Cpec Impact On Economy and Industry: Presenter: Muhammad Saad

CPEC  IMPACT ON
ECONOMY AND INDUSTRY

Presenter : Muhammad Saad
Inception
▪ CPEC is a collection of infrastructure projects currently under

construction throughout Pakistan.
▪ Originally valued at $46 billion, the value of CPEC projects is now worth
$62 billion.
▪ CPEC is intended to rapidly modernize Pakistani infrastructure and
strengthen its economy by the construction of: modern transportation
networks, numerous energy projects, and special economic zones
Projects
▪ Initially, the projects of the CPEC amounted $46 billion, but, afterwards,
China has invested more amount for the energy sector, roads and railway
infrastructure, technology parks etc.
▪ According to an estimate, the current worth of CPEC is $62 billion and it
will head up to $75 billions till its completion.
▪ The projects initiated by the CPEC are of 2 categories namely:
o Chinese Financed Projects
o PSDP (Public Sector Development Program) Project
How will CPEC boost Pakistan economy?
 Energy
 Infrastructure
 Gwadar
 Rail based mass transit projects
 New provincial projects
 Proposed special economic zones (SEZS)
 Social sector development projects
 CPEC related projects under PSDP
 Other Projects
Energy Sector
▪ Energy generation will be a major focus of the CPEC project, with approximately $33
billion expected to be invested in this sector.
▪ As part of the “Early Harvest” scheme of the CPEC, an estimated 10,400 MW of
electricity could be available for use as part of CPEC’s “Early Harvest” projects.
▪ The energy projects under CPEC will be constructed by private Independent Power
Producers, rather than by the governments of either China or Pakistan. The Exim
Bank of China will finance these private investments at 5–6% interest rates, while the
government of Pakistan will be contractually obliged to purchase electricity from
those firms at pre-negotiated rates.
There are total 21 energy projects to be built or upgraded under CPEC
from which some of the notable ones are;
▪ Thar I - The Shanghai Electric company of China will construct two 660MW power
plants as part of the “Thar-I” project in the Thar coalfield of Sindh province. The facility
is expected to be put into commercial use in 2018.
▪ Thar II - The China Machinery Engineering Corporation in conjunction with Pakistan’s
Engro Corporation will construct two 330MW power plants.
▪ Port Qasim Electric Company Coal Fired, Sindh - It will generate 1320MW electricity
and its estimated cost is $1,980 million.
▪ Gwadar Coal fired Power Project, Gwadar will produce 300MW energy and costs $600
million.
▪ HUBCO coal power plant 1X660 MW, Hub Balochistan will generate 660MW
electricity with a cost of $970 million.
▪ Gaddani Park Power Project will contribute 1320 MW with a cost of $3960 million.
Infrastructure
▪ Infrastructure projects includes building and expanding roads and railway.

▪ Some of the major projects are:
o KKH Phase II (Thakot -Havelian Section) of length 118km
o Peshawar-Karachi Motorway (Multan-Sukkur Section) with a length of 392km
o Khuzdar-Basima Road N-30 (110 km)
▪ In the railway sector, some of the major projects are:

o Expansion and reconstruction of existing Line ML-1 of 1,872km
o Capacity Development of Pakistan Railways
Gwadar
▪ Gwadar forms the crux of the CPEC project, as it is imagined to be the link between
China's ambitious One Belt, One Road (OBOR) project, and its Maritime Silk Road
project.
▪ In total, more than $1 billion worth of projects are to be developed around the port of
Gwadar.
▪ China will grant Pakistan $230 million to construct a new international airport in
Gwadar.
▪ Gwadar Port Complex is also under construction.
Special Economic Zones (SEZs)
▪ A special economic zone (SEZ) is an area in which business and trade laws are
different from rest of the country.
▪ SEZs aims include: increased trade, increased investment, job creation and effective
administration.
▪ To encourage businesses to set up in the zone, financial policies are introduced.
These policies typically regard investing, taxation, trading, quotas, customs and
labor regulations.
▪ Some of the SEZs which are a part of CPEC are;
 Rashakai Economic Zone on M-1
 Special Economic Zone Dhabeji
 Bostan Industrial Zone
 Punjab - China Economic Zone, M-2 District Sheikhupura
 ICT Model Industrial Zone, Islamabad
 Development of Industrial Park on Pakistan Steel Mills Land at Port
Qasim near Karachi
 Bhimber Industrial Zone
 Mohmand Marble City
▪ Pakistan is very notable around the globe because of its extremely important strategic
location.
▪ Around 80% of China’s trade and energy imports travel through the pirate
swarmed Strait of Malacca and Indian Ocean, both patrolled by the Indian Navy.
▪ The CPEC would not only be the alternative to Strait of Malacca but also provide China w
ith an entry point to the Persian Gulf.
Routes
▪ There are 3 routes included in the infrastructure of CPEC which are;

