I had written this post and received 20+ thanks and positive ratings but after the forum was restored from old backup that post is gone now. I had written the post on Office and copy pasted the content before editing it further on PDF. So I would just copy paste again of whatever raw content I had saved in the laptop
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Pakistan China Economic Corridor
Chinese Version:
China has an economy of over $10 trillion dollars, reserves of over 3 trillion dollars and the world’s largest exporter of goods worth 2300 billion dollars and the combined International trade volume of 4200 billion dollars.
China has ambitious plans to create Silk Road Economic Belt (SREB) and Maritime Silk Road (MSR) connecting Middle East, Africa and Europe through rail, road and pipelines. Chinese companies has already spent hundreds of billions of dollars in Africa, Latin America, Middle East and European market and are highly successful in doing business with under-developed nations. China is the largest investor in South Asia and plans to expand its influence by pledging 100 billion dollars of investment in India, 46 billion dollars in Pakistan and 20 billion dollars in Bangladesh as a mean of foreign direct investment or soft loans.
Strait of Malacca
It is considered the most important trade route in the world with 25% of the world’s total traded goods passing through the Strait of Malacca in over 100,000 vessels. Approximately 35% of the world’s oil is carried to China, Japan, Korea and East Asia as well as 60% of Chinese oil imports from Gulf region passes through the Strait of Malacca. It takes about 12,000 kilometres or 45 days to reach Western China (unverified sources) as compared to 3000 kilometres of journey with 75% reduced time scale and massive savings in transportation cost if re-routed through the Pakistan-China economic corridor. The narrowest part of Strait of Malacca stretches to only 2.8 kilometres and China has strong reservations about the possible blockade by US naval forces in the event of war.
Benefits for China
As per the survey reports during the development of Gwadar port, it is estimated China will save approximately 20 billion dollars per year in transportation cost and provide direct port access to the underdeveloped Western China.
China wants to develop Western China comparatively to Eastern China and Gwadar port can play a significant role in the development of Western China.
There is also no denial to the fact that China will link the Pakistan-China Economic Corridor route to major cities in China and the same route can be linked further with Japan, Korea and Mongolia. I also foresee this future-silk route being linked to Central Asian Republics, India and Afghanistan as soon as the key infrastructure in Pakistan and China is ready and operational.
China also foresee that its current trade volume of $4.2 trillion dollars would have grown between $10 to $15 trillion dollars by the time this investment has been fully made until 2030 and the strait of Malacca is already congested and cannot fulfil the requirements of East Asia. China needs alternative routes to continue the pace of growth and the Pakistan-China Economic Corridor is the most significant, safe, efficient and cost effective route available for China.
By the time the Pakistan China Economic Corridor has been built and the vessels starts to dock at Gwadar port, the economy of Pakistan, China, South Asia and Central Asia would have increased by manifold and it is highly likely that China will save a lot more than estimated as the factors of two-way route and multiple nations connecting to the same route will come in.
Energy Projects
The reason China is keen to invest in energy projects is,
- China wants to do business in Pakistan (burn coal, generate electricity for 6 cents, sell it for 8 cents per unit)
- She wants to see stable Pakistan
- She wants to strengthen relationship with Pakistan in order to protect her future interest
- Economically strong Pakistan is in the interest of China
- China also need electricity to fulfil their own projects in Pakistan
- China wants to increase influence in Pakistan
The untold investment
China has invested billions of dollars in Pakistan since last 10 years and plans to invest more in separate projects not part of the MoU’s signed during the President XI’s visit in Pakistan. China will also invest further in order to protect its interest in Pakistan and this deal of 46 billion dollars is also not going to be the last deal made by China for the next 15 years. It is likely by the passage of time, several new projects will be lucrative enough for China to invest more.
It is also a good news that Pakistan will finally see significant investment coming in Pakistan after long time and will boost confidence for foreign investors to invest in various sectors of Pakistan.
The bitter truth
We have a history of signing MoU’s and China making commitments to Pakistan. It is estimated that roughly 65 billion dollars of projects were signed during 2001 and 2014 but less than 10% of the projects were ever materialised.
During the visit of Premier Wen Jiabao in 2010, China pledged to invest 30 billion dollars in Pakistan but no significant work was done after that. It was mostly reported due to our negligence, incompetence and corruption that the Chinese companies backed off from their commitment but it is a bitter truth that same can be repeated once again.
Pakistan Version:
Pakistan will be the most beneficiary of Pakistan-China Economic Corridor in short and medium term. China will most likely be gaining a lot more in long term but it is always going to be a win-win situation for both nations and will enhance the bilateral relationship between both countries.
Pakistan will be able to generate millions of jobs in all 4 provinces and 4 territories across the country and especially in under developed Balochistan. Gwadar will be transformed to become a mega-city thanks to the hard work and/or need of the hour. With the energy requirements fulfilled and availability of cheap electricity, Pakistan will be able to grow at faster pace, increased exports, providing relief to industries by offering cheaper electricity tariff and fulfilling non-stop energy requirement.
The planned route will link most of the major cities in Pakistan and will most likely create many new cities across the route. It might be the game changer for Pakistan if we can manage it properly. The biggest relief for Pakistan will be increased revenue in taxes, lower unemployment rate, earning billions of dollars from trade route, blessed infrastructure from China and the shadow of China being a good sign for security for short term goal. Hundreds of industrial parks will be created alongside the route to enrich the maximum benefit out of it.
Gwadar port
Not only will the Gwadar port link China with less than 3000 kilometres in distance, it will offload the burden from heavily congested Karachi ports. It will also create an environment of competition and help curtail corruption. Pakistan will be able to take the maximum benefit of this route by connecting every major city through the corridor and the planned Motorways across Pakistan. It is estimated that Pakistan will save at least 5 billion dollars from Gwadar port per year if the Chinese vessels were re-routed to Gwadar from the Strait of Malacca and this figure is only bound to increase in future.
I also foresee that we will be enhancing Karachi port and developing a new port soon at Ormara or Pasni to share the burden of existing ports.
Did Pakistan allure China or is it a Chinese project?
I believe it’s purely a Chinese project serving their own interest and future needs. The good thing for Pakistan is, Pakistan enjoy good relationship with China and it happens to be geographically located at such a place where it fits the purpose of China. The credit must go the serving Government regardless but it is technically a Chinese project, serving Chinese interest and future ambitions.
Repercussion of rising Chinese influence in Pakistan
I have always been stern opponent of completely handing over the control of our state assets to foreign nations. We have historically abide by the commandments conferred to us by the so-called Superpowers. With China soon reaching the stature of Super-Power it will be really hard for us to ask them to evacuate the ports if God forbid such a need arises after few years. I have always been a supporter of having complete control over state assets like Iran and we must learn to manage our internal affairs by ourselves. Pakistan has historically been fouled by the super powers and only served the purpose of puppets in the great game of chess and I will not be surprised if same is repeated again after few years.
We must learn the policy of being neutral at International arena and that’s what India is good at. In worst scenario we could handover the transfer of port to China at shared basis with the Government of Pakistan being the major stake holder and for a limited period only (non-negotiable). I am not doubting the good intentions of China but if we take too many favours from anybody, it will be hard for us to say No in the event of conflict.
Pakistan should not try to become the 24th province of China. It must act independently and make independent policies.
