"The 1,800-kilometer China-Pakistan railway is planned to also pass through Pakistan's capital of Islamabad and Karachi," Zhang Chunlin said at the two-day International Seminar on the Silk Road Economic Belt in Urumqi, Xinjiang's capital, according to China Daily. "Although the cost of constructing the railway is expected to be high due to the hostile environment and complicated geographic conditions, the study of the project has already started," Zhang said. "China and Pakistan will co-fund the railway construction. Building oil and gas pipelines between Gwadar Port and China is also on the agenda," Zhang added.
|Source: China Daily|
The Pak-China link announcement was part of the discussion on China's broader effort to revive the historic Silk Route by building three main corridors through southern, central and northern Xinjiang to connect China with Russia, Europe and Pakistan. The Silk Road Economic Belt International seminar which concluded on Friday in Urumqi, Xinjinag was jointly sponsored by the State Council Information Office, China International Publishing Group (CIPG), China Academy of Social Sciences (CASS) and Xinjiang Academy of Social Sciences.
In a report last year, China's State-owned Xinhua News Agency articulated China's motivation to expand land trade in addition to building its navy to protect its sea trade. Here's what it said:
“As a global economic power, China has a tremendous number of economic sea lanes to protect. China is justified to develop its military capabilities to safeguard its sovereignty and protect its vast interests around the world."
The Xinhua report has for the first time shed light on China's growing concerns with US pivot to Asia which could threaten China's international trade and its economic lifeline of energy and other natural resources it needs to sustain and grow its economy. This concern has been further reinforced by the following:
1. Frequent US statements to "check" China's rise. For example, former US Defense Secretary Leon Panetta said in a 2011 address to the Naval Postgraduate School in California: "We try everything we can to cooperate with these rising powers and to work with them, but to make sure at the same time that they do not threaten stability in the world, to be able to project our power, to be able to say to the world that we continue to be a force to be reckoned with." He added that "we continue to confront rising powers in the world - China, India, Brazil, Russia, countries that we need to cooperate with. We need to hopefully work with. But in the end, we also need to make sure do not threaten the stability of the world."
|Source: The Guardian|
2. Chinese strategists see a long chain of islands from Japan in the north, all the way down to Australia, all United States allies, all potential controlling chokepoints that could block Chinese sea lanes and cripple its economy, business and industry.
|Karakoram Highway-World's Highest Paved International Road at 15000 ft.|
Chinese Premier's emphasis on "connectivity and maritime sectors" and "China-Pakistan economic corridor project" is mainly driven by their paranoia about the US intentions to "check China's rise" It is intended to establish greater maritime presence at Gwadar, located close to the strategic Strait of Hormuz, and to build land routes (motorways, rail links, pipelines) from the Persian Gulf through Pakistan to Western China. This is China's insurance to continue trade with West Asia and the Middle East in case of hostilities with the United States and its allies in Asia.
|Pakistan's Gawadar Port- located 400 Km from the Strait of Hormuz|
As to the benefits for Pakistanis, expanded trade and the Chinese investment in "connectivity and maritime sectors" and "China-Pakistan economic corridor project" will help build infrastructure, stimulate Pakistan's economy and create millions of badly needed jobs.
Clearly, China-Pakistan ties have now become much more strategic than the US-Pakistan ties, particularly since 2011 because, as American Journalist Mark Mazzetti of New York Times put it, the Obama administration's heavy handed policies "turned Pakistan against the United States". A similar view is offered by a former State Department official Vali Nasr in his book "The Dispensable Nation".
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Should connect the central corridor to the souther through, Zahidan, Quetta link. RCD was a threat to many international powers but seems the way for the future.
fulfills national dream of rent seeking. We contribute nothing. Just live off Chinese gifts.
Nadeem H: " fulfills national dream of rent seeking. We contribute nothing. Just live off Chinese gifts."
Chinese don't gift anything to anybody. China won't, can't build rail-link without Pakistan cooperation and some Pak funding
Many over optimistic officials of Pakistan say this corridor has the ability to eliminate poverty and unemployment in Pakistan... What do you think Mr Haq?
