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Despite the current wave of rumors, CPEC is on track because it's critical for China. This article explained it very well and shows what's in it for Pakistan as well.
Huge Chinese trade boost for Middle East in the pipeline?
RICHARD WACHMAN | Published — Sunday 10 December 2017
LONDON: China aims to ramp up its economic and soft power in the Middle East as part of a wider offensive to bolster trade and national security, experts told Arab News.
The move is contingent on the development of a massive new trading hub at Gwadar port in Pakistan which lies at the southern extremity of the much-touted $55 billion China-Pakistan Economic Corridor (CPEC). The corridor is Beijing’s flagship infrastructure project which involves building an oil pipeline, refineries, power stations, roads and railways to boost trade from Gwadar on the Arabian Sea, northwards into western China. CPEC is one of the most important elements of Beijing’s new global network of Silk Roads, dubbed One Belt, One Road.
Critically, construction of the corridor and development of Gwadar is a way to convey crude and liquified natural gas (LNG) from Saudi Arabia and the Gulf into the Middle Kingdom, instead of having to go the much longer way through the Malacca Straits and South China Sea, a journey that takes at least an extra week for container ships.
In 2014, China imported an average of 6.1 million barrels of oil a day. Of that, more than 52 percent — or 3.2 million barrels — came from the Middle East with Saudi Arabia in the lead, according to a paper published in 2016 by the S Rajaratnam School of International Studies, Nanyang Technological University, Singapore (NTU).
Seen from that angle, little wonder China views CPEC as a vital strategic imperative: In the event of a conflict with the West, the US could blockade the Straits and choke off vital oil supplies. This is referred to as the “Malacca Dilemma,” where 80 percent of China’s oil imports traverse this potential chokepoint, said Gareth Price, a senior fellow at London-based Chatham House.
“CPEC offers the Chinese a hedge against blockade,” added Price. Yue Jie, head of China Foresight at the London School of Economics told Arab News, China will be the biggest single user of oil by 2030, according to the International Energy Agency. Additionally, Chinese oil imports have increased as a result of a steep fall in domestic production from the long-established Daqing and Shengli fields inside China, said Jie.
She added that protecting its mushrooming global strategic interests is forcing China to realign its policies and relationships in the region. China, for example, wants to expand its financial clout by increasing circulation of the remnimbi, the Chinese currency, in the Middle East, she said.
Christian Zhang of BMI Research, the global geopolitics and country risk consultancy, told Arab News: “There are advantages for China to further develop relations in the Middle East, which accounts for about $200 billion worth of trade, making the region China’s fourth largest trading partner after the US, Japan and South Korea.
“When CPEC is up and running, that will offer more opportunity for trade with the Middle East, and Europe, through Pakistan,” said Zhang.
China can help Pakistan modernize, and Chinese companies view the country as a place where they can produce more cheaply than in China, where wage inflation has taken off, explained Zhang. Pakistan-made goods could then be sold to the Pakistani domestic market or shipped to Europe and the Middle East, he said.
Huge Chinese trade boost for Middle East in the pipeline?
RICHARD WACHMAN | Published — Sunday 10 December 2017
LONDON: China aims to ramp up its economic and soft power in the Middle East as part of a wider offensive to bolster trade and national security, experts told Arab News.
The move is contingent on the development of a massive new trading hub at Gwadar port in Pakistan which lies at the southern extremity of the much-touted $55 billion China-Pakistan Economic Corridor (CPEC). The corridor is Beijing’s flagship infrastructure project which involves building an oil pipeline, refineries, power stations, roads and railways to boost trade from Gwadar on the Arabian Sea, northwards into western China. CPEC is one of the most important elements of Beijing’s new global network of Silk Roads, dubbed One Belt, One Road.
Critically, construction of the corridor and development of Gwadar is a way to convey crude and liquified natural gas (LNG) from Saudi Arabia and the Gulf into the Middle Kingdom, instead of having to go the much longer way through the Malacca Straits and South China Sea, a journey that takes at least an extra week for container ships.
In 2014, China imported an average of 6.1 million barrels of oil a day. Of that, more than 52 percent — or 3.2 million barrels — came from the Middle East with Saudi Arabia in the lead, according to a paper published in 2016 by the S Rajaratnam School of International Studies, Nanyang Technological University, Singapore (NTU).
Seen from that angle, little wonder China views CPEC as a vital strategic imperative: In the event of a conflict with the West, the US could blockade the Straits and choke off vital oil supplies. This is referred to as the “Malacca Dilemma,” where 80 percent of China’s oil imports traverse this potential chokepoint, said Gareth Price, a senior fellow at London-based Chatham House.
“CPEC offers the Chinese a hedge against blockade,” added Price. Yue Jie, head of China Foresight at the London School of Economics told Arab News, China will be the biggest single user of oil by 2030, according to the International Energy Agency. Additionally, Chinese oil imports have increased as a result of a steep fall in domestic production from the long-established Daqing and Shengli fields inside China, said Jie.
She added that protecting its mushrooming global strategic interests is forcing China to realign its policies and relationships in the region. China, for example, wants to expand its financial clout by increasing circulation of the remnimbi, the Chinese currency, in the Middle East, she said.
Christian Zhang of BMI Research, the global geopolitics and country risk consultancy, told Arab News: “There are advantages for China to further develop relations in the Middle East, which accounts for about $200 billion worth of trade, making the region China’s fourth largest trading partner after the US, Japan and South Korea.
“When CPEC is up and running, that will offer more opportunity for trade with the Middle East, and Europe, through Pakistan,” said Zhang.
China can help Pakistan modernize, and Chinese companies view the country as a place where they can produce more cheaply than in China, where wage inflation has taken off, explained Zhang. Pakistan-made goods could then be sold to the Pakistani domestic market or shipped to Europe and the Middle East, he said.
