PAGE Blog Business Weekly Magazine
China-Pakistan Economic Corridor (CPEC) has the potential to usher in a new era of economic progress and prosperity for both countries benefiting the whole region as well. The project is expected to be “a game changer” not only for Pakistan and China but also for the whole region. Last month, Pakistan and China signed 51 deals, mostly related to CPEC, which will link Pakistan’s Gwadar Port on the Arabian Sea and Kashghar in China’s northwestern Xinjiang province, during two-day visit of the Chinese President Xi Jinping to Pakistan.
Gwadar Port, an essential part of the larger economic corridor project, will ultimately link China to the Arabian Sea. Gwadar-Kashgar connectivity through road and rail projects and related activities including trade transactions, goods transportation and storage facilities are likely to develop closer trade and business links among regional states. The CPEC project has implications for whole region including the Gulf countries. The proposed economic corridor will not only enhance trade between the GCC group of nations and southwest Asia, but it will also enable China to secure energy routes through Gwadar, a strategic seaport located in southwestern Balochistan province, near Strait of Hormuz and close to Middle East.
The two countries have discussed laying an oil pipeline from Gwadar Port to Western China. The proposed pipeline, which is a part of China-Pakistan Economic Corridor, could be extended and connected with Iran, which has already offered to supply crude oil. In the proposed corridor, Gwadar Port is likely to become a major outlet for trade between the China, Central Asia and the Gulf region. China has already taken the operational control of Gwadar Port where oil shipped from the Central Asia and the Middle East may be unloaded and transported overland to China through the proposed trade corridor. Gwadar is poised to emerge as a hub port providing facilities of warehousing, trans-shipment, transit and coastal trade and the commercial and industrial openings for international export-import trade.
The development of road and rail links between the two provinces, Balochistan and Xinjiang, will give distinction to Gwadar Port of becoming the gateway port for Western China. Rail link will transfer goods to and from Western China, changing it from a remote region into a station that will transfer goods and commodities worth billions of dollars every year. A fully operational Gwadar Port and establishment of port-related communications and links on regional level will bring China and Pakistan in the regional as well as global mainstream of geo-politics and geo-economics in near future. It will not only provide eastern China with cheap and secure sources of energy for its rapid development but also provide a boost to the development of Western China and Pakistan.
The proposed projects such as a gas pipeline from Iran to China via Pakistan, transfer of LPG from Middle East to China by using railway carriages and a major oil refinery at Gwadar can greatly reduce the time and distance for oil transport from the Gulf to China.
China and Pakistan are connected with the Karakoram Highway, which is a part of the silk route that links China, Pakistan, Afghanistan, Iran and Turkey. While addressing a gathering of students and academics in Beijing, the former President Pervez Musharraf in April 2008 had first floated the idea of building gas and oil pipelines between Pakistan and China. He suggested the gas pipeline from Pakistan’s south to the Khunjerab Pass, linking the two countries, would be raised till it crossed the Pass at 15,000 feet, thereafter more than half of the length would be in descent. He proposed that gas pipeline between Iran and Pakistan could be expanded to China. A year after the Musharraf’s proposal, Beijing showed interest to import about one billion cubic feet a day through the proposed Iran-Pakistan-China (IPC).
In 2010, China declared Kashgar, an important transit point on the ancient Silk Route and a gateway between China and Pakistan, as Special Economic Zone (SEZ). The proposed Kashgar SEZ would develop Xinjiang into a major trading hub and more energy and economic integration with South and Central Asia. The SEZs in Gwadar and Kashgar and the rail and road connectivity between the two proposed SEZs would have great economic, political and strategic implications for the whole region. On one hand, the two countries are working on laying the strategic Havelian-Khunjerab railway track in the difficult terrain of Karakoram connecting China with Pakistan from Gwadar in Balochistan. On the other hand, there are proposals to connect the Pakistan Railways with the trans-Asian railway network that will link the two countries through rail networks. This will facilitate trade to the Central Asian Republics (CARs), Russia and China and beyond.
After construction of the proposed rail, road and pipeline projects between China and Pakistan, Gwadar port will handle most of the oil tankers to China. In the present age of globalization, Gwadar has greater scope and tremendous potential to emerge as distribution and logistics hub in the region. It is because of its geo-economic importance that Gwadar was highlighted as the future port of global investors at an international conference on ‘Free zones, science and technology parks, enterprise zones’, held in Brussels in 2007. The conference was jointly organized by World Free Zone Convention (WFZC) and World Customs Organisation (WCO).
Slow progress in Balochistan
The deteriorating law and order situation in the restive Balochistan is the main reason for slow progress on port-related projects in Gwadar. Today, the province suffers from a separatist insurgency. It reels from sectarian terrorism and targeted killings on ethnic lines. It is not the ports and pipelines, which will bring peace and stability in the country but it is peace which will actually materialize the projects vital to economic progress and prosperity. Balochistan has ever remained on the political periphery of the country. The province has ever been at the receiving end. The long history of neglect and discrimination against the province and the military operations undertaken in the past and the one currently underway has turned it into a mega sensitive province.