Anon: "Many over optimistic officials of Pakistan say this corridor has the ability to eliminate poverty and unemployment in Pakistan... What do you think Mr Haq? "
No single project can do it by itself. However, Pakistan's economic integration with world's fastest growing and soon-to-be-largest economy can go a long way toward achieving that goal over time.
Riaz bhai, when ever you post something good about Pakistan, there are always extremely bitter Hindu haters/trolls (like anonymous @ 28 and 29 June) out there. What do you think is the problem with them? Plus when you were abroad, do they behave like this there too, or Pakistanis there are too preoccupied in being Americans that they ignore slurs against their home land?....
Here's a Bangkok Post Op Ed by Ali Khizar on China-Pakistan trade and investment:
While the potential for trade with India is high, it accounts for just 5% of total volume due to longstanding military tension between the wary neighbours, while Pakistan’s exports to Afghanistan are on...
One country that is taking a bigger slice of the pie is China, which is on pace to become Pakistan’s biggest trading partner. Its share of official trade has doubled in the last decade and in absolute...
China has pledged to invest $32 billion in energy, transport and infrastructure projects in Pakistan in the next five to seven years. The Exim Bank of China has agreed to fund these projects in both the...
As they say, there is no such thing as a free lunch – Pakistan has to be cautious in selecting these projects and should not fall into a state of complacency. These investments will be in the form of loans...
Please credit and share this article with others using this link:http://www.bangkokpost.com/business/news/418135/chinese-help-for-pakistan-comes-at-a-high-price.
Don't be too harsh on them,there are valid reasons to their irrational emotions,they have been ruled by foreigners for over a thousand years and once liberated were left with half the territory of their native land. I would imagine anybody else would also act bitter in such a situation. Just ask the native Americans.Let them be happy with the militant violence in Pakistan(former part of Bharat) while their own half-left Bharat implodes from the inside:
Pakistan-China connectivity plans include high-speed fiber-optic connections as well.
With this new link, Pakistan is going to enjoy the redundant internet voice and data connectivity through China. Country is currently severed with spurs through undersea cables namely SEA-ME-WE 3&4 and IMEWE.
This dependency is not only a risk but also entails security concerns, noted APP. The voice/data and internet traffic can be monitored and disturbed easily. To offset such a threat, through this project, a link will be created between Pakistan and Trans-Asia Europe (TAE) cable in China, which would enable both Pakistan and China to have alternative routes for their international telecom traffic,” said the report citing its source.
The elites of both countries have termed Pakistan-China Economic Corridor as “future of the world,” as almost 3 billion people, which is almost half of the world’s population, from China, South Asia, Central Asia could benefit from this economic corridor.
The official data provided by Pakistan’s Federal Ministry of Planning and Development showed that being one of the biggest transit trade routes in the world, it would link China to the Middle East, Central Asia, Africa and other regions and give access to the landlocked countries to the world biggest markets, India and China.
It stated that the Pakistan-China Economic Corridor would be of high economic value as about the 3 billion people at both sides of the border would be its direct beneficiary while the overall bilateral trade volume would be increased to 7 billion dollars.
The data further showed that Pakistan intends to get the greatest benefit out of this project and for that it has planned to establish industrial parks and economic zones along the Kashgar-Gwadar trade corridor.
Pakistan’s central government’s seriousness to get maximum benefits from the Pakistan-China Economic Corridor can be judged with the fact that it has already approved the projects worth 52 billion to be started in the economic zones.
Dr. Zafar Mehmod, a prominent economist, opined that the poverty rate would be reduced to the minimum while the unemployment would almost come to an end.
Talking about the economic corridor, Javed Shahzad Malik, the high official of Ministry of Kashmir Affairs and Gilgit-Baltistan, said the dream of building up economic corridor is being translated into reality and work is under way to upgrade KKH, motorways, and railway lines, fiber optic, and oil and gas pipe lines.
He said a number of tunnels with overall length of 200 km would be constructed on different locations to maintain the vehicular speed on KKH at 80 km per hour.
Speaking with a Kabul-based Journalist, writer and political activist who worked as an advisor in the Hamid Karzai government, Azam Beg Tajik hoped that such a trade route would become a profitable hub and economic activity center, serving as a lifeline to the economy of the country in the near future.
