uploads/2017/08/The-Belt-and-Road-
Initiative.pdf
125
4.1.6 China-Central Asia-West Asia Economic Corridor (CCWAEC)
The China-Central Asia-West Asia Economic Corridor runs from Xinjiang in China and
exits the country via Alashankou to link the railway routes of Central Asia and West Asia
prior to reaching the Mediterranean coast and Arabian Peninsula. This corridor largely
contains 5 states in Central Asian region (Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan
and Turkmenistan) and Iran and Turkey in West Asia as well.
4.1.7 China-Indo-China Peninsular Economic Corridor (CICPEC)
In 2014, in Bangkok during the Fifth Leaders Meeting on Greater Mekong Sub-regional
Economic Co-operation, Chinese President Li Keqiang, put forward suggestions regarding
the expansion of ties between China and the five states in the Indo-China Peninsula are
conjointly planning and building a massive transport connection and industrial cooperation
projects, establishing a new form of collaboration; and indorsing sustainable and
coordinated socio-economic development. It links China with Indo-China peninsula and
goes through Vietnam, Laos, Cambodia, Thailand, Myanmar and Malaysia.
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Map No 08 China-Central Asia-West Asia Economic Corridor
Source: https://www.lehmanbrown.com/wp-content/uploads/2017/08/The-Belt-and-Road-
Initiative.pdf
127
Map No 09 China-Indochina Peninsular Economic Corridor
Source: https://www.lehmanbrown.com/wp-content/uploads/2017/08/The-Belt-and-Road-
Initiative.pdf
128
4.1.8 China-Pakistan Economic Corridor (CPEC)
It is a 3000 km long route that connects China’s Kashgar region with Gwadar in Pakistan.
Originally valued at $ 46 billion, China has decided to spend $ 62 billion on developing
infrastructure. It is included in China’s 13th five-year plan. CPEC is proposed to rapidly
modernize Pakistan’s infrastructure and reinforce its economic development by building
up modernized transport link, various energy ventures and special economic zones (SEZs).
CPEC is a package of communication means including highways, pipelines and
modernization of Pakistan Railways. Many projects are in construction phase and soon
many will expand all through Pakistan’s territory.
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Map No 10 China-Pakistan Economic Corridor
Source: https://www.lehmanbrown.com/wp-content/uploads/2017/08/The-Belt-and-Road-
Initiative.pdf
130
4.1.9 Bangladesh-China-India-Myanmar Economic Corridor (BCIMEC)
During Premier Li Keqiang’s 2013 visit to India, both China and India proposed the
construction of BCIMEC. The route joins four states encompassing nine per cent of worlds
land mass and 440 million people.
The BCIMEC Joint Working Group convened its first meeting in Kunming. The key areas
of cooperation include: transport infrastructure, commercial and investment circulation,
and people-to-people contact. A 2,800 km long corridor will run through Kolkata-Dhaka-
Mandalay-Kunming that will take the form of series of railways, airways, motorways,
waterways and telecom networks. China announced that the project is open to everyone but
China has never listed all OBOR-related projects or deals. Since 2013, as dominant actors
in this mega venture, almost 50 Chinese state-owned companies have made investment in
about 17,000 OBOR projects.
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Map No 11 Bangladesh-China-India-Myanmar Economic Corridor (BCIMEC)
Source: https://www.lehmanbrown.com/wp-content/uploads/2017/08/The-Belt-and-Road-
Initiative.pdf
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4.2 Multiple Perceptions on Developing BRI
By constructing OBOR, China aims to promote development of China’s western Xinjiang
region particularly that will also help to transform economic relations across large parts of
Eurasia. This will also raise China’s image on the world geopolitically. It has also been
criticized that Chinese President Xi unearthed his ambitious BRI in 2013. Chinese
government, banks, state-owned enterprises will be the main financing sources for the
construction of these transcontinental infrastructure projects, China, in future, could
become a “new imperial power” pursuing a “debt-trap diplomacy” (Wu, 2018 March 4).
Some analysts view that OBOR could be utilized as a strategic tool to counter US’ ‘pivot
to Asia’. Tang Min, a Counselor working in State Council of Chinese government,
observed that the new entrants in the world top economic are facing hiccups and
discriminatory policies from USA. USA prefers TPP over other trade regimes therefore in
present situation OBOR is the best option for new entrants (Cai, March 2017). As per the
U.S. perception, BRI overseas bases are an instrument to augment Chinese influence and
to bring smaller states under Chinese sphere of influence. This outlook appears in
Hamilton’s ‘String of Pearls’ strategy, claiming that China can turn its maritime
infrastructure into military bases. China’s influence could be expanded owing to this
strategic location in order to contain India, ensuring secure routes to the Strait of Malacca
(Marantidou, 2014).
“It is also considered that through economic corridors, China is trying to overcome the
Strait of Malacca since whoever controls that strait can exercise a stronghold on China’s
supply energy lines. BRI and its economic corridors act as a strategy to make South Asian
regional states economically and politically reliant on China” (Garver, 2006). Also, China
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is increasing its ‘Sphere of influence’ around the globe for its own national interests. As
China is promoting investment while strengthening its economic ties with regional states.
It is also argued that China asserts regional dominance, create bases into Indian Ocean
littoral states and challenge the international order.
Contrarily to this, China is of the view that by developing the BRI, China does not aim to
challenge the US pivot to Asia. By establishing a new model of regional cooperation,
China aspires to share its developmental opportunities. The BRI increases the presence of
China in the South Asian region, affecting the economies of neighbouring states by means
of trade, foreign direct investment and financial aid. The BRI should be considered as good
investment for private investors as the US president Trump backed out of the Trans-Pacific
Partnership (TPP). BRI is gaining more impetus aimed at providing a vast network for
international trade similar to TPP. As the United States has left the void at world’s
economic stage, China is likely to fill the gap. Louis Kuijs, head of Asia Economics at
Oxford Economics in Hong Kong stated that by participating in this venture’s developing
countries, investors are investing in creating more buying power and establishing efficient
routes to fully utilize these new markets (The Belt and Road Initiative, 2017). Moreover,
developing countries of the world will be integrated in this arrangement, the countries that
aspire to become more incorporated in the global market. By inaugurating BRI, it will
likely to have a benefit on geo-economic and geostrategic situation of the region.
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As the Chinese chairman Deng Xiaoping in April 1974, in a special address to United
Nations General Assembly clearly stated,
“China is not a superpower, nor will she ever seek to be one.
If one day China should change her color and turn into a
superpower, if she too should play the tyrant in the world,
and everywhere subject others to her bullying, aggression
and exploitation, the people of the world should identify her
as social-imperialism, expose it, oppose it and work together
with Chinese people to overthrow it.” (Wallis & Carr, 2016)
However, Chinese plans for integrated South Asia by building infrastructure projects that
include land-based economic corridors through roads and railways and maritime lanes
through South Asian regional sea ports. China and Pakistan launched their first
infrastructural project by developing Karakorum highway through Karakorum Mountain
ranges aiming to promote “trade and people to people contact and the implicit propose of
enhancing both countries’ political and logistical control over the frontiers to deal with
external and internal security threats” (Haider, 2005). By building BRI civilization, China
never intends to develop a Sino-centric culture. The nations along the BRI have their own
distinguished cultures, history, tradition, religions and social systems.
4.3 CPEC: Forging A Common Destiny
The CPEC is a multi-billion mega project that will undertake the construction of highway
and railway links running all through Pakistan. It will start from Gwadar, Baluchistan
towards Kashgar in western China, passing through parts of Baluchistan, Sindh, Punjab,
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KP provinces and then Gilgit-Baltistan in northern Pakistan to reach Khunjrab Pass and
beyond, to China. The All Weather Strategic Partnership has turned into joint statement
during Chinese President Jinping’s visit to Pakistan.
The CPEC is a flagship project that can offer an integrating platform for more than three
billion people in the interconnecting South, Central and West Asia, the Middle East and
the African regions. The increasing trade, investment and monetary flows in the region
through integrating economies and lessening regional disparities could contribute towards
greater Asiatic regions.
“CPEC will be a strategic game changer in the region, which would go a long way in
making Pakistan a richer and stronger entity than ever before.” (First post, April 22, 2015)
Sited at the crossroad of South Asia, Central Asia, China and the Middle East, Pakistan’s
geographical location can serve as a pivot to regional market, with a vast population, large
and diverse resources and untapped potential of trade. In this way, Pakistan’s economy has
tremendous strategic development potential. It is located at the juncture of energy
proficient to energy deficient countries. Geostrategically, it is placed by world’s emerging
economies; India and China and countries rich in natural resources that are, Afghanistan
and Iran. In February 2017, the Egyptian Ambassador to Pakistan expressed interest in
CPEC cooperation (Mahmood, 2016).
There are three routes have been decided that are eastern, western and central alignments.
The corridor is divided along three routes that cover the length and breadth of entire
Pakistan.
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Map No 12 Southern, Northern and Central Corridors of CPEC
Source: http://pakistanhouse.net/wp-content/uploads/2016/11/cpec.pdf
137
For cargo transportation, three routes have been spotted. The planned Eastern Alignment
passed through well settled and crowded areas of Sindh and Punjab as both provinces have
good infrastructure and industrial base. The 2nd projected route for cargo transportation
will link two other provinces, KP and Baluchistan which are meagerly populous provinces
with less infrastructure and industrial areas. The third route is designed to build in future
by expending KP, Punjab and Balochistan road infrastructure.
Industrial parks are an important element of CPEC. Many Industrial Parks and Special
Economic Zones will be established along the CPEC routes. Industries in these zones will
use local raw materials for export oriented items. Regional countries can establish their
supply chain mechanism to produce items for exports by using CPEC arrangements.
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Map No 13 List of Projects in CPEC
Source: http://3.bp.blogspot.com/-uGqPzrV9SqY/Vddc6cgyTVI/AAAAAAAAHD8/PeW-
Hkoajas/s1600/CPEC%2BProjects.jpg
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4.3.1 Special Economic Zones (SEZs)
The plan includes more than 40 Special Economic Zones (SEZ), which will surely attract
and encourage foreign investment. This foreign investment is expected to boost local
employment and industrialization. “Special Economic Zones (SEZs) are 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.” Under the aegis of CPEC, regional
connectivity is fostered across Eurasian land. Through establishing SEZs, Regional
connectivity will be boosted in significant financial zones and strategically significant
locations within Pakistan, aimed at facilitating industrial development. Market-oriented
policies and governmental measures facilitate trade opportunities that will complement the
formation of SEZs. The institution of free trade zones (FTZs) at the Gwadar port alike
FTZs in Shanghai and Hong Kong is an instance of such market-oriented strategies
projected for operationalization. China’s chief economic organizer’s involvement in
National Development and Reform Commission (NDRC) to transform Gwadar port into a
nucleus of market-oriented development again accentuates the significance of China puts
on CPEC’s financial features (Yan, 2015, November 17).
4.3.2 Roadway Projects
The CPEC venture envisions major up-gradation and revamping of scattered road network
of Pakistan. The projected and estimated cost for this huge task is almost $10.63 billion as
budgeted by Chinese authorities. The projects under ‘Early Harvest’ will be completed
with the budget of $6.1 billion with with 1.6 percent interest rate.
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Map No 14 Highway Network of CPEC
Source: http://cpec.gov.pk/map-single/1
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4.3.3 Western Alignment
This was the original route that has been deferred by the government to be built after the
eastern alignment of the corridor will be completed.
The CPEC as pilot project of great Belt & Road initiative presents an enormous plan of
expansion, up-gradation and development of all major roads of Pakistan which run through
urban, rural and less developed areas of all provinces
By mid-2018, the Western Alignment comprises of up-gradation hundreds of km of roads
into 2 and 4-lanes distributed highways will be completed. In the future, it is also
envisioned that the land acquisition adequate for advancing portions of the roads to a 6-
lane motorway. In sum, as part of the Western Alignment the CPEC plan anticipates
overhauling of 870 km of road in Baluchistan region alone. Of those 870 km long road,
620 km portion has already been reconstructed.
The roadway connection in the Western Alignment will commence on the M1 Motorway
at Barahma Bahtar Interchange which is nearby interchange of Hasanabdal from where
road leads to Abbottabad. The Karakoram Highway will touch the planned Western Route
at Burhan interchange proximate to the new 285-km-long controlled-access Brahma
Bahtar-Yarik Motorway will start. Just at the north of DI Khan, the motorway will
terminate near the town of Yarik. The project’s groundbreaking ceremony held on May 17,
2016.
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Map No 15 Western Alignment of CPEC
Source: https://timesofislamabad.com/23-Nov-2016/cpec-western-route-update
143
Before arriving into KP province, the under construction motorway will run through
famous area of Sind called, Sagar Doab and enter in the district of Mianwali after crossing
the Indus River. This section of motorway will cost approximility $1.05 billion and will
cross three rivers the Indus, Soan, and Kurram. There are 74 channels and 11 interchanges
on this section.
Islamabad Turbat, Panjgur, Naag, Basima, Sohrab, Kalat, Quetta, Qila Saifullah, Zhob, DI
Khan, Mianwali and Hasan Abdal will be interconnected with development of thee
Western route which ultimately reach Gwadar.
(http://cpec.gov.pk/project-details/29). The western route is almost the same as the
eastern route with an additional regional connectivity link to Afghanistan through Chaman
and will connect Iran through Quetta’s Kho-e-Taftan link (Sial, 2014).
Karachi-Lahore Motorway: It will move from Karachi to Lahore by traversing interior
Sindh (mainly Hyderabad, Dadu and Sukkur), and sections of South Punjab, including
Raheem Yar Khan and Multan. “At the southern terminus of the new Brahma Bahtar-Yarik
motorway, the N50 National Highway will also be upgraded between DI Khan, KP and
Zhob near Balochistan province, with eventual reconstruction between Zhob and Quetta.
The upgraded roadway will consist of a 4 lane dual-carriageway spanning the 205 km
distance between the two cities. The first portion of the N50 to be upgraded will be the 81
km portion of the N50 between Zhob and Mughal Kot, with construction works having
begun in January 2016. Construction on this portion is expected to be completed by 2018
at a cost of $86 million” (Hassan, 2018).
Directing South from Quetta, the CPEC’s Western Alignment will move forward to the
town of Surab in central Balochistan as the N25 National Highway. From Surab to Hoshab
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near the city of Turbat, a 470 km long route is identified as the N85 National Highway that
will join central Balochistan with the town. As per scheduled, the stretch of road between
these cities was completed in December 2016.
Meena (2017) has observed that areas adjunct to Western Alignment will host more than
seven special economic zones. The Western Alignment will link Hoshab and Gwadar with
a 193 km Motorway named M8. M8 has been completed and inaugurated in February 2016
by the former Prime Minister, Nawaz Sharif
4.3.4 Eastern Alignment
Two factors are involved, China and Pakistan have agreed to build the eastern alignment of
the corridor; firstly, Chinese companies are willing to construct the eastern route on a
B.O.T (Build-Operate-Transfer) basis and other factor is that it is more secured than the
western alignment (Sial, 2014). The eastern alignment is a roadway project located in
Sindh and Punjab provinces. Linking two big unban and industrials hubs of Pakistan,
Lahore and Karachi a 1,152 km long motorway with 4 to 6-lane controlled access highway
is planned to travel with the speed up to 120 km per hour that will go through Gwadar,
Basima, Khuzdar, Sukkur, Rahim Yar Khan, Bahawalpur, Lahore, Islamabad and
Mansehra.
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Map No 16 Eastern Alignment of CPEC
Source: https://blogs.igreen.pk/en-us/Cpec
146
The scheme of road connection between Karachi and Lahore is called Eastern Alignment.
This road network under this scheme will pass through Hyderabad, Sukkur, Multan and
Abdul Hakeem. This scheme has been divided into four section. Section a is between
Karachi and Hyderabad named M9, section two is been Hyderabad and Sukkuar, section
three is between Sukkur and Multan and section four is between Multan and Lahore. The
length of sections is 136 km, 345 km, 392 km, and 33km respectively.
(http://cpec.gov.pk/project-details/29)
Fig No 19 Projects included in Eastern Alignment of CPEC
Figure 4.5 is made by the researcher.
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The M9, already know Super Highway between Karachi and Hyderabad has been
completed in stipulated time period and serving as a speedy link for ports of Karachi. It has
been completed in stipulated time and now working as the 4-lane controlled access
Motorway (The Nation, March 11, 2015). The M9 motorway also known as Karachi-
Lahore motorway will change its course in Hyderabad for another motorway called M6
towards Sukkur which will consist of 6 lane. The total length of this motorway is 345 km.
For better and effective road approach for interior towns and cities of Sind like Khairpur
and surrounding areas the government will spend approximately $1.7 billion. There are
many water channles in this area including the mighty the Indus River therefore twenty
five bridges and more than five interchanges are to be built. The operational National
Highway and Indus Highway will run along many sections of under construction
motorway cross connectivity among all roads. Keeping in view the size and scope of this
important project the concerned Pakistani authority has planned to offer it to foreign
investors on a Build-Operate- and Transfer (BOT) basis Regarding this, China and South
Korea’s enterprises expressed their keen interest in this venture. The estimated cost, of 6
lanes Motorway between Sukkur and Multan, is around 2.89 Billion US Dollars. This 392
Km long motorway will have controlled access through 11 interchanges and 10 resting
areas. The road will pass under 492 other highways and fly over the 54 interprovincial
roads. The Pakistan Government awarded the contract for construction of this project to the
Chinese State owned company in the first month of 2016, a delay of four months was
caused due to procedural and financial regulations/ requirements. The Chinese
Government has agreed to provide loan on soft terms, i.e. on very minimal rate of interest,
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meanwhile only 10% of the project costs will be provided by the Pakistani government. A
projected time line of the project shows that it will take 36 months before its completion.
The Multan-Lahore Motorway is divided into two sections. Khanewal to Abdul Hakeem.
This section is part of M4 Motorway and ADB has financed this project. The other 231 km
under-construction portion of motorway covers the portion between Abdul Hakeem and
Lahore.
4.3.5 The Central Route
The future central route will originate from Gwadar, Quetta and reach DI Khan via
Basima, Khuzdar, Sukkar, Rajanpur, Liya, Muzaffargarh and Bhakkar.
