Analyzing the China-Pakistan Economic Corridor within OBOR Initiative

This report provides an in-depth analysis of the One Belt One Road (OBOR) initiative, with a specific focus on the China-Pakistan Economic Corridor (CPEC). The study examines the project's background, significance, potential impacts on both China and Pakistan, and the challenges it faces, including freight and operational issues. It also delves into key policy strategies and offers recommendations for improvements, emphasizing the importance of enhanced security and coordination. The report highlights the positive contributions of CPEC to Pakistan's economic growth and China's economic consolidation, exploring its implications for global trade and regional development. The analysis covers various aspects of the corridor, from infrastructure development and energy projects to the strengthening of economic ties and the potential for increased employment and economic stability in the region. The report also discusses the significance of the OBOR strategy in relation to the CPEC, the potential impact on regional stability, and the benefits for both countries, including technological exchange and enhanced intermodal logistics. The report concludes with a comprehensive overview of the project's implications for the future of trade, infrastructure and geopolitical dynamics.

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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.

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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

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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 21st Century 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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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 (Rehman et 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

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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.

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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
(Bahoo et 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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between the various parts of Pakistan. The infrastructural development will facilitate
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.

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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
have been diplomatic supporters of Pakistan for a long time despite having significant
ideological differences. Along with the economic impact there will be significant improvement
in aspects such as improvement of educational standards, mass-media, diplomatic cooperation

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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 (Chaudhry et 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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Freight and operational challenges
The growth of infrastructure can 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. This can cause significant operational challenges that can affect the overall
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.

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As explained previously there are significant tensions that are present in the regions of
Balochistan, Khyber Pakhtunkhwa and the tribal areas that can affect the pace of the
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
development is mostly taking place in Xinjiang, which is also facing significant armed
insurgency and separatism. There is the presence of Uighur militants in the areas where the roads
will be established.

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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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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.

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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.

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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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References
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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
Economic Corridor (CPEC) on Pakistan's trade: Empirical Evidence from Gravity
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Economic Corridor. Strategic Studies, 34(4), pp.147-164.
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