Why CPEC Could Change Pakistan, China And Asia Forever

Why CPEC Could Change Pakistan, China And Asia Forever
akphotography1021 / Pixabay

The energy crisis in Pakistan is growing, and in spite of efforts by the government it does not seem to be solvable. However, thanks to the intervention of China and the formation of CPEC, the country may see some relief in the coming years.

Play Quizzes 4

CPEC Defined

CPEC stands for the China Pakistan Economic Corridor, and it is just one link in a chain that the Chinese are forming in the Asian region. The goal of the joint effort is to improve Pakistan’s infrastructure with updated roads, highways, and bridges. It also includes investment into energy projects, which could help solve the problems that Pakistan faces in that area. The local media and politicians praised Xi Jinping when he announced that the Chinese would invest $46 billion into the project.

ValueWalk’s July 2022 Hedge Fund Update: Tiger Cub Hedge Fund Shuts Down

investWelcome to our latest issue of issue of ValueWalk’s hedge fund update. Below subscribers can find an excerpt in text and the full issue in PDF format. Please send us your feedback! Featuring Andurand's oil trading profits surge, Bridgewater profits from credit, and Tiger Cub Hedge Fund shuts down. Q1 2022 hedge fund letters, conferences Read More

China vs Pakistan: What are the risks?

The Chinese do not invest in a country unless there is a guaranteed return on that investment. Profit and risk are carefully calculated by experts before a proposal is drawn up, and there is rarely an investment made that does not heavily favor the Chinese government. This is one of the driving factors in the ongoing US vs China trade war, and is one reason Donald Trump refuses to give in on his demands to Beijing. Pakistan will have to consider very carefully what accepting CPEC could mean in the future.

According to the Organization for World Peace, investments from China have not always worked out in favor of countries they have invested in. Sri Lanka was unable to make re-payments on Chinese investments in the country. In retaliation, the Chinese government seized control of Hambantota Port for a period of 99 years. Pakistan will need to consider possibilities like this, as CPEC becomes part of their plan to move forward.

Pakistan’s Obstacles

Pakistan is a country in distress at the least, and in some people’s opinion it is a failed state altogether. There is conflict and division in various regions of the country, as well as growing tension with India. All of this coupled with an increasing energy crisis could be the fuel for a fire that can’t be easily put out. The country is desperately in need of help to sort out its mounting problems, and it is possible that CPEC and China could be the answer they have been looking for. Overcoming the hurdles to make CPEC profitable for both sides will be difficult.

Moving Forward

Pakistan welcomed the investment from China, as a means of eliminating the strain on their nation. However, they must treat China as an equal partner in the endeavor, or they may soon find themselves in even worse straits than they are now. Caution is a must as CPEC is implemented, in order to protect the Pakistani’s from inadvertently giving up territory to a foreign government. Already some issues have been reported with projects, as Dawn noted that Pakistani contractors and companies were denied access to the jobs. Instead, equipment and manpower was sourced from China, leaving the Pakistani’s outside the inner circle. The Diplomat reports that one official complained “labor is also coming from China. There are no restrictions on Chinese firms to involve Pakistani contractors and use local equipment and labor as they take the lion’s share of infrastructure projects.”

CPEC – Is it the solution?

If CPEC proceeds as Pakistan intended for it to, it could indeed be the salvation the people have been hoping for. Already 17 energy projects have been finalized, and 4 more are being considered. They include plans that involve coal, solar, hydropower, and natural gas to help improve the country’s energy situation. The addition of better roads to connect trade cities will also aid Pakistan’s ability to generate income. Additionally, China intends to connect the port of Gwadar in Pakistan’s Balochistan province with its own western province of Xinjiang via the Indian Ocean. This will help facilitate trade between the two nations.

The energy crisis in Pakistan is acute, with power outages lasting from 6-8 hours at a time and occurring all across the country. These outages cost the nation more than $18 billion in 2015 alone, and left the country crippled without power. The problem arises due to the outdated design of Pakistan’s power plants, which fall short of the necessary output to power the homes and businesses. On average they miss the mark by more than 7,000MW, leaving people to depend on diesel generators to provide power. CPEC could change all of that with the energy projects proposed by China. The plan calls for $35 billion to be invested in updating the infrastructure surrounding Pakistan’s power supply.

China Has The Power

China has proven that it has the technology to help Pakistan pull through its energy crisis. The country has managed to keep its own population supplied with power, and maintain economic growth and population increase. Most of their power supply is provided through coal, in spite of their commitment to finding clean energy sources. CPEC could help improve the situation in Pakistan. However, if the country is intent on clean energy as its main resource, then following China’s lead may not be the right choice. If CPEC is properly implemented, it could change the entire region forever. It would also prove that working together for the common good is profitable, and could encourage other countries to do the same. For now, we will have to wait and see how it turns out.

Updated on

No posts to display