4.4 Karakorum Highway
In order to boost trade and economic connectivity with countries in the region and beyond
to fulfill its rising energy needs and enhance exports, it is projected that Pakistan could
emerge as a hub of trade and commerce in the region.
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Map No 17 Central Alignment of CPEC
Source: https://www.slideshare.net/ShahMeerHashimRaza/ict-role-and-opportunities-in-china-pakistan-
economic-corridorcpec
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4.5 Railway Projects
By 2020, the up gradation of Pakistan’s ageing railway, under the aegis of CPEC, has been
significantly emphasized that includes rebuilding of complete Main Line-1 railway
between Karachi and Peshawar currently controlling 70 per cent of Pakistan’s railways
traffic. Additionally to the ML-1 railway, ML-2 and ML-3 railways have also been
extended and developed. A 4,693-meter high Khunjerab Pass will also be completed under
the CPEC plan. Through railway line direct access to Chinese and East Asian goods to
Karachi and Gwadar will be available in 2030. As part of first phase of Pakistan Railways
modernization a large number of stations to be renovated and 250 passengers’ coaches will
be supplied. By the end of year 2019, the project will bring total investment of
approximately $5 billion to Pakistan’s railway system.)
4.5.1 Main Line-1
Under the CPEC “Early Harvest” plan a complete overhauling of the 1,687 km long ML-1
railway between Karachi and Pesawar is included (Hassan, 2018) costing $3.65 billion.
The total estimated cost of ML-1 refurbishing project is $8.2 billion. It will be executed in
two stages till 2021.The train operations of Pakistan Railways will be improved and travel
time between cities will be reduced with increase of train speed. The train speed will be
increased from 105 km per hour to 160 km per hour. It is anticipated that after
modernization the revenue of Pakistan Railways will increase up to $480 million. The
development of ML-1 will reduce the transit time from Karachi to Peshawar by half.
Currently, Pakistan’s railways credit for 4 per cent of freight traffic in the country. After
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Map No 18 Main Line-1, Main Line-2 & Main Line-3
Source: https://timesofislamabad.com/10-May-2017/cpec-pakistan-to-repay-5-billion-each-year-to-china
152
completion, Pakistan railways transportation are estimated at 20% of the country's freight
traffic.
The first phase of the project focused on the construction of Multan to Peshawar section,
Hyderabad to Multan section, and finally the Hyderabad to Karachi section. The ML-1 is
mostly the dual track railway that covers the area between Karachi and the Lahore with
long stretches of single track. The route is mainly single track between Shahdara and
Peshawar city. Between Karachi to Shahdara, the construction work to dualize the entire
track has been completed. The remaining stretch of track between Shahdara and Peshawar
is to be constructed as dual track railway.
4.5.2 Main Line-2
With the up gradation of ML-1, the CPEC also calls for the development of 1,254 km ML-
2 between Kotri (Sindh province) to Attock (northern Punjab province) through Larkana
and DG Khan. Under the CPEC plan, it is also projected to connect Gwadar to the town of
Jacobabad, lying at the juncture of ML-2 and ML-3 railways.
4.5.3 Main Line-3
Between Bostan near Quetta, to Kotla Jam in Bhakkar District near the city of DI Khan,
the construction of a 560 km long railway line is also included in the ML-3 railway. It will
provide access to southern Afghanistan. By 2025, before terminating in Kotla Jam, the
railway line will run through the city of Quetta and Zhob.
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4.6 Orange Line Train (OLT)
Under the CPEC arrangement, Orange Line of Lahore Metro is under-development costing
$ 1.6 billion. As a commercial project, up gradation on the line has already initiated. The
27.1-km span line, the 25.4 km will be elevated and the rest of the section 1.72 km will be
underground between Jain Mandir and Lakshmi Chowk. After completion, the project will
have the capacity to transporting 250,000 commuters every day along with the planning to
increase capacity to 500,000 commuters daily by 2025.
“Orange Line is an automated rapid transit system. When operational, the Orange line will
become Pakistan's first metro rail line. The Orange line is the first of the three proposed
rail lines as planned for the Lahore Metro. The line will be served by 26 stations. Though it
is frequently mentioned as a part of the wider CPEC arrangement, the Orange line is being
financed by the Government of Punjab. CRRC Zhuzhou Locomotive rolled out the first of
27 trains for the metro on 16 May 2017. Recently numerous successful trials have been
run.” (All About Orange Line Metro Train Lahore, March 17, 2018)
In May 2014, by signing a memorandum of understanding (MoU) between Beijing and
Islamabad, the project was initiated. In December 2015, financing of the project was
secured, when China’s Exim Bank offered a soft loan of $1.55 billion. In October 2015,
the development work on the project initiated. The Phase 1 of the project was awarded to
Habib Construction Services costing ₨. 21.49 billion (US$200 million). ZKB Engineers
and Constructors for civil works was awarded the second phase of the project in October
2016, between Chauburji and Ali Town costing 11.39 billion rupees.
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Map No 19 Orange Line Train
Source: https://crayon.pk/all-about-orange-line-metro-train-lahore/orange-line-routes/#main
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4.7 Khunjerab Railway
Under CPEC long term arrangements calls for development of 682 km long Khunjerab
Railway line in the city of Havelian to Khunjerab Pass on the Chinese frontier with
extension to China's Lanxin Railway in Kashgar, Xinjiang. As expected to complete by
2030, the railway will roughly parallel the Karakoram Highway costing approximately $12
billion. For railway link between Havelian and Chinese frontier a 300 million rupees final
study is going in pipeline. A preliminary feasibility study was completed in 2008 by the
Austrian engineering firm TBAC.
4.8 CPEC Energy Sector Projects
The current energy generating capacity of Pakistan is 24,830 MW. However, the country is
faced with energy shortfalls of over 4,500MW on a regular basis with routine power cuts
up to 5 hours daily shedding an approximately 2–2.5% off its annual GDP. The major
focus of CPEC is energy generation capacity and an estimated 33 billion dollars is
estimated to be spent in this sector. As part of “Early Harvest Project” of CPEC,
approximately 10,400 MW electricity is expected to be generated by March 2018. The
private Independent Power Producers will construct all the projects rather than the
governments of China and Pakistan. The Exim Bank of China will provide funds to private
interested investors with five to six percent low mark-up rates. However, the government
of Pakistan will purchase electricity from these private firms at pre-negotiated rates.
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4.8.1 Renewable Energy Projects
By 2030, Pakistan aims to produce 25% of its energy needs by renewable energy projects.
The world's largest solar power plant is the 6,500 acre Quaid-e-Azam Solar Park that is
being built close to the Bahawalpur city having capacity of 1000 MW. Xinjiang Sun Oasis
has completed the first phase of the project. The rest will be installed by Zonergy under the
umbrella of CPEC project. “The Turkish company Zorlu Enerji has been constructing the
Jhimpir Wind Power Plant that is already selling 56.4 MW of electricity to the government
of Pakistan. Also, under the aegis of CPEC, another 250MW of electricity are to be
produced by the Chinese-Pak consortium United Energy Pakistan and others at the worth
of 659 million dollars.” (https://pt.slideshare.net/MubshirHussain/china-pakistan-
economic-corridor-97312365) At the worth of 115 million dollars, a wind farm, Dawood
Wind Power Project is under-construction by Hydro China will be able to generate 50 MW
of electricity.
China's EXIM bank is financing the SK Hydro that will construct 870 MW Suki Kinari
Hydropower Project in the Kaghan Valley of Pakistan's KP province at the worth of $1.8
billion. Also, China’s Silk Road Fund has financed a $1.6 billion under-construction Karol
Dam that is 720 MW. Under the aegis of CPEC, a 4,500MW $14 billion Diamer-Bhasha
Dam is also included as a project. The $2.4 billion, 1,100 MW Kohala Hydropower Project
is being constructed by China's Three Gorges Corporation predates the announcement of
CPEC, though funding for the project will now come from CPEC fund.
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4.8.2 Coal
Under the auspices of CPEC’s “Early Harvest Project”, the bulk of energy generation
capacity is coal-based plants. An estimated $5.8 billion are proposed to complete the
project. Two 660MW power plants will be constructed by Shanghai Electric Company of
China. The ‘Thar-I’ project in the Thar coalfield of Sindh province is driven by locally
sourced coal that would be commercially used in 2018. Two more 330MW power plants
will be constructed near Thar-1 by China Machinery Engineering Corporation and
Pakistan’s Engro Corporation as part of Thar- II Project, the development of coal mine
capable of producing up to 3.8 million tons of coal per annum is proposed. At the cost of
$1.95 billion, the first phase is estimated to complete by early 2019. Over the course of ten
years, the subsequent phases will generate an additional 3,960MW of electricity. Also, a
$2.1 billion in Matiari to Lahore Transmission Line, and $1.5 billion in Matiari to
Faisalabad transmission line are to be built. The China Electric Power Equipment and
Technology Company will construct Matiari to Lahore Transmission Line on urgent basis.
Pakistan Port Qasim Power Project near Port Qasim in Sindh, a 1,320MW $2.08 billion
project will be a joint initiative of China’s Power Construction Corporation – a subsidiary
of Sinohydro Resources Limited and Qatar’s capital Al-Mirqab.
4.8.3 Liquefied Natural Gas (LNG) Projects
In 2016, China additionally announced an amount of $8.5 billion investment to develop
Pakistan’s infrastructure. Also, an amount of $4.5 billion is allocated for Pakistan's main
railway line, starting form Karachi to Peshawar as well as to lessen energy shortages, a $4
billion toward an LNG terminal and transmission lines will also be constructed.
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China’s government has shown interest in building up a 711 km LNG pipeline worth 2.5
billion dollar from Gwadar to Nawabshah. As part of 2,775 km Iran-Pakistan gas pipeline,
the pipeline is designed with 80 km portion between Gwadar and Iran frontier to be linked
when sanctions against Tehran are relieved. However, Iran has completed a 900 km
portion on its side of the frontier. Chinese state-owned Petroleum Pipelines Bureau has
taken the responsibility to construct a pipeline to transport 1 billion cubic feet LNG on
daily basis and an additional 500 million cubic feet is also completed. This project will
provide gas exporters with access to Pakistani markets as well as secure route to China for
its own imports.
Moreover, two projects; a 1,100 km North-South LNG Pipeline between Karachi and
Lahore is to be built with Russian assistance that is expected to be completed by 2018. The
other planned $7.5 billion TAPI Pipeline involving Turkmenistan, Afghanistan, Pakistan,
and India is also projected.
The other under-construction LNG projects under Chinese support and financing are not
the official part of CPEC or funded by it. China’s Harbin Electric Company is constructing
a 1,223MW Balloki Power Plant that is financed by China’s EXIM bank. China’s Harbin
Electric Company and General Electric from United States decided to jointly construct a
1,180MW Bhikki Power Plant near Sheikhupura. It is estimated to be Pakistan’s most
efficient power plant that will provide power for estimated 6 million homes.
The Huaneng Shandong Company and Shandong Ruyi Science & Technology Group are
jointly constructing a $1.8 billion Sahiwal Coal Power Project in central Punjab having
1,320MW capacity.
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In Punjab’s province, coal-based projects include worth 589 million dollars to construct a
coal mine and a 3000 MW coal power plant in Punjab’s Salt Range. In Baluchistan
province too, a $970 million plant with a capacity to 660 MW is to be built from coal.
Also, a 300MW coal power plant is under-construction in the city of Gwadar that is being
funded by a zero per cent interest loan.
4.8.4 Early Harvest Energy Projects
From 2018-2020, over 10,000 MW of electricity-generating capacity is to be developed
and added in Pakistan’s electric grid under the “Early Harvest” scheme of CPEC.
Additionally, a 1,223 MW Balloki power plant, a 1,180 MW Bhakki power plants along
with 969 MW Neelum–Jhelum Hydropower Plant and 1,410 MW Tarbela IV Extension
Project are under-construction that will result in an additional 10,000 MW being added to
Pakistan’s electric grid that are a combination of official and non-official CPEC projects.
An additional 1,000 MW of electricity will be brought in from Kyrgyzstan and Tajikistan
as a fragment of CASA-1000 project that is projected to be completed by 2018.
SAARC free trade area can be a podium to join CPEC for all South Asian Countries to
advance trade with CARs and Eurasia. Afghanistan can be a big beneficiary of CPEC
because of its geostrategic position in the region. Its landlocked boundaries can turn into
trade points for CARs and China. China has offered Afghanistan to join the CPEC for its
rapid economic development. The CPEC will be a direct link between China and Middle
East through Gwadar and can connect Afghanistan with the rest of the world. The Gwadar
is a merging point of land route and maritime route of OBOR in South Asia.
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The current trade between South Asia and CARs is not remarkable as both blocs are
lacking proper infrastructure for smooth and speedy trade. South Asian propensity is
attached with shared economic growth which is locked by the regional conflicts. The
CPEC can bring all countries of South Asia together to achieve their development plans for
the welfare of their people.
4.9 Gwadar Port: A Flagship Project of CPEC
4.9.1 Gwadar & Sea Politics
Geography is considered as one of the significant features persuading the development of
human society and sea is considered as the most critical environment that occupies
approximately three-quarters of the earth surface. Currently, the struggle to secure avenues
for transportation of resources is prevalent. In the Indian Ocean Region, an antagonism is
already seen to control choke points, ports and connecting routes that will amplify in the
time to come. Due to the ample natural resources, Indian Ocean region has emerged into
the arena of geopolitical competition. The Indian Ocean littoral states have also seen with a
steady rise in their power. Gwadar is a gateway for many surrounding regions because of
its location. This location gives it a strategic importance in North Arabian Sea. This
position makes it a short entry point in Gulf region for South Asia, Central Asia, China and
Russia. (Khetran, 2015).
Growth in international economic activity has led to multiple volume increase in the
maritime trade activities, therefore it has impacted the dynamics of sea-politics as well.
Now, it has become more imperative to keep keen vigil on the maritime trade channels.
Resultantly, the new seaports of Gwadar and Chah-bahar will have deep impact on the
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Geo-Strategic partners of the region including Pakistan, Iran, China, India and even
Central Asian States. (Tanoli, 2016).
Ports function as significant transportation hubs that expedite goods movement to
businesses in local communities and international markets.
Deng (2018) has explained that ports are considered as the biggest infrastructural facility in
transporting goods from the producers to the consumers, most of the international
merchandise has to ultimately ship through some sea port after its land transit through
roads or railroads, air transit or even in some cases through domestic or inland water
channels. Intermodal transportation means transit and transfer of cargo goods from one
point to the destination through various modes of transportation.
4.9.2 Gwadar: The Crux of CPEC
Gwadar port in Pakistan is a warm water and deep sea port. Gwadar as the crux of CPEC
project is envisaged to connect China’s BRI and its MSR project. Above 1 billion worth
projects are to be developed around Gwadar port by December 2017.
The Ex-President Pervaiz Musharraf of Pakistan has used the analogy/example of funnel
for the region. He compared, Gwadar as the lower opening of a funnel while the “mouth”
of the funnel comprised of Central Asian States and western provinces of China, and the
funnel narrowed down through Afghanistan and Pakistan and opens down into the sea
through Gwadar port. A very apt example to elucidate the trade flow in the region, the
goods from all over the Central Asian and western Chinese areas will find their way out
through Gwadar and upstream coming raw material will do the likewise. (Malik, 2012)
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The success of multi-billion dollars’ mega venture CPEC is heavily dependent on the
successful operationalization of Gwadar port. Due to the enhanced focus on commercial
activities and economic prosperity through transit trade fee, the sea politics is getting more
and more complex. Currently, Baluchistan has been in-focus due to its massive
infrastructural projects. The Baluch people earlier have no history of economic
development. The infrastructure is severely lacking there. For Pakistan, the construction of
Gwadar port bears an extensive strategic and economic value. After ports of Karachi and
Qasim, it is considered the third most significant port in Pakistan. Gwadar is considered
“as the jewel in the crown”. It is anticipated to play a significant role in Pakistan’s trade
and cargo transshipment. Also, approximately, 80 per cent of China’s oil is transported
from Strait of Malacca to Shanghai, its distance is close to 16,000 km that with the
operationalization of Gwadar will reduce to less than 5000 km.
4.9.3 Geographical Location of Gwadar Port
Sited at the mouth of Persian Gulf, about 390 nautical miles at Strait of Hormuz, about 234
nautical miles from west of Karachi, 80 km from Iranian frontier, 320 kms form Cape al-
Hadd in Oman and from close proximity from Iranian ports of Chabahar and Bander
Abbas (Zaheer, 2006). Located at the cross junction of international sea shipping and oil
trade routes, Gwadar can act as international trade hub for Pakistan. Gwadar port would
connect three regions; South Asia, Central Asia and the Middle East. After developing the
port, Pakistan would be able to explore natural resources of CARs. It has the potential not
only to transform the economy of Pakistan but also the whole region. Through connecting
Gwadar to Kashgar, the corridor will help generate the economic activities where China
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has already established an economic zone. It will cut sea transportation distance by more
than 4,500 nautical miles from Shanghai to major ports in the Gulf region. The Gwadar-
Kashgar connection shows the concept of shared destiny. As it is rightly stated that China
and Pakistan’s friendship cannot be measured in the context of dollars and pounds so that
China’s interest and involvement in Gwadar cannot be mistrusted.
4.9.4 Significance of the Gwadar Port
Gwadar port holds a significant position in the Gulf region and the ‘Great Game’ (Bhonsle,
2006) in order to check and monitor Indian movement and expansionist designs in Arabian
Sea and Persian Gulf. It holds two-third of the world’s oil reserves. Through which
approximately 13-million-barrel oil per day passes. Historically, it was purchased by
Pakistan in 1958 from Omani Sultanate. During the initial years of its construction,
Gwadar port remained under Port Singapore Authority (PSA). In 2002, both sides China
and Pakistan agreed to construct Gwadar deep sea port. The first phase was inaugurated by
Gen. Pervez Musharraf in 2007 with worth $248 million but the port remained
underutilized for varied reasons. In 2013, owing to its slow progress, the port was handed
over to China Overseas Port Holding Company (COPHC). Since then, China has agreed to
provide a comprehensive support for developing the Gwadar Deep Sea Port in Pakistan,
fortifying the geo-strategic ties with Pakistan and thereby expanding the global village.
