China-Pakistan Economic Corridor and Its Implications

 CHINA-PAKISTAN ECONOMIC CORRIDOR AND ITS IMPLICATIONS

Introduction[pic 1]

China and Pakistan has been having strong bilateral trade and economic relations since years. China is the major trading partner with Pakistan both in terms of exports and imports. Trade and commercial links between Pakistan and China were established in 1963 when both countries signed the first long-term trade agreement. Both countries signed Free Trade Agreement (FTA) in 2006, under which Pakistan secured market access for several products of immediate export interest. Again in 2009, both countries signed the FTA on Trade in Services. [pic 2]

As per data of Pakistan Economic Survey, the volume of trade between Pakistan and China has improved from US$ 4.1 billion to US$ 9.2 billion with effect from year 2006-07 to year 2012-13, thereby representing an increase of 124%. China’s exports to Pakistan have increased by 1% during this period and Pakistan’s by 400 percent from around $600 million to $2.6 billion in the aforementioned period. China’s share in Pakistan’s total exports has increasingly developed from 4% to 10% from 2008-09 to 2013-14.

Development of the China-Pakistan Economic Corridor (CPEC) is likely to further improve the existing trade and economic relations among both countries. Chinese Premier Li Keqiang emphasized the need for construction of the CPEC during his visit to Pakistan in May 2013. Pakistani government has also shown interest for the project. The corridor will connect Gwadar Port in Pakistan to Kashgar in China. This will make the Gwadar a fully operational deep sea hot water port in the region. Gwader Port was opened for processes in 2007 and it was transferred to China Overseas Ports Holding, a Chinese state-owned enterprise in 2013. Gwadar is now evolving as a major deep water commercial port. The corridor will serve as a primary gateway for Chinese trade with Middle East and Africa.  It is estimated that construction of CPEC will shorten the route for oil supplies from Middle East to China by 12,000 kilometers as compared to the existing route.  [pic 3]

CPEC is comprised of enormous development project that will link the Gwadar Port to China through roads, railways, and oil and gas pipelines and through the optical fiber. The project also foresees the establishment of various economic zones along the corridor. [pic 4]

Major Projects of China Pakistan Economic Corridor

Projects in Gwadar Port and City:Gwadar is the heart of the CPEC with development of projects worthmore than $1billion at and around the port of Gwadar by December 2017. Improvement plans at Gwadar Port include construction of Breakwaters, Dredging of berthing areas and channels as well as the construction of infrastructure for Free Zone and EPZs port related industries. [pic 5][pic 6]