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 What is the CPEC?

  • The CPEC — one of the One Belt, One Road’s (OBOR) largest investments — was formally launched in 2015.

  •  Signing over 50 projects worth $45 billion, China set up the ‘Silk Road Fund’ to invest in CPEC projects planned till 2030. 

  • The main project was to establish a corridor connecting Pakistan’s Gwadar port in Balochistan to China’s Kashgar in the south-western Xinjiang region. 

  • The Silk Road Fund, which manages the investment, is being financed by a consortium of Chinese banks

  • The projects themselves are undertaken by various Chinese firms in collaboration with Pakistani companies. 

  • Apart from this corridor, a number of power projects and several special economic zones are to be developed under the CPEC.

Current Status

  • The CPEC had teething troubles in 2016 as several projects ground to a halt over confusion on funding, contractor selection, delay in bidding process etc.

  •  For example, the Gwadar port faced multiple issues, starting with water supply. 

  • The 11.2 billion rupees project to supply, treat and distribute water to the port by connecting the Swad and Shadikaur dams was delayed.

  • Other projects like the 600 MW Gwadar coal-fired power plant and the Gwadar Smart Port City Master Plan too ran into issues over uncertainty about funding.

  • These projects are financed by commercial Chinese loans and are insured by the China Export and Credit Insurance Corporation (Sinosure) against non-payment, guaranteed by the Pakistan government. 

  • The biggest thorn in CPEC’s side is the intense protest by locals in Balochistan against the Gwadar port city project. 

  • Fearing loss of local livelihoods such as fishing, and resisting the use of unskilled Chinese labour instead of Pakistani locals.

  • Baloch residents have refused to sell land to the Chinese for building the port. 

  • The Gwadar port has been leased to the China Overseas Ports Holding Company which means that Beijing reaps 91% of the profits while Islamabad gains only 9%. 

  • This has led to a rise in anti-China sentiments among Baloch locals.

  • China stopped funding three road projects — 

  1. 210-km Dera Ismail Khan-Zhob Road worth 81 billion rupees, 

  2. 110-km Khuzdar-Basima Road worth 19.7 billion rupees, 

  3. 136-km Karakoram Highway worth 8.5 billion rupees 

  • Over suspicions of corruption, China also complicated the Gwadar port issue by insisting on Yuan as a legal tender in the region. 

  • The port construction, already slow due to local resistance, virtually stalled. 

  • In 2022, China refused to further expand cooperation with Pakistan in the areas of energy, water management, and climate change under CPEC.

  • With the recent visit to Beijing, Islamabad is attempting to restart funding for its key projects.

  • While Mr. Kakar and Chinese President Xi Jinping reviewed the progress of other projects, the development of the Gwadar port itself remains unresolved.



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Learnerz IAS | Concept oriented UPSC Classes in Malayalam: CPEC UPSC NOTE
Learnerz IAS | Concept oriented UPSC Classes in Malayalam
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