The Geopolitical Significance of the China–Pakistan Economic Corridor (CPEC)

The China–Pakistan Economic Corridor (CPEC) is a collection of projects currently under construction at a cost of about $50 billion that is now seen as integral within the One Belt One Road (OBOR) initiative. Projects under the umbrella of the CPEC are designed to strengthen the Pakistani economy by the overhaul and construction of major infrastructure projects, establishment of special economic zones and a significantly improved electricity supply.

In November 2016, the birth of the CPEC began in earnest when Chinese cargo was transported to the port of Gwadar for onward maritime shipment to Africa and West Asia. Infrastructure projects will span the length and breadth of Pakistan and will eventually link Pakistani seaports in Gwadar and Karachi to China’s northwestern autonomous region of Xinjiang via a vast network of highways and railways.

Infrastructure projects will be financed by heavily subsidised concessionary loans via the Exim Bank of China, China Development Bank, and the Industrial and Commercial Bank of China. Over $33 billion worth of energy infrastructure projects are to be constructed to alleviate Pakistan’s chronic energy shortages. A network of pipelines to transport liquefied natural gas and oil will also be laid as part of the project, including a $2.5 billion pipeline between Gwadar and Nawabshah to eventually transport gas from Iran.

Pakistan achieved a total generation capacity of 1,185 megawatts from renewable energy when the first wind power project under the CPEC was installed in Gharo. Pakistan is amongst the few countries in the world today producing over 1,000 megawatts of electricity from renewable energy sources and had been listed 39th in the renewable energy index. The present installed power generation capacity from renewable energy sources stands at 1,135MW, which includes 590MW from wind, 400MW from solar and 145MW from bagasse. Plans are in progress to increase power generation from solar and wind to 1,756MW and 1,000MW respectively within the next two years.

China’s interest in deepening economic ties Pakistan is hardly a surprise given the US’s diminishing interest in Pakistan. The fact that China’s goal was to invest in Pakistan’s infrastructure was always going to be greeted with enthusiasm by a nation which has struggled economically for many years.

The CPEC project is seen by China as a terminus point for a trade and energy corridor emanating from the Central Asian Region and offers them strategic and geopolitical advantage given the port of Gwadar is located not far from the Strait of Hormuz and at the mouth of the Persian Gulf. By developing the port of Gwadar, China are now able to conduct economic projects in Afghanistan and critically, one of their objectives is to use Pakistan as a pipeline corridor to procure oil and gas, particularly from Iran.

We continue to see the growing influence of China across the entire expanse of the OBOR initiative, with Pakistan also now a full member of the Shanghai Cooperation Organisation. Iran will figure prominently in this CPEC project and is projected to upgrade to a full member of the SCO in 2018, which are further indications of the growing influence of Iran not only in the Middle East.

It should perhaps therefore come as no surprise that the six nation conference on Afghanistan which started yesterday in Moscow included Russia, China, India, Iran, Afghanistan and Pakistan,.The US and NATO were not invited to this conference, so perhaps the US and Israel ought to take particular note of these developments.

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