Since then, the development of Gwadar is going on rapidly. The development of Gwadar
city, Gwadar International Airport and Gwadar power generation plants are the significant
proposed projects that are under construction. The port has initiated freight operation,
seasonal cargo and commercial trade activities are underway. For Pakistan, the Gwadar
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holds a geo-strategic and economic worth. Also, China’s 60 per cent of oil comes from
Persian Gulf by ships, travelling over 16,000 km took 2 to 3 months through its only
commercial port, Shanghai. Gwadar will cut the distance to only 5000 km that can serve
round the year.
Chaturvedy (2017 January 6) has observed that it is not possible for any nation to sustain
its political and military presence in a region without developing its economical presence
therein. The significance and role of sea ports in attaining economic wellbeing and security
has helped both the countries, China and Pakistan, to continue their strategic partnership in
the arena of Indian Ocean leading to MENA region and beyond.
Gwadar would pave the way for special economic zones (SEZs), foreign reserves and free
trade zones that would contribute towards economic prosperity of Pakistan by increasing
trade and commercial activities. Originating from Persian Gulf and Strait of Hormuz,
Gwadar will help Pakistan monitor Sea Lines of Communications (SLOCs). Gwadar will
be able to control the oil sea routes and trade links among regions such as South Asia,
Africa, Central Asia, Gulf and Middle East as well as provide strategic leverage to Pakistan
against India as the port is far away from India. Additionally, it will encourage
collaboration of Pakistan with other states in oil and energy sector.
It is anticipated that approximately 20 countries of the Middle East, Central Asian, South
Asia and China will be benefited from this mega initiative. The port will facilitate Central
Asia, Afghanistan, UAE, Qatar, Oman, Saudi Arabia, Iran, Iraq, China and other countries.
For their industrial growth and development, all these countries need uninterrupted and
cost-effective energy supply. Located at the crossroad of South Asia, West Asia and
Central Asia, Pakistan can provide shortest possible access for the transportation of energy.
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More than 90 per cent of the international trade is transported through sea while 95 per
cent of Pakistan’s trade is sea-borne. Pakistan’s trade is extensively reliant on sea-borne
trade that contributes about 40 per cent to its national GDP (Khan, 2013). Gwadar, being
the trade hub for entire region, will serve as the consumer market of Asia and is equipped
with modernized cargo transferring to meet the challenges of global trade. By the
implementation of Gwadar port mega project and utilization of its resources, the
Baluchistan province will be lifted up.
Countries like Turkmenistan that are landlocked and cannot reap the benefits from its
natural assets, Gwadar holds a very significant place for them. The projects like Trans
Afghan Gas Pipeline (TAP) from Turkmenistan to Gwadar, the long-dormant project is
intended to pump Turkmen natural gas to markets in South Asia. Kazakhstan is having
excessive oil but no means to reach the international markets. The idea of transporting oil
to Gwadar and then to the rest of the world is in the pipeline. The international companies
like Shell is setting up a mega oil refinery in the area, UAE business groups is also
interested in Gwadar. Approximately an amount of US$ 30 billion, the UAE has
committed to invest in the area with an additional US$ 60 billion to build hotels, resorts
and recreation centres in Gwadar. Other Arab countries are also anticipating to announce
projects in the area (Conrad, 2017 June 26).
China’s Eastern seaports are thousands of kilometers away from its western region. China
for the purpose of international trade looks at the proximate Gwadar port that is a chunk of
CPEC. From the Shangai port, Kashgar is 4500 km while Gwadar is 2800 km providing
Chinese access to Afghanistan and Central Asian States. However, when Strait of Malacca
can be blocked by India, Gwadar can be used as a substitution route by China.
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4.9.5 Construction of Gwadar Port
China is providing 80 per cent of the cost of project in terms of grants and soft loans.
China is the direct beneficiary of the project and will gain immense advantages. More than
500 workers are working on 24-hour basis to complete the project. The port will be fully
operational very shortly. The Frontier Works Organization (FWO) has been awarded the
contract, who has already initiated the project. Additionally, the construction of Gwadar
Special Economic Zone worth 2 billion dollars has also started. Also, a network of roads,
connecting Gwadar with Karachi, Pasni, Ormara and Turbat will be constructed in four
phases.
4.9.6 Gwadar vs. Chabahar
Iran and Pakistan are constructing rival ports, rail and highway networks. As neither
country has been able to handle the monetary costs and technical challenges on its own,
both have partnered with other states. Pakistan has turned towards China and India got
involved in China’s Chabahar port. China is not just constructing and financing the
Gwadar port project but it has considered the Gwadar as the terminus of back door
transportation corridor into China’s western region. For the enhancement of China’s
energy security, a pipeline has been proposed that will carry crude oil form the port of
Xinjiang. According to several US security analysts claim that as part of its ‘String of
Pearls’ strategy, Although China, under the doctrine of “Harmonies Oceans” denies having
any military ambitions in the Indian Ocean, but in order to have better access and control
on the Middle Eastern and African Market and its resources, China wants to carve an
viable presence right in the heart the region through Gwadar. Thus they could provide fast
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and reliable trade supply to the MENA region. Sited just forty-seven miles from Gwadar,
India is collaborating Tehran in developing Chabahar port. According to the plan,
Chabahar port will be connected to Afghanistan, former Soviet Central Asian states and
Russia. Ultimately, “a multi-modal transport link” to get access to Iran and India is also
considered as potential natural gas pipeline besides the seabed from Chabahar to India,
circumventing Pakistan. India aspires to accelerate the plan owing to its strategic location
of a backdoor corridor into Afghanistan bypassing Pakistan. A 218-km Zaranj-Delaram
highway in Afghanistan is under-construction by India at a heavy cost and great danger
which it anticipates to link to the new port.
With the outlay of US $85 million, India is investing heavily in Afghanistan that is aimed
at reducing Chinese sphere of influence in the region. As India has built road infrastructure
from Afghanistan to link Zaranj-Delaram road to Chabahar port in Iran, however, Pakistan
seriously needs to pay attention, tackle the challenges and accelerate the construction work
on Gwadar port which is vital for economic development and maritime security of Pakistan
and regional connectivity. On the one hand, China is really anxious about increasing
Indian naval presence at Indian Ocean region and Arabian Sea (Nixon, 1992). On the other
hand, the conclusion of Indo-US Nuclear Deal and cooperation of India and Iran in the
reconstruction of war-ravaged Afghanistan region have pushed Pakistan towards China.
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Map No 20 Gwadar vs. Chabahar Port
Source: http://www.geocurrents.info/geopolitics/balochistan-and-a-new-great-game-in-central-asia
169
For long, India has been seeking for a transit route for relief assistance to Afghanistan
through Pakistan but Pakistan has consistently denied it. Through Iran’s Chabahar port,
transportation of Indian goods could be made to Afghanistan as well as to Central Asia.
In 2016, Indian Premier Modi, Afghanistan’s President Ashraf Ghani and Iranian President
Hassan Rouhani met where the Premier Modi avowed billions of dollars to modernize
Iran’s south‐eastern Chabahar port and help establish a free trade zone, stretching towards
the Iran-Afghan border in the coming years. India has been holding talks with Iran on the
development of the port since 2003. However, owing to the long‐drawn‐out negotiations
between the two countries and the international tension over Iran’s nuclear programme and
the subsequent sanction in Tehran in 2012 the further development of the Project remained
stalled. When sanctions were partly relaxed, the two sides will move on promptly to go
ahead.
4.9.7 Operationalization of Gwadar
On November 13, 2016, a cargo ship carrying sixty containers departed from Gwadar
towards Arabian Sea. Another sixty containers have left Kashgar on October 2016 and
were loaded on go KKH that marked the first shipment through CPEC. Similarly, the rail
plus sea route for CPEC from within China was inaugurated on 2nd December, 2016, when
the sea bound container train carrying 500 tons of freight started from the Chinese southern
province of Yunnan, towards Guangzhou port. This freight will be carried forward on ships
to Karachi, the Port City of Pakistan. This will serve as another, rail and sea, trade route
between China and Pakistan. It is expected, that this route will help to save 50 percent on
transportation charges.
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CHAPTER NO 05
Geopolitical Implications, Regional Constraints and
Benefits of CPEC
5.1 Geo-political Implications of CPEC
‘The time and tide are not in favour of the
detractors. They will die their death in the
hurricane of CPEC since China and Pakistan are
determined to make CPEC a success story. A
$62 billion mega economic venture is China’s
gift for Pakistan.’
CPEC provides a great opportunity to guarantee the economic future of China, Pakistan
and other regional stakeholders. An all-out exertion has been made by the opponents to
thwart the CPEC construction, wrenching into works by conducting terrorist disruptive
activities in every nook and corner of the country.
Owing to the recent bout of strain between U.S.-Pakistan ties, the Trump administration
has announced to halt an amount of US $ 1.3 billion in terms of security assistance to
Pakistan along with other retributive recommendations that are under consideration. The
heightened estrangement in U.S.-Pak ties provides Beijing with a prospect to promote a
new model of international development to modify the foremost US model. China initiated
the geo-economically ambitious model of Belt and Road Initiative (BRI) following the
principles of “wide consultation, joint development, and mutual benefits” for the regional
development. As part of BRI, CPEC has won support from all corners of Pakistan.
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Additionally, of late China has hosted the first trilateral summit between China, Pakistan
and Afghanistan in order to promote negotiations between Pakistan and Afghanistan.
Furthermore, Afghanistan may partake in the corridor (Grossman & Zhu, 2018 Feb 26).
Also, China has increased investment in Sri Lanka that has generated fears in India since
India has viewed it as a backyard.
Russia is too much fretful about the CPEC venture since this has realized into increased
influence and presence of China in the Central Asian region. The region, for a long time, is
deemed within Moscow’s sphere of influence. Currently, an intensified Moscow-Beijing
competition has been noticed. The other area of concern is that several countries in Asia
and abroad (including the U.S.) are apprehensive about the geostrategic impact of BRI.
However, China has tried to alleviate these apprehensive of late by stressing the “win-win”
model of the initiative. Its efforts will have significant foreign policy implications for a
number of key regional actors that includes India, Russia and Japan.
It is also deemed that the West is ambivalent of China’s swift rise. As per the former US
Secretary of Defence Donald Rumsfeld says, “My view of China is that its future is not
written, it is being written”. The West always is tilted towards India. The west continues to
treat China as if it is still in “Qing Dynasty era” that has shown neglect in China’s
maritime capabilities. However, China opposes the ideology of domination of any power
against any state big or small. It believes in a win-win situation. China’s peaceful rise has
been deemed by the people of Asia-pacific region as a sign of peace, security and
development. China’s foreign relations are based on engagement, dialogue,
accommodation, reconciliation, promotion of peaceful co-existence and mutual trust,
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security, balance and harmony. There is an opportunity for all nations for peace and
harmony in the world (Javed, 2016).
The US sees CPEC as a mega venture that will multilaterally support the idea of regional
connectivity, collective economic development and anticipates Afghanistan’s future
involvement in CPEC. The U.S. is well aware of the development of CPEC; China will
have a potential naval threat in the Indian Ocean region. The U.S is giving a strategic
leverage to India so that India can maintain its regional dominance. The signing of Indian
Nuclear Deal of 2006 between US and India and US’ aspiration to project India as a
regional power signal the same aspiration.
UAE is also concerned with the construction of CPEC. Ports play a significant role in the
economic enhancement of UAE and whne Gwadar port will be fully opertaionalized, it will
have a direct impact on the Dubai port economically.
5.2 Regional Constraints to CPEC
5.2.1 Afghanistan Factor
Afghanistan’s unstable security is one of the major concerns to the successful completion
of CPEC projects. The long porous border between Pakistan and Afghanistan is a grave
security concern for Pakistan. Terrorist factions operating from Afghanistan have carried
out most of the terrorist activities in North-western region of Pakistan. This will delay the
process of CPEC. Cordial relations between Pakistan and Afghanistan will prove to be
vital for CPEC successful implementation. In order to reap the benefits from CPEC, China
has been involved in facilitating the dialogue and reducing the bitterness between them. A
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stable Afghanistan is of paramount significance for the development of CPEC and of the
region.
5.2.2 Indian Concerns for CPEC
India is extremely apprehensive about CPEC’s route that passes from disputed Jammu and
Kashmir region as both Pakistan and India assert their claim on the territory. Sushma
Swaraj, the foreign minister of India called the project “unacceptable” passing through
contested Jammu and Kashmir region. According to Indian claim, the CPEC passes
through Indian claimed territory, thus, violates the Indian territorial integrity. Since the
initiation of the project, India has been up roaring statements in opposition to this mega
venture at different international and national forums. Furthermore, India boycotted the
OBOR forum in Beijing on May 14-15, 2017. As the Indian External Affairs spokesperson
Gopal Baglay stated, “No country accepts a project that ignores its core concerns on
sovereignty and territorial integrity.” (Miglani, 2017 May 13) Some Indian scholars
consider CPEC as a part of colonialist agenda and a threat to India’s domestic security on
part of Chinese by developing Gwadar port project and securing access to Indian Ocean
region.
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Map No 21 Indian Claim on CPEC passing from Kashmir
Disputed Territory
Source: https://www.indiatoday.in/world/story/one-belt-one-road-pakistan-occupied-kashmir-china-cpec-
beijing-976918-2017-05-13
180
The Kashmir dispute has proved to be a biggest impediment for a huge future investment
coming in the region. Despite several efforts to resolve the issue, the status quo between
India and Pakistan remains the same. Since the seven decades have been passed, India
should come forward for the determination of the enduring conflict.
In turn, the Chinese analyst Zi Shi, in a lecture delivered on “One Road & One Belt”
supports a non-involvement policy in the region, one that follows the ‘Three Nos’: namely,
no interference in the internal affairs; no increase of influence, and no dominance (Khan,
2017). However, the project is heading towards progress and successful completion.
Markey observed that China’s naval presence and influence in the Arabian Sea is an
apprehension for India. Furthermore, India is concerned that Gwadar may be employed for
military purposes that may disrupt Indo-US strategic cooperation. Also, India is concerned
about China’s construction of seaports in other countries in Bangladesh, Sri Lanka and
Myanmar as part of ‘String of Pearls’ strategy.
India is also apprehensive by Chinese growing presence and influence in Indian Ocean
region.
India holds that CPEC will curtail its influence in the region as China will get easy access
to Indian Ocean via Gwadar Port. China is also encircling India with its South Asia
Economic Corridor which will connect India, Bangladesh, and Myanmar with China. The
Silk Road Economic belt and Maritime Silk Road will open new destinations for Chinese
products. On the other hand, Chinese presence and contacts with Indian neighbors will be
increased which undermine the Indian sway. Moreover, India is working with Iran to
counter CPEC by constructing Chahbahar port. This will be the gateway for India to
supply its products to Central Asian States and Afghanistan. Moreover, India should make
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strong relations with Chinese opponents as a strategy to balance power structure in the
region.
However, India’s continuous opposition to CPEC won’t make any affect to the
development of the project in any way. On the other hand, the CPEC plan is open and
inclusive. Moreover, the CPEC plan invites other countries to incorporate in the project.
China and Pakistan are working on mutual basis for collective economic cooperation.
5.2.3 Iranian Concern
Gwadar is considered as a rival port to Chabahar. However, in September 2016, in a
meeting with Pakistan’s premier, the Iranian president showed the desire to be a part of
CPEC. As China has gained strength and confidence, its geo-political role has also
undergone a transformation. China’s peaceful rise has been seen as a stabilizer in the Asia-
pacific region. The West has not reconciled by China’s rise and its emerging world order to
reshape global economics.
However, with the emergence of China as a regional economic power, it has been able to
generate its own economic sphere of influence by means of developing its extensive export
capacity and a robust market. Therefore, Pakistan opened the door for Chinese financing at
a time when China has achieved a high geo-economic growth in the region as well as a
strategic status in the Indian Ocean region (Azeemi, 2007).
5.3 Security Challenges to CPEC
One of the gravest challenges in the security situation is a source of concern in the
successful completion of CPEC. The long existing insurgency in Baluchistan is a challenge
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to CPEC as well as sovereignty of Pakistan. The gravitating law and order situation in
Baluchistan and Gwadar is strategically located in Pakistan’s Baluchistan province. The
anti-state Baluch outfits maintain that CPEC will exploit local resources. In Baluchistan’s
restive region, many non-locals, businesses and multi-national companies’ personnel have
been under attack. In order to eliminate these terrorist outfits in the country. A sentiment
has been prevailed that China can reap the benefits of the CPEC and Baluch will be a
minority. The feeling of deprivation along with foreign elements’ involvement is a gravest
challenge for successful development of CPEC. The region has severally observed strikes
and demands of political and economic rights of the people as well as a fair stake in CPEC
since it is the entry point of CPEC. The Pakistani army has launched several operations to
eliminate them.
The security situation is one of the major concerns to hinder the successful completion of
CPEC-related projects at internal and external levels. Pakistan is faced with the daunting
challenges of extremism and terrorism. From Xinjiang to Gwadar, East Turkestan Islamic
Movement (ETIM), TTP, LeT, LeJ, ISIS, BLF and other militant outfits are hindering the
CPEC security. All these factions are dynamically trying to halt this mega venture. These
terrorist factions and sub-nationalists in the whole country are trying to threaten the CPEC
project. Since 2014, the separatist outfits in Baluchistan have killed more than 50 labourers
is roadside bomb explosions. Chinese nationals and Pakistani workers are protecting them.
In order to ensure the security of Chinese workers and CPEC security, Pakistan army has
created a special force that is Special Security Division (SSD). The major security
challenge consists of Al-Qaida from parts of Afghanistan.
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5.3.1 Political Constraints
Besides security challenges, an additional challenge towards the completion of CPEC is
the political disagreement between political parties in Pakistan. There is a disagreement on
route selection, allocation of developmental funds between the provinces under the aegis of
CPEC. The smaller provinces have apprehensions over the policies of federal government.
