China-Pakistan Relations: Historically, Pakistan and China have enjoyed close strategic ties, which transformed from a defense focus to economic cooperation with CPEC's Framework Agreement in July 2013.
CPEC's Role in BRI:
BRI Framework: CPEC is integral to China's Belt and Road Initiative (BRI), which comprises the Silk Road Economic Belt and the 21st Century Maritime Silk Road. The BRI was announced by President Xi Jinping during his visits to Kazakhstan and Indonesia in 2013.
Corridor Network: The BRI consists of six economic corridors, with two near the Gulf region the China-Pakistan Economic Corridor and the China-Central-West Asia Economic Corridor.
Significance for China and Pakistan: CPEC is envisioned as a 3,000 km network of infrastructure linking Kashgar in China's Xinjiang with Gwadar in Pakistan's Baluchistan, facilitating trade and investment opportunities for both countries.
Historical Context: China's interest in Gwadar predates the BRI, beginning in 2001, when China agreed to develop Gwadar and connect it through a coastal highway with Karachi.
Timeline:
Inception of CPEC: Formally launched in 2015 during President Xi's visit to Islamabad, CPEC marked a shift in China-Pakistan ties toward economic growth.
Core Areas of Focus: Gwadar port, energy projects, transportation infrastructure, and industrial cooperation. This formula represents the areas where both nations seek to prioritize investments and development.
Phased Implementation:
Early Harvest Phase (2018): Initial projects aimed to complete foundational elements.
Short-Term Phase (2020): Focus on accelerating infrastructure development.
Medium-Term Phase (2025): Broader, intermediate projects aiming to expand upon initial goals.
Long-Term Phase (2030): Projects are expected to fulfill the overall CPEC vision by creating lasting economic benefits.
Steering Committee: Oversees the strategic direction and annual reviews, with seven working groups focused on planning, energy, transportation infrastructure, Gwadar, industrial cooperation, socio-economic development, and international cooperation.
Annual Reviews and Planning: JCC's annual meetings provide a platform to evaluate past performance and strategize future investments, addressing challenges to maintain project momentum.
Direct Investments: Chinese investments in CPEC amount to $25.4 billion, generating substantial revenue, tax income, and job creation.
Job Creation: Over 192,000 direct jobs were created, significantly impacting Pakistan's employment landscape.
Government Collaboration: Some CPEC projects are supported by Pakistan's Public Sector Development Program.
Energy Sector: Completed 11 projects have added 8,000 MW capacity; an additional 1,200 MW will complete by 2024, with 3,100 MW projects planned.
Transportation Infrastructure: Approximately 888 km of highways and motorways completed, with another 853 km underway.
Communications: An 820 km fiber optic cable connects Rawalpindi to Khunjerab Pass, facilitating secure digital trade with China.
Partial Operationalization: Gwadar is gradually becoming a functioning commercial port with ongoing infrastructure developments.
Key Projects and Funding:
Strategic Leasing Agreement: China Overseas Port Holding Company manages Gwadar on a 40-year lease, investing $250 million in industrial development.
Additional Projects:
Pandemic and Political Hurdles: The COVID-19 pandemic, political instability, and security concerns affected CPEC's pace between 2019-2021.
Resumed Progress: In 2022, CPEC projects gained new energy, focusing on additional areas such as water resource management, climate adaptation, mining, agriculture, and renewable energy.
SCOs Strategic Importance: Formed in 2001, the SCO now represents about 40% of the global population and 30% of the world's economic output, with eight member states and several dialogue partners.
China's Investments and Trade:
Gas Pipelines: The China-Central Asia Gas Pipeline supports China's energy security.
Transportation Networks: Roads, railways, and customs hubs like Khorgos Gateway facilitate cross-border trade, strengthening regional ties.
2019 Pledge: Crown Prince Mohammed bin Salman pledged $20 billion for CPEC projects, including a $10 billion refinery and petro chemical complex in Gwadar.
Recent Developments: The refinery project was initially moved to Karachi but was revived in 2022.
UAE Investments: Plans include a $5 billion refinery along Balochistan's coastline, with a $1 billion investment in SEZs.
Qatar's Role: The Qatar Investment Authority has committed $3 billion for Gwadar projects, focusing on food storage and industrial facilities.
Potential Connection: Iran is interested in linking Chabahar to Gwadar via pipelines and highways, enabling energy exports to China.
Saudi-Iran Normalization: Facilitated by China, the Saudi-Iran thaw could enhance regional cooperation and support Iran's CPEC participation.
Trilateral Forum: Pakistan, China, and Afghanistan envision extending CPEC into Afghanistan for trade and development.
Security Concerns: Terrorism remains a barrier, but dialogues continue, as demonstrated in the 2023 Trilateral Dialogue.
Pakistan's Economic Revival: CPEC mitigates energy shortages, improves infrastructure, and generates industrial productivity. SEZS are key to future economic growth.
Benefits for Gulf Nations: GCC countries, through CPEC, strengthen economic ties with China and diversify trade and investment links in Central Asia.
Central Asia and South Asia Integration: Central Asia sees CPEC as a route to the Gulf; South Asia could benefit from broader trade connections if India-Pakistan relations improve.