Economic Prospects of CPEC | Sulman Ahmed

The China-Pakistan Economic Corridor (CPEC) is becoming an economic prospect not many nations of the world can ignore much longer. “It is not only of great significance for promoting the development of China and Pakistan but also of great significance to the stability and development of the whole region,” said Hua Chunying, spokesperson from the Chinese Foreign Ministry while pointing towards the financial, logistic, operational and durational superiority of the project.

And with Iran considering becoming part of the project, the stakes are set to go through the roof. It has been several years now since Iran was outcast by world powers over its controversial nuclear programme, but the recent international agreement could result in easing away of the sanctions that have haunted the country for much too long. Pakistan has suggested Iran consider connecting with the CPEC through improved border mechanisms and betterment of rail and road links connecting the two countries. If the breakthrough is achieved, South Asia has much to gain.

Iran is an energy hub ready to stage a comeback in world economy. Iranian funds worth billions of dollars are expected to reenter the global economy and almost all nations are tweaking their plans to accommodate this massive wealth. However, it’s probably the right time for Pakistan to remind Iran the old adage, love thy neighbour.

The two countries have historically had amicable trade and diplomatic relations, and Iran’s interest in the CPEC is something Pakistan should pursue dedicatedly. With the Chinese market hungry for energy and Iran having ample supplies of the same, Pakistan could well become the missing piece in this regional economic puzzle.

Providing an alternative to the unsafe sea route in the South China Sea, the CPEC will connect China with the Gulf region and the Arabian Sea at Gwadar, making transportation of Chinese goods to the Middle East, Africa and Central Asia a much less-costly affair. China’s cost of oil barrel import from Middle East, by cutting a corridor directly from Kashgar to Gawdar, will be brought down to one-third of the current level which is approximately $18 million on import of 6.3 million barrels.

Chinese products also stand a good chance of acceptance by Iranian consumers disconnected from the world for a while. Simultaneously, Iran is eyeing as much as $100 billion worth of energy deals in the near future, and Tehran’s abundant oil and gas reserves could well find a thriving demand in China too. For Pakistan, the opportunities are manifold. The world’s largest explosive manufacturer, Beijing Auxin Chemical Technology Limited has already signed a Memorandum of Understanding with its Pakistani importer, Biafo Industries Limited, to set up a joint-venture company for the manufacture ofemulsion explosives in Pakistan that will help in clearing grounds for construction.

On the other hand, energy production is expected take a major leap forward due to projects like The Thar Coal Projects. This along with two other harvest projects, would be able to generate up to 2400 MW of power by the year 2018.

Moreover, with Khurram Dastagir’s invitation to the SCO countries to use the port for trade purposes, Pakistan is all set to increase its reach with in the region. These unexplored trade routes will not only cement Pakistan’s position in the region but also create employment opportunities in the region.

— The writer is freelance columnist based in Lahore.

Source:http://pakobserver.net/detailnews.asp?id=278038