Also, there is a lack of transparency and the demand to make all the arrangements related
to the development of CPEC to be made public. A lack of political consensus may lead
towards delay and disruption in the completion of CPEC related projects. The KP and
Baluchistan provinces show concerns on changing the routes which the federal government
disapproves. In May 2015, an ‘All Party Conference’ was conducted to address the
concerns of all provinces related to CPEC. All parties agreed to develop the Western route
and pledged their political support. However, the issue is not decided completely. The
allocation of resources has been politicized for political benefits.
5.4 Benefits of CPEC to Pakistan
Both China and Pakistan are interested in minimizing the conflict in South Asia. CPEC
provides the opportunity to integrate economies in order to curtail the enduring conflicts in
the region. Also, it would provide job opportunity and prosperity to millions of people in
both countries. It would also develop China’s western region as well as Improve
infrastructure connectivity in all forms; rail, road, air, sea, telecommunications and energy
etc. across the globe.
In February 2014, Pakistan’s President Mamnon Hussain visited China and stated that
“project is going to be a monument of the century. It will benefit not only Pakistan and
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China, but also the whole region with billions of people.” (Tiezzi, 2014) Additionally, both
the countries again echoed their firm resolution to implement the plans of proposed
Economic Corridor.
CPEC is regarded as a very significant project for China and Pakistan. CPEC not only
provides a secure alternate trade transit route for Pakistan and China but it also helps
economic enhancement of the region and to counterbalance Indian regional influence. By
strengthening its huge naval presence in the Indian Ocean region, CPEC also secures
China’s trade routes. Pakistan will be benefitted economically by becoming a transit trade
route for international trade, by increasing employment opportunities, alleviating poverty
and bringing stability and prosperity by occupying the locals in economic and commercial
activities. Moreover, CPEC would attract foreign investment which has a prospect to
enhance Pakistan’s export, increase its GDP. It will open up trade and business
opportunities in Pakistan as well. In past, Pakistan’s economy has been beaten down from
energy shortage, high inflation, inadequate infrastructure development and sluggish
economic development. Pakistan’s geostrategic location has allowed it to play a significant
role in geopolitics, trade and transit. The building up of CPEC provides Pakistan with the
prospect to the up gradation of infrastructure development and economic boom of the
entire province as the corridor passes across Pakistan. The Central Asian region can play a
significant role in Pakistan’s economic revival. As per the blueprint, new infrastructure,
railways, airports and seaports are to be built in this ambitious plan. Provinces like KP and
Baluchistan lagging far behind in terms of development will also get infrastructural boost
and enhanced economic gains. Moreover, it offers Pakistan Gilgit Baltistan region
province in this great opportunity of socio-economic development. Since Pakistan’s
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economy is heavily dependent on sea trade. With the development of Gwadar port and its
connectivity will reduce the load on Karachi and Bin Qasim ports.
5.4.1 CPEC: Significance for China
China has deemed great strategic and economic boom from CPEC. China aspires to
counter the separatist outfits in the region with the transformation of economic
enhancement in China’s Xinjiang province. As part of CPEC, Gwadar will provide the
western China with shorter, economical and safer route. China crude oil dependency from
the Gulf and Iran is approximately 47 per cent from its total consumption. The complete
inland distance from eastern China to western China will cut from 16,000 km to 3,000 km.
Also, Gwadar, as a pivot provides economic security to China.
Currently, almost 80 per cent of Chinese oil is transported from Strait of Malacca to
Shanghai port, the transportation time from the Middle East and Africa will be reduced
from 30 days to 2 days after the completion of the projects that are in the pipeline. Also,
Gwadar can be used as an alternative in case the Strait of Malacca is blocked.
China envisaged that by constructing CPEC, China’s relatively backward and restive
Xinjiang region will be economically developed that will bring peace and stability in this
region by facilitating trade with Central Asian states to fulfill its growing energy needs.
It would facilitate China’s shortest access to markets of Asia, Europe and beyond.
Furthermore, owing to low labour cost, Chinese investors have a lot to be offered in
multiple sectors in Pakistan.
In future, it can pave the way for regional economic and trade connectivity and integration
at wider level between regions of South, Central and East Asia. However, the current
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attitude between India and Pakistan regarding their trade and economic relations and
people-to-people connectivity etc. ought to be changed. Through CPEC, the regional
economic integration can prove to be a harbinger to determine all the political clashes
through economic cooperation. To initiate a beginning, the Asian nations need to set aside
their enduring political differences in order to make the 21st century, the Asian century.
The states of South, Central and East Asia need to build more and more economic
connections. To start regional trade integration and economic activities, CPEC as a
flagship of OBOR can prove to be a catalyst. However, there are some potential threats and
challenges looming that can hamper the up-and-coming CPEC infrastructure development
and can obstruct CPEC transforming into reality. The infrastructure construction process is
stalled due to the ongoing and severe power shortages. Throughout the year, the demand
for energy exceeds capacity by 4-7000 megawatts in the countrywide. Day by day
worsening security situation in Afghanistan and its spill over impact on Pakistan along
with the ongoing political controversies in Pakistan regarding the selection of different
routes in all provinces and lack of trust between regional neighbouring states are prevailing
the whole situation. In a wider perspective, CPEC can foster economic community
throughout the South Asian region but beyond regions of the world if materialized in its
true sense.
5.4.2 Impact of CPEC on Regional and Extra-regional level
In the years to come, CPEC will radically transform the entire Asian region geo-politically
and strategically. It has the colossal potentials that will restructure the economic viewpoint
of the regional member states. Millions of people will be benefitted form as the initiative
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has the capacity of economic boom, mounting trade, enhanced cooperation and amplified
cultural connectivity among the people in the region. Afghanistan will be a major
beneficiary of the project if CPEC is extended to this landlocked country that can bring
country’s fragile economy and security to stabilization (Butt & Butt, 2015, December 09-
10).
The landlocked Central Asian Republics that is vital for their oil richness and natural gas
resources will get access to sea and diversification of energy channel that CPEC project
can fulfill. The goods from the CARs can easily be transported to Middle East and Europe
via Gwadar port (Butt & Butt, 2015, December 09-10).
At the outset, CPEC faced resistance from Iran. Recently, considering its geo-political
significance, Iran has showed the desire to participate in the project aiming to enhance
connectivity through railways and roads and expand the trade and transportation. Also,
under the auspices of CPEC, Pakistan and China will construct “the liquid natural gas
(LNG) terminal at Gwadar and the 700 km long pipelines to import LNG from China
which can become the Iran-Pakistan pipeline as well” (Butt & Butt, 2015, December 09-
10).
With the changing geo-political scenario, the U.S. presence and influence in the region
may recede notably that seemingly provide China with an opportunity to perform the role
of a equalizer in the South Asian region largely owing to the deteriorating its ties with
Russia. By supporting Pak-Sino relations, the US can use the mounting economic
dependence to cope with major concern of the US with the help of China to counter the
threat of extremism and terrorism. However, the U.S has reservations over Pakistan’s
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handing over the Gwadar port to China, fretful of expansion of Chinese, may be used as
Chinese naval base (Butt & Butt, 2015, December 09-10).
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References
Azeemi, H.R. (2007). 55 Years of Pakistan-China Relationship. Pakistan Horizon, Vol. 60,
No. 2.
Butt, K.M. & Butt, A. A. (2015, December 09-10). Impact of CPEC on Regional and
Extra- regional Actors: Analysis of Benefits and Challenges. International
Conference on CPEC. GC University, Lahore, Pakistan.
Grossman, D. & Zhu, K. (2018 February 26). What Next for China-Pakistan Relations?
RAND CORPORATION. https://www.rand.org/blog/2018/02/what-next-
for-china-pakistan- relations.html
Javed, A. H. (2016). Rise of China and the Asian Century. Islamabad; NUST Publishing
Islamabad.
Khan, H.U. (December 2017). China Pakistan Economic Corridor (CPEC): Benefits for
Pakistan and Comparison with Suez and Panama Canals. (Master’s Thesis).
Naval Postgraduate School, Monterey, California.
https://calhoun.nps.edu/bitstream/handle/10945/56741/17Dec_Khan_Hanif_Ullah.
pdf?se quence =1&isAllowed=y
Kennedy, S. & Parker, D.A. (2015). Building China’s “One Belt, One Road”. Centre for
Strategic & International Studies (CSIS). https://www.csis.org/analysis/building-
china%E2%80%99s-%E2%80%9Cone-belt-one-road%E2%80%9D
Miglani, S. (2017 May 13). India skips China's Silk Road summit, warns of 'unsustainable'
debt. Reuters.
Retrieved from: https://www.indiatoday.in/world/story/one-belt-one-road-pakistan-
occupied- kashmir-china-cpec-beijing-976918-2017-05-13
190
Tiezzi, S. (2014). China, Pakistan Flesh Out New ‘Economic Corridor’. THE DIPLOMAT.
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CHAPTER NO 06
SURVEY RESULTS
The analysis of the data, collected form the population through questionnaire or by using
other data collection techniques can helpful in summarizing the opinion of respondents. On
the analysis and interpretation of the data researcher can predict and generalize the findings
of scientific research. This whole process is based on the characteristics and attitude of the
respondents.
6.1 Population and Sample Size
The main objective of this research is to find out the impact of ‘CPEC on Indo-Pak
relations directly and indirectly. The population of this survey is huge and scattered on a
vast area. It is impossible for the researcher to approach the whole population therefore
sample of 90 respondent is designed for survey. The purposive sampling technique is
employed for collection of data. Respondents have been divided on the basis of their
profession without any discrimination of gender.
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Table No 01 Profession wise Distribution of Population
Sr. # Sample category No of Sample
1 Parliamentarians/Politicians 30
3 Economists/Academia 30
4 General Public 15
5 Bureaucrats 15
Total 90
The nature of the topic requires the input of parliamentarians and economists due to their
role in policy making therefore total number of respondents from both categories is twenty.
Bureaucrats implement the policies and general public is the direct beneficiary of any
policy. The response of bureaucrats and general public is also crucial for any project and
same is also included.
6.2 Interview Schedule
Interview schedule is considered the best data collection tool. A questionnaire of 15
questions was designed for interview and tested (Annexure ‘A’). For ease of respondents
questionnaire was divided into three sections i) Trade Corridors and Regional
Connectivity, ii) Shadow of Indo-Pak relations on CPEC, iii) Trajectory of China, India
and Pakistan relations. Many changes were made in questionnaire after testing as it is
necessary for validity and accuracy of questionnaire. Three respondents of each category
were selected to test the questionnaire and some questions were reshaped as per convince
193
of respondents. Almost all the respondent have keen interest in CPEC and its impact on
India in general and on Pakistan in particular.
Fig No 20 Trade Corridors and Regional Connectivity
The figure 6.1 shows that most of the respondents from all categories agree that in modern
times trade corridors are most feasible mode of connectivity. All respondents from
economists held that corridors are modern way of collaboration. More than half of the
respondents believe that CPEC is an opportunity of regional peace. Politician and
economist ponder that economic interests overcome political differences because it is
evident that after Cold War economic relations harness the world affairs. Less than half of
respondents of bureaucrats negate the importance of trade corridors. More than half of
respondents from all categories think that economic interest can shape political relations.
Bureaucrats and public respondents’ view that CPEC will be a game changer not only for
194
Pakistan but also for whole region and other regional countreis will join CPEC for
collective economic development.
Fig No 21 Shadow of Indo-Pak Relations on CPEC
The role of China in settlement of Indo-Pak dispute is a key question and politicians,
economists and bureaucrats are optimists about China role in resolution of Indo-Pak
conflicts except general public. In the same manner all respondents are hope full about
China role in protecting Pakistani interests in UNO except bureaucrats. More than half of
respondents are agree that Indo-Pak relations will be normalized after successful
conclusion of CPEC.
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Fig No 22 Trajectory of China, India and Pakistan Relations
No doubt that the future political and strategic scenario of the region is reliant on all three
countreis. No country cannot live in isolation therefore majority of respondents view
CPEC as opportunity of regional peace. In South Asia peace cannot be maintained without
India and Pakistan and China will certainly play its role for peace between India and
Pakistan through mediation. All respondents think that China mediation can work to bring
both countries on table for amicable settlement of all outstanding issues.
The above trends of judgment of selected respondents infer that CPEC will be a golden
opportunity of peace and prosperity in South Asia. It will create opportunities of
communication and association among regional countreis which increase trust and level of
understanding among all countreis. In the formulated hypothesis it is assumed that the
cooperation of China and Pakistan will reduce the chances of conflict between India and
Pakistan which seems correct and true.
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CHAPTER NO 07
Summary, Conclusions & Recommendations
7.1 Conclusion
Sino-Pak relations stood the test of time. Despite different beliefs and cultural systems,
Pak-China relations are epitome of enduring partnership. Pakistan recognized the People’s
Republic of China in 1949. The “all-weather strategic partnership” has shaped the glorious
journey of almost seven decades that continues to strengthen. Since the beginning of
diplomatic relations in 1951 after the Bandung Conference, a multidimensional
relationship has been formed. China and Pakistan have helped each other at political,
diplomatic, commerce, technical, economic and military areas etc. at mutual, regional and
multilateral level. The five principles of mutual respect for sovereignty and territorial
integrity, non-aggression, non-interference in each other's internal affairs, equality and
mutual benefit, and peaceful co-existence are furthering the China-Pakistan relations
(Shanglin, 2001). Furthermore, China and Pakistan supported each other in the struggle
against hegemony and power politics (Ghengli, 1996).
The two nations have virtually no shared culture, history, or economic ties. Initially, it was
deemed that China-Pak strategic alliance would serve as a counterbalance to India. In
1962, while escalating border tensions led towards Sino-India war in 1962. In 1963,
Pakistan conceded the Trans-Karakorum Tract to demarcate the border between Pakistan
and China and to enhance diplomatic relations. Later, Pakistan offered China with the
diplomatic conduit to open up for the West. China is also apprehensive about the Islamic
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militant organizations operating in Pakistan and Afghanistan and poses a threat to
Pakistan’s restive Xinjiang region.
China and Pakistan shared strong military ties. Founded on a shared enmity with India,
China provided Pakistan with the material to build nuclear weapons. The military alliance
aims to counter the Indian hegemonic designs and American regional influence. China,
since 1962, has been a steady source of Pakistan’s military equipment, helped initiation of
the ammunition factories, provided technical support and modernized existing facilities.
During its years of diplomatic isolation, Pakistan acted as China’s backdoor by building a
bridge between Nixon and Mao. Currently, Pakistan plays a significant role in China’s
transition from a regional to global power. The country lies in the heart of China’s plans to
build a network of ports, pipelines, roads and railways to connect oil and gas fields of the
Middle East to the mega cities of East Asia (Small, 2015).
Lately, China has provided Pakistan with Chengdu J-10B fighter as the US counterpart
Lockheed Martin F-16C Block 52/60, the most advanced F-16, for orders on either aircraft
for the Pakistan Air Force. In order to enhance military and weapon systems that includes
the enhancement of JF-17 Thunder fighter aircraft, K-8 Karakorum advance training
aircraft, Hongdu L-15 and Al-Khalid tanks. China has also played a significant role in
developing Pakistan’s nuclear infrastructure. It helped Pakistan build Khushab reactor after
Pakistan acquire uranium and plutonium when as the Western countries made it hard for
Pakistan to acquire them. The most significant contribution of China to Pakistan's defence
needs has been establishing a heavy mechanical complex and heavy foundry and forging
near Taxila at the cost of $7 million (Chaudhri, 1986). They both have conducted several
joint military exercises. Towards the completion of Chashma Nuclear power Complex and
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plutonium reprocessing facility, China offered technical and material support. In 2015,
China concluded the sale of eight conventional submarines valued at $5bn. China has
become Pakistan’s largest supplier of arms and its third-largest trading partner. Beijing has
supported Pakistan to bolster its hedge against India. China has supported Pakistan’s
missile and nuclear programme and they both jointly produces JF-17 fighter. Chinese-built
submarines are sold to Pakistan.
In a world prone to violence, relations between the friendliest of countries sometime
become stale, and especially when the countries adhere to different ideologies.
Astonishingly the relations between Pakistan and China, despite many political changes
within the two countries, have remained stable during the past thirty-five years. China gave
economic and military aid to Pakistan whenever it badly needed and it continues to flow to
this day on the regular basis. The motivating force behind their friendship is their common
objective to promote world peace and stability by maintaining the regional geo-political
balance (Chaudhri, 1986).
Traditionally, Pakistan and China have evolved in political and strategic arena. Currently,
the two have developed their ties in economically. In this shift, the CPEC is a significant
milestone. In order to expand economic links, the initiative is hailed in both the countries.
In order to reap its full benefits, there are several security and political constraints and
challenges that must be adhered. The “all-weather strategic partnership became more
elevated when the two governments signed 51 memorandum of understandings (MoUs)
that are now in implementation phase. Furthermore, the large shipment of Chinese goods
went through the Gwadar port, a flagship CPEC project in Balochistan province in
Pakistan’s southwestern region.
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China-Pakistan Economic Corridor (CPEC) is multi-dollar mega venture is a collection of
infrastructure projects that are currently under construction throughout the length and
breadth of Pakistan. Originally valued at $46 billion, the worth of CPEC projects are now
estimated to be $62 billion that are aimed at rapidly modernizing Pakistan’s infrastructure
and boost its economy by developing modern transportation and communication networks,
numerous energy projects and special economic zones (SEZ). A $62 billion ambitious
CPEC mega venture is a developmental project between China and Pakistan that is
supposed to be a ‘fate changer’ in the geopolitics of South Asian region. It aims to link
Kashgar in China and Gwadar port in Pakistan through a vast network of railways,
highways, roads and pipelines. It will have a deep impact on Pakistan’s economy, regional
economics and international connectivity. It is aimed at promoting regional connectivity
between Pakistan, China and Eurasia. It also gives China access to Middle East as Gwadar
is proximate to the Arabian Sea. As envisioned, it is estimated to be completed by 2030 is
a win-win model for both China and Pakistan in particular and the entire region in general.
On the one hand, China will save millions of dollars every year by shortening its route for
energy imports from the Middle East by about 12,000 km and also gets greater access to
the Indian Ocean. On the other hand, Pakistan expects infrastructural enhancement and the
reduction, or even elimination, of its severe energy crisis by getting in return an estimated
$34 billion for various hydro, solar, thermal, and wind-driven power plants as well as get
transit trade tariff.
