The China-Pakistan Economic Corridor

Issues Details: 
Vol 10 Issue-3 Jul - Aug 2016
Page No.: 
Sub Title: 
A detailed analysis of Sino-Pak cooperation and China’s Geo-strategic Gains from CPEC
Compiled by the Defstrat Research Team
Saturday, July 23, 2016

The China Pakistan Economic Corridor (CPEC), is a collection of various infrastructure projects that would, besides the primary central purpose to establish a 3000 km communication link between Gwadar on Pakistan’s Makaran coast  to Kashgar in China’s Xinjiang province. 
These projects, which derive from several mutual agreements, would result in substantial infrastructure development in Pakistan particularly in its road, rail and energy sectors besides spurring economic activity and employment opportunities.
The initial estimated cost of execution of the proposed projects is approximately $46 billion.
The Projects of the CPEC Projects are:
Roadway Projects
Reconstruction of the Karakoram Highway : 
•             Upgradation of the 487 km section from Raikot to Burhan.
•             Construction of a four-lane access controlled highway of 59 Km between Burhan and Havelian. 
•             Construction of a 4-lane dual carriageway between Havelian and Shinkiari.
•             Construction of a 354 km two-lane highway between Shinkiari and Raikot.
Eastern Alignment from Burhan to Gwadar and Karachi:
•             Upgrading the existing Islamabad-Lahore Motorway (M-2).
•             Upgrading the Karachi-Lahore Motorway on its various stretches.
•             Karachi – Hyderabad (136 km): To be a 4 lane access-controlled Super-highway.
•             Hyderabad – Sukkur (296 km):  To be a Six-lane access-controlled motorway running parallel to the existing                 National Highway and Indus Highway having 7 interchanges and 25 bridges.
•             Sukkur – Multan (392 km): A Six-lane access-controlled Highway. 
•             Multan – Lahore (via Abdul Hakim) (333 km): Upgradation of both portions of this stretch - the102 km roadway between Khanewal and Abdul Hakeem and the 230 km stretch between Abdul Hakeem and Lahore. 
Western Alignment from Burhan to Gwadar: 
- A newly built six-lane controlled access highway from Burhan to Fateh Jung, Pindigheb and Kundal (on the Indus) to Yarik near Dera Ismail Khan (DI Khan).
- A 4 lane dual-carriage way spanning the 205 km to Jhob and on to Quetta.
- A 4 lane dual-carriageway from Quetta via Kalat to Surab where it would connect to Hoshab near Turbat in SW Baluchistan and connect with the newly completed road to Gwadar.
(Projects on the Western alignment are being executed by the Pakistan Army’s Forward Works Organisation, an administrative Branch of the Pakistan Army)
Central Alignment from Gwadar to Burhan: Long term plans had been drawn up for a “Central Alignment” to originate from Gwadar via Basima, Khuzdar, Sukkur, Rajanpur, Layyah, Muzaffargarh, Bhakkar, Mianwali, Attock and to Burhan where it would connect with the Karakoram Highway.
Other Roadway Projects:  In addition there are projects to develop other strategic roads as follows:
•             Upgradation of the 175 km road between Gilgit and Skardu. 
•             Two roads that form the 447 km between Quetta to Multan route provide a link between the Western Alignment and the Karachi-Lahore Motorway to be re-constructed. 
•             Link from Taxila through Peshawar and Torkhum to connect the Eastern alignment to Jalalabad in Afghanistan.
Railway Infrastructure Projects
•             Main Line 1 (ML-1) Railway: A complete overhaul of the 1,687 km Karachi to Peshawar ML-1 line.  The projects include dual-tracking of the Shadara-Peshawar section, construction of a spur from Taxila to Havelian (location of proposed dry dock), dual tracking of the Sahiwal-Raiwind section and upgradation works include computerized signal systems and fencing tracks in urban areas. 
•             Main Line 2 (ML-2) Railway: Upgrading the 1,254 km ML-2 from Kotri (Sindh) to Attock via   Larkana and Dera Ghazi Khan.
