China-Pakistan Economic Corridor (CPEC) – UPSC GS2

What is CPEC?
  • CPEC is a 3,000-km long route of infrastructure projects connecting China’s northwest Xinjiang Uygur Autonomous Region and the Gwadar Port in the western province of Baluchistan in Pakistan.
  • It is a bilateral project between Pakistan and China, intended to promote connectivity across Pakistan with a network of highways, railways, and pipelines accompanied by energy, industrial, and other infrastructure development projects.
  • It will pave the way for China to access the Middle East and Africa from Gwadar Port, enabling China to access the Indian Ocean and in return China will support development projects in Pakistan to overcome the latter’s energy crises and stabilising its faltering economy.
  • CPEC is a part of the Belt and Road Initiative. The BRI, launched in 2013, aims to link Southeast Asia, Central Asia, the Gulf region, Africa and Europe with a network of land and sea routes.
  • Pakistan signed a new agreement with China to begin the second phase of the USD 60 billion CPEC.
  • The second phase primarily revolves around Special Economic Zones (SEZs) development and industrialisation.

What is India’s Stand on CPEC?
  • India has been severely critical of the CPEC, as it passes through Pakistan-occupied Kashmir, which is a disputed territory between India and Pakistan.
What will be CPEC’s Implications for India?
  • India’s Sovereignty:
    • India has continuously opposed the project since it passes through the Pakistan-occupied Kashmir territory of Gilgit-Baltistan.
    • The corridor is also perceived to be an alternative economic road link for the Kashmir Valley lying on the Indian side of the border.
    • Most key players in the Indian state of Jammu and Kashmir, have expressed optimism about the project.
    • There have been calls by local business and political leaders to declare Kashmir on both sides of the Line of Control (LoC) a ‘Special Economic Zone’.
    • However, a well-connected Gilgit-Baltistan that attracts industrial development and foreign investment, if CPEC proves a success, will further consolidate the region’s perception as internationally recognised Pakistani territory, diminishing India’s claim over the 73,000 sq km piece of land which is home to more than 1.8 million people.
  • Chinese Control Over Trade Via Sea:
    • Major US ports on the East Coast depend on the Panama Canal to trade with China.
    • Once CPEC becomes fully functional, China will be in a position to offer a ‘shorter and more economical’ trade route (avoiding travel through the entire Western Hemisphere) to most North and Latin American enterprises.
    • This will give China the power to dictate the terms by which the international movement of goods will take place between the Atlantic and the Pacific oceans.
  • Chinese String of Pearls:
    • China has been increasing its presence in the Indian Ocean with the ‘String of Pearls’ ambition: A term coined by the Americans and often used by Indian defence analysts to refer to a Chinese game-plan of encircling India through a network of airfields and ports.
    • With an existing presence in Chittagong port (Bangladesh), Hambantota port (Sri Lanka), Port Sudan (Sudan), Maldives, Somalia and Seychelles, a control of Gwadar port establishes complete dominance of the Indian ocean by the Communist nation.
  • Emergence of Pakistan as an Outsourcing Destination:
    • It is poised to speed up Pakistan’s economic progress.
    • Pakistani exports, mainly in the textile and construction material industry, compete directly with those of India in the US and UAE – two of the top three trading partners of both countries.
    • With the supply of raw material from China becoming easier, Pakistan will be suitably placed to become a regional market leader in these sectors – mainly at the cost of Indian export volumes.
  • Stronger BRI and Chinese Dominance in Trade Leadership:
    • China’s BRI project that focuses on the trade connectivity between China and the rest of Eurasia through a network of ports, roads and railways has been often seen as China’s plan to dominate the region politically. CPEC is one giant step in the same direction.
    • A China that is more accepted and integrated with the rest of the global economy will have a better say in the United Nations and with individual nations, which may prove to be bad news for an India aspiring to acquire a permanent seat at the UN Security Council.
Way Forward:
  • India’s future strategy thrust on CPEC must be based on a careful reassessment of the potential benefits as well as disadvantages from the BRI project.
  • India should speed up work on development of its own strategic projects like, Bangladesh, China, India and Myanmar Economic Corridor (BCIM) and Chabahar Port.
  • The Asia-Africa Growth Corridor is an India-Japan economic cooperation agreement, it can provide India great strategic benefits and counter China.