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7.2 The thesis tries to explain that
Chinese-led infrastructure development opportunities will create mutual economic
growth in the neighbouring South Asian region and will become a win-win
cooperation model between China and its neighbouring states.
The BRI and CPEC infrastructure ventures do not aim to bring smaller states under
China’s sphere of influence by establishing market dependencies and creating
Chinese overseas bases along the economic routes.
CPEC is neither restraining the US Marshal Plan nor it tries to influence the
developing economies and is influencing the international order.
CPEC is aimed at developing China’s western legging provinces.
CPEC will give way to regional multilateralism. It will neither create Chinese
sphere of influence nor will it cede towards Indian hegemonic designs in the region
over the smaller states.
7.3 Recommendations
CPEC is multidimensional, huge and extensive opportunity not only for both the countries
but it is for beyond regions. In order to make it a success story, China and Pakistan need to
play their due role. In the light of above discussion, the following policy options are
recommended:
Pakistan needs to focus on the timely completion of the project in order to reap its
full benefits and by protecting it from hindrances. The antagonistic forces envision
varied methods to derail the upcoming economic boom, anticipated with the
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successful completion of CPEC related infrastructure. The timely materialization of
CPEC would encourage socio-economic development in Pakistan.
Equal chances should be provided to all the provinces by the government especially
the deprived Baluchistan province. The federal government of Pakistan should
make every effort to confiscate the apprehensions of the provinces, involving them
by giving equal opportunities and focusing on their stake in this socio-economic
and infrastructure development project.
The benefits should also be transferred to people in order to increase their living
standard and their education level. The transformation at the grass root level should
be made discernible.
In order to operationalize Gwadar port and materialize the aim to make Pakistan
transit corridor, Pakistan’s security is the top priority. The leadership of the country
is trying to eradicate the hydra-headed terrorist activities in Baluchistan and other
parts of the country through offensive operations in the country. Kulbhushan
Yadev’s presence and Modi’s acceptance of the involvement of RAW creates fear
in Pakistan’s apex leadership that it may sabotage the global game-changing CPEC.
All the regional states should make collective efforts on their part to end the
menace of terrorism in the region and to keep going this infrastructural
development mega initiative for the collective success of the region.
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Appendix ‘A’
The China-Pakistan Economic Corridor: an assessment of potential threats and
constraints
Safdar Sial
Introduction
China and Pakistan have developed strong bilateral trade and economic ties and
cooperation over the years. China has gradually emerged as Pakistan’s major trading
partner both in terms of exports and imports. Bilateral trade and commercial links between
the two countries were established in January 1963 when both signed the first bilateral
long-term trade agreement (Ministry of Finance, 2014:126). Under the Free Trade
Agreement (FTA) between the two countries – signed on November 24, 2006 and
implemented from July 1, 2007 – Pakistan secured market access for several products of
immediate export interest.1 Later, both countries signed the FTA on Trade in Services on
February 21, 2009 that became operational from October 10 that year (Ibid).
These include cotton fabrics, blended fabrics, synthetic yarn and fabrics, knit fabrics, home
textiles like bed-linen etc, minerals, sports goods, cutlery, surgical goods, oranges,
mangoes, industrial alcohol, etc. The whole project is expected to be completed by 2030,
whereas related short-term projects including motorways and energy projects are to be
finished by 2017-2018.
According to statistics provided in Pakistan Economic Survey 2013-2014, the volume of
trade between Pakistan and China has increased from US$ 4.1 billion in the year 2006-07
to US$ 9.2 billion in 2012-13, representing an increase of 124 percent. While China’s
exports to Pakistan increased by one percent during this period, Pakistan’s exports
increased by 400 percent from around $600 million in 2006-07 to $2.6 billion in 2012-13.
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As a result, China’s share in Pakistan’s total exports has gradually picked up from four
percent in 2008-09 to 10 percent during the fiscal year 2013-14.2
The China-Pakistan Economic Corridor (CPEC) is expected to further strengthen trade and
economic cooperation between the two countries. Chinese Premier Li Keqiang emphasized
the construction of the CPEC during his May 2013 visit to Pakistan (Tiezzi, 2014). The
incumbent Pakistani government has also shown much enthusiasm for the project since
then. The corridor will connect Gwadar Port in Balochistan (Pakistan) to Kashgar in north-
western China, which will make Gwadar not only fully operational but also a significant
deep sea port in the region. Opened for operations in 2007, the control of Gwadar Port was
transferred to China’s state-owned China Overseas Ports Holding in February 2013. Since
then, Gwadar is undergoing a major expansion to turn it into a full-fledged, deep-water
commercial port (South China Morning Post, 2014). When the corridor is constructed, it
will serve as a primary gateway for trade between China and the Middle East and Africa.3
The corridor is expected to cut the 12,000-kilometre route that Middle East oil supplies
must now take to reach Chinese ports (Ibid). The China-Pakistan Economic Corridor
Besides meeting China’s needs in energy and developing its far west region and upgrading
Pakistan’s economy, the CPEC is expected to benefit the people of countries in South
Asia, contributing towards maintaining regional stability as well as economic integration
(China Daily, 2013).
As cited earlier, the CPEC is a comprehensive development program that entails the
linking of Gwadar Port to China’s northwestern region of Xinjiang through highways,
railways, oil and gas pipelines, and an optical fiber link. Major physical infrastructure to be
built includes 2,700-kilometre highway stretching from Kashgar to Gwadar through
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Khunjrab, railways links for freight trains between Gwadar and Khunjrab linking to China
and having possible regional connectivity with Afghanistan, Iran and India, and the
Karachi-Lahore motorway. The project will also undertake the revival and extension of the
Karakorum Highway that links Xinjiang with Pakistan's northern region Gilgit–Baltistan
and Khyber Pakhtunkhwa.4 Besides physical links connecting Pakistan and China, the
project also envisages establishing several economic zones along the corridor. Also, an
Energy Planning Working Group of the CPEC has been established that will undertake
fast-track implementation of power projects related to the CPEC. Those projects of 21,690
MW power productions will be undertaken with the assistance of China under the CPEC
plan (Pakistan Today, 2014).
4 The highway was started in 1959 and completed in 1979.
5 Some Baloch nationalists believe that mega projects in Balochistan such as Gwadar Port
are not providing due share or benefit to the Baloch people. In that context, too, it is not
specifically an anti-China sentiment on their part rather it is their anti-mega projects
narrative that makes nationalists aggrieved with Chinese involvement in Balochistan’s
development projects.
This report assesses potential threats and risks that could affect the implementation of the
CPEC project in terms of insecurity and violence that pervade Pakistan, internal political
and economic constraints, and also global and regional geostrategic impediments. The
purpose is to understand and evaluate Pakistan’s security, political and economic
environment and regional geostrategic dynamics in the medium to long term to explore
feasibility prospects for the corridor and also to manage potential threats, if any, that could
hamper the implementation. Most importantly, the report discusses the security aspect in
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detail in which the probability of threats vis-à-vis extremist militancy, nationalist
insurgency and criminal violence are analyzed with the main focus on areas across
Pakistan which will be traversed by the China-Pakistan Economic Corridor.
1. Political and economic constraints
Although Pakistan regards China an “all-weather friend” and bilateral relations between
the two countries have never been uneasy over the course of history, yet it is important to
evaluate the variables that can affect Pakistan’s political and economic capacity and
response to implement the elements of the larger CPEC project over longer periods of
time. Important among these variables are: 1) Pakistan’s political stability and policy
consistency; and 2) The present situation of Pakistan’s economy and future scenarios.
With regard to the first variable, a positive aspect is that there is almost consensus among
Pakistan’s political parties on maintaining friendly relations with China which suggests
that in principle there should be no major political impediment in the way of the
construction of the China-Pakistan Economic Corridor. With an exception of minor
segments among nationalist parties in Balochistan,5 Pakistan’s regional parties look
towards China in a positive manner to preserve bilateral ties. Similarly Pakistan’s military
The China-Pakistan Economic Corridor establishment, which is also a key stakeholder in
policymaking processes in Pakistan, considers China a trusted and valuable partner in
bilateral military, economic and strategic areas of engagement and cooperation. Every
political party that comes into power in Pakistan holds frequent high-level meetings with
the Chinese government to discuss the political and strategic prospects that are helpful in
strengthening bilateral relations and cooperation. Nor have there been high level bilateral
exchanges of military officials between the two countries less frequent.
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Also, Pakistani and Chinese geostrategic concerns have historically remained largely
converged around many common areas of strategic and bilateral interests. The relationship
between the two countries mainly hinges on four shared areas of interest that include
‘economic cooperation, energy security concerns of both countries, shared internal security
concerns, and largely converging geostrategic interests’ (Mezzera, 2011).
All these factors indicate that a change of government in Pakistan is less likely to reverse
or halt the CPEC project as successive future governments are expected to maintain
consistency in Pakistan’s foreign policy towards China and also policy on bilateral trade
and economic engagement. For example, the incumbent Pakistan Muslim League-Nawaz
(PML-N) government in Pakistan restarted the country’s political and economic
engagement with China from the point where the outgoing Pakistan People’s Party (PPP)-
led government had left it.
At the same time, as the revised alignment of the corridor, or eastern alignment which will
be discussed at length later in the report, will not run through most parts of Balochistan and
Khyber Pakhtunkhwa (KP) as initially planned, some analysts are of the view that it would
be difficult for the federal government to muster political ownership for the CPEC project
from all the provinces.6 As the new CPEC route will largely pass through Punjab, the
political leadership of Balochistan and KP may view their provinces as being deprived of
the development and employment opportunities the CPEC will bring with it. However, the
government claims it has not abandoned the original western route, which will be
constructed later, and that the decision to first construct the eastern alignment was based on
financial and security reasons.
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Apart from that, long-term political stability will be required in Pakistan to smoothly
implement projects such as the CPEC. In the past, Pakistan has faced many phases of
political instability and turmoil that weakened the country’s development roadmap and
also affected policy consistency. It was a very promising development for the country’s
political stability that a democratically elected government completed its five year term
and a peaceful transition of power happened after the 2013 elections. But the current
government now faces a political crisis after just 14 months of being in power. This crisis
unfolded itself after two political parties – Pakistan Tehreek-e-Insaaf (PTI) led by Imran
Khan, and Pakistan Awami Tehreek (PAT) led by a religious scholar Tahirul Qadri –
started their protests and sit-ins in Islamabad on August 14. Apart from certain other
demands, both parties demanded resignation of the prime minister. While the former is a
political stakeholder having representation in the National Assembly and also heads the
coalition government in Khyber Pakhtunkhwa, the latter had not contested the 2013
election and does not have considerable electoral strength. The PTI alleges the ruling
PML-N of rigging in elections and demands fresh elections under a ‘neutral’ interim set-
up. Nonetheless, the PAT advocates a new political system that ensures ‘true and
participatory’ democracy. The China-Pakistan Economic Corridor
The ongoing political instability has already caused huge losses to the economy besides
distracting the political leadership from other matters of vital importance related to
governance, terrorism, policymaking and implementation of policies. Certain important
visits to Pakistan of heads and officials from different countries and also international
organizations including the International Monetary Fund (IMF) were either deferred or
shifted to locations outside Pakistan in the summer-autumn of this year.
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As far as the second variable is concerned, economic growth and development are linked
to political stability to a great extent. At present, Pakistan’s economic outlook, although
not bright, seems positive and improving. On August 18, 2014, the IMF raised its growth
forecast for Pakistan to 4.3 percent for the current fiscal year, up from 4 percent (Daily
Times, 2014).In the absence of certain major political crisis and policy breakdowns, it
would be safe to say that the country’s economy is right on the track and will improve
gradually.
Put it another way, Pakistan can provide the required funds and facilities for the CPEC
project over a longer period of time, if there is no major political conflict and no economic
meltdown. The government has already allocated over Rs73 billion as the budget for the
Public Sector Development Program (PSDP) to execute development projects under the
CPEC during the current fiscal year. Most of it this will be spent on the construction of
Karachi-Lahore motorway and connecting roads and for land acquisition and relocation of
utilities (Zafar, 2014). But in the case of a prolonged political crisis and economic
meltdown gripping the country, such yearly and periodic allocations for the project could
be disturbed causing delays to the project outcomes beyond the set targets.
The China-Pakistan Economic Corridor project needs about $32 billion of investment and
loans for the project are expected to come mainly from Chinese banks and corporations.
For that purpose, the Federal Minister of Planning, Development and Reform Ahsan Iqbal
and the Punjab Chief Minister Shahbaz Sharif held several meetings on their three-day
visit to China in July 2014 with the Chinese National Development and Reform
Commission, National Energy Administration, China Development Bank, Industrial and
Commercial Bank of China, Exim Bank, and heads of the Chinese corporate sector (Ibid).
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Secondly, the corridor will be largely built on BOT (build-operate-transfer) basis. As a
result of Chinese financing loans, the project will be completed by Chinese companies,
especially state-owned enterprises in China. It is expected that the project will be
financially viable for these companies because the revenues generated by the project
through BOT-related facilities would cover its cost and provide sufficient return on
investment. Under BOT arrangements, Chinese companies will also receive concessions
from the government to finance, design, construct, and operate the designed projects as
agreed in the concession contract, or BOT. The government may also provide support for
the project in form of provision of the land.
2. Geostrategic dynamics
The CPEC is part of China’ efforts meant to strengthen its trade and commerce
connectivity with different regions of world. In September 2013, Chinese President Xi
Jinping emphasized reviving the ancient trade routes connecting China, Central Asia and
Europe through developing three main corridors through southern, central and northern
Xinjiang, which connect China with Russia, Europe and Pakistan (Jia, 2014). Also, the
Chinese have recently increased focus on the Bangladesh-China-India Myanmar corridor
that would provide China’s landlocked Yunnan province access to the Bay of Bengal
(Chowdhury, 2013).
While China’s prime focus in constructing theses corridors seems to strengthen its trade
and economic connectivity with countries in the region and beyond primarily to fulfill its
soaring energy needs and enhance exports, it is expected that Pakistan could emerge as a
hub of commerce and trade in the region with the construction of the CPEC that would
entail establishing several economic and industrial zones and physical road and railway
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links connecting Pakistan and China. As the corridor also anticipates having regional
connectivity with India and Afghanistan–although it is still too early to comment whether
regional element of the CPEC will become operational or not–it could also enhance
regional economic and trade cooperation, that in turn would contribute towards regional
peace and stability.
Gwadar holds central place in the utility of the China-Pakistan Economic Corridor because
without making the Gwadar Port fully functional, it would be difficult for China to see the
anticipated corridor as an energy corridor that appears as one of its main objectives behind
the construction of the CPEC. Located near the Strait of Hormuz, which channels about
one third of the world's oil trade, Gwadar could play a key role in ensuring China's energy
security as it provides a much shorter route than the current 12,900km route from the
Persian Gulf through the Strait of Malacca to China's eastern seaboard (Chowdhury, 2014).
However, there is the view that the construction of the CPEC will ‘place Gwadar on the
matrix of intense geo-strategic competition’ (CPGS, 2014). It has been said that Gwadar
will also put China and Pakistan in a strategically advantageous position along the Arabian
Sea compounding already existing Indian concerns that stem from ‘China's involvement in
nearby ports such as Hambantota in Sri Lanka, Sittwe in Myanmar and Chittagong in
Bangladesh’ (Chowdhury, 2014). One the other hand as India is also energy hungry it
looks forwards to developing Iran’s Chabahar Port. In October 2014, Indian Prime
Minister Narendra Modi’s cabinet decided to develop Chabahar Port, which many believe
is central for India to open up a route to landlocked Afghanistan, where it has developed
close security ties and economic interests (Dawn, 2014a), and to have access to energy-rich
Central Asian States.
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While Gwadar is located in Pakistan’s Balochistan province, where a nationalist
insurgency is rife, Chabahar is located in the Iranian province of Sistan-Baluchistan where
unrest prevails as well mainly due to certain violent Sunni sectarian-nationalist groups
operating in the district. If peace and stability is not achieved in Afghanistan after the
drawdown of international assistance forces, and countries in the region, mainly India,
Pakistan and Iran, engage in proxy wars, it could have some implications for internal
security mainly for Pakistan, Afghanistan and Iran that could impact development projects.
Pakistan has blamed India in the past for supporting Baloch insurgents from Afghan soil.
Similarly, Iran has concerns regarding Jundullah–a sectarian insurgent group based and
operating in Iran’s Sistan-Baluchistan province with free cross-border movement into and
from Pakistan. But analysts argue that while Pakistan has struggled to achieve security in
Balochistan, Iran has the capacity to enforce its writ in Sistan-Baluchistan that suggests
Chabahar could become functional earlier than Gwadar, if pursued by India and Iran
fervently.
Nonetheless, China has devised a pro-active foreign policy vis-à-vis the Middle Eastern
countries by using the United Nations as a platform to negate the ongoing war in the region
(CPGS, 2014). As far as Iran is concerned, China wishes to resolve the Iranian nuclear
issue through peaceful political settlement. Moreover, when it comes to ties between
Pakistan and India, China has played its part (Ibid). At the same time, for China, Pakistan’s
geo-strategic position is very crucial as it serves as a window into the Middle East.
Meanwhile, it has already expanded its trade, infrastructure and energy links with most of
the Central Asian Republicans (Pakistan-China Institute, 2014). But insecurity and
instability in Afghanistan are a major source of concern not only for China but also other
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neighboring countries including Pakistan, India and Iran. China is already the biggest
economic investor in Afghanistan with about $7.5 billion investment (Ibid). China has
recently enhanced bilateral and trilateral efforts aimed at strengthening regional
cooperation and coordination. It hosted the Fourth Ministerial Conference of the Heart of
Asia-Istanbul Process Beijing on October 31, 2014 with a view to promote security and
stability in the Afghanistan, in cooperation with its neighbors (Arif, 2014). China has also
pushed the matter of Afghanistan’s future after the drawdown withdrawal to the top of the
Shanghai Cooperation Organization’s agenda (Pakistan-China Institute, 2014).
