Understanding the Importance of CPEC for China

Pakistan is of great economic importance to China for many reasons and there are a number of joint projects being undertaken by the two countries. Certain regions of Pakistan fall under China’s Belt and Road initiative while the China-Pakistan Economic Corridor (CPEC), organisation is also central to investment.

But how much is China actually putting into these projects and what are the key areas of interest?

How much is CPEC worth?

The majority of projects between the two parties fall within the auspices of CPEC. Established in 2013, the China-Pakistan Economic Corridor was originally valued at $46 billion as China first began their financial involvement. The last set of confirmed figures that we have are from 2017 and they state that the numbers had risen to $62 billion. That represents a steady rise over four years but in the period that has followed, there is likely to have been a more spectacular increase.

The reason for that is largely down to the port city of Gwadar. The location, on the south western tip of Pakistan has been a target for Chinese investment for some time and it is currently a main focal point as far as CPEC is concerned.

2019 has seen the biggest series of developments yet including the commencement of construction on the city’s International Airport while additional transport links are also in the pipeline. Energy related projects are also in production while interest in Gwadar real estate is experiencing significant and steady growth.This location attracts substantial Chinese investment but why is that the case?

Why is Gwadar so central to China’s economic plans?

Much of China’s investment in Pakistan centres around the upcoming port city of Gwadar. It is of strategic significance, not least because it is the closest deep sea port to the Strait of Hormuz and 20% of the world’s ocean bound petroleum passes through the Strait at some point.

China is keen to accelerate development in Gwadar under the CPEC umbrella and a large portion of the country’s total investment falls in this region. The biggest projects of all fall in and around Gwadar with the city’s international airport costing some $265 million alone. It’s certainly true that Gwadar boosts the investment bill as far as China are concerned but how does it affect the overall figures?

What are the current numbers relating to Chinese investment in Pakistan?

As recently as February 2019, it was reported that China was investing another $3.5 billion in various projects across Pakistan. Away from Gwadar, some $1.42 billion was pumped into the power station at Karot while, in 2017, China assumed responsibility for the Karachi Circular Railway with a budget of $2 billion.

It may be tough to pin down the exact figures relating to Chinese investment in Pakistan but clearly these are serious numbers. In time, the value of CPEC will be updated and at that stage, we will get a clearer idea as to how many billions have been allocated.

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