China-Pakistan Economic Corridor [CPEC UPSC Notes]

By : Neha Dhyani

Updated : Mar 17, 2023, 19:46

The China-Pakistan Economic Corridor (CPEC) is a group of infrastructural projects built across Pakistan for seamless trade connectivity between Pakistan and China. It is part of the Chinese government's larger One Belt, One Road (OBOR) plan. CPEC is a massive project that would link Kashgar in China's Xinjiang with Gwadar port in Pakistan's Baluchistan.

The CPEC project aims to build energy development, special economic zones, harbours, and transport systems to update Pakistan's necessary infrastructure and enhance its economy quickly. We have shared further details about the China-Pakistan Economic Corridor here.

About CPEC

The China-Pakistan Economic Corridor or CPEC is a large-scale infrastructural project aiming to connect the Chinese city of Kashgar with Pakistan’s port city, Gwadar. A part of China’s Belt Road Initiative (BRI), the purpose of the CPEC is to enhance connectivity and promote economic development, not only in China and Pakistan but also across Asia, Europe and Africa.

The project was initially valued at $46 billion, but currently, it is estimated at around $62 billion. The CPEC project involves the construction of roads, pipelines and railways across Pakistan. It will also involve the construction of industrial parks, power plants, etc.

CPEC Full Form

The full form of CPEC is China-Pakistan Economic Corridor. CPEC refers to a developmental project between China and Pakistan that aims to create infrastructure in Pakistan for seamless trade between Asia, Europe and African countries. The CPEC is a multi-billion dollar project that would make it easier for American and other businesses to trade in Asia.

CPEC - How it Affects India?

Since the CPEC crosses through Pakistan-occupied Kashmir's Gilgit-Baltistan, India has been staunchly opposed to the project, which Pakistan denies. When China-Pakistan Economic Corridor is entirely operational, China will be able to offer most North and Latin American businesses a "shorter and more cost-effective" trading route.

China-Pakistan Economic Corridor is a part of the Belt and Road Initiative (BRI), which focuses on commercial connections between China and the rest of Eurasia. The network of ports, highways, and trains can mean that China is attempting to dominate the area politically.

China-Pakistan Economic Corridor - India’s Response

The Indian government, which has strained relations with Pakistan, opposes the China-Pakistan Economic Corridor project because the Karakoram Highway is being upgraded in Gilgit Baltistan, which India claims as its own.

  • Vijay Kumar Singh, India's Minister of State for External Affairs, highlighted reservations over the China-Pakistan Economic Corridor in May 2016.
  • Despite Indian reservations, China and Pakistan began construction on the $44 million Pakistan-China Fiber Optic Project on May 19, 2016.
  • This project would traverse through Gilgit-Baltistan, the same territory about which India has voiced concerns about China.

China-Pakistan Economic Corridor - Problems

The China-Pakistan Economic Corridor passes across Pakistan-occupied Kashmir (PoK) and Baluchistan, both of which have long-standing insurgencies and are vulnerable to terrorism and security threats. Here are some of the problems that could arise because of the CPEC.

  • The lack of openness and accountability in the China-Pakistan Economic Corridor project is concerning since it may be tilted economically and strategically in China's favour.
  • The Chinese strategy of not collaborating with local businesses would not help Pakistan create jobs.
  • The CPEC project may jeopardize Pakistan's sovereign power by allowing China to dictate its foreign policy, particularly with India.
  • This would complicate the already strained relations between India and Pakistan and would cause political turmoil in South Asia.
  • Political tensions in Afghanistan may also obstruct the benefits of transit corridors in South Asia.

China-Pakistan Economic Corridor - Criticism

Several Pakistani news organizations have attacked the CPEC project's finances as cloaked in mystery, with "much secrecy and far too little openness." The trade imbalance is also a problem since Chinese goods via the Karakoram Highway have entered the local Pakistani market cheaper due to Pakistan's higher manufacturing costs.

Some Baloch nationalists reject the China-Pakistan Economic Corridor's massive development initiatives, claiming that local communities may "lose control" of natural resources.

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FAQs on China-Pakistan Economic Corridor (CPEC)

Q1. What is CPEC?

CPEC or China-Pakistan Economic Corridor is a project between China and Pakistan that aims to connect the Chinese city of Kashgar with the port city of Pakistan’s Gwadar. The CPEC is a part of China’s Belt and Road Initiative (BRI), which seeks to make trade more seamless across Asia, and other continents.

Q2. What is the full form of CPEC?

The full form of CPEC is China-Pakistan Economic Corridor. This is a project between China and Pakistan that aims to develop infrastructure in Pakistan for seamless trade between Asia, Europe and African countries.

Q3. Which countries are a part of the CPEC?

The countries that are part of the CPEC are Pakistan and China. CPEC is a part of China’s Belt and Road Initiative (BRI), an initiative that aims to develop a trade corridor to facilitate trade between Asian, European and African countries.

Q4. Who is the founder of CPEC?

President Asif Ali Zardari and Premier Li Keqiang signed several memorandums of understanding on economic cooperation in 2013 to improve mutual connectivity. So, they are the founders of CPEC. China and Pakistan inked agreements on 12 August 2015, in the city of Karamay.

Q5. Is CPEC a problem for India?

CPEC could be a problem for India due to the widespread development across Pakistan, especially in areas closest to India. The project could harm the ecosystems of the Himalayas and the Indus River Basin. Moreover, the CPEC will move across some of the disputed land between India and Pakistan.

Q6. What is the latest news regarding CPEC?

Pakistan and China have inked a new deal to start the second phase of the $60 billion China-Pakistan Economic Corridor [CPEC]. The second phase focuses on the development and industrialization of Special Economic Zones (SEZs).