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CPEC
● … the jumbo sized investment project has dazzled the region….

● BRI covers 70 countries.

● CPEC valued at $ 62 billion.

● CPEC has the potential to catapult Pak from deathly hallows of economic backwardness and insecurity to the eternal sunshine
of economic prosperity, cooperation and security.

● Time to realize Geostrategic significance

● From regional backwater.

● When, who and where OBOR was announced?

● A basket of development projects.

● Route length, Gwadr to Kashgar: 3000 km.

● Pakistan — the host of BRI’s crown jewel, the China-Pakistan Economic Corridor —

● The total value of projects of China-Pakistan Economic Corridor (CPEC) is $50 billion, revealed the answer of the federal
government in the question hour in the National Assembly on 9th January.

● Its commonly believed that the total value of CPEC projects is $62 billion but the response of the federal government made it
clear that CPEC is valued at $50 billion approximately including the ML-1 Railways project.

● According to the details shared by the National Assembly of Pakistan, 13 projects of CPEC worth $11 billion are completed and
13 projects worth $18 billion are under implementation. $21 billion projects are still in pipeline, read the detailed answer of
Asad Umar Federal Minister for Planning and development a copy of which is available with Balochistan Voices.

● CPEC is a consensus that transcends political parties, regions and communities across Pakistan. It also enjoys the most
extensive and strongest support in China.” Precisely, CPEC binds Pakistan with world’s second-largest economy, which is a
good sign for foreign investment in country
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THE CPEC CONSISTS OF ONE BELT, THREE PASSAGES, TWO AXIS AND FIVE FUNCTIONAL ZONES IN TERMS OF ITS SPATIAL
LAYOUT

FOUR PHASES / STAGES OF THE CPEC

It must be kept in mind that the planning of CPEC follows four stages and frim information would flow only when we reach that stage.
These stages are:

I. Early Harvest 2015‐2019 Most of the projects relate to Energy sector which are already completed or expected to be
completed by 2019 adding approximately 7000 MW electricity to the national grid and thus easing the energy shortages and
load shedding that had crippled the industry and exports

II. Short term projects up to 2022 mainly Roads, Gwadar Development, Optic fiber network and the Hydel, coal mining and
power projects

III. Medium projects up to 2025 Railways and Industrial zones

IV. Long term projects up to 2030 Completion of Industrial zones, Agriculture, Tourism etc.
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THREE ROUTES OF THE CPEC

Global VALUE CHAINS (GVCs) : a shift from Globalization to a New Global Economy.

LTP

● Signing of the LTP during the 7th JCC meeting.

● 11/25/017

CURRENT PROJECTS

● The current CPEC portfolio consists of 43 projects, of which 22 are under implementation. Another 157 projects of the
corridor will be gradually completed in the next 12 years.

● 11 put of 22 CPEC projects have already been completed ( May, 2019)

TOTAL INVESTMENT UNDER THE CPEC UPTILL NOW

● May, 2019

● In total, $19 billion had been invested by China in all the projects – $13 billion given as commercial loans and $6 billion as
concessionary loans to be repaid by the Pakistan government in the next 25-30 years.

CHALLENGES

1. Financing Woes of the Project

a. Huge Debt Burden

i. $40 billion to China in 20 years in the shape of repayments of debts and dividends on a $26.5 billion
investment.

ii. Start when? highest when?, 2021, 2024

iii. Percentage of total debt? 6%

iv. Export revenues in 2024 should rise to $ 40 billion and this additional amount arising from the CPEC
related outflows can be absorbed without much stress on the balance of payments provided we continue
to ensure that exports grow at least 10 percent annually.

b. Financing Mechanism

i. BO (O) T (energy)

ii. The CPEC energy projects are a foreign direct investment based on commercial contracts, which are in
accordance with the standard clauses provided by the Pakistani government.

iii. The financing of the energy projects is mainly provided by the equity of Chinese companies and
commercial loans which borrowed from China Development Bank and other commercial banks in the
rates of around 5%. I

iv. In other words, any debt arising from CPEC energy project would be borne by the Chinese investors
instead of the Pakistani government.

2. Some Problems / Bottlenecks / Setbacks

i. 91 % revenue from Gawadar

ii. Bhasha Dam

iii. ADB backed away from ($ 2.1 billion or 32% of the total loans)

iv. Total length:1872 km

v. Concerns regarding Mainline (ML 1 project)...$ 8.2 billion.