While cooperation among all countries in the region, at least in terms of trade and
economy, would be an ideal scenario with changing regional dynamics, there is a strong
likelihood that persisting bilateral conflicts and an environment of mistrust will keep them
polarized and part of alliances where Pakistan would certainly remain closer to China, with
emerging regional dynamics having little impact on the construction of the CPEC and
functioning of the Gwadar Port. But it still remains to be seen whether or not the CPEC
and Gwadar could become instrumental in forging and enhancing regional coordination
and cooperation, although they are designed to have regional connectivity with India and
Afghanistan.
3. Security-related threats
There are certainly security-related threats linked to the China-Pakistan Economic Corridor
and while most might originate in Pakistan, the Xinjiang province in western China is also
facing security threats from Uighur militants and the East Turkestan Islamic Movement
(ETIM). Uighur and ETIM militants have long sought shelter in Pakistan’s tribal areas
along with the local militants. However, Pakistan’s security forces have fought foreign
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militants in North Waziristan Agency including ETIM and Uighurs in recent months with
the commencement of the military operation Zarb-e-Azb which has also weakened the
operational capacity of ETIM (Khan, 2014). Furthermore, US drone strikes in various
areas of FATA have also dented the group by eliminating a number of its leaders.
The security of the corridor is of crucial importance for Pakistan as well as China in order
to further strengthen trade and development-related ties. It is feared that growing militancy
will threaten the commencement of projects designed for the corridor. It will thus be a
challenge for both countries to quash militant groups and their fighters along and across
their borders. China also expects assistance from Pakistan in this regard. The presence of
local and foreign militants in Pakistani tribal areas usually generates pressure on the
government, therefore affecting bilateral relations (Rana, 2014).
Militant groups in Pakistan are relatively less hostile to China when compared to America
and its western allies, but at the same time, they have targeted Chinese citizens, workers
and engineers in past. The Uighur militants’ links with the Taliban in FATA pose a major
threat to Chinese interests in Pakistan. An Uzbek-speaking militant leader Mufti Abu Zar
al-Burmi recently released a video message directing all Taliban groups to carry out
attacks on Chinese embassies and companies and kidnap or kill Chinese nationals
(Rehman, 2014). The second source of threat to security could be Baloch insurgent groups
who are against mega development projects in Balochistan, including Gwadar Port
currently being developed by Chinese companies. Thirdly, the militant-criminal nexus in
certain areas also poses a threat to Chinese engineers, workers and citizens in the form of
kidnapping and robberies. In the past, there have been many incidents of kidnapping and
killing of Chinese citizens working and living in Pakistan.
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This part of the report discusses the nature and level of potential security threats to the
China-Pakistan Economic Corridor, which can appear in different parts of Pakistan in form
of protracted violence, terrorist attacks, kidnapping and criminal activities. The threat
assessment for different regions–through which the CPEC will pass–is based on the
frequency of terrorist attacks reported from these areas over the past few years, and also
the presence of militant, insurgent and criminal groups in those regions.
3.1 Geography of the CPEC
The CPEC is a huge project that will undertake the construction of highway and railway
links running through most of Pakistan starting from Gwadar in Balochistan and
culminating in Kashgar in western China, while passing through parts of Balochistan,
Sindh, Punjab, Khyber Pakhtunkhwa provinces and Gilgit-Baltistan in northern Pakistan to
reach the Khunjrab Pass and beyond to China.
Eastern alignment: Pakistan and China have decided to initially construct the eastern
alignment of the corridor mainly due to two reasons: first, Chinese companies are
reportedly willing to undertake the construction of the eastern alignment on a BOT (build-
operate-transfer) basis, and secondly it is more secure compared to the western alignment
planned earlier. The eastern alignment will run through only a few areas of Balochistan
and KP provinces where the security situation is more volatile compared to other parts of
the country. This change in original planning earned some criticism from parliamentarians
in these two provinces who thought the new alignment will deprive their respective
provinces of development and employment opportunities that the CPEC brings (The News,
2014).
227
Senators from KP and Balochistan during a meeting of the Senate Standing Committee on
Finance held in June 2014 said that the new corridor alignment [eastern] excluded many
areas of their provinces and the new route largely passed through the Punjab (Ibid). The
Federal Minister for Planning and Development, Ahsan Iqbal informed the senators that
investors were unwilling to construct the western route on a BOT basis. He said the
government had decided to construct the relatively more secure eastern route first with
Chinese assistance and that it had not abandoned the original western route, which would
be constructed later (Ibid).
The eastern alignment of the corridor originates from Gwadar, travels parallel to the
Makran Coastal Highway eastwards (towards Karachi), and then after passing through
parts of interior Sindh, and southern, central and northern regions of Punjab, it reaches
Islamabad. From Islamabad, it extends to Haripur, Abbottabad, and Mansehra districts of
the relatively peaceful Hazara Division in KP –this part of the corridor will also run
through Muzaffarabad, the capital of Azad Jammu and Kashmir–and reaches Khunjrab
after passing through Diamer and Gilgit areas in northern Pakistan. The corridor will also
run through the Pamir Plateau and Karakoram Mountains. A link from Taxila through
Peshawar and Torkhum will connect the eastern alignment of the corridor to Jalalabad in
Afghanistan. Regional connectivity with India through the eastern alignment is designed to
be provided through the Hyderabad-Mirpurkhas-Khokhrapar-Zero Point link and the
Wagha border, Lahore.
Western alignment: This was the original alignment which the government says it has
deferred until the eastern alignment of the corridor is completed. According to the western
alignment plan, the economic corridor (highway and railway) starts from Gwadar and runs
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through some southern and eastern districts of Balochistan (Khuzdar and Dera Bugti,
respectively), and some districts in South Punjab to reach D.I. Khan in KP. From D.I.
Khan, it further extends to Islamabad and Abbottabad and from there onwards, the route is
the same as in the eastern alignment. The western alignment will have an additional
regional connectivity link to Afghanistan through Chaman and will connect to Iran through
Quetta-Kho-e-Taftan link.
Karachi-Lahore Motorway: It will run from Karachi to Lahore through traversing interior
Sindh (mainly Hyderabad, Dadu and Sukkur), and parts of south Punjab, including
Raheem Yar Khan and Multan.
3.2 Potential security threats to CPEC in each geographical region of Pakistan
Pakistan faces diverse challenges to its security and stability, for instance, Taliban
militancy in KP and the tribal areas, a nationalist insurgency in Balochistan, ethno-political
violence in Karachi, growing religious extremism and radicalism, and the deteriorating law
and order amid acts of terrorism and violence being reported from across the country
almost on daily basis.
This prevailing environment of insecurity, militancy and violence can pose serious threats
to the construction of the China-Pakistan Economic Corridor. As the level and nature of
this threat is not uniform, it is a positive aspect that the finalized eastern alignment of the
corridor runs through parts of the country which are relative more secure with few
exceptions.
As China and Pakistan have decided to initially construct the CPEC along the eastern
alignment, this section of the report assesses the security, law order situation and militant
229
landscape of the regions through which the Gwadar-Kashgar Highway and railways will
run, also including areas to be traversed by the Karachi-Lahore Motorway.
Gwadar and Makran Coastal Highway
7All data and statistics used in this section are taken from the Pak Institute for Peace
Studies’ (PIPS) database on conflict and security (http://san-pips.com/index.php
?action=db&id=1), unless otherwise stated. The China-Pakistan Economic Corridor
Summary: Baloch insurgents pose the key threat in Gwadar and the coastal belt; the
Taliban and sectarian militants have minimum presence in this region. Baloch insurgents
can carry out low intensity attacks targeting the CPEC-linked installations and
infrastructure and workers besides attempts at kidnappings. The level of threat is medium,
and needs stringent security measures.
The 653 kilometers long Makran Coastal Highway extends towards the east to link Gwadar
with Karachi. This is where the Balochistan part of the CPEC will originate from and run
similarly towards Karachi. Security threats to the construction of the CPEC and workers
can also appear from neighboring northern districts of Gwadar and Makran Coastal Belt,
e.g. Kech, Awaran and Lasbela. As the militant landscape of these districts is largely
linked to that of Panjgur and Khuzdar, too, it is pertinent to assess the security situation of
this entire region spread over 6 districts.
A review of reported terrorist attacks between 2007 and July 2014 suggests that Kech and
Khuzdar are the most volatile districts in this region. (See Chart 1) A worrisome factor is
that Gwadar shares boundaries with Kech, a district where the activities and influence of
Baloch insurgents has increased over the past few years. On the whole, 1,040 terrorist
attacks took place in these six districts between 2007 and July 2014, representing 23
230
percent of total attacks reported from Balochistan during that period. In other words, 23
percent of total terrorist attacks reported from Balochistan between 2007 and July 2014
were concentrated in six districts of Gwadar, Kech, Awaran, Panjgur, Lasbela and
Khuzdar.
Targets hit in most of these attacks included security forces, civilians, political leaders,
non-Baloch settlers and workers, gas pipelines and power pylons, railways tracks, and
government installations and property etc.
Chart 1: Terrorist attacks in Gwadar and neighboring districts (January 1, 2007-July
31, 2014)
-e-Jhangvi (LeJ) and the
Tehreek-e-Taliban Pakistan (TTP) or its Balochistan chapter Tehreek-e-Taliban
Balochistan (TTB) have very little presence and operational activities in Gwadar, Kech,
Awaran and Lasbela, four districts that will have immediate proximity with the CPEC
alignment. But religious extremist and violent sectarian groups have enhanced their
presence and activities in Khuzdar that lies towards north of Lasbela and Awaran districts.
the Taliban or associated groups and sectarian groups such as LeJ due to their minimum
presence in Gwadar and its immediate neighborhood. Another reason is the fact that such
development projects have not been prime targets for religious extremist and sectarian
groups.
Gwadar, Makran Coastal Belt and neighboring districts emanates from Baloch insurgent
groups, mainly the Balochistan Liberation Front (BLF) and Lashkar-e-Balochistan (LB)
231
while the Balochistan Liberation Army (BLA) and Baloch Republican Army (BRA) are
also occasionally found involved in insurgent attacks reported from these four districts.
coastal Makran belt although it operates across Balochistan. The group represents
disgruntled middle-class and lower middle-class Baloch youths. The LB led by Javed
Mengal is concentrated in south-western districts of Balochistan (Panjgur, Gwadar, Kech,
particularly Turbat) and also Khuzdar. It is suspected that the group was involved in
terrorist attacks on the Chinese Consulate in Karachi and a blast at the Lahore Railway
Station in August 2012 (PIPS, 2013). The BLA and BRA are also active in parts of
Gwadar and its neighboring districts particularly Panjgur and Kech.
frequency of terrorist attacks in these areas in quite low compared to other regions of
Balochistan. From 2011 onwards, Baloch insurgents have hit different targets in Gwadar at
an average of nine attacks in 2013 or less than one attack a month. These targets range
from security forces including Gwadar coast guards, non-Baloch settlers, state
installations, public and private property, and political leaders and workers etc.
headquarters of Makran Division, and parts of Gwadar. Also, the growing nexus of Baloch
insurgents with Taliban-like groups and criminal networks has the potential to increase the
overall security threat for Gwadar and its neighborhood. To curtail such a threat it is
necessary to counter the Taliban, sectarian groups and criminals from across Balochistan
so that they are not able to expand their outreach to Gwadar region.
232
Karachi and interior of Sindh
All data and statistics used in this section are taken from the Pak Institute for Peace
Studies’ (PIPS) database on conflict and security (http://san-pips.com/index.php?
action=db&id=1), unless otherwise stated.
Summary: The level of threat is medium in Karachi and very low in interior parts of
Sindh. With the presence of large numbers of militant, sectarian extremists and criminal
elements in Karachi, there is a probability of attacks on engineers and workers of the
CPEC-related projects and also security personnel deployed to provide security to the
project sites and workers. Incidents of kidnapping too cannot be ruled out.
A security analysis of major areas of Sindh along the eastern alignment through which
Gwadar-Kashgar highway and railways and Karachi-Lahore motorway will run reveals
that major threat can emerge from Karachi whereas the level of threat in interior of Sindh
is quite low. The China-Pakistan Economic Corridor
Between 2007 and July 2014, as many as 962 terrorist attacks took place in areas of Sindh
through which the CPEC and Karachi-Lahore Motorway will run. Most of these attacks,
889, occurred in Karachi alone. Among 31 attacks reported form Hyderabad, most were
low intensity attacks carried out by Sindhi nationalists and others.
Most of these attacks targeted security forces and law enforcement agencies, civilians, Shia
and Sunni religious communities, and political leaders and workers. A few attacks also
targeted NATO supply vehicles. A considerable number of low intensity attacks also hit
railway tracks and trains, mainly in interior parts of Sindh.
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Chart 2: Terrorist attacks in parts of Sindh where CPEC-linked projects will run
(January 1, 2007-July 31, 2014)
-e-Taliban Pakistan (TTP) and associated groups
and sectarian militants such as Lashkar-e-Jhangvi and Sipah-e-Muhammad. While
sectarian groups are largely engaged in sectarian violence–with an exception of Lashkar-e-
Jhangvi that is also engaged in terrorist attacks on security forces and other targets being a
key ally of TTP–most of the terrorist attacks including high profile are carried out by the
TTP and associated groups.
i has failed to break the network of militants in
the city. Reports also suggest that criminals were mainly targeted in security forces’
surgical strikes going on in the city for several months now. There is dire need to launch a
comprehensive operation against militants in Karachi because the TTP and its allies
including foreign militants are well entrenched in the city, more than what is usually
thought, mainly in areas of Gadap, Sultanabad, Gulshan-e-Buner, Manghopir, Sohrab
Goth, Mauripur, Musharraf Colony, Usmanabad, Steel Town, Sultanabad, and Orangi
Town. The brazen attack on cargo terminal of Karachi airport in June this year provides
enough evidence to suggest how militants have established their network and strengthened
their operational capabilities in Karachi. It also highlights lapses in the state’s security and
intelligence infrastructure.
The China-Pakistan Economic Corridor
launched in North Waziristan. Taliban militants based in Karachi along with Sunni
234
sectarian groups will be more than happy to welcome their fellow Taliban militants fleeing
from North Waziristan.
been reported to be gradually rising there. The increasing incidents of persecution of
religious minorities there suggest that interior Sindh, which historically and traditionally
has been a land of peace and pluralism, is not safe anymore from the onslaught of religious
extremism and radicalism. Although the frequency of terrorist attacks has been quite low
in interior parts of Sindh, yet few high profile attacks were reported from there in recent
past including a lethal suicide-and-gun attack by a group of five militants on the regional
headquarters of the Inter-Services Intelligence (ISI) in Sukkur in July 2013.
interior Sindh, through which the CPEC will run, threat to security of these areas has been
gradually rising from Sindhi nationalist groups mainly Sindhu Desh Liberation Army.
Sindhi nationalists have carried out some low intensity cracker attacks in recent months
and years targeting state infrastructure such as railway tracks but their operational capacity
and organizational strength are too weak to cause some heavy damage. Hence the threat
from nationalists to security of interior parts of Sindh also remains low that can be easily
managed with stringent security measures.
Punjab and Rawalpindi-Islamabad
All data and statistics used in this section are taken from Pak Institute for Peace Studies’
(PIPS) database on conflict and security (http://san-pips.com/index.php? action=db&id=1),
unless described otherwise.
235
Summary: The overall threat level is low in those parts of Punjab and Islamabad from
where the CPEC corridor will pass. However sporadic incidents of violence including
against the project-related targets such as sites, engineers, workers and security personnel
cannot be ruled out completely. It is imperative to eliminate TTP’s support structures in
Punjab to prevent high value and high intensity attacks in future.
Over the past eight years, starting from 2007, Lahore and Islamabad-Rawalpindi have
faced maximum terrorist attacks and casualties compared to other regions of Punjab
through which the CPEC-linked roads and railway links will pass. However, sporadic
attacks have also been reported from other areas as illustrated in Chart 3.
Chart 3: Terrorist attacks in parts of Punjab and Islamabad where CPEC-linked
projects will run (January 1, 2007-July 31, 2014) The China-Pakistan Economic
Corridor
Targets for most of these attacks were security forces, civilians, and Shia and Sunni
communities. Some attacks were also aimed at political leaders and workers, private
property and NATO supply vehicles. A spree of terrorist attacks including lethal suicide
attacks gripped Lahore and Islamabad-Rawalpindi after the 2007 Red Mosque siege and
that continued for 2 to 3 years. Even after that time period, high intensity attacks have been
reported in few other cities of Punjab.
also some Deobandi madrassas. These support structures have helped the TTP in past to
carry out lethal attacks in the heart of Punjab, Lahore, Rawalpindi and Islamabad. But
strong vigilance and surveillance of security and law enforcement agencies in Punjab have
236
denied the TTP permanent operating bases or safe heavens. That keeps the security threat
to the CPEC-linked projects and personnel in Punjab low.
he eastern alignment of the CPEC will run through those parts of Punjab
which are relatively safer and tactically difficult for the free movement and entrenchment
of militants. For instance, the CPEC alignment in southern Punjab (Raheem Yar Khan,
Bahawalpur and Multan regions) will be located towards the east of the Indus River and
will be least vulnerable to security threats that could emerge from the western side of the
River Indus. To the west of Indus certain areas are the hub of extremist groups and
criminals gangs (D.G. Khan and Rajanpur, respectively) but also serve as districts where
militants from Khyber-Pakhtunkhwa are found as it is the simplest entry-point into Punjab
– D.G. Khan through the Indus Highway and link roads is the route used. Also, to the west
of the Indus, there is the presence of criminal elements, mainly in Kacha area of Rajanpur,
an area that lies between the River Indus and the Indus Highway. These criminals
reportedly have formed a nexus with LeJ and have been found involved in kidnapping and
road robberies.
safer than south Punjab. Although Chart 3 displays a large number of terrorist attacks
reported in Lahore and Islamabad-Rawalpindi between 2007 and July 2014, as mentioned
earlier these cities were specifically targeted in the aftermath of Red Mosque operation of
2007. Also, most of these attacks were orchestrated from outside and terrorist
infrastructures have minimal presence in these cities, although operational support exists.
Another factor to be noted is that development projects and infrastructure schemes have
hardly remained targets for militants in these and other cities of Punjab.
