The China – Pakistan Economic Corridor runs from China to the Gulf of Oman and the Arabian Sea.
SUMMARY
The China-Pakistan Economic Corridor (CPEC) is a collection of various infrastructure projects started on November 13, 2016. It is a flagship program under the Belt and Road Initiative that provides Beijing, direct access to to Gulf of Oman and Arabian Sea. Recently, critics of CPEC (both inside and outside Pakistan) have voiced their concerns over energy and economy issues between the two countries. However, both China and Pakistan representatives contend CPEC still provides benefits both parties. China’s primary focus seems to be the stability on the western border of China through CPEC, while Pakistan wants to save its economy. Chinese news media on July 31, 2018, saying that CEPC will benefit both countries. On August 1, 2018, Shamshad Akhtar, Pakistan’s Caretaker Minister of Finance, stated Pakistan will push the CPEC to develop without any doubts. However, Pakistan will need to pay off the loans in the next 30 years. In response to concerns over energy security, Muhammad Zubair Umar, the outgoing governor of Pakistan’s Sindh Province, said that the CPEC program would help solve the problem of power shortages in Karachi – one of the largest and most vibrant cities in Pakistan. China is also a key market for United State oil and energy exports. However, since the start of the “trade war,” China indicated potential tariffs on US energy. Pakistan is an energy abundant country, it could be China’s next oil import partner.
FAO GLOBAL ASSESSMENT
The China-Pakistan Economic Corridor is the flagship program between China and Pakistan, which both countries hope to be beneficial. If this program succeeds, China may be able to reduce energy import dependency from the US, which will have a negative impact on the US energy sector. Moreover, the energy sector in the US is tied to more than 1 million jobs each year. Since tariffs on China’s steel have been implimented, the cost for making a pipeline has already increased. If China decides to put tariffs on US energy exports, it will be a shock for small and medium energy enterprises (SMEs) in the US as well as those SMEs in China who rely on cheap imports. To reduce the negative reverberations, US SMEs (ex: pipeline building companies) can potentially look to enter joint-ventures with Chinese companies in the Southeast Asian investment or infrastructure building programs. This could not only help reduce the cost of importing Chinese steel, but also explore the potential business opportunities in Southeast Asia.
Related Links
- Modern Diplomacy: CPEC: A Tool for Stability and Prosperity
- Global Times: Pakistan pushes back against criticism of CPEC
- China Daily USA: Removing doubts key to success of CPEC
- Reuters: Pakistan dismisses U.S. concerns about IMF bailout and China
- Forbes: Trade War With China Exposes U.S. Mineral Import Problem
Analyst Bio
Weiting Li -International Policy Associate-
Weiting Li is an international policy intern at FAO Global, where she focuses on international trade, technology, and environmental policies. Weiting is currently a second year graduate student pursuing dual master’s degrees in public policy at Georgetown University and Business Administration at University of Geneva. Prior to Georgetown, she was the assistant for government relations and working groups at European Chamber of Commerce in China. She graduated from Gettysburg College with a major in Sociology and a minor in Business.
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