CPEC-A Game Changer

For Pakistan
For China
For the Region
 Power Politics in the Mid-East, Central Asia, South Asia and East Asia

• New Regional Alignments Emerging

– USA-Israel-Saudi Arabia Vs. Russia-China-Iran
– Turkey and Pakistan have to realign their foreign
policies
– India tries to offset China’s influence in the Region
– Pakistan will continue ‘India-Centric’ policy but with
new alliances
• New Multipolar World Balance of Power System in
the Making
– But this time it’ll be different
– Regional Organizations along with powerful countries
will dictate world political and economic order
• Post-COVID19 World will be a different world
• Emerging powers are Demanding their Share in
world politics
 The Power Politics in the Pacific

South China Sea and the Rise of China and BRI

Asia-Pacific and the ASEAN Feeling A Push From
both the Pacific Rivals
Indo-Pacific Realignments of the Global and
Regional Actors
US military footprint
Great Power Politics in the South China Sea, Asia-Pacific
and the Indo-Pacific

• South China Sea,

• Asia Pacific Region,
• Indo-Pacific Region
 The Questions are????
• How US will keep its dominance in the
Asia-Pacific?
• How China will assert its hegemony in the
South China Sea and the Asia-Pacific?
• How do new regional alignments affect the
geo-politics of the region starting from the
Indo-Pacific to Asia-Pacific and beyond?
– The question will be: How would US be able to
balance the power politics of the Indo-Pacific?
Great Power Politics in the South China Sea
and the Asia-Pacific
– Maritime disputes carry a special significance in Asia.
– China portrays the South China Sea dispute as
fundamentally a question of sovereignty and survival.

• Unlike in Europe, water is the organizing element of the

continent, which wraps around
• the East and South China Seas,
• the Bay of Bengal and
– Indian Ocean
– Securing the right to patrol, build bases and regulate trade
through these waterways can mean access to resources
critical to sustaining economic growth and political stability.
• China will continue to push herself in the South China Sea
because controlling the waters is key to its national security
strategy.
• Since the end of the Cold War, the US has been the unquestioned
pre-eminent power in the Pacific Rim
• The United States will be limited in its ability to respond because
of
– its concerns about escalation
– because of China's nuclear capabilities.
– Russia Rising
– North Korea as a Nuclear Flash Point and S.Korea and Japan
will remain involved
• North Korea will remain a ‘Rogue State’ for US, Japan and South Korea
• Chinese territorial claims — and island building — in contested waters of
the South China Sea.
 Why Asia-Pacific Rim
is Critical for China…..

Why US will remain a

Power Factor in the
Pacific…..

Entry of New Regional

Actors in the Indo-
Pacific…

India
Pakistan
Australia
Vietnam complained recently
about new Chinese lighthouses, for
example, and the Philippines has
taken its counterclaims to
international court.

In pursuit of their respective

interests, the United States and As an island nation with few natural resources,
China have chosen to interpret Japan’s economic lifelines can only pass
international maritime law through the seas — it has no land options.
differently.
US: Realignment Rebalancing in the Region
• U.S. national strategy is to maintain global superiority at sea.
• By controlling the seas, the US is able to guarantee the secure
movement of U.S. goods and to deploy military power worldwide.
• China has been emerging as a potential regional hegemon
• the South China Sea has become the most visible area of tension.
• China is no longer able to protect its national economy without
securing the maritime routes it needs to maintain trade and to
feed
• Beijing is reshaping the status quo in the South China Sea
– With neighbors unable to directly challenge China’s concrete actions in
the sea,
– and the United States hesitant to use force to halt Chinese expansion,
• However, Japan has announced to establish her own military, naval
and air force on modern lines
• South Korea has shown her intentions to modernize her air force and
navy
• Australia during COVID-19, has shown her US ties more important
than her trade ties with China
• China in order to secure her strategic interests have started a very
ambitious and adventurous plan-the BRI
 The Indo-Pacific and the Changing Regional Dynamics

• US-India strategic partnership on the rise

• US is trying to keep its dominance in the region
– Diego Garcia-US Naval Bases in the Indian Ocean
• China try to enter the Indian Ocean
– Sri Lanka Port
– Gwadar Port
– Chabahar
– Djibuti Port
• Pakistan Looking beyond Middle East Partners
– Turkey, Malasiya, Iran etc
CHINA CARVING A NEW ASIAN ORDER THROUGH BRI