237
minimal, it is also important that militants have the capacity to orchestrate high value and
high intensity attacks in those areas of Punjab from where the CPEC road and railway links
will pass. It is imperative to ensure that the tribal militants’ support structures in Punjab are
eliminated and strong surveillance and vigilance is maintained to prevent any major
terrorist attacks. Police and intelligence agencies have a major role to play here.
Khyber Pakhtunkhwa and AJK
All data and statistics used in this section are taken from Pak Institute for Peace Studies’
(PIPS) database on conflict and security (http://san-pips.com/index.php? action=db&id=1),
unless otherwise stated.
Summary: The threat level for the CPEC alignment in this region is also low because the
Hazara Division of KP is relatively more secure and safer from militancy than other parts
of the province. However, local Taliban militants in Mansehra, some of them linked with
the TTP, could pose a security threat to workers and engineers associated with the CPEC.
Parts of KP through which the CPEC will travel (Haripur, Abbottabad, and Mansehra)
have traditionally been least violent when compared to other regions of the province. The
presence of militant groups is also low in these areas, with the exception of Mansehra
where local Taliban groups are operational but with minimum capacity to carry out major
attacks without help and support from outside terrorist groups. Between 2007 and July
2014, as many as 4,732 terrorist attacks took place in KP and only 52 of these attacks, or 1
percent, occurred in the three districts of Haripur, Abbottabad and Mansehra. Also most of
these 52 attacks were concentrated in Mansehra alone; 4 in Abbottabad and 2 attacks took
place in Haripur, respectively. (See Chart 4)
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Chart 4: Terrorist attacks in parts of Khyber Pakhtunkhwa where CPEC-linked
projects will run (January 1, 2007-July 31, 2014) The China-Pakistan Economic
Corridor
As mentioned earlier, local Taliban militants in Mansehra, some of them linked with the
TTP, can pose a degree of threat to workers and engineers with the CPEC, but the
probability and intensity of such a threat is low.
province. However, the Taliban in the past have tried to make inroads into these areas. For
instance, in September 2007, an attack on army’s mess building in Haripur had killed 20
soldiers. Since no major terrorist attack has been reported from these two districts.
region, and also to counter any threats that might be posed by local Taliban and extremist
groups.
Muzaffarabad has also remained peaceful over the years with the exception of a few
attacks in the past; only three terrorist attacks occurred in the city between 2007 and July
2014, all in 2009. One of these attacks was a sectarian-related suicide attack that claimed
10 lives and injured 81 others. Another suicide attack had targeted am army barracks
killing two soldiers, while the third attack was a low intensity cracker blast that killed one
person. 2009 was the year when reports started to appear in the media that the TTP was
trying to make inroads into Muzaffarabad, but since then no such attacks have been
reported; nor have any reports surfaced describing the TTP’s presence in the region.
239
Diamer and Gilgit
All data and statistics used in this section are taken from Pak Institute for Peace Studies’
(PIPS) database on conflict and security (http://san-pips.com/index.php? action=db&id=1),
unless described otherwise.
Summary: The region has seen plenty of sectarian violence in past. Some high intensity
attacks in recent years on security forces and foreigners also revealed TTP and other
militants’ outreach to these areas. However, the absence of militant bases and support
structures in Gilgit and Baltistan suggests the threat level to the CPEC in this region will
be low. However, sporadic attacks on the CPEC-linked sites and personnel cannot be
ruled out.
After passing through parts of KPK and Azad Kashmir as described earlier, the CPEC will
run through Diamer and Gilgit districts of Gilgit-Baltistan. Sporadic terrorist attacks from
the region in recent years, aimed at high value targets, attracted global attention and also
raised concerns that Pakistani militants, mainly the TTP, in collaboration with the ETIM
and Chinese Uighur militants would attempt to entrench themselves in this region. Other
than that most violence incidents reported from this region have been sectarian-related.
A total of 74 terrorist attacks were reported from Gilgit-Baltistan between 2007 and July
2014 – 71 from Diamer and Gilgit alone – out of which 55 were sectarian-related and only
16 were carried out by the TTP and associated militants and other groups. (See Chart 5)
Chart 5: Terrorist attacks in parts of Gilgit-Baltistan where CPEC-linked projects
will run (January 1, 2007-July 31, 2014)
Pakistanis at Nanga Parbat tourists’ base camp near Bunar Nullah. The TTP spokesperson
240
Ehsanullah Ehsan told media representatives through telephone calls that the group’s
faction named Junud-e-Hafsa had carried out the brutal attack. He further said the killings
were in revenge for US drone attacks and the killing of TTP chief, Waliur Rehman
Mehsud (Khan, 2013). The Diamer attack also revealed that the nexus of the TTP, Al-
Qaeda and the East Turkistan Islamic Movement (ETIM) could pose as a threat to
Pakistan’s internal security and also that of China’s Xinjiang province.
captain and the Superintendent of Police in Diamer were shot dead in Chilas City (the
district headquarters of Diamer) by the TTP militants. These officials were investigating
the Nanga Parbat incident and the killing of foreign tourists by the militants (The News,
2013).
police station in Diamer district. They took away 10 guns, three pistols, thousands of
rounds, wireless telephone sets, police uniforms and other police personnel belongings
(Dawn, 2014b). Locals from Diamer suspected these attackers were associated with
Taliban militants.
3.3 The state’s capacity and responses to maintain security and law and order
Pakistan has the required capacity and security infrastructure to deal with potential threats
to the CPEC project. The country has a huge security and law enforcement infrastructure
comprising military, paramilitary including Rangers and FC, police and local police forces
such as the Khasadar force in FATA and Levies force in Balochistan. Additionally, it has
strong professional intelligence agencies. Sufficient sources and equipment for security,
law enforcement and intelligence agencies would imply better standard. But with the threat
241
of terrorism being non-conventional and asymmetrical, Pakistan needs more stringent
efforts to deal with this threat.
Tribal militants against whom the Pakistani army has launched several military operations
in the past, including latest military operation, Zarb-e-Azb – launched on June 15, 2014 in
North Waziristan that is ongoing –would suggest a policy of containment of militancy, but
much needs to be done in this regard. Initial reports following the launch of the military
operation in North Waziristan suggested that foreign militants mainly those from Central
Asia and China were prime target of military strikes. Several militants belonging to ETIM
and the Islamic Movement of Uzbekistan (IMU)–both groups along with the TTP have
close links with Chinese Uyghur militants–have been killed in the military operation so far.
The government and army have vowed to clear North Waziristan of all militants including
local and foreign, so there is hope that these foreign militants from Central Asia and China
will no more find sanctuaries and shelter. Some reports suggest many of them have already
relocated to either Afghanistan and elsewhere or other parts of FATA and Pakistan.
However, it has been established that many of their ‘hideouts’ in Waziristan have been
destroyed. This will certainly reduce security threats for the CPEC project emanating from
FATA.
As far as Balochistan is concerned, the province is already under strict security scrutiny in
the presence of the Frontier Constabulary, police and Levies. In recent months, attacks by
nationalist insurgents and militants have decreased. The state’s security apparatus in
Balochistan, if utilized effectively, is capable to deter any threats to CPEC-linked projects
and activities.
242
However, there is an immediate need to address security problems in Karachi, which is
complex city where militants find many weak spots and spaces to hide, recuperate, recruit,
plan and operate. The Rangers and police have carried out security operations in the city,
but there is need to expand scope of this operation to eliminate all sorts of militants.
Law enforcement agencies, mainly the police can handle the security of the CPEC
alignment in Punjab, Islamabad, KP and also Gilgit-Baltistan with the help of intelligence
agencies. Coordination among different security, law enforcement and intelligence
agencies will be vital to secure the route, construction and workers of the CPEC project.
Provincial police departments can take pre-emptive steps to ensure the security of Chinese
engineers and others working on the CPEC-related projects. Some precedents were set in
recent past. For instance, the Lahore City Police established eight special security desks
around the city in June 2014for Chinese citizens employed in government, semi-
government and private sectors (Express Tribune, 2014).
4. Conclusion
Long-term political stability in Pakistan is vital to smoothly implement the projects like the
China-Pakistan Economic Corridor. In the past, Pakistan has gone through phases of
political instability and turmoil that weakened the country’s development roadmap and
also affected policy consistency. Similarly, if now or later, some prolonged political crisis
and economic meltdown grip the country, the yearly and periodic budget allocations for the
CPEC project could be disturbed causing delays to the project outcome beyond set targets.
Although the prevailing environment of insecurity, militancy and violence in Pakistan can
pose serious threats to the construction of the China-Pakistan Economic Corridor, the level
and nature of this threat is not uniform across Pakistan. It is encouraging that the areas
243
through which the finalized eastern alignment of the corridor will run are relatively more
secure than those of the earlier planned western alignment, though with few exceptions.
The level of threat to the security of the CPEC project, including sites and personnel, is
low along most areas of eastern alignment with the exceptions of Gwadar, the Makran
Coastal Belt and Karachi, where threat level is assessed to be medium. At the same time, it
is imperative to ensure stringent security measures along the entire CPEC alignment. The
China-Pakistan Economic Corridor
244
Appendix ‘B’
STRENGTHENING GEO-STRATEGIC BOND OF PAKISTAN AND CHINA
THROUGHGEO-ECONOMIC CONFIGURATION
UMBREEN JAVAID AND RAMEESHA JAVAID
Abstract. An intimate relationship between Pakistan and China is not a novel phenomenon.
For decades, they have been ‘all-weather’ friends –both countries enjoy enduring and
deep-rooted ties. Initially, China and Pakistan were involved in a geo-strategic context, but
since the end of the Cold War, their relations have increasingly become multidimensional.
China emerged as an economic regional power, and over the years has been successful in
generating her own sphere of influence by developing a huge export capacity along with a
robust market. Pakistan had her own way with a long history of rivalry with India and then
fighting the war against terror that dragged her into destitute economic conditions. India’s
increasing interest and influence in the region and her growing cooperation with the US
alarmed both Pakistan and China. Reciprocating, Pakistan and China agreed to build a
“One Belt One Road” project; also known as the China Pakistan Economic Corridor. This
study helps in analyzing the addition of the geo-economic aspect in the geo-strategic Sino-
Pak relationship with reference to the China Pakistan Economic Corridor in the
transitioning geo-political scenario.
I. BACKGROUND
The twenty first century has seen a paradigm shift from strategic alliance to the
establishment of economic cooperation between countries around the world — the national
interest and security of the state being the determinants of this cooperation. States redefine
their interests and reshape their policies owing to the realization that it does not seem
245
possible for them to preserve their welfares with their existing capacities (Abid and
Ashfaq, 2015). Apex level talks and diplomatic consultations are traits of a robust
partnership between nations in a variety of fields, such as industrial ventures, development
programmes, defense, infrastructure and other areas of cooperation (Noor et al., 2008).For
decades, China was deemed as a ‘sleeping giant’ that has awakened and now playing a key
role not merely in South Asia but in the entire world. President Xi Jinping’s predecessor
Xiaoping followed a conservative foreign policy based on “hide your strength, bide your
time, never take the lead”, however the current premier, President Xi, calls for a more
vigorous, activist and assertive foreign policy, and dreams of a “strong and powerful”
Chinese state.
The Peoples Republic of China (PRC) and Pakistan’s relations date back to 1950 — very
soon after the creation of the PRC. The long history of camaraderie between the two is
underlined by mutual trust and assurance. Mao Zedong, the Chairman of the Chinese
Communist Party announced that the PRC was ready to establish diplomatic ties “with any
foreign government willing to observe the principle of equality, mutual benefit and mutual
respect for sovereignty and territorial integrity” (Mahdi, 1986). Pakistan, in 1950,
responded to his call by recognizing the PRC. In 1954, Chinese Premier Chou En-Lai
made a statement that summed up one consistent aspect of the Chinese foreign policy by
stating that “.… all people should have the right to choose their own state system and way
of life without interference from other nations .… revolution cannot be exported” (Mahdi,
1986). In spite of believing in an absolutely opposing ideology, Pakistan accepted the
Chinese notion at first, thus, rendering it possible for two states with different socio-
political systems to establish durable ties. Secondly, Pakistan was convinced that the PRC
246
harbored no designs of territorial aggrandizement against her neighbors. Thirdly, Pakistan
concurred with the Chinese that there was no actual ‘conflict of interests’ between the two.
Therefore, Sino-Pak relations were founded on a very cordial footing. Maintaining a
wholesome connection with China has been a vital feature of Pakistan’s foreign policy.
Pakistan helped China in sustaining the balance of power in the region (Iqbal, 2015). The
Chinese President, Hu Jintao (2003) explained China’s “Good Neighbor Policy as part of a
strategy of peaceful development which China sought to promote as an interdependent,
rather than competitive, relationship with her neighboring countries and the world” (Iqbal,
2015). In 1966, armed assistance between China and Pakistan began, in 1972, strategic
partnership was developed and in 1979, economic collaboration commenced. The
relationship is said to be ‘higher than the mountains’ and ‘deeper than the oceans’.
Following are a few key events in Pakistan and China relationship. In September 1950,
Pakistan voted in favour of a resolution challenging the right of the Nationalist Chinese
representation in the United Nations, and asked for the seating of the true representative of
the Beijing government. Pakistan also supported the ‘One China Policy’ and in 1951, trade
relations between the two were firmly established.
In 1954 and 1955, Pakistan joined SEATO and CENTO respectively due to her search of
security against India (Syed, 1974). These pacts were initiated as a cordon solitaire to
contain the Soviet Union and China. Meanwhile from mid fifties to early sixties, Sino-Pak
ties were somewhat dented. The decade of the sixties eventually saw a consolidation of the
Sino-Pak friendship. In 1961, Pakistan viewed her role as an ally of the West, and renewed
her links with China as well. Pakistan again voted for China’s seating in the United
Nations.
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The Peoples Republic of China also offered military, technical and economic assistance to
Pakistan. China has been a sturdy supplier of military apparatus to Pakistan since 1962,
along with establishing ammunition factories and providing technical support. During and
after the Sino-Indian border conflict of 1962, vast quantities of weapons began to pour in
India from the US, radically upsetting the power balance in the region. Washington
insisted that the arms were intended to hold the line against China, Pakistan, however, had
no assurance that these arms would not be used against her. Beijing taking cognizance of
Pakistan’s policy shift, in 1961, announced her willingness to resolve the Sino-Pak
boundary conflict. Both the countries formally agreed to locate and align their common
border and in 1963, a border agreement was concluded. In 1963, Pakistan and China
entered into an agreement granting each other the most favoured nation status in trading
and shipping, thus, furthering their trade relations. In 1963, due to Pakistan’s changing
perceptions and developments in Pak-China friendship,
Washington postponed a $ 4.3 million fund to Islamabad. Later that year, the US Under-
Secretary of State, George Ball visited Pakistan and tried to convince President Ayub that
China was a real threat to the subcontinent and that India and Pakistan needed to cooperate
on matters of defence and that the Pak-China friendship also violated the spirit of the Pak-
American alliance, but President Ayub did not agree. During the same year, China for the
first time abandoned her neutral position on the Kashmir issue and endorsed Pakistan’s
stand for a plebiscite. In February 1964, Chou and Ayub issued a joint statement and
expressed the hope that the Kashmir problem would be determined “in accordance with the
wishes of the people of
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Kashmir as pledged to them by India and Pakistan” (Butt, n.d). Post the Tashkent
Agreement, Pakistan rejected the Brezhnev Doctrine because it was directed against
China’s interests.
Later in 1964, China gave a $ 60 million interest-free loan to Pakistan.During the Rann of
Kutch dispute and the 1965 Indo-Pak war, China supported Pakistan’s position against
India and provided her with military equipment during the war when the US had cut off
supplies of weapons – the main source of weapons for Pakistan. On the other hand, India
continued to receive weapons from the Soviet Union. Later in 1966, Pakistan and China
made an agreement to develop a heavy machinery complex at Taxila. The 1970s brought in
marked contrast to the 1960s given the external forces and pressures that Pakistan-Sino
friendship had to bear. In the Indo-Pak war of 1971, China failed to aid Pakistan but
supported her later in the United Nations. In 1978, the Karakoram highway linking Gilgit
with China was formally opened. Later on, Pakistan built a 300-megawatt nuclear power
plant with the help of the Chinese. All this became the foundation of a new era in the
bilateral relations between the two countries, which have continued to be uninterrupted till
to date.
II. GEO-STRATEGIC COMPULSIONS IN PAK-CHINA RELATIONS
China in the early period of her inception opted for a closed-door policy. Pakistan-China
strategic relations began after the two countries signed the Border Agreement in 1963,
which was intended to counter Indian and regional American influence. The bond between
Pakistan and China is, therefore, crucial because it enables China to limit Indian ambitions
to rise as a regional power, to counter-balance the emerging US-India partnership and to
enhance her standing against India. The US is desirous of maintaining a situation wherein
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she remains a dominant actor in the region; the US-India Civilian Nuclear Agreement
signed by President Bush in 2006 reveals this aspiration. Resultantly, the US is firm on
holding its military presence in the region particularly in Afghanistan. She is dynamically
engaged in a “strategic” rapport with India to buttress her regional dominion with a vision
to check China’s admission to the Persian Gulf and the Arabian Sea through Pakistan.
India attained a convenient umbrella to follow her own time honored antagonistic agenda
against Pakistan. In spite of the coalition with Pakistan in the war against terror, the US is
employing all means, both overt and covert, to pressurize Pakistan in sustaining her agenda
in the region. Moreover, India’s Pakistan mania, her hegemonic designs and territorial
clashes further strengthened ties between Pakistan and China so that India’s anti-Pakistan
aspirations may be checked.
China’s opening up overlapped with the Soviet breakdown and this shaped prospects for
China to develop her economic scope in Central Asia, meanwhile the newly liberated
Central Asian Republics (CARs) were also worried about their economic improvement.
The strategic alliance between Pakistan and China, that was previously intended to counter
Indian and regional American influence, opened up new dimensions of economic activities
and infrastructure development in the region. The regional policy, from China’s
perspective, consisted of generating a synergy of collaboration in matters of trade and
energy with the CARs and contiguous states for mutual development. Pakistan, in these
circumstances, acts as a regional prop of China and Central Asia that can play a part in her
own domestic progress along with development in Central Asia by increasing trade,
transport and energy links. This cooperation would also be beneficial for the whole region
and the small states, especially the energy-rich CARs. In order to fulfill the strategic needs
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of China, Pakistan always supported her development policies and halted instability in the
Xinjiang province from the Uyghur-related militancy.
