This report analyzes the implications and significance of the One Belt One Road Initiative, specifically focusing on the China-Pakistan Economic Corridor. It explores the potential impact, challenges, and policy strategies of this mega-project, highlighting the need for better security and coordination between the two countries.
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Running head: ONE BELT ONE ROAD INITIATIVE ONE BELT ONE ROAD INITIATIVE Name of the Student Name of the University Author Note
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1ONE BELT ONE ROAD INITIATIVE Executive Summary The report aims to find out the essential implication of the One Belt One Road initiative concerning China and the other partner countries. The China-Pakistan Economic corridor is selected as the part of the OBOR initiative that is to be analyzed and evaluated. The aim is to find the essential prospects of CPEC within the wider framework of OBOR. The study have provided the essential background of the mega-project between Pakistan and China. Moving forward the significance, impacts, challenges and policies that are significant factors affecting the progress of the project have been analyzed and evaluated. Recommendations have been provided considering the same. The implications have pointed towards the need for better security and coordination between the two countries that can enhance the prospects of CPEC. The project was found to positively contribute to the economic growth of Pakistan and consolidation of the economy of China.
2ONE BELT ONE ROAD INITIATIVE Table of Contents Introduction......................................................................................................................................3 Case study context: China–Pakistan Economic Corridor................................................................6 Significance of the OBOR strategy in the given case......................................................................8 Potential impact and implications..................................................................................................11 Freight and operational challenges................................................................................................13 Key policy strategies......................................................................................................................15 Recommendations and key actions................................................................................................17 Conclusion.....................................................................................................................................18 References......................................................................................................................................19
3ONE BELT ONE ROAD INITIATIVE Introduction The report is based on the One Road One Belt Initiative by China. The significance of transport corridors and maritime routes are evaluated and discussed through the study. The government of China in 2013 took an initiative towards the establishment of a Silk Road Economic Belt. Moreover, the concept of a 21stCentury Maritime Silk Road was also brought forward (Ijaz 2018). The most important functions of these corridors that are created is to facilitate the effectiveness of trade and commerce for the participating countries. The positive growth of the economy of the participating countries is also another major function of the initiative. The development of the route has required heavy funding and investments largely from the side of the Chinese government and also from the part of some of the partner countries. Two main corridors are the main focus of the initiative. One is the Bangladesh-China-India-Myanmar Economic Corridor and the other is the China-Pakistan economic corridor. The main focus of the study is to find out the advantages and disadvantages of the OBOR initiative. The selected corridor for the study is the China-Pakistan economic corridor. The corridor is to provide China access to the Indian Ocean with the port of Gwadar in Pakistan. The significance of the China- Pakistan economic corridor towards the economic development of both the countries are discussed through the study. Additionally, the impact of the same on global trade is also an important aspect to be focused in the report. The management of the OBOR is analyzed and evaluated. The implications of the analysis can help in further understanding of the economic benefits that can be derived from more such initiatives.
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4ONE BELT ONE ROAD INITIATIVE Case study context: China–Pakistan Economic Corridor The China-Pakistan Economic Corridor is also known as the CPEC. It contains a number of currently under construction infrastructure projects that are taking place in Pakistan. The original value of the entire project was estimated to be 46 billion US Dollars. However, as of 2017 the value of the project has increased to 62 Billion dollars (Hali, Shukui and Iqbal 2015). The rapid development of the economy of Pakistan is one of the major concern of this project. The project hence also focuses on the creation of better infrastructure, energy projects and special economic zones in Pakistan. The project is to cover the entire length and breadth of Pakistan. The corridor project became partly operational in 2016 as China transported cargo over land to the Gwadar port of Pakistan (Rehmanet al.2018). The cargo was later sent to Africa and Western Asia on special sea route shipments. In 2017 some of the major projects for power generation were commissioned. The strategy is also focused towards strengthening the relationship between Pakistan and China. The initiative focuses on building a large number of highways that will cover a large part of Pakistan. The agreement between the government agencies of Pakistan and China is focused towards also creating a large railway network that facilitates transnational transportation. The vast network is focused towards providing support to the currently dilapidated condition of the existing transportation systems in Pakistan for which the country can incur an estimated 3.55 per cent loss on its annual GDP. The modernization of the existing transportation networks in accordance of the plans of the CPEC aims to connect the seaports located in Gwadar and Karachi to Northern Pakistan. Subsequently, the connection will be extended to the western regions of China and parts of Central Asia. A motorway is under construction that is to be 1100 kilometers long and will connect the cities of Karachi and Lahore. There is also the proposal for complete
5ONE BELT ONE ROAD INITIATIVE reconstruction of the Karakoram highway which will be from Hasan Abdal stretching up to the Chinese Border. There will be proposed further up gradation of the main railway line between Peshawar and Karachi. Train travel will be facilitated up to 160 kmph. This is to be done by the year 2019. The railway netwoek of Pakistan is to be extended to eventually connect Xinjiang Railway of Kashgar. Concession loans will be subsidized with a required 11 billion dollars. The project will further include investing 33 billion dollars in infrastructure of technology by private organization. This is to cater to the energy problems that are faced by Pakistan which amount to more than 45 hundred megawatts regularly. The project aims to make infrastructure that can provide more than ten thousand four hundred megawatts of electricity between 2018 and 19. Moreover, to power the projects fossil fuels will be utilized and other hydroelectric and wind- power projects are also being included for the same reason.