• The BRI
 BRI
• Announced in 2013- China connecting herself with the world…….
• Land Route is called “ Silk Road Economic Belt”
• Sea Route is called “Maritime Silk Road ”
• Purpose
– Economic corridors
– Trade
– Energy
– Transportation and communication
– Infrastructure Dev
– Cultural links and diplomacy
 BRI
• 1000 billion US Dollars
• Initially, More than 66 countries, mostly are
developing countries
• It will connect two third of world population- WB
• As of October 2019, the plan touches 138
countries with a combined Gross Domestic
Product of $29 trillion and some 4.6 billion
people.

https://chinapower.csis.org/china-belt-and-road-initiative
 BRI: Action Plan
In March 2015, the Ministry of Foreign Affairs disseminated an action
plan
• to better align high-level government policies like economic
development strategies and plans for regional cooperation
• Strengthening the coordination of hard infrastructure
development plans
• development of soft infrastructure development-Trade
agreements, financial integration, uniform standards
• people-to-people connections
 Belt & Road Forum

• 1st held in 2017, 2nd in 2019

• Attract potential countries
• Projection and promotion of BRI
• Strengthen relations with BRI countries
• Clarify misunderstandings about BRI
 BRI Dynamics
• World powers opposing it • China promotes “Shared
• Regional resistance Future” policy
– India
• Critics say China
– Japan
– Australia
promoting defense and
•
strategic interests
China’s Debt Trap or Debt
Diplomacy.
– Due to this criticism, name was • Whether USA ever be part
changed from OBOR to BRI
of BRI
– Srilanka Port control transferred to
– US-China Trade War
Chinese Company in 2017
– China’s loan constitutes less than • India not in the BRI Forum
2% of SriLanka’ total debt, while of
Europe is more than 10%
– China’s Loans to Pak are 2-3 % of
total debt
China Pakistan Economic Corridor
Overview, Opportunities and Risks
 Belt and Road Initiative
• Multi-billion dollar initiative that aims to create a modern Silk
Road connecting the world’s second-largest economy with
Central Asia, Europe and Africa

• 68 countries have signed up to the initiative

• It is expected to cost 1 trillion USD

• Enshrined in the Chinese Communist party’s constitution

Old Silk Route Map
Belt and Road Initiative Map
Belt and Road Initiative Map
BRIEF OVERVIEW OF CPEC
CPEC: Nodes and Functional Zones
 CPEC Cooperation Fields
• Energy (Coal, Wind, Solar, LNG , Transmission)

• Infrastructure (Road, Rail, Aviation, Data connectivity)

• Gwadar Port (Socio-economic development)

• Industrial Cooperation (Gwadar Free Zone is

operational and other SEZ’s and industrial parks are
being finalized)
• Socio-Economic Dev. Projects
 Sectoral Composition of CPEC
Sector Amount (USD Projects
Billions)

Energy 35 21 projects
Roads 6.1 2 projects
Rail 3.7 2 projects
Lahore Mass Transit 1.6 1 project
Gwadar Port 0.8 11 projects
Fiber optics 0.04 1 project
Mass Transit & New Projects 14.5 10 projects
Total 62
 Financing
Sector
Modes
Amount (USD
of CPEC
Financing Mode
Billions)

Energy 35 FDI
Roads 6.1 Soft Loan
Rail 3.7 Soft Loan
Lahore Mass Transit 1.6 Soft Loan
Gwadar Port 0.8 Loans & Grants
Fiber optics 0.04 Loans
Mass Transit & New Projects 14.5 Soft Loans
Total 62
 CPEC Long Term Plan
Early Harvest Projects 2015-2019 Most energy projects
Common and eastern alignment of CPEC
Gwadar port development
Railways

Short term Projects 2019-2022 Western route projects

Optic fibre
Gwadar port development
Railways (ML-1 upgradation)

Medium Term Projects 2022-2025 Railways (ML II)

Industrial Zones

Long Term Projects 2025-2030 Railways (ML-III)

Industrial Zones
Tourism
CPEC Road Network
CPEC Railway Network
CPEC Fiber Optic Network
 Expected Gains from CPEC
• Economic Growth
– Energy production (10,000+ MW has been added to
national grid)
– Employment generation during construction phase
– Boost in industrial production and export revenues
– Stimulation of Private Investment

• Potential to reduce regional disparities and conflict

• Promotion of regional trade with neighbouring

countries
CPEC: China’s Motivation & Objectives
• Strategic Objective
» To become global leader by making Eurasia economic
and trading rival to transatlantic zone dominated by
America
» Increased control over strategic sea routes