1. The total cost of the project is $8.2 billion, with 85% financing coming from China with a grace
period of 8 to 10 years. Although this would mean no immediate outflows on account of
repayment, the remaining 15% which translates into a whopping Rs193 billion would have to
be contributed by Pakistan. Even for the first phase of $2.3 billion, we would need to pitch in
Rs54 billion.

2. During the JCC meeting, the two sides agreed to speed up the preliminary design work on ML-
1, approve the project and finalise the bidding documents. And while the question of its
financing remains in limbo, given the IMF’s embargo on government guarantees, China agreed
to establish a high-level financing committee which would consider RMB financing besides
other options.

3. Rail mega-projects under the BRI umbrella have run into problems elsewhere in Asia.

a. In Thailand

b. Malaysia’s new Prime Minister Mahathir Mohamad outright cancelled the Chinese-
funded $20bn East Coast Rail Link (ECRL).

vi. Poor Ease of Doing Business (World Economic Forum).

vii. Size if the CPEC to stay at $50 billion.

BOONS / BENEFITS FOR PAKISTAN

1. SEZs

a. Total 9 approved but currently work on 3 has been expedited.

b. M3 Industrial City in Faisalabad, Chinese SEZ Dhabeji, Sindh and Hattar SEZ in KP province, said the BOI.

c. Under CPEC’s industrial cooperation, the first Special Economic Zone (SEZ) at Rashakai has been inaugurated in the
current month where 20 factories would be set up initially.

d. Location factors to be kept in mind: geographical continuity, trade-offs among wages, transportation cost distance
from the business district.

e. As opposed to common perception, SEZs are not merely about lower taxes, reduced tariffs or lucrative investment
incentives. There is much more to them. In fact, these carrots remain peripheral to the central concept behind SEZs.

f. The SEZ legislation should be based on three principles of ease of administration, transparency and automaticity.

g. Autonomous and Empowered Zone Authorities

h. Chinese media reports have claimed that groundbreaking for one such zone, based in Pakistan’s Khyber
Pakhtunkhwa province, will take place this month and “directly employ 150,000 people” in industries that include
light engineering and food processing.

i. The China-Pakistan Economic Corridor (CPEC) is likely to create about 575,000 direct and over 1 million indirect
jobs in four special economic zones (SEZs) to be set up in Pakistan's Khyber Pakhtunkhwa (KP), Punjab, Sindh and
Balochistan provinces, an official from the CPEC Center of Excellence said.

j. Sharing the initial details of the possible industries in the SEZs, based on the letter of intentions and applications to
buy plots in the industrial areas, Zia said the major industries in Punjab's Allama Iqbal SEZ are expected to be
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textile, light engineering, pharmaceutical, steel, food processing and chemicals with a potential to create 290,000
direct jobs.

k. KP's Rashakai SEZ whose groundbreaking is likely to take place in December this year is likely to directly employ
150,000 people in light engineering, marble, plastic and packing, gem and jewelry, food processing and steel
industries.

i. With potential industries including food processing, cooking oil, ceramics, gems and jewelry, marble,
minerals, agriculture machinery, iron and steel, motorbike assembling, electrical appliances and
automobile, Balochistan's Bostan SEZ is likely to produce 55,000 jobs for locals, Zia added.

l. Sindh's Dhabeji SEZ has a potential to create 80,000 jobs with potential industries including food and beverages,
pharmaceutical, electronics, automobile and plastic related products.

m. Four out of nine SEZs including KP's Rashakai, Sindh's Dhabeji, Punjab's Allama Iqbal and Balochistan's Bostan, with
the state-run National Vocational and Technical Training Commission (NAVTTC) t

2. Industrial Cooperation

a. Tax breaks

3. Inclusion of KSA in the CPEC.

a. Investment in mega Gwadar oil city

b. $ 22 billion investment promised in 2018.

c. Mindful of tensions with Tehran

4. BOOST TO ECONOMY / IMPROVED MACROECONOMIC CONDITIONS OF PAKISTAN

CPEC has solved the problem of limited investment capacity caused by insufficient savings and shortage of foreign exchange in
Pakistan and provided a high-quality source of impetus for Pakistan’s economic development.

a. The Chinese government provided $5.874 billion in concessional loans to Pakistan, with a consolidated interest rate
of only 2%, far below from International levels.

b. The Chinese government also provided $143 million in interest-free loans for the Gwadar East Bay Expressway
project and free assistance for some livelihood projects in Pakistan.

c. Over the past five years, Pakistan’s GDP grew by an average of 4.77%, especially in the 2017-2018 fiscal year, when
Pakistan’s GDP grew by 5.8%, the highest rate in recent 13 years.

d. Pakistan’s annual foreign direct investment grew from $650 million to $2.2 billion and the per capita annual income
rose from $1,334 to $1,641.

e.

f. 2.5% projected annual growth for Pakistan.

g. A boost of 2.5% to current GDP hovering around 5 % = 7

h. Current GDP growth is 3.3 %

5. JOBS

a. 700, 000 (2015-2030)

b. 1.2 million in current projects.