6ONE BELT ONE ROAD INITIATIVE Significance of the OBOR strategy in the given case The OBOR strategy is an ambitions yet well planned large scale mega-project that is aimed towards enhancing the economic growth and development of China along with the economies of South and parts of South-East Asia. The strategy is focused towards achieving significant development with regards to the economic potential of the developing countries of the region. However, the projects are not only focused towards improving the economic and trans- national business oriented activities of these regions. There will be significant impact of the OBOR on the optimal development of the regions that will be covered through the strategy. For example- there will be growth of employment, livelihoods, financial stability and ground level development. The significance of the OBOR strategy concerning China-Pakistan economic corridor is large and is intended to serve essential interests of both China and Pakistan. The rapid development of Pakistan is an important factor that makes the strategy even more significant (Bahooet al.2018). Pakistan is one of the largest South Asian country with a large population. Along with the infrastructural and economic development of Pakistan, the strategy will serve to positively impact the lives of a large portion of the population of the country. Electricity supply would increase leading to the betterment of the lives of people in the country that face severe issues due to shortage of power. The potential impact on Pakistan is estimated to result in the creation of more than 2 million jobs from 2015 to 2030 (Miller 2017). Subsequently, this can result in a more than 2% increase of the annual economic growth of the country. The country can experience economic stability and functional optimizations of the economic activities that takes place both within and internationally. The Domestic trade of the country is not optimally developed between the far off places. Hence, there is currently significant connectivity issues
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7ONE BELT ONE ROAD INITIATIVE betweenthevariouspartsofPakistan.Theinfrastructuraldevelopmentwillfacilitate transportation and logistics functions of the various organizations located in the country. The significance of the specific economic corridor for China is also great. The country currently does not have access to the southern coastal regions of South Asia. This means that the country has to take the longer routes of transportation for trade with Africa and West Asia(Ijaz 2018). This is the reason China have not been able to establish proper business relationship with the African or West Asian nations. This is especially the case with maritime trade which can boost the trade of a country like China greatly. Moreover, the corridor will strengthen the economic position of China in Asia as it will get access to both the eastern and western waters of the continent. The particular agreement with Pakistan will help the country to strengthen its economic ties with West Asia which includes the Middle East.
8ONE BELT ONE ROAD INITIATIVE Potential impact and implications The potential impact of the China-Pakistan Economic corridor could be revolutionary for the economic growth of Pakistan and result in the consolidation of China’s economic power. The potential impact of the OBOR and CPEC within the same can greatly develop a large part of South Asia. According to Bhattacharjee (2015) the instability, underdevelopment and conflict situation of the South Asian region will be greatly mitigated due to the cooperative avenues that are being taken. Positive levels of stability will be reached that can help to generate better relationships not only between the two concerned countries of CPEC but also between all the South Asian countries. This will be due to the much larger scope of OBOR that also includes another corridor that encompasses India, Bangladesh, Myanmar and other countries on the central and eastern front of South Asia. The economic impact of the CPEC will be great if all the infrastructural projects are effectively carried out. The generation of electricity, the better linkage of roads and the greater economic gains will contribute towards the increase in living standards of the areas that will be touched by the corridor. Especially there will be very significant development of the coastal areas of Pakistan. Gwadar and Karachi could develop world class port infrastructures that will help in their trade with the other significant trade partners of the country (Singh and Magray 2017). Pakistan has long standing trade relationship with the Middle Eastern countries. As a result of the CPEC the trade will be further strengthened. Moreover with China also engaging in trade a strong transnational trade economy will be established. As opined by Irshad (2015) China havebeendiplomaticsupportersofPakistanforalongtimedespitehavingsignificant ideological differences. Along with the economic impact there will be significant improvement in aspects such as improvement of educational standards, mass-media, diplomatic cooperation
9ONE BELT ONE ROAD INITIATIVE and the increased coordination of the thinkers and innovators of the nations. There will be more political security due to better connectivity and the frequent political tensions of Pakistan can be effectively solved. Some of the most important benefits that both the countries will be able to derive are in relation to greater mutual growth and development. China is a significantly developed nation and through the corridor there will be effective exchange of technology between the two nations. In the opinion of Wolf (2016) the greater impact of the economic corridor will be to link Asia with Europe, Middle East and Africa. The large scale land projects and infrastructural development of seaports will contribute greatly towards the enhancement of intermodal logistics. Pakistan and China are both home to large corporations that can increase their businesses manifold as a result of the corridor. A large part of the global geopolitics will be benefitted. Balochistan, Khyber Pakhtunkhwa and the tribal areas of Pakistan have been historically disadvantage however their potential towards being essential centers of global business while at the same time witnessing exceptional development themselves (Chaudhryet al.2017). In essence, the impact of the CPEC can pioneer the development of more such projects that can greatly contribute to strengthening world economy in general.
