China-Pakistan Economic Corridor (CPEC)

China’s OBOR initiative envisages linking China with the rest of Eurasia and promoting economic cooperation among these countries and was unveiled in September-October 2013.

 An extension of OBOR is the China-Pakistan Economic Corridor (CPEC) which was conceived in 2014.

What is it?

CPEC is clutch of projects valued at $51 billion project which aims at rapidly expanding and upgrading Pakistan’s infrastructure and strengthening the economic ties between the People’s Republic of China (China) and Pakistan. It includes building roads, laying railway lines and pipelines to carry oil and gas.

CPEC eventually aims at linking the city of Gwadar in South Western Pakistan to China’s North Western region Xinjiang through a vast network of highways and railways.

The proposed project will be financed by heavily-subsidised loans, that will be disbursed to the Government of Pakistan by Chinese banking giants such as Exim Bank of China, China Development Bank, and the Industrial and Commercial Bank of China.

Why is it important?

The CPEC, once completed is expected to cut short the trade route for China’s oil imports by 6000 miles. It is expected to open up a brand-new strategic gateway for China to tap into African, West Asian and South Asian trade.

The CPEC is expected to give the flagging Pakistan economy a shot in the arm too. About 90 per cent of the total outlay for this project will be funded by the consortium of Chinese banks and the balance 10 per cent by Pakistan. Reports claim that this project will likely add about 7 lakh direct jobs between 2015 and 2030 and add about 2-2.5 percentage points to the Pakistani GDP.