The corridor to prosperity

Officially announced in 2014, the China Pakistan Economic Corridor (CPEC) was the ray of hope Pakistan’s economy was desperate for. The extensive plan entails a national agenda for economic betterment, beginning from measures to be taken to increase energy production in the power-deficient country, stressing the importance of special economic zones, undertaking large-scale road and rail infrastructure overhauls and development projects in Gwadar Port. Experts seemed sceptic, the feasibility of the proposed large-scale projects was questioned and the lack of security and transparency of corrupt institutions was brought into light.

The aid-dependent state of Pakistan, cursed with incapable institutions impeding economic progress, has welcomed Chinese support with open arms. As ever, the government did not find it pertinent to disclose all information to the very public that voted them into office. Out of the total $45 billion budget for CPEC, independent companies will invest around $35 billion in energy production and we will be able to buy electricity from them at competitive rates. The remaining amount agreed by China to be loaned to Pakistan is in the form of concessionary loans, offered at low interest rates.

Though details of projects have been far from transparent, the ambition that drives CPEC projects began to show in 2015. The government dived into what appears to be a rapid modernisation of the country’s infrastructure. While projects like the Orange Line Metro in Lahore raised environmental concerns and faced criticism, the government did not do so much as bat an eyelash and continued construction, undeterred. The only bankable thing the regime has to go on is the eventual aid such projects will be towards market activity, by providing rapid transit for individuals in the metropolitan centres of the country. The investment in this project is immense, but is it the most efficient, cost-effective, and least damaging to third parties? Although the question of an alternative underground route has been brought up and brushed aside by policymakers repeatedly, sufficient evidence has not been provided for overlooking the option. If London in 1890 and Cairo in 1987 introduced their modern underground railway lines that now provide rapid transit to up to 4 million commuters daily, surely we can dig a little deeper, quite literally, and provide a similar service that benefits commuters without the decimation of our cultural heritage.

With almost 50% of the total population of Pakistan aged between 15 and 55, the commencement of CPEC is expected to generate jobs all over the country and help individuals of employable ages otherwise unable to find jobs. The interesting thing about CPEC is seen in the way it is supposed to be spread all over Pakistan, and not only Punjab, as would be expected of any “national” plan introduced by the current government. The construction of coal power plants in central and southern Punjab, Sindh and Balochistan will steadily raise demand for skilled and unskilled labour in rural and urban localities in these areas. A little over 60% of Pakistan’s population resides in rural areas and are engaged in unskilled work, which may be able to find more opportunities at these coal plants and mines. The provinces of Punjab and Sindh will gain the most in terms of employment generation in the energy sector, as most power plants will be constructed there in the next 15 years. Though it can be said that these provinces are favoured in infrastructural development projects quite frequently, there is the inevitable benefit to the masses in terms of job creation and overall prosperity. The electricity generation plants will be located far from the economic centres of these provinces, areas that are usually neglected when it comes to economic development. Though there will be a disproportionate gain from these investments, it must be noted that otherwise neglected areas are being invested in. No one would have expected special teams to be hired, billions of dollars invested into locating and extracting coal reserves if China had not proposed its interest in the matter.

Improving Pakistan’s inland links may be essential to the success of CPEC, but its benefits to the country itself could be immense. The immediate reconstruction of tracks in Punjab and increased speed for trains is underway. The eventual plan of the railway overhaul will link the northern areas from Khunjerab Pass at the Pak-China border to all provinces east, west and south. In addition to this, a complex network of road links in all provinces is proposed, the eastern part of which will begin construction soon. Being able to safely access most areas of the country by road can enable people to travel more and distributors to access more markets. Better road and rail transport systems are essential to the smooth working of any economy, and Pakistan since its conception, has rarely had a project with its focus on linking every corner of the country to each other.

Another initiative proposed under CPEC is of the creation of special economic zones along the CPEC from Khunjerab to Gwadar. These zones will provide industries with easy access to transport, labour and provide tax concessions according to their nature of operation and level of activity. This is expected to boost investment not only from domestic entrepreneurs but also from foreign sources.

The ability of China and Pakistan to maintain peace in an area susceptible to external pressures while separatist groups work on both sides to create chaos, should be the greatest hurdle for CPEC, one that may or may not be overcome entirely. Even if Pakistan does not attain a utopian secure state, CPEC is likely to bring about the infrastructural development the economy needs.

Nevertheless, both countries are determined and infrastructural development is underway. Now and in the long run, people will hope to find more employment opportunities, real estate in Gwadar is booming and should become more and more favourable to invest in, and bilateral trade and FDI to Pakistan is expected to increase. Most of these effects should be felt even if CPEC is not implemented in its entirety. If there is one good thing that will come out of this, it will be the realisation of the potential our country has to explore its natural reserves, tap into renewable energy sources, the endless opportunities it can provide its people with improved infrastructure and building of new cities. A young and crisis ridden country as it is, it requires investment and guidance to make use if its geo-strategic importance. The CPEC is not an overnight project and it will take time for its benefits to be realised. In the meanwhile, the country should allocate resources towards education and training, to create a workforce that is suited to a more prosperous economy.