CPEC Facts and FAQs

The objective of this post is to understand the facts related to CPEC (China Pakistan Economic Corridor) in light of geo-political, economic and historical facts. I hope you will be able to find answers to the following most common questions related to CPEC:

  1. What is CPEC Pakistan?
  2. Why China provides strong financial support to Pakistan?
  3. What is the role of PMLN or PPPP government?
  4. Why political elites try to take credit of expected economic prosperity proposed by CPEC?
  5. What will be the future of Pakistan if there is no PMLN or PPPP in power?

Economic History of China

In order to understand dynamics of CPEC and its geo-political and economic implications, it is very important to read and learn about the less known history of China. I suggest reading following well written articles on Wikipedia:

  1. History of China
  2. Economic history of China before 1912
  3. Economic history of China (1912-1949)
  4. Economic history of China (1949-Present)
  5. Economy of China

In recent past, the average annual GDP growth rate of China was 10% (for past 30-years).  Chinese economy is labelled as the second largest economies of the world after United State of America. Eastern region of China was the major contributor to this milestone achievement. It’s very interesting to note that the GDP per capita of Eastern Region is US$ 15,000 on average whereas the Western Region (close to Pakistan and India) is less than US$ 2,000.  China’s mega plan is focused on gradual increment in the GDP per Capita of Western Region to make it equivalent or higher than GDP per capita of Eastern Region.

Global Growth Challenges post Financial crisis of 2007-2008

The global financial crisis of 2007-2008 was marked as the worst economic crisis in the history of the world. The impact on global economy was much deeper than the great depression. The Eurozone crisis further aggravated the situation, leading to slowing down the growth of western economies. Central banks of some countries had to drop interest-rates below 0% to support the economic revival cycle.

Since China was exporting goods and services to United States and Eurozone, therefore the aftermath of financial crisis of 2007-2008 and eurozone crisis severely hit the Chinese economy. In order to sustain the aggregate growth rate of 10%, the Chinese were left with only one option i.e., find and develop new markets. The smart Chinese government drafted a mega plan called One Road One Belt project to efficiently and cost effectively transport goods and services to Europe, South Asia and African nations.

Further reading:

  1. Financial crisis of 2007-2008
  2. Eurozone crisis

Political challenges in South-China Sea & CPEC

An estimated share of China is approximately 60% in global shipping and logistics industry. China’s imports and exports are carried out mostly via sea-routes through Strait of Malacca located in South-China sea. The region has territorial disputes between China, Indonesia, Malaysia, Philippines and Vietnam. The shipping-blockade can disturb US$ 5 trillion worth of global trade, which can severely damage economy of China dependent on import of energy, raw material and exports of goods.

One Belt One Road (OBOR) / CPEC Initiative

The One Belt One Road (OBOR) infrastructure initiative provides an alternate route to safeguard internal and external economy of China while bringing in value and benefit to economies of participating countries. In short, CPEC Pakistan is as important to China as Kashmir is to Pakistan.

Role of Bhutto (PPPP) and Nawaz Sharif (PMLN) government in CPEC

The above facts explicitly clarify the historical facts, geo-political and economic constraints faced by China to sustain growth rate of 10% for next few decades. China-Pakistan Economic Corridor (CPEC Pakistan) is the most critical part of complete OBOR project, as it this corridor is planned to be the next bi-directional import-export gateway for energy and raw-material imports and exports to emerging economies (Africa, Middle East and Europe).

The role of the Government of Pakistan is limited to facilitation as the major investment, technical and administrative support will be provided by the government of China. Infrastructure security is a must and Pakistan Military promised to take the responsibility. The role of political government is thus very limited in delivering and managing the CPEC related project. However, their major role is to safeguard the interest of the people of Pakistan by negotiating contracts and deals favoring economic development of its citizens.

After critically analyzing the past events related to CPEC Pakistan, the official plan is held secret. The general public nor the political parties have clear visibility of the complete plan. The official CPEC website has limited information. Government representative and stakeholders are reluctant to share information in seminars and conferences related to CPEC. However, the projects and related opportunities were only shared by the group close to the Nawaz Sharif family and elite members of the society.

Future of CPEC without PPPP and PMLN

The future of Pakistan in light of CPEC is bright and prosperous even without the active involvement of PMLN or PPPP government as the real success of this project is tied with people to people relationship between China and Pakistan. All the political parties are trying to miscommunicate and mislead the general public by linking the stability of the government with CPEC related development. However, the real fact is that parliamentarians (read post on Pakistani Parliamentarians and Democracy) from both the government PPPP and PMLN failed to attract foreign direct investment (FDI) in Pakistan in their respect tenures.

China’s plan is to establish industries in special economic zones, build energy and logistic infrastructure to support economic development of both countries. Since the political elites have vested interest in creating economic inequality to keep their families and relatives in power to seek long-term economic rents, therefore every political elite relentlessly tries to take credit of CPEC Paksitan and its related economic benefits to the people of Pakistan which is not true based on above facts.

As responsible citizens of Pakistan, we should elect responsible leaders with immecable character and integrity. Otherwise, we will continue to remain in viscious cycle and would never able to reap true benefits from CPEC Pakistan.