•             Main Line 3 (ML-3) Railway: A medium term plan to be completed by 2025 for the ML-3 proposes construction ofa 560 km stretch from Bostan (located on the Afghanistan border) to Kotla Jam (near Dera Ismail Khan) passing through Quetta and Zhob.
Energy Sector Projects.
Renewable Energy Projects: The renewable energy projects under the CPEC are:
•             Quaid-e-Azam Solar Park (Bahawalpur) A 6,500 Acre Park with an estimated capacity of 1000 MW stated to be the world’s largest solar plant. 
•             Jhimpir Wind Power Plant: Enhancing the existing power generation capacity by an additional 250 MW.
•             Suki Kinari Hydropower Project (Kaghan Valley, KPK) with installed generation capacity of 870 MW. 
•             Karot Dam: Arun-of-river concrete-core rock fill gravity dam on the Jhelum 65 km upward of Islamabad with an installed capacity of 720 MW.   
• Kohala Hydropower Project: A run-of-the-river hydro-water project with a capacity of 1100 MW on the Jhelum near Domel in Muzaffarabad District of POK.   
•             Dawood Windfarm at Bambhore, Sindh (with a production capacity of 50 MW).
Coal Powered Projects
Despite several renewable energy projects, the bulk of new energy generation capacity under CPEC will however be coal-based plants. These are:
• Thar-I Project: Two 660 MW power plants are being set up in the Thar coalfield of Sindh to be fired by locally sourced coal.
•             Thar-II Project: Two 330 MW power plants and a a coal mine capable of producing up to 3.8 million tons of coal per annum
•             Port Qasim Power Project: A 1320 MW capacity power plant being built as a joint venture between Qatar’s Al-Mirqab Capital and China’s Power Construction Corporation. 
•             Sahiwal Coal Power Project A 1,320 MW at Sahiwal, Punjab (being constructed as a joint venture to be owned and operated by two Chinese firms). 
•             Pind Dadan Khan Coal Power Plant: A coal mine and a 300MW coal power plant being developed in Punjab’s Pind Dadan Salt Range.
•             Hub Coal Power Plant (Baluchistan): A 660 MW to be built by a joint consortium of China’s China Power Investment Corporation and the Pakistan’s Hub Power Company at Hub in Lasbela District of Baluchistan. Capacity to eventually increase to 1290 MW.
•             Gwadar Coal Power Plant: A 300 MW coal power plant for the city and port of Gwadar. 
•             Transmission Lines from Matiari to Lahore and to Faisalabad: As infrastructure for electricity distribution from the Thar power plants.
Other power projects which are not part of the CPEC but also being constructed with urgency are:
•             Balloki Power Plant:  A 1,223 MW Power Plant is currently under construction near Kasur. 
•             Bhikki Power Plant: A 1180 MW Power Plant near Sheikhupura, expected to be Pakistan’s most efficient power plant, and provide enough power for an estimated 6 million homes.
•             Neelum Jhelum Hydro-electric Project (NJHEP) located 41 km upstream of Muzaffarabad envisages the diversion of Neelum waters through tunnels at Nauseri in POK.
•             Tarbela IV Extension Project to be completed in June 2017, would enable addition of 1,410 megawatts (MW) to the national grid. The Project is being constructed by the Water and Power Development Authority (WAPDA). 
LNG Pipelines: A711 km LNG pipeline from Gwadar to Nawabshah designed to be part of the 2,775 km Iran–Pakistan gas pipeline, with an 80 km portion between Gwadar and the Iranian border.
Gwadar Port and City: Gwadar Port will initially be expanded and upgraded to allow for docking of larger ships of up to 70,000 DWT and a breakwater is being constructed around the port besides a floating LNG facility with a 500 million cubic feet capacity to be connected to the Gwadar-Nawabshah segment of the Iran–Pakistan gas pipeline.  An Export Processing Zone of 47,000 acres and a Special Industrial Zone of about 4,000 hectares, Oil refinery of 1,000 and a residential area of 400 hectares a 300 MW coal power plant, a desalinization plant, and a 300 bed hospital besides a Pak-China Technical and Vocational Institute and most importantly, construction of the Gwadar International Airport.