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10ONE BELT ONE ROAD INITIATIVE Freight and operational challenges The growth of infrastructurecan subsequently lead to the establishment of better connectivity. However, there can still be significant challenges that remain for the freight transportation activities that are to take place through the corridor. Other significant challenges are concerned with the effort that will be required for the establishment of effective transport infrastructure in some of the areas. Moreover, there remains a significant challenge with regard to the time it will take to establish a fully connected logistics network along with the other essential projects that will facilitate the same. There is also the challenge of growing instability especially in Pakistan due to terrorism and the influence of extremist and separatist groups in many areas of Pakistan as well as China. Hence, operational or freight related challenges can easily affect the developmental works. According to Wolf (2016) Pakistan has a long history of undertaking unsuccessful developmental projects. This issue is aggravated due to the unstable political situation of the country.Thiscancausesignificantoperationalchallengesthatcanaffecttheoverall effectiveness and success of the entire corridor. The mega-projects that take place in the country either frequently get stalled due to lack of proper vision or get disrupted due to political tensions that arise between the provinces. Granting local ownership also increases controversy at times and the developmental works get delayed. Concerning freight transport there are also other important challenges that have to be addressed. A significant portion of the road transport infrastructure will lead through places that have rugged terrain. Building roads in these regions can be very challenging. This would especially make things very difficult in case of the large containers that need to be transported. The Karakoram related infrastructural development can be greatly affected by this.
11ONE BELT ONE ROAD INITIATIVE As explained previously there are significant tensions that are present in the regions of Balochistan,KhyberPakhtunkhwaandthetribalareasthatcanaffectthepaceofthe developmental works. Another challenge for the operations will be the limited communication between Islamabad and the regions in which the CPEC projects are being implemented (Mustafa and Zafar 2017). There is lesser transparency and ongoing corruption. These factors can contribute towards the failure of the project. As mentioned previous some there can be significant freight challenges with regards to quality of roads and freight costs. Some of the areas have convoluted road connections that can result in greater transportation costs being incurred. The infrastructural developments can also get affected due to armed insurgency that is increasing in the specific areas where the projects are being carried out. In Pakistan areas of Balochistan and the Tribal dominated areas are witnessing armed insurgency leading to significant security concerns in relation to the freight systems (Ijaz 2018). Similarly in China the CPEC oriented developmentismostlytakingplaceinXinjiang,whichisalsofacingsignificantarmed insurgency and separatism. There is the presence of Uighur militants in the areas where the roads will be established.
12ONE BELT ONE ROAD INITIATIVE Key policy strategies It is important that both the countries engaged in the CPEC agreement make essential policies to facilitate the developmental projects that are being incorporated. Moreover, there is a need for policies that can tackle the challenges that are present with regards to the mega project. The policy strategies that are being implemented by Pakistan are in regards to controlling the political issues in Balochistan which has been identified as a significant high risk area (Ibrar, Mi and Rafiq 2016). The required policies however, need to address the areas of security and infrastructural challenges. Moreover, the policies should be focused towards facilitating the acquirement and transport of all the necessary resources that are required for facilitating the infrastructural development. In Pakistan, there needs to be policies that ensure significant levels of autonomy to the organizations that are involved in the developmental works. The projects should be held directly under the supervision of the Central Government of Pakistan. Pakistan should also develop policies that ensure that no regionalist tensions arise between the provinces involved in the development of the CPEC. Special zones can be create to facilitate and better administer the fast development of the required infrastructure. As of now security forces have been deployed by both the Pakistani and Chinese governments to provide security to the workers and engineering teams that are deployed in the areas of development. More than 12 thousand security forces have been deployed by Pakistan for providing security of the Chinese workers in Pakistan. China have also tightened the security of the insurgency hit Xinjiang area (Wolf 2016). Moreover, China has planned to send 4 ships to the security agency that is concerned with providing maritime security to the infrastructural development going on in the port areas. Policies should be made that greatly secure the most important areas concerning the CPEC. There is also a significant need to develop
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13ONE BELT ONE ROAD INITIATIVE policies aimed at subsidizing the costs of resources required for the developmental work. Policies are also required that facilitate the involvement and investments from other countries that can help to strengthen the mega-project. In essence, these policies can guide the progress and successful completion of the CPEC.