• Secondary Objectives
– Finding profitable home for China’s vast foreign reserves
– Stimulus package for a slowing economy: New markets for
Chinese Companies such as high-speed rail firms
– Export excess capacity in cement, steel and other metals
– Stable neighborhood for its restive western
provinces
 Potential Risks and Challenges
• Debt sustainability & sovereign guarantee crisis

• Security issues

• Implementation delays (political instability, weak capacity)

• High Costs and Conflict of Interest Issues

• Rise in regional inequality and ethnic tension

• Negative Impact on local industry

• Thank You
 The Rise of China
• China needs to fulfill its ‘Chinese Dream’

• Needs access to World markets

• Wants military dominance in the Asia-

Pacific

• Needs alternative trade and strategic route

through Indo-Pacific, in case if there is
active conflict in the Asia-Pacific
Why Asia-Pacific
Rim is Critical for
China…..

Why US will
remain a Power
Factor in the
Pacific…..

Entry of New
Regional Actors
in the Indo-
Pacific…

India
Pakistan
Australia
 CHINA CARVING A NEW ASIAN ORDER

• The BRI
 BRI-a New Silk Road
• BRI is an Infrastructure Development
Diplomacy
• China is opening up to the East and the
West
• redefines China’s geopolitical relations
• President Jinping’s New Silk Road
initiatives include
– the Silk Road Economic Belt, and
– Maritime Silk Road (MSR) of the
21stcentury.
 BRI
• Announced in 2013- China connecting
herself with the world…….
• Land Route is called “ Silk Road Economic
Belt”
• Sea Route is called “Maritime Silk Road ”

• BRI also the best strategic choice for China

to deal with the United States
 BRI-an Ambitious Global Plan
• 1000 billion US Dollars
• Initially, more than 66 countries, mostly are
developing countries
• It will connect two third of world population-
(World Bank)
• As of October 2019, the plan touches 138
countries with a combined Gross Domestic
Product of $29 trillion and some 4.6 billion
people.
https://chinapower.csis.org/china-belt-and-road-initiative
 BRI Dynamics
• World powers opposing it • China promotes
• Regional resistance
– India
“Shared Future” policy
– Japan • Critics say China
– Australia
promoting defense and
• China’s Debt Trap or Debt
Diplomacy.
strategic interests
– Due to this criticism, name was
changed from OBOR to BRI
– Srilanka Port control
• Whether USA ever be
transferred to Chinese part of BRI
Company in 2017
– US-China Trade War
– China’s loan constitutes less
than 2% of SriLanka’ total • India not in the BRI
debt, while of Europe is more
than 10% Forum
– China’s Loans to Pak are 2-3 %
of total debt
Old Silk Route Map
Belt and Road Initiative Map
China Pakistan Economic Corridor
Overview, Opportunities and Risks
 CPEC-Background
• China becoming a new center of the world
economy
• It needs to link its economy with East Asia,
Central Asia, West Asia and Europe
• its economic development is increasingly
dependent on international oil and gas
resources.
– Its dependence on foreign oil has reached 70%
 CPEC
• On April 20, 2015, Pakistan and China signed a
landmark agreement to start CPEC
• The China Pakistan Economic Corridor (CPEC) is
being called a ‘Game Changer’ and a ‘Fate
Changer.’
• The CPEC is not just an economic project.
– Although, the core of the project will remain geo-
economic
– But it has many civilizational, cultural, political and
strategic dimensions.
• CPEC-a flagship project of China’s “Belt and Road
Initiative”
• linking China through the Arabian Sea and the Persian
Gulf, it connects it with;
– Central Asia
– the Middle East and
– South Asia.
• CPEC will expand trade potential and enhance energy
security of the region.
• CPEC can help the neighboring countries to connect
with each other
 CPEC-6 Dimensions
1. Strategic energy cooperation-Energy corridors,
oil and gas pipelines
2. Regional Connectivity through Infrastructure
Development - highways, railways, fiber optics
3. Technical cooperation
4. Strategic cooperation
5. Business development and Mega Cities
Network-SEZs
6. Cultural and people-to-people diplomacy
BRIEF OVERVIEW OF CPEC
CPEC: Nodes and Functional Zones
 CPEC Cooperation Fields
• Energy (Coal, Wind, Solar, LNG , Transmission)

• Infrastructure (Road, Rail, Aviation, Data

connectivity)

• Gwadar Port (Socio-economic development)

• Industrial Cooperation (Gwadar Free Zone is

operational and other SEZ’s and industrial
parks are being finalized)
 CPEC PROJECTS
Sector Amount Projects
(USD Billions)