6. INFRASTRUCTURE
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a. Transportation networks

i. 2000 km of rail and road network connecting Gwadar to China.

ii. KKH phase 2 ( Havelian-Thakot) section.

iii. Karachi-LAHORE motorway (Sukkur-Multan section)

iv. In the first phase of CPEC, 510 km road network was constructed and now in the second phase, an
additional 1275 km length of roads would be built.

b. Lahore Orange Line

i. 94 percent work complete

ii. Mega city of Lahore.

iii. 250,000 passengers per day , 27.1 km long.

c. Mariline ML 1 and Havelian Dry Port

i. Benefitting 70% of Pak population.

ii. $9.2 billion cost

d. Fiber Optic

i. $ 44 million, from Pindi to Khunjerab, 820 km long cable, altitude of 4500 km. (already inaugurated)

e. The Gwadar Port Free Trade Zone covers an area of 923 hectares and is constructed in four phases in two zones,
one north and one south. On January 28, 2018, the Gwadar Free Zone Phase 1 was formally completed and put into
operation, and the investment attraction was also completed simultaneously.

i. China is setting up 19 factories in Gwadar, saying that the measure will help create job opportunities for
Balochistan’s youth.

7. Energy: Mega Mega MegaWatts

a. $35 billion, 16000 MW

b. 19 power plants

c. 15 energy projects with energy generating capacity of 11,110 MW are planned out of which 11 (with a capacity of
more than 6000 MWs) are in operation or construction phase.

d. REDUCED DEPENDENCE ON LNG

e. Work on 13 energy projects having capacity to generate 8,995MW electricity under China Pakistan Economic
Corridor (CPEC), throughout the country is in progress.

f. About 20 energy projects under CPEC with total investment of over US $25 billion will add 12,335MW electricity in
the national grid, revealed documents available with APP.

g. Addition of 10,000MW to the generation capacity in Pakistan in a span of four years.

h. Electricity outages had cost the economy about 1.5 to 2 percentage points of GDP.

i. Inauguration of a 300 MGW of Gwadar coal fired Power Plant in November indicates that the CPEC is back on line.

j.

k.

8. TOURISM

9. Budget Trade Deficit

a. Pak facing deficit if $9 billion

b. China would provide $ 1 billion in next 3 years.

10. NATIONAL UNITY

11. LINK PAKISTAN TO REGIONAL HUBS AND ORGANIZATIONS

a. ASEAN, SCO and ECO.

12. LEGITIMACY TO PAKISTAN'S STANCE ON KASHMIR

13. ENDING INDIA'S ECONOMIC INFLUENCE

14. CHINA WILL GET A STAKE IN SECURITY OF PAKISTAN.

a. He argues that by making CPEC (under the high stakes flagship One Belt One Road (OBOR) Project) a part of the
Chinese Constitution, President Xi Jinping has virtually offered sovereignty guarantees to Pakistan. Pakistan’s multi-
dimensional relationship with China — the rising superpower that is next door, unlike a distant US — also makes
PLA’s “humongous non-kinetic capabilities available to Pakistan in Cyber Warfare and Electronic Warfare”,
balancing out any Indian advantage.

15. AGRICULTURE INVESTMENT

a. Seafood, steel and agriculture sector to boost bilateral business.

16. OPPORTUNITY FOR SKILL DEVELOPMENT

a.

GEOSTRATEGIC CONNOTATIONS OF THE CPEC

1. China will take measures to secure its interests in the region

2. Cooperation with Russia

a. Integrating the Eurasian Economic Union Project in the CPEC.

3. US-India vs China-Pak- Russia-Iran

4. Excellent Advantage of Pakistani Coastline from Military Standpoint

a. From Jiwani in the West to Keti Bandar in the East

b. Coastline naturally suitable for naval bases, communication bases, air, missile and radar bases.

c. A natural springboard to dominate the IOR.

d. It overlooks and cover the Persian Gulf, including the Strait of Hormuz and the Greater Middle East Region.