Fibre Optic Connectivity:  An 820 km Cross border Optical fibre cable link from Rawalpindi to Kunjerab. 
Industrial Parks and Mineral Processing Zones: As many as 29 industrial parks and 21 mineral economic processing zones are to be set up across the four provinces of Pakistan at the undermentioned locations:
- Punjab: Sialkot, Gujranwala, Rawat, Lahore, Sundar, Multan and Vehari. Mineral processing zones are also proposed at the Salt Range (for antimony) and at Chiniot (for Iron ore).
- Sindh: Sukkur, Larkana, Karachi, Bin Qasim, Korangi Creek, Khairpur. Mineral processing plants are to be set up at Thar and Lakra (for coal).
- KPK: Hattar, Gadoon, Ghazi, DI Khan, Jalozai, Nowshera, Bannu, Chitral and Risalpur. Mineral processing plants are to be set up at Dargai and at North Waziristan (for Chromite), Kurram (for Antimony), Waziristan (for copper), Chitral (for Antimony), Besham (for Iron ore and Lead), Nizampur (for Iron ore), and Mohmand (for marble).
- Baluchistan: Quetta, Dostan, Gwadar, Khuzdar, Uthal, Hub, Dera Murad Jamali. Mineral processing zones are proposed at Khuzdar (for Antimony and Chromite), Chaghi (for Chromite), Qila Saifullah (for Antimony and Chromite), Saindak (for Gold and Silver), Reko Diq (for Gold), Kalat (for Iron ore), Lasbela (for manganese) Gwadar (Oil Refinery and Muslimbagh (for Chromite).
China’s Geo-strategic Gains from CPEC
The CPEC would as an alternative to the present long SLOCs on its maritime route which are over 10,000 kilometer long and faces a direct threat from India. 
As much as 60 % of Chinese energy is presently derived from coal.  CPEC provides a cost-effective oil import route which would change China’s energy mix. 
The US ‘Pivot to Asia’ strategy is in effect a ‘Contain China’ Policy and holds the prospect of blocking China’s trade routes. In such contingency, CPEC provides an alternative supply and trade route.
CPEC gives China opportunity to promote a “Look West” Policy to further its connect with Afghanistan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Russia and Europe.  The CAR States can be leveraged by China to use the CPEC and Gwadar as a trading link.
Gwadar Port leased to it provides China a locational advantage to compete with major Middle-eastern ports such as Abu Dhabi, Dubai and Doha, besides Iranian ports, including Chabahar.   
CPEC would help uplift the economy of Xinjiang Province which is home to over ten million Uighurs and augur peace and stability through energy and trade opportunities and job creation. It would complement China’s Western Development plan that also covers Tibet and Qinghai, besides Xinjiang.
Advantages to Pakistan from CPEC: Major economic and strategic advantages to Pakistan are:
•             CPEC elevates Pakistan-China relations to a new high in their existing strategic alliance. 
•             As China’s vital energy supply route would pass through Pakistan, China would be compelled by economic circumstances to support Pakistan’s security. 
• Chinese Naval assets at Gwadar would check India’s aspirations to dominate the Arabian Sea. On return after the lease period, it would be Pakistan’s second naval base.
•             CPEC gives Pakistan a boost to its sagging power generation capacity and boost industrial production.
•             Pakistan’s Road and Rail infrastructure would be upgraded.
• CPEC Projects and the Special Economic Zones would provide immense job opportunities to Pakistani youth.  
Security Concerns: There are several threats to the CPEC within China due to conflict between Muslim and the Han populations in Xinjiang and from the TTP and Waziristan Groups, Baluch and Sindh Groups in Pakistan. 
India’s stance on CPEC: India’s objections to the CPEC are on a point of principle that its projects are located and/or pass through POK which belongs to it. China has however dismissed these concerns terming CPEC as a “commercial project” that does not “target any third party”.