Energy 35 21 projects
Roads 6.1 2 projects
Rail 3.7 2 projects
Lahore Mass Transit 1.6 1 project
Gwadar Port 0.8 11 projects
Fiber optics 0.04 1 project
Mass Transit & New
Projects 14.5 10 projects
Total 62
 Financing Modes of CPEC
Sector Amount (USD Financing Mode
Billions)

Energy 35 FDI
Roads 6.1 Soft Loan
Rail 3.7 Soft Loan
Lahore Mass Transit 1.6 Soft Loan
Gwadar Port 0.8 Loans & Grants
Fiber optics 0.04 Loans
Mass Transit & New
Projects 14.5 Soft Loans
Total 62
 CPEC Long Term Plan
Early Harvest Projects 2015-2019 Most energy projects
Common and eastern alignment of CPEC
Gwadar port development
Railways

Short term Projects 2019-2022 Western route projects

Optic fibre
Gwadar port development
Railways (ML-1 upgradation)

Medium Term Projects 2022- Railways (ML II)

2025 Special Economic Zones

Long Term Projects 2025-2030 Railways (ML-III)

Special Economic Zones
Tourism
CPEC Road Network
CPEC Railway Network
CPEC Fiber Optic Network
 Expected Gains from CPEC
• Economic Growth
– Energy production (10,000+ MW has been added to
national grid)
– Employment generation during construction phase
– Boost in industrial production and export revenues
– Stimulation of Private Investment

• Potential to reduce regional disparities and conflict

• Promotion of regional trade with neighbouring

countries
 CPEC: China’s Objectives

• Strategic Objective
» To become global leader by making Eurasia
economic and trading rival to transatlantic zone
dominated by America
» Increased control over strategic sea routes

• Secondary Objectives
– Finding profitable home for China’s vast foreign reserves
– Stimulus package for a slowing economy: New markets
for Chinese Companies such as high-speed rail firms
– Export excess capacity in cement, steel and other metals
– Stable neighborhood for its restive western
provinces
 Potential Risks and Challenges
• Debt sustainability & sovereign guarantee crisis

• Security issues- particularly in Balochistan

• Implementation delays (political instability, weak capacity)

• High Costs and Conflict of Interest Issues

• Rise in regional inequality and ethnic tension

• Negative Impact on local industry

• Foreign hands sabotaging the CPEC

 CPEC- Future Dynamics
• The Indian Ocean will become the new theater of struggle for world
powers
• CPEC defines China’s changing geo-economic and geo-strategic
perspective.
• the construction of ports in the Indian Ocean as the foothold along
the 21st century MSR —
– the Gwadar Port in Pakistan,
– Hambantota Port in Sri Lanka,
– Chittagong Port in Bangladesh, and
– the Kyaukpyu Port in Myanmar
• And with the completion of the CPEC, China will have a strategic
advantage over US and India
• Even, the emerging Sino-Russia ties under BRI and SCO will offer
Russia access to the Indian Ocean
 US-China Rivalry
• China does not have military allies and military
bases overseas to secure BRI and its economic
corridors
• whereas the United States have troops and
more than 900 military bases around the
world
 The Indo-Pacific and the Changing Regional Dynamics

• US-India strategic partnership on the rise

• US is trying to keep its dominance in the region
– Diego Garcia-US Naval Bases in the Indian Ocean
• China try to enter the Indian Ocean
– Sri Lanka Port
– Gwadar Port
– Chabahar
– Djibuti Port
• Pakistan Looking beyond Middle East Partners
– Turkey, Malasiya, Iran etc
 Challenges to the CPEC
• Pakistan has to balance its relations with US and China
– A balancing foreign policy is required
• Security of CPEC is a concern for China
– Baloch separatists should be subdued
– Shia-Sunny sectarian violence not only hamper CPEC in
Balochistan but also affect Pak-Iran relations
• Indian vehemently opposing CPEC
– An economically strong Pakistan having strategic ties with China
and Central Asia is a threat to India’s hegemony in South Asia
– India has increased cooperation with the US, Japan and the West
– It is to counterbalance Sino-Russian influence in South and Central
Asia
 China may bring Regional allies together

• A triangle of Pak-Iran-
Afghanistan
• TAPI and IPI Gas Pipelines
may be redirected to
connect with CPEC
• China has signed $ 400 Bil.
Agreements with Iran
• Turkey has the key position
in BRI when it enters Europe
The Modern Greate Game in Central Asia and
Beyond
A New Cold war and Containment has started