5. China Might develop a crucial oversight in the East West Region of the IOR

a. Already secured a strategic base in Djibouti

6. The US too has acquired a "military logistic" base on the western coast of India. It has also outsourced the maintenance of the
ships of the US 7th fleet to Reliance Defence.

7. By moving on Pakistan's CoastLine, China has played a Deep Strategic Master Stroke.

a. Attempt at loosening US hold over the Malacca strait choke point.

b. Deterred Indian influence in the region.

8. STRATEGIC IMPLICATIONS OF THE CHINEESE MANEUVERS FOR THE US

a. Advantageous position of China and Russia in the Af-Pak region.

b. The US threat of blocking the Malacca strait has been neutralized.

c. If time arises, the US would be forced to confront China at multiple theaters in the IOR.

i. East and South China seas

ii. IOR / Arabian Sea

d. Increased Dependence of the US on its Allies

i. Japan, Australlia and S.Korea in the East and South China Sea

ii. Will India back the US in the IOR?

e. China Could Block Crucial Straits

i. Strait of Hormuz ( from the Makran Coast)

ii. Baby el Mandeb (from Djibouti)

iii. Thus, China would seal off both theaters of war from ME, Europe and the Mediterrania, if and when
required.

The IOR is bow likely to get further nuclearized.

Source: CPEC: Geostrategic connotations by Brigadier Imran Malik from the News.

BENEFITS FOR CHINA

● Short route and time, (earlier, 16000 km long route and 2-3 months time)

● Circumvent the America's "Pivot to Asia".

● Betterment of Xinjiang region

● Solidifying relations

● Industrial Overcapacity and investment opportunities for Chinese traders.

● China's String of Pearls.

INDIAN RESPONSE

● India's concerns regarding blockage of the Strait of Hormuz.

● Building Chahbar port by pledging $20 billion.

○ Wanted to deny the Central Asian market to Pakistan.

● Chabhar located 72 km away from Gwadar.

● Iran declared Chabahar as sister port of Gwadar.

● 55 billion set aside for sabotaging the CPEC.

● Claims that CPEC passes through the disputed territory.

● Indian plans to capture the CENTRAL asian market will be nipped in the bud.

● Threat of Chinese naval activities in Gwadar.

CHALLENGES TO THE CPEC

1. Security

a. Special Security Division...15000 troops.

2. India

a. RAW

b. Zubair Hayat (CJCS)... India 55 billion for sabotaging CPEC.

c. Ajit Doval has accepted India's role.

3. Afghanistan

4. Matching China's Pace and Pakistan's Weak Existing Infrastructure

5. Governance Issues

a. As per World Economic Forum’s Global Competitiveness Index, the five most problematic factors for doing business
in Pakistan are corruption, tax rates, government instability, crime and inefficient government bureaucracy.
Availability of infrastructure comes way lower in the list.

b. On this Belt and Road Index, Pakistan was ranked the 11th least attractive country. (Out of 67 BRI countries)

6. Political Demagoguery in Pakistan

7. USA'S CRITICISM

a. "Made in China, made for China initiative."

b. Pak-US relations have been vacillating between highs and lows.

c. These relations have their anchorage in the Cold War.

8. USA'S PIVOT TO ASIA

a. London-based policy think tank Chatham House

b. The Quad

c. USA'S strengthened Indo-Pacific command.

d. 80% of Chinese trade on South China Sea trade routes.

e. Obama and Hillary

9. SUPERPOWER RIVALRY

10. THE GEONOMICS OF THE CPEC

a. Pakistan is fast losing balance in its relationship with Iran and Saudi Arabia. The $10 billion Saudi pledge for a
refinery and petrochemicals complex in Gwadar has not only come as cause for caution for Iran, but also China. The
latter has concerns that it may lead to Saudi-Iranian proxy warfare in the coastal region, at the bottleneck of CPEC.
The Baloch in Gwadar also see the refinery in the context of Iran-Saudi Arabia rivalry.

b. They believe it will bring in US influence due to the common strategic objectives of the Saudis and Americans
against Iran.

c. Though the refinery would be set up about 100 kilometres away from the Pakistan-Iran border, it will continue to
perturb China.

11. Negative Propaganda

12. Red Tapism

TRADE WITH CHINA

● From $2.2 billion in 2005 to $ 13.5 billion in 2016. (6 folds increase)

● Balance of trade tilted in China's favour.

● Pak's 75% non-oil exports from China.

● China: largest source of Pak's exports.