14ONE BELT ONE ROAD INITIATIVE Recommendations and key actions It is recommended that the countries provide more importance towards stabilizing the political issues that may arise with regards to the CPEC. There are significant political factors that can affect the progress of the infrastructural works that are taking place with regards to the corridor. Pakistan needs to develop policies that will stop any form of miscommunication and disputes that can arise between the central authority and the provinces or between the provinces. It is highly recommended that significant planning is done to facilitate the creation of a clean environment for the progress of the work. It is also important that timelines are strictly considered for the rapid completion of the various projects. There is the requirement for back up plans in case of projects that face unforeseen delays. In that case new timeframes have to be established to align the same projects with rest of the developmental works. As found through the study security is a great concern. Hence, it should be prioritized at all the levels of the developmental framework. Security forces should be deployed at places where significant insurgency or terrorist activities can take place. It is important to create a map of the areas that fall under this category. Cooperation, communication and mutual consent is much required for effective implementation of the CPEC and should always be prioritized.
15ONE BELT ONE ROAD INITIATIVE Conclusion The China-Pakistan Economic Corridor is found to be greatly beneficial for the entire region encompassing Pakistan, Western China and parts of Afghanistan. The pipelines that have been established for the developmental works are crucial for providing power to one of the most ambitious partnerships that have been ever created between China and Pakistan. However, it becomes important that the safety and security of the construction works in the conflict regions have to be essentially considered before implementing significant progress plans. The armed insurgency and growth of terrorism in these parts make it challenging for the tasks to be successfully completed in time. It is important that for obtaining the greatly positive desired results Pakistan and China take part in essential coordination, cooperation and communication with each other. The CPEC is significant to the development of the entire western front of South Asia.
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16ONE BELT ONE ROAD INITIATIVE References Bahoo, S., Saeed, S., Iqbal, M.J. and Nawaz, S., 2018. Role of China-Pakistan Economic Corridor in Pakistan’s Trade, Investment, Energy, Infrastructure, and Stock Market.Journal of Independent Studies & Research: Management & Social Sciences & Economics,16(1). Bhattacharjee, D., 2015. China Pakistan economic corridor.Available at SSRN 2608927. Chaudhry, I.S., Gulzar, F., Ahmad, H.G. and ur Rahman, S., 2017. Impact of China-Pakistan EconomicCorridor(CPEC)onPakistan'strade:EmpiricalEvidencefromGravity Model.Review of Economics and Development Studies,3(1), pp.29-38. Hali, S.M., Shukui, T. and Iqbal, S., 2015. One belt and one road: impact on China-Pakistan Economic Corridor.Strategic Studies,34(4), pp.147-164. Ibrar, M., Mi, J. and Rafiq, M., 2016. China Pakistan economic corridor: Socio-cultural cooperation and its impact on Pakistan. In5th EEM international conference on education science and social science (EEM-ESSS 2016)(pp. 179-183). Ijaz, M., 2018. Growth versus Development: The case of China Pakistan Economic Corridor. Irshad, M.S., 2015. One belt and one road: dose China-Pakistan economic corridor benefit for Pakistan's economy?.Journal of Economics and Sustainable Development,6(24). Miller, D.T., 2017. The China Pakistan Economic Corridor: Indicator of Chinese Strategic Energy Goals and a Challenge to the Open Procurement Status Quo.Jackson School of InternationalStudies.UniversityofWashington,SeattleWashington,web.isanet. org/Web/.../HKU2017-s/.../a30ae7f2-83ba-4b48-b15c-3ebbe670d948. pdf (25.12. 2018).
17ONE BELT ONE ROAD INITIATIVE Mustafa, S. and Zafar, A., 2017. China Pakistan Economic Corridor: Importance and Challenges for Pakistan and China.International Journal of Social Science and Economic Research,2(11). Rehman, A.U., Hakim, A., Khan, K. and Khan, I.U., 2018. Role of CPEC in development of trade, transport and economy of Pakistan.Romanian Journal of Transport Infrastructure,7(1), pp.77-92. Singh, S. and Magray, J.M., 2017. China-Pakistan Economic Corridor (CPEC), Its Impacts on Pakistan Economy.International Journal of Innovative Research and Advanced Studies. Wolf, S., 2016, June. The China-Pakistan Economic Corridor: an assessment of its feasibility and impact on regional cooperation. InSADF Comment, South Asia Democratic Forum (SADF), Brussels, Belgium. Wolf, S.O., 2016. China-Pakistan Economic Corridor (CPEC) and its impact on Gilgit-Baltistan. South Asia Democratic Forum (SADF). Zhang, R. and Shi, G., 2016. Social impacts assessment for China-Pakistan Economic Corridor investment activities.Energy,33, p.76.