o The Western Route originating from Gwadar will pass through Turbat, Panjgur, Nag,
Basima, Sorab, Qalat, Quetta, Qilla Saifullah and Zhob and reach Dera Ismail Khan
before leading to Islamabad.
o The Second (Central) Route will originate from Gwadar and reach Dera Ismail Khan
via Basima, Khuzdar, Sukkur, Rajanpur, Layyah, Muzaffargarh and Bhakkar.
o The Third (Eastern) Route will include Gwadar, Basima, Khuzdar, Sukkur, Rahimyar
Khan, Bahawalpur, Multan and Lahore/Faisalabad and then reach Islamabad.
 CPEC will provide China an alternative and shorter route for energy imports from the
Middle East, thereby reducing shipping costs and transit times.
 The currently available sea-route to China is roughly 12,000 kilometers long, while the
distance from Gwadar Port to Xinjiang province is approximately 3,000 kilometers, with
another 3,500 kilometers from Xinjiang to China's eastern coast.
 As a result of CPEC, Chinese imports and exports to the Middle East, Africa, and Europe
would require much shorter shipment times and distances.
 With the advent of CPEC transit times between Kashgar and Pakistan's coast will be
greatly reduced, which in turn will also reduce transit times to the Kyrgyzstan and
hydrocarbon-rich Kazakhstan through already existing overland routes.
 Additionally, the Chinese government has announced plans to lay railway track from
Tashkent, Uzbekistan, towards Kyrgyzstan with onwards connections to China and
Pakistan.
Significance for SMEs
▪ CPEC will have significant impacts on the SME sector of Pakistan.

▪ Recently, a Chinese business delegation met with SMEDA officials in Lahore to
discuss about the joint ventures that china could initiate with Pakistani business
society.
▪ The CPEC is considered to generate 700,000 new jobs in Pakistan.
▪ The SEZs along with the trade routes will help to nurture the entrepreneurial firms
related to logistics, warehousing, fisheries, trucking, minerals, food processing,
construction, dairy and live stock, cold storage and supply chain businesses etc.
The Impact of CPEC on Pakistan’s Industrial Sector
▪ A key component of CPEC is the Industrial cooperation,which envisions to fully benefit from
the demographic and natural endowment of the country and enhancing its industrial capability
through creation of new industrial clusters, while balancing the regional socioeconomic
development, enhancing people’s wellbeing, and promoting domestic peace and stability.
▪ In the past five years, China-Pakistan trade has continued to grow rapidly, with the annual
growth rate of 18.8% on average; bilateral investment has also been soaring, and China has
become one of the biggest sources of foreign capital for Pakistan. International economic and
technological cooperation has shown strong momentum, expanding into more areas while
social and people-to-people exchange has increased at parallel.
▪ The orderly and timely flow of economic factors in both countries along the CPEC will
significantly improve the resource allocation efficiency and bring into full play the comparative
advantage of each country with respect to the industrial sector specifically.
Conclusion
▪ China Pakistan Economic Corridor is the linkage of China and Pakistan with about 2700km long road, rail and
gas and oil pipeline. This connectivity will replaced Chinese current lengthy (12500km) shipping route
which will save a lot of time and billions of shipping charges for China and provide a short and safe route for
their trade with the entire world.
▪ However, CPEC will play a significant role in the development and prosperity of Pakistan. CPEC has many
socio economic impact on the local residents of Pakistan as it will cover the current energy crises in
Pakistan and provide millions of jobs opportunities for the local people of Pakistan, it will increase the trade
and business opportunities which will directly improve the income of the common people and minimize
unemployment and poverty in the country and will generate revenue for Pakistan which strengthen
the economy of Pakistan.
▪ CPEC will provide access to basic amenities of life specifically in remote and rural areas of Pakistan like
education, health and banking. These opportunities will directly or indirectly affect the people of Pakistan
and will improve the living standard of Pakistani people. That‘s why CPEC is called the fate changer for
Pakistan.
Thank You.
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CPEC  IMPACT ON

ECONOMY AND INDUSTRY

▪ CPEC is a collection of infrastructure projects currently under

▪ Infrastructure projects includes building and expanding roads and railway.

▪ In the railway sector, some of the major projects are:

▪ There are 3 routes included in the infrastructure of CPEC which are;

▪ CPEC will have significant impacts on the SME sector of Pakistan.

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