● Meager Bilateral Trade with China

○ The bilateral trade between India and China has reached $7.70 billion in 2019. Philippines’ trade volume with China
is three times higher than that of Pakistan. Vietnam, which is half of Pakistan’s economy, has four times higher
bilateral trade with China. Bangladesh’s export to China has been recorded at $3.3 billion in July 2019, as compared
to Pakistan’s that stands at $1.9 billion

DIMENSIONS OF THE CPEC

1. Financial

a. AIIB and the Silk Bank Initiative.

b. Soft loans and grants

CRITICISMS

1. CPEC loans are to blame for current financial crisis.

a. Response: link b/w BOP and loans. Pakistan's debt servicing accounted for $5 billion out of which only $500 million
or 10% went to China.

2. CPEC terms harm local Industries. ( Tax breaks)

a. Response: User-specific SROs

3. Infrastructural projects will only benefit the Chineese.

a. Pakistan is to gain from becoming a transit hub. (Singapore, Hong Kong, Dubai)

4. Lack of Transparency
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a. Little is known about the processes for selecting firms” for Belt and Road projects, the report said. “Moving toward
international good practices such as open and transparent public procurement would increase the likelihood that
BRI projects are allocated to the firms best placed to implement them.”

b. There was also a need to increase the transparency of debt terms and conditions for Belt and Road projects to allow
governments to assess the risks to their ability to sustain debt, the report said.

5. Concerns of Balochistan

a. The province only had two projects, the Gwadar port and Hubco-China coal-fired power plant in the CPEC.

6. American Criticism of the CPEC

a. Former Defence Secretary Mattis...disputed territory

b. Secretary of State Mark Pompero… IMF bailout for Chineese loans.

c. 16 US Senators wrote letters to Secretary of State...IMF loans for China.

d. Threat if Gwadar being used as Chinees naval base ...Djibouti , Africa.

e. Alice Wells, the acting assistant secretary of state for South Asia

i. “It’s clear, or it needs to be clear, that CPEC is not about aid,”

ii. "CPEC relies primarily on Chinese workers and supplies, even amid rising unemployment in Pakistan,”

iii. “Even if loan payments are deferred, they are going to continue to hang over Pakistan’s economic
development potential, hamstringing Prime Minister (Imran) Khan’s reform agenda,”

QUOTES

● "A certain country will soon realise benefits…. (Chineese envoy)

● Washington Times

● The Economist

● Belt and Road Initiative will require equally ambitious reforms from participating countries,” World Bank Vice-President Ceyla
Pazarbasioglu for equitable growth said in a statement.

● CPEC IS WHERE THE BELT AND ROAD MEET.

SECOND PHASE OF THE CPEC

● Pakistani and Chinese leadership on Saturday began discussions on the China-Pakistan Economic Corridor’s (CPEC) next phase
at the end of the Belt and Road Forum(BRF).

● Industrial cooperation in from of SEZs,

● Social sector cooperation for which it would be investing $1billion in 27 education, health, agriculture, water and irrigation,
human resource development and poverty alleviation projects.

● Pak-China Free Trade Agreement (FTA) 2

● Second phase of China-Pakistan Economic Corridor (CPEC), a part of China's ambitious Belt and Road Initiative (BRI) would
generate over 1.5 million job opportunities in the country.

LATEST DEVELOPMENTS

● Visit of Chineese V.P (May,26)

○ Inaugurated many projects among them the Rashakai SEZ.

● Chineese Companies have Shown Willingness to Invest in Pakistan.

○ Li Fung, valued at $60 billion, working in 50 countries.

○ Current placing orders of $100 million in Pak.

● The Second Phase if the CPEC will boost Industrial Cooperation

● IRAN'S PLAN TO BUILD A PIPELINE PARALLEL TO THE CPEC (E-CPEC+)

● ESTABLISHMENT OF THE CPEC AUTHORITY

● China-Pakistan Free Trade Agreement (CPFTA) phase-II

○ In April 2019, PM Imran also announced “the next phase” of the multibillion-dollar economic cooperation project
with China which, he asserted, will focus on eliminating poverty in Pakistan.

○ “Together, Pakistan and China are entering the next phase of CPEC, with greater emphasis on socio-economic uplift,
poverty alleviation, agricultural cooperation, and industrial development,”

○ The second phase of the Free Trade Agreement between China and Pakistan comes into effect on January 1, 2020,
an

○ Phase two of the much-touted China-Pakistan Free Trade Agreement came into effect as of Wednesday, said a trade
official.

○ The new phase will allow Pakistani manufacturers and traders to export around 313 new products to the
Chinese market with zero duties, Commerce Secretary Ahmad Nawaz Sukhera said in a tweet.