III. SINO-PAK TRADE RELATIONS: A BRIEF HISTORY
China, the biggest neighbor of South Asia, has projected soft power towards the region.
She is the world’s second largest economy. With the increasing economic and social
developments, China is hovering to play a central role in every area of international
relations while positioning herself as a centre of growth (Bahera, 2015). “Since 1978, she
has pursued a policy of gradual transition from a centrally planned economy to a market-
based economy coupled with an ‘open door’ policy that involved substantial liberalization
of international trade and investment regime” (Tennakoon, 2012). Improved port
connections, more roads, up gradation of border infrastructure and deepening political and
trade relations are rapidly altering the entire range of China-South Asia relations. Chinese
goods can be seen everywhere – by developing port facilities in this region; she will open
and expand markets for goods and services. Pakistan and China have convergent interests
and shared goals for a common stake of regional peace and stability. China has
transformed her contiguous zones into a commercial nucleus. Pakistan and China
established trade and commercial ties in the 60s. In 1963, the first bilateral trade agreement
was signed between them. In 2006, and later in 2009, both countries signed Free Trade
Agreements (FTAs). China is Pakistan’s greatest economic hope and the second-largest
trading partner after the United States. Mutuality of interests and growing economic
relations mainly in areas of trade and investment are the hottest trends. Both sides have
inked numerous agreements in the field of economic cooperation and free trade. With the
changing regional and international apparatus after 9/11, Pakistan-China relations took a
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new dimension of understanding and cooperation. In 2002, China started to heavily invest
in the Gwadar deep-sea port. In 2008, a railway via the Karakoram Highway to connect
China’s rail network to Gwadar Port was approved for construction. In 2013, the Gwadar
port was handed over to the state-run Chinese Overseas Port Holdings after earlier being
managed by Singapore’s PSA International (Small, 2015). Beijing is also believed to be
involved in transforming it into an energy transport hub (Panday, 2012). China Pakistan
Economic Corridor (CPEC) – the latest mega venture between the two nations – shall
accomplish its politico-economic purposesvia trade and development and will be effective
in generating constancy in
South Asia. Subsequent to its completion, it will function as a crucial and focal point for
trade amongst China, Middle East and Africa. The corridor will shorten the 12,000 km
long route that takes the Middle East oil to the Chinese ports (Abid and Ashfaq, 2015). In
May 2014, Pakistan and China signed a deal to commence a Metro Bus project in Lahore
and an Orange Line track would also be built. In April 2015, 51 memorandums of
understandings (MOUs) were concluded, along with the plan of the CPEC. The bilateral
trade along with deeper economic integration through linkages in trade, energy,
communications, infrastructure, and connectivity will strengthen the process of economic
development and a prosperous destiny may be shared. Annual trade between Pakistan and
China, according to latest statistics, has increased from less than US $ 2 billion in 2006 to
US $ 16 billion by 2015, and with a 12 percent annual increase (The Nation, 20 March
2015) it is expected to further increase to US $ 25 billion by 2017, therefore further
consolidating the relationship.
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IV. THE ‘BELT AND ROAD’ POLICY
The “One Belt One Road” plan incorporates an area with a population of 4.4 billion and a
total economic volume of US $ 21 trillion, which is 29 percent of the world’s total (Liping,
2015). It is envisioned that the plan would knit much of Asia, Europe, Africa, and the
Middle East more close via latest infrastructure and free trade zones (Catanza et al., 3 July
2015).
V. CPEC AND ITS GEO-STRATEGIC DYNAMICS
CPEC is another milestone in the development of Pakistan-China relationship. Pakistan is
a significant strategic partner for China in order to get access to the Central Asian
economies, Southern Asian region, Africa and Middle East. The deep-sea port of Gwadar
offers direct access to the Indian Ocean and beyond (Abid and Ashfaq, 2015). With this
insight, Pakistan allowed Chinese direct investment as China is elevating her levels of
economic development and her strategic status in the Indian Ocean. In the milieu of
altering regional and international scenarios, CPEC, in order to safeguard common
interests, represents a model of cooperation, coordination and strategic communication
between China and Pakistan to reinforce connectivity in areas of trade and economy with
states in the region to fulfill increasing energy needs and enhance exports.
As the CPEC is said to be a game-changer (Iqbal, 2015), Pakistan may become a nucleus
of trade and commerce that will establish numerous trade and economic zones, roads and
railways infrastructure. If the corridor becomes operational, it may enhance economic and
trade collaboration in the area that will truly contribute to attaining regional peace and
stability (Sial,
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2014). Chinese Premier Li Keqiang visited Pakistan in 2013 and unveiled the proposal to
construct the CPEC. The Chinese President Xi Jinping visited Pakistan and brought
forward the prospects of stability for Pakistan in the future (Irshad, Xin and Arshad, 2015).
The passageway is situated where the Silk Road Economic Belt and the 21st century
Maritime Silk Road meet reflecting that regional amalgamation is an unavoidable measure
that needs to be taken to satisfy the demands of a globalized world. Hamilton’s (an
American consulting firm) famous geopolitical thesis of the development of a ‘String of
Pearls’ by China reflects the aspirations of the Chinese state to establish and exert its
geopolitical influence over major communication choke points on the Indian Ocean and it
does so by magnifying its naval presence in the Ocean. The interest of China in the
development of the Gwadar port reflects its ambition of further strengthening its presence
in the Indian Ocean. About 80 percent of China’s oil passes through the Strait of Malacca –
the dependency on this particular maritime passageway renders China to develop its naval
power in the Indian Ocean.
VI. GWADAR PORT AND ITS SIGNIFICANCE
The Gwadar port will operate as a tail of the New Silk Road, which will connect China’s
Kashgar to different communication networks (Abid and Ashfaq, 2015). It holds an
essential position in the CPEC venture …. Located close to the Strait of Hormuz, through
which about 40 percent of the world’s oil supply flows. “Gwadar as a key shipping point
could play a key role in ensuring China’s energy security as it provides a much shorter
route than the current 12,900km route from the Persian Gulf through the Strait of Malacca
to China’s eastern seaboard” (Chowdhury, 2013). The port is intended to change Pakistan
into a center of “commercial activities among the energy rich Gulf and Central Asian
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states, Afghanistan, and China, and to offer the Pakistan Navy with strategic depth beside
its coast as a marine base” (Syed, 2013). Gwadar will also permit China to expand her
import routes for crude oil and broaden her influence in the Indian Ocean.
The CPEC shall play the role of an energy corridor for China, as it lets China import oil
from a much shorter route. The CPEC also holds much geostrategic significance …. it will
put Pakistan and China in a strategic and beneficial position on the Arabian Sea, further
aggravating Indian concerns.To counter the Gwadar port, India is investing in Iran’s
Chabahar port. The Chabahar port will provide access to India to the Arabian Sea from
another point, and will also help the landlocked Afghanistan, which has established strong
and intimate ties with India.
VII. GEO-ECONOMICS: REAPING ITS BENEFITS FROM PAK-CHINA
RELATIONS
Geo-economics is defined in two different manners: “as the relationship between economic
policy and changes in national power and geopolitics; or as the economic consequences of
trends in geopolitics and national power. Both the notions that ‘trade follows the flag’ (that
the projection of national power has economic consequences) and that ‘the flag follows
trade’ (that there are geopolitical consequences of essentially economic phenomena) point
to what is called geo-economics” (Baru, 2012). The US skeptically views China’s rising
economic power – it is said that the ‘Beijing Consensus’ is taking precedence over the
‘Washington Consensus’. International game changing institutions such as China’s Asian
Infrastructure Investment Bank (AIIB) are facilitating China in achieving its geopolitical
goals and in its global economic proliferation. When Britain signed up for the AIIB,
analysts asserted that Britain has now become a player of China’s global geo-strategic and
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geo-economic game. The CPEC and the new Silk Road are also said to be Chinese
instruments in its geoeconomic game.
Geo-politics and geo-economics are interrelated, however the latter might outmaneuver the
former as the use of armed forces has now become rare and war by commercial means is
now the principal focus of global clashes. Therefore, “geo-economics reflects the
interdependence of global and national economies” (Khan, 2003). The global politics of
the twenty-first century have assumed a new demeanor. Competition among countries has
taken a new form; competitors
are now more interdependent. With the switch away from bipolarity, globalization grew
and geo-strategic primacies were reformulated to give more emphasis to geo-economic
considerations. Regionalism, within the process of globalization, gained significance in
making regional cooperation frameworks that focused on economic integration and
common development.
The world has therefore become interdependent in bilateral, regional and intra-regional
contexts. The economic integration between regional actors is deemed to be a source of
global prosperity and peace. South Asia is one of the least integrated regions in the world;
where intra-regional trade is only 3-5% of the total trade of the region, representing just
over 1% of regional GDP (Tyagi, 2015). For trade and development, states in the region
must come together. China is concerned with the economic development and stabilization
of the region especially her southwest flank - Pakistan and Afghanistan. Now Pakistan and
China are attempting to create a new alliance, outside military cooperation, through
economic cooperation that will further cement the Pak-China friendship. The proposed
economic corridor of around $ 46 billion (that is around 20 per cent of Pakistan’s annual
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GDP), measuring around 3000 km, and offering Pakistan with required economic
infrastructure, will link the northwestern region of China’s Xinjiang province with the
Gwadar port in Pakistan via roads, railways and pipelines network. By connecting its west
to the Gwadar port, China aims at speeding up its economic development, as it is the
closest outlet than any Chinese coastal port. The economic corridor will benefit trade
between China, Pakistan, India, Afghanistan and eight other Central Asian states flanked
by both China and Pakistan.
China’s current greatest concern is energy security. Presently, its oil shipments pass
through the Strait of Malacca …. the Chinese are under a constant threat of a US blockade
of the Strait. Henceforth, a more reliable and shorter route via Pakistan is the solution to
China’s energy security issue.
The CPEC will provide the Chinese proximity to the mineral-rich areas
of Pakistan and Afghanistan – further fulfilling its energy security agenda. It is also worth
mentioning that the CPEC shall also give the Chinese contiguity to the oil and gas reserves
of Iran, the untapped gas reserves of Afghanistan, and to the gas and unexploited oil
reserves of Balochistan. China has been heavily investing in Africa in the recent past few
years; in 2008 the figure was US $ 7 billion and it reached a whooping US $ 26 billion in
2013 (Wharton School, 2015). The West is greatly worried about the ‘burgeoning
influence’ (The Economist, 2015) of the Chinese in the African continent, as the Chinese
have increased their investment and trade levels with the African states considerably.
Satisfying its African and Asian geo-economic scheme, the CPEC will also give the
Chinese a closer passage for trade with Africa and will also
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ease the transport of capital and machinery from China to Africa. India is dismayed by the
CPEC and stridently opposes the corridor passing through Kashmir. Premier Modi said
that the project was unacceptable and lifted the matter with China which she laid off by
asserting that it was just a business venture. India, with a huge economy, aspiring hard to
become a global power and wanting to expand her influence in Central Asia for trade and
energy transportation, has taken ardent interest in Iran’s Chahbahar Port. All the more,
Pakistan’s land routes could be used for trade through Chahbahar if the two countries
could confide through economic integration.
BENEFITS TO CHINA
Chinese growth strategies are export-led and for this reason she desires to expand trade
routes. From numerous projects including Gwadar project, China is likely to benefit
strategically and economically.
● An oil shipment from the Gulf to Strait of Malacca to China takes 45 days to reach its
destination, whereas via the Gwadar port, the same oil shipment will reach China in just 10
days.
● The project gives China access to the Indian Ocean and beyond.
● China will be able to advance her influence in Central and South Asia.
● China is the largest oil importer in the world. For her, energy security is of great concern.
A pipeline will shorten thousands of kilometers of ocean trek via Southeast Asia.
● The projected Corridor will shorten the route for China’s power imports from Middle
East by 12,000 kms (Jidong, 2013: 118).
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● A link will be offered to China’s undeveloped far-western region to deep-sea port of
Gwadar on the Arabian Sea via Kashmir through an intricate network of roads, railways,
pipelines, energy and business zones.
● The project will boost trade with CARs, the Middle East and Africa.
● Gwadar port gives China a strategic location in the energy rich Caspian Region.
● The deep-water Gwadar port at the mouth of the Strait of Hormuz is very economical for
China. She gets an opportunity to use the direct approach to Gulf of Aden and Persian Gulf
merely traveling 2500 Km on the existing Silk route.
● Gwadar Port can allow China to oversee the Sea Lines of Communications (SLOCs)
(just 460 km away from Karachi); to monitor the maritime US occupation in the Persian
Gulf, and the Indian Naval Bases of Gujarat and Mumbai. Approximately 60% of China’s
power resources approach from the Persian Gulf and are carried through this route (Ashraf,
2015).
● The management and usage of the Gwadar port under the Chinese lets China establish its
presence on the Indian Ocean and near the Strait of Hormuz. This also lets China add
Gwadar to its ‘string of pearls’.
BENEFITS TO PAKISTAN
Pakistan welcomed Chinese investments for social and economic development that are
likely to develop infrastructure, roads, highway, ports, and energy and communications
sectors.
● Gwadar port, on the Balochistan coast, is expected to encourage investments, boost trade
flows and serve as a regional hub for commercial traffic that can influence the geostrategic
milieu of the region. Pakistan will gain profits in transit fees (Azeemi, 2007).
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● Chinese marine presence is expected to advance Pakistan’s coastal defense. Gwadar will
also buttress Pakistan to check SLOCs starting from the Persian Gulf and bottleneck the
Strait of Hormuz (Jidong, 2013).
● The port will facilitate transmission of Central Asia’s huge power resources to world
markets.
● The inception of international trade via Gwadar will create new stakeholders in
Afghanistan that will help in normalizing situation in the war-torn Afghanistan.
● The project will boost trade with CARs and the Middle East.
● The project can fulfill Pakistan’s energy needs that are beyond her indigenous
production. It would make an effort to mend Pakistan’s dilapidated power infrastructure.
By 2017, some $ 15.5 bn worth of wind, coal, solar and hydro energy projects would be
materialized and add up 10, 400 megawatts of energy to Pakistan’s national grid
(Bhattacharjee, 2015).
● Outside the CPEC framework, China plans to build more than one billion USD worth of
infrastructure in Pakistan; including a six-lane 1,240 km expressway between Karachi and
Lahore which is scheduled to complete by 2017, up gradation of Karakoram Highway, and
modernization of transportation in Rawalpindi, Karachi, Lahore, and three other Pakistani
cities.
● Pakistan and China were geostrategic allies, and are now moving forward towards being
geo-economic partners also.
AREAS OF DISCOMFORT
The successful implementation and well-timed completion of the China Pakistan
Economic Corridor project is contingent upon several factors. The government of Pakistan
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and especially the government of Balochistan must ensure that the security environment of
the areas through which the CPEC will pass through is safe and protected. The Pakistan
Army has established a Special Security Division (SSD) for safeguarding the lives and
properties of the construction and administration personnel of the CPEC. Although the
bond between China and Pakistan is said to be indissoluble, it may become weaker due to
any misapprehensions between the two on the issue of the Uyghur militants, upon which
China has doubts that non-state actors in Pakistan train them, and these militants then
travel to China through the Xinjiang province.
Another factor that may dampen the spillover benefits of Pakistan and China’s geo-
economic alliance is Pakistan’s participation in the War on Terror (WoT). The WoT has
led to the destruction of life and property in Pakistan and has gravely affected peace of this
nation. However, the ongoing Operation ‘Zarb-e-Azab’ against militant outfits in North
Waziristan, which is contiguous to Afghanistan, has led to a reduction in the terrorist
attacks in
Pakistan. In September 2015, The Washington Post published a report and stated that
Pakistan has seen a 70% decline in the annual number of terrorist attacks. Lack of good
governance, widespread corruption and incompetent public institutions add to the list of
the concerns of the Chinese government and companies willing to invest in Pakistan.
VIII. CONCLUSION
Traditionally, the main motives behind the strategic alliance and close collaboration
between Pakistan and China were to counter India’s increasing influence, regional
American influence and to sustain the balance of power in South Asia. It appeared that
ever since the Bandung Conference at which Pakistan and China came close to each other,
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developments in the relations of the two countries had been watched with apprehensions
by India. With the changing international scenario, due to the process of globalization,
trade and economic relations started between Pakistan and China. The CPEC is a game
changer project under the emerging Chinese geo-economic scheme – a 2,000 km
transportation link from Kashgar, China to the Arabian Sea. Pakistan faces multiple
challenges in the execution of the CPEC project, yet it can yield many gains from this
pivotal scheme. Pakistan and China’s relationship is likely to bolster and become more
vibrant in the coming future as the attractive geo-economic dimension is intensifying and
deepening their geo-strategic alliance; thus, further fortifying and reinforcing their
association.
Annexure ‘C’
Survey Questionnaire
S.No Questions
Section ‘A’ ‘ Trade Corridors and Regional Connectivity’ 1 Are Trade corridors like CPEC modern means of connectivity?
2 Are trade corridors make countreis inter-dependent?
3 Can Economic interests influence political interests?
4 Will CPEC venture be a global game changer and a fate changer for Pakistan?
5 Will other regional countries join CPEC for collective economic development?
Section ‘B’ ‘Shadow of Indo-Pak Relations on CPEC’ 1 Will China work for settlement of Indo-Pak disputes?
2 Will tense Indo-Pak relations hamper CPEC’s successful operationalization?
3 Can Indo-Pak relations be normalized after CPEC completion?
4 Will any war between India and Pakistan hurt the economic interests of China?
5 Will china safeguards Pakistani interest in UNO?
Section ‘C’ Trajectory of Chin, India and Pakistan Relations’ 1 Will China spare India to disrupt the successful implementation of CPEC?
2 Can Indo-Pak issues be resolved through mediation of China?
3 Will CPEC reduce chances of war between India and Pakistan?
4 Sooner or later, will India join CPEC or OBOR?
5 Is the CPEC an opportunity of regional peace?
