Economic and strategic implications of China Pakistan Economic Corridor (CPEC)

Abstract

China Pakistan Economic Corridor (CPEC) is one of the corridors of China's Belt & Road Initiative (BRI) which China first proposed in 2013. It is 21st Century version of the Ancient Silk Road with an aim to connect China with the rest of the world through road and maritime trade routes. Similarly, the planned outlook of CPEC manifests linkages with Central Asia, Africa and Europe. It comprises of roads, railway transportation networks, energy power plants, a port and special economic zones development, and cross border optical fibre cable installation (Ministry of Planning, Development and Reform, 2017). Given the history of mutual trust between the two countries, CPEC was approved in April 2015 without any resistance from either sides. While it serves China as a gateway to other regions, for Pakistan it has multi-fold relevance which is the main research theme of this dissertation. This research analyzes CPEC's economic implications for Pakistan and strategic implications for both Pakistan and China. While around 147 countries signed the BRI, the response has not been warm from all countries. While some consider it a part of China's strategic plan to gain dominion that will result into a new world order, others like India, are more concerned about regional hegemony. There is an on-going economic crisis that started with COVID-19 pandemic in 2020 and it got worse due to Russia's invasion of Ukraine. It will not be absurd to state that the biggest blow came in the form of energy supply shortages. This crisis serves as a reminder of how important it is to secure energy supply. However, China foresaw this looming crisis and this is one of the motivations behind BRI in general and CPEC in particular. If succeeded, CPEC will present China with a new trade route for its energy supply which currently goes through the Strait of Malacca. Furthermore, this research undertakes an in-depth analysis of several economic implications of CPEC; namely, how infrastructure investment may or may not alter the economic growth trajectory of a country and the role of redesigned supply chain and logistics in boosting local industry. Last but not the least, the much contentious topic of debt-trap is also discussed. The study relies on both quantitative and qualitative research methods depending on the nature of the designed research questions.