○ The implementation of the agreement’s second phase, he added, would make 90% of China’s global imports
duty-free for Pakistan. “Confident that it will help our exports increase substantially,” he added.

○ Beijing earlier approved premature activation of the second phase of the pact with Pakistan, signed during
Prime Minister Imran Khan’s visit to China last April.

○ Pakistan is already enjoying zero duties on exports of 724 products to China under the first free trade pact
signed between the two countries in 2006. After implementation of the second pact, Pakistan has been allowed to
export more than 1,000 products to China on zero duties.

○ The new facility will particularly benefit the agriculture, leather, confectionary items and biscuits product
sectors.

○ Last year, Pakistan signed an agreement with China to use Chinese currency for bilateral trade in a bid to get
rid of the dollar burden in $15 billion worth of bilateral trade.

○ According to official data, Pakistan and China’s bilateral trade volume grew to reach some $15.6 billion in the
2019 fiscal year, up from $2.2 billion in 2005.

○ The 2017-2030 plan includes enhancing cooperation in sectors such as: chemical & pharmaceutical, engineering
goods, iron & steel, light manufacturing & home appliances and construction materials not only to meet the
demands of Pakistan’s local markets but further export it in the region as well as international market.

● US CRITICISM

○ Also in ONE NOTE

○ November, 2019
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○ Alice Wells, the lead US diplomat for South Asia, criticised CPEC for what she called creating a debt burden for
Pakistan, disproportionately benefitting Chinese state-owned enterprises. She specifically mentioned the
‘expensive’ price tag of the planned ML-1 upgradation and lashed out at the lack of transparency in the project. She
also claimed that the US approach of promoting FDI and trade offered a ‘better’ alternative to the Chinese model of
investment through state-run companies

SUGGESTIONS

● Fixing SEZs

○ The Special Economic Zones (SEZs), Industrial parks etc. to be set up along the Corridor should be open to Pakistani
firms on the same terms as to the Chinese. Any incentives given to the Chinese would be equally applicable to all
investors.

○ Firstly, there is a need to fix the SEZs and that would mean providing quality infrastructure and investor-
friendly regulations. Only then can the investors be enticed with investment incentives.

○ Unfortunately, however, we have turned this approach upside down. The government is mulling over incentives
for investors, while the new SEZs remain incomplete and the existing ones continue to wrestle with basic
issues like utilities, land titles and complicated regulations hidden behind the façade of one-windows.

○ These SEZs, if fixed, can make Pakistan the choicest destination for relocating industries from China.

○ Due to increased labour costs, over-capacity and environmental factors, China is gradually exiting from
industries like garments, textiles, cement, papermaking, light engineering, etc. There is no reason why
Pakistan cannot join the league of Vietnam, Myanmar, Cambodia, Indonesia and Bangladesh to house these
industries.

● Fixing Border Delays

○ A World Bank study also cautions that border delays and trade restrictions can wipe off most of these advantages.
And this is exactly where Pakistan is lacking.

○ The World Economic Forum’s Enabling Trade Index ranks Pakistan at 122 amongst 136 countries. Pakistan
scores below South Asia on all but the two pillars of transport infrastructure and services.

○ This means that we need to look beyond infrastructure and improve on dimensions like efficiency and
transparency of border administration.

● Same Tax Treatment and Increasing Imports

● Financial Policy

○ Commercial banks should finance Pakistani Companies either stand alone or in joint ventures with the Chinese
companies in collaboration.

○ For small and medium enterprises, providing goods and services for the CPEC projects, or setting start‐up
businesses, the existing Funds set up by DFID, USAID etc. should be geared up to meet this demand.

● Technical Education

○ NAVTTC and TEVTAs are not satisfied with the current abilities of the skilled labor in Pakistan, adding that
restructuring and upgradation of the structure of the national technical training institutes is the need of the hour to
facilitate the forthcoming industrial zones.

