China Pak Economic Corridor (CPEC), initially a $46 billion project, has secured an additional $8.5 billion of new investment from Beijing as part of the countries’ joint ventures on energy, infrastructure and transport. The primary aim of CPEC is to rid Pakistan of the massive power shortfalls and link China’s landlocked north-west to the world’s largest deep-sea port at Gwadar on the Arabian Sea. An estimated $4.5 billion will be spent on upgrading railway tracks, a possible construction of a high speed rail line from Karachi to Peshawar. Another $4 billion will go toward an LNG terminal and transmission line. Federal Minister Ahsan Iqbal said,
This has now all been approved, so this is an additional $8.5 billion to the $46 billion we had already, so we are now close to $55 billion.
The International Monetary Fund predicted in June, 2016 that Pakistan’s gross external financing needs would rise to $15.1 billion in 2018/19 as opposed to $11.4 billion in the current financial year however, Iqbal is of the opinion that the risks would be countered by the massive economic boost Pakistan will receive by the investment. He said,
As the economy grows, our capacity to undertake the responsibilities of repayments also improves. What really matters is that all of that investment is going into productive sectors.
Under CPEC, new economic zones will created all along the corridor. Iqbal hopes that some industries from China will shift to Pakistan because of cheaper wages and production costs. He added,
Our preferred mode is joint ventures, because that will a stake to both Pakistani and Chinese enterprises so now our government is actively promoting business-to-business links.
While China-Pak Economic Corridor will take a few years to complete, the benefits have already started emerging. A few more years, and this massive investment by China will start yielding results that will not only benefit China, but Pakistan for the foreseeable future.You can follow us on Facebook, Twitter, or Google+ for more updates. Otherwise fill in the subscription box above, or subscribe to our RSS Feed.