○ "There is also a need for a CPEC consortium of technical and vocational institutes where both Chinese and Pakistani
technical institutes should sit together to assess the future technical demand and collaborate together for the
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training of Pakistani students and trainers with China's state-of-the-art technology to facilitate the SEZs in
Pakistan."
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BELT AND ROAD INITIATIVE

a. China’s Belt and Road Initiative (BRI) is a multifaceted economic, diplomatic and geopolitical undertaking that has
morphed through various iterations, from the “New Silk Road” to “One Belt One Road”.

b. The BRI imagines a US$1.3 trillion Chinese-led investment program creating a web of infrastructure, including
roads, railways, telecommunications, energy pipelines, and ports. This would serve to enhance economic
interconnectivity and facilitate development across Eurasia, East Africa and more than 60 partner countries.

c. First proposed in September 2013, it is the signature foreign policy initiative of Chinese President Xi Jinping. It is a
project of unprecedented geographical and financial scope.

d. to create a modern Silk Road spanning some 65 countries, which have a combined gross domestic product (GDP) of
US$21 trillion.

e. Beijing’s multibillion dollar Belt and Road Initiative (BRI) has been called a Chinese Marshall Plan, a state-backed
campaign for global dominance, a stimulus package for a slowing economy, and a massive marketing campaign for
something that was already happening – Chinese investment around the world.

f. The project, eventually termed the Belt and Road Initiative (BRI) but sometimes known as the New Silk Road, is one
of the most ambitious infrastructure projects ever conceived. It harkens back to the original Silk Road, which
connected Europe to Asia centuries ago, enriching traders from the Atlantic to the Pacific.

2. TWO PRIMARY COMPONENTS

a. SREB (5 Economic corridors) and MSR (key seaports)

3. CHINA'S EMPHASIS ON COOPERATIVE NATURE OF THE PROJECT.

a. China has been at pains…

b. At BRF, Xi emphasised …

c. Yet behind the rhetoric … an emerging China-led operating system.

4. WHAT WILL CHINA GET OUT OF IT?

a. Diversifying supply lines of oil

b. Addressing the threat of naval blockade

c. Utilising her navy's deep blue water capabilities

d. Attending to the issue of industrial Overcapacity.

e. Putting to use its $3 billion capital reserves

f. Economic and political influence

g. Securing and diversifying transportation routes

h. Aid with no strings attached

i. Leadership of the Globe

j. String of Pearls

k. Has sticked interests of Developing nations.

l. Malacan dilemma

m. Strings of perals

5. GEOPOLITICAL IMPLICATIONS OF THE BRI

a. CHINA'S ASCENDENCY TO THE WORLD STAGE.

b. CHINA'S SOFTWARE OF INTEGRATION AND HARDWARE OF TRADE

c. CHINA MAY BECOME WORLD LEADER OF POST CARBON ECONOMY

d. US: a WORLD POWER RIDING INTO THE SUNSET

e. DEEPENING SINO-RUSSIAN FRIENDSHIP: RUSSIA IS COZYING UP TO CHINA

6. BRI'S STRATEGIC PRIORITIES

a. Supporting China's Go Global Policy.

b. Strengthening China's geopolitical role.

c. Increased export to the BRI countries.

d. Strengthen RMB's Global Role.

e. Promote Industrial Restructuring

f. Reduce Industrial Oversupply

7. Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era,”

8. IS OBOR NEW? / WIL IT FAIL?

9. CHALLANGES POSED TO THE OBOR

a. SECURITY

i. Traditional

1. Great power geopolitical games

2. US opposition

a. A made in China, made for China Initiative.".

b.

3. Territorial disputes

4. Internal political turmoil and conflicts in member countries.

ii. Non-Traditional
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1. The pressure of regional economic integration

2. Sea chanell safety

3. Terrorism

4. Trans-national organized crime.

10. BRI'S 6 CORRIDORS.

11. ITALY'S JOINING OF THE BRI

a. First NATO, European country.

b. US criticized.

12. CRITICISM

a. Allegations of economic imperialism

b. The Debt Trap

c. China's String of Pearls

d. Allegations of Military Bases

i. "If it can carry goods, it can carry troops." Jonathan Hill, Director at Asia Project, CSIS.

e. Popularizing China's Political Model

i. "Human rights are being left in the ditches by the sides of the New Silk Roads." (Herbert Weisner, General
Secretary of the Germany's PEN center.)

f. Offering Countries an Alternative Development Path

i. Aid with no strings attached

ii. China contends that it is pursuing its objectives within the current economic system.

g. Human Rights in the Xinjiang Region.

13. RECOGNIZING PAKISTAN'S PIVOT ROLE IN THE OBOR

a. Pakistan' position to take action against the ETM in Afgh.

b. Pakistan's leverage with the Afghan Taliban

c. Pakistan is where the Belt and the Road of the OBOR meets

d. Strategic significance of the Gwadar port and the Makran coast.

e. CPEC is the Crown Jewel of BRI

14. HOW WILL THE OBOR BE FINANCED?

a. $40 billion Silk Road fund

b. The New Development Bank (for BRICS)

c. AIIB ($1 trillion)

15. RECENT SETBACKS AND OBSTACLES

a. Malaysia, Sri Lanka, Pakistan (Main Line 1), Nepal, Burma, Myanmar (from $7.2 billion to $1.3 billion of Kyaukpyu
port)

b. Nepal recently blacklisted the Church na Harbour Engineering Company on allegations of corruption.

c. What it shows?

d. Hambantota port, Lanka

16. BRI: CHINA'S VISION OF GLOBALIZATION IN BEIJING STYLE

17. 3 REASONS WHY THE US SHOULD JOIN THE BRI (According to the Diolomat)

a. There is directly ni Strategic competition between the 2. (C.Asia and in the South East Asia interests overlap to a
certain degree)

b. US companies can immensely benefit from the BRI projects.

i. Caterpillar and the General Electronics.

ii. In 2016 alone, GE maelde $2.6 billion by selling machinery to OBOR related projects.

c. BRI can be turned into an opportunity of cooperation between the 2.

i. The US will be better positioned to monitor trade practices of China by becoming part of the OBOR.

ii. USA'S initial apprehensions regarding the AIIB, and the New Development Bank…

18. LATEST BRI SUMMIT: WANNING INTERNATIONAL OPPOSITION TO BRI / GROWING INTERNATIONAL ENDORSEMENT
OF THE BRI

a. Facts

i. 26-4-019, 37 heads of state, ministers and 500 delegates participated.

ii. 125 countries and 40 international organizations have joined the BR initiative.

iii. 175 agreements signed and projects worth $90 billion completed.

b. Why the US Opposition Has proved futile?

i. Allegations of debt trap

ii. The Strategic rationale of the US for opposing the BRI

1. Hindrance in USA's efforts for creating a ring of alliances around China.

2. Maintains US influence in the Indo-Pacific region.

iii. Over 90 percent of developing countries' debt is owned by the Western World.

c. Amid Trade and Economic compulsions, none of America's Asian Allies has confronted China

d. BRI's Growing Popularity in Europe

i. Italy first G7.

e. USA'S own companies are engaged with BRI

i. GE, Caterpillar.

ii. 150,000 US companies are operating in Chineses economic system.

f. Important Position of Pakistan

i. Of the $1tr allocated by China to BRI projects, $72bn is envisaged for CPEC. Of the $90bn invested so far,
around $27bn was in Pakistan.

19. HOW OTHER COUNTRIES HAVE RESPONDED TO THE OBOR?

a. INDIA

i. Strings of Petals: India has tried to convince local countries that the BRI is a plan to dominate Asia,
warning of what some analysts have called a “String of Pearls” geoeconomic strategy whereby China
creates unsustainable debt burdens for its Indian Ocean neighbors and potentially takes control of
regional choke points.

ii. Trump's Indo-Pacific strategy of 2017, framed India as a counterweight to China in Asia.

iii. Developing assistance to neighbor Afghanistan $3 billions

iv. Chabhar, $20 billion.

b. JAPAN

i. Suspicions about China

ii. Agreed with India to develop the Asia Africa Growth Corridor (AAGC) to connect parts of Maymar with
East Africa.

iii. JAPAN committed to spend $110 billion throughout Africa.

c. Europe

i. Macron cautioned against the BRI…. partner countries could become "vassel states"

ii. Italy, first county in the G 7 to join BRI.

d. Russia

i. Moscow's concerns and the Eurasian Economic Union.

ii. Putin has vowed to link up the Eurasian vision with the BRI.

iii. China has entered into negotiations for FTA with Russia.

iv. " The integration of the EAEU with the Silk Road projects means reaching a new level of partnership and
actually implies a common economic space on the continent. "

v. Vostok military excercises 2018

20. CHINA'S REBOOT OF THE BRI

a. The Reboot

b. Why?

i. Excessive criticism

c. How
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i. Excessive concessions

ii. Dropping if BRI not an option.

d. What are the Adjustments?

i. Finance

1. CHINA'S Ministry of Finance guidelines on sustainable BRI lending.

2. Flowing UN General Assembly principles on debt sustainability.

ii. Corruption

1. Following UN Global Compact

2. CCCD's summit.

iii. Inclusivity

1. CEO summit

2. All are open to participate in project bidding etc.

iv. Environment

21. CONCLUSION

a. Addressing criticism by allaying concerns of the participating states.

b. More transparency in the bidding process

c. Curbing corruption

d. Sharing development experience and expertise.

e. Cooperation and inclusiveness.

f. Ultimate test of China: winning countries' support of the China Model of Development.