Given the future economic prospects highlighted by the experts, government officials and local people, it is expected the Pakistan-China Economic Corridor would not only help boost economic activities but also bring the socioeconomic conditions and living standard in this region at par with other developed regions of the world.
The Executive Committee of National Economic Council on Thursday approved a dozen development schemes worth Rs428 billion including projects related to China-Pakistan Economic Corridor and raising of Balochistan Constibulary.
Under the chair of Finance Minister Ishaq Dar, the ECNEC also approved the construction of Karachi-Multan-Lahore Motorway (KLM) Project’s Sukkur-Multan leg. The approval came just days before a Pakistani delegation is set to leave for China to discuss financing issues of infrastructure and energy sector projects that will be completed under the economic corridor project.
The 387 kilometer long Sukkur-Multan project will be completed at a cost of Rs259.4 billion. 90% of the project cost will be funded by China, according to a handout issued by Ministry of Finance after the ECNEC meeting. The remaining cost of the project will come from PSDP.
The project is expected to be completed by October 2017 and will be executed by National Highway Authority. The project envisages construction of 387 km long, six lanes, Sukkur-Multan section and is part of 1,148 km Karachi-Lahore Motorway.
The body also approved land acquisition, affected properties compensation and relocation of utilities for construction of the Motorway. This will cost Rs51 billion.
With the approval of the land acquisition and construction of a section of the Karachi-Lahore motorway, the issue of Pak-China corridor route has been settled. In order to address security concerns on the old western route through Balochistan, the government has opted for the new Eastern route despite protestations from Khyber-Pakhtunkhwa (K-P) and Balochistan parliamentarians.
The old route was along the western lines of the country but passes through some restive areas. Pakistan and China have agreed to construct the economic corridor that will give access to western parts of China to Gwadar port for international trade and secure energy supplies for the future.
The ECNEC approved a project for raising the Balochistan Constabulary at a cost of Rs5.2 billion. The project is aimed at assisting police and district administration in maintaining law and order in the crisis hit province.
The project will see a 10,000 strong Balochistan Constabulary for which 6,000 personnel will be recruited. 4,000 reserve police personnel will be merged into this force to raise it to 10,000 members.
The constabulary will also be responsible for ensuring security along the economic corridor.
Gwadar free trade zone
The body also approved acquisition of land for establishment of Free Trade Zone in Gwadar at a cost of Rs6.5 billion.
The project aims to acquire 2,281 acres of land for establishing a free trade zone at Gwadar Port. 1,627 acres of the required land would be acquired from private land owners.
The meeting also approved the widening and improvement of the 250 km long Kalat-Quetta-Chaman Road section of National Highway N-25 with a revised cost of Rs 19.2 billion.
Pakistan is eying the Beijing’s proposed huge investment of about $40 billion over the next eight years in the country’s energy, water, coal, roads and other infrastructure projects.
According to the Board of Investment, a sizeable growth will be recorded in the foreign direct investment inflows from the next year’s second half.
The BOI has also established facilitation centers in Islamabad and other provincial capitals to assist small entrepreneurs in setting up their businesses valued less than Rs100 million, Dr Miftah Ismail, special assistant to the prime minister and chairman of BOI, told the media persons on Tuesday.
These offices will facilitate small and medium enterprises through one-window operation in obtaining utility connections and government registration approvals at federal, provincial and district levels. These types of legal and other administrative approval always take time.
“We are working with the provinces on simplification of their laws regarding businesses establishment, as the government wants to encourage business and creation of jobs,” said the chairman.
Business persons who want to establish their businesses will have to first apply to the head office and if they require support in provinces in taking approvals or permits, “Our directors and other officers will fully facilitate them.
This facility is available to investors and entrepreneurs with capital of Rs100 million or less,” he said.
Dr Ismail said the investment to gross domestic product ratio decreased substantially to 14 percent in 2013-14 from 19.2 percent in 2007-08 because of lowering local and foreign investments.
The fixed investment to GDP ratio was recorded at 12.4 percent as against 13 percent last year.
Pakistan’s ranking in the World Bank’s ‘Ease of Doing Business’ and on the ‘Global Competitiveness’ has been deteriorating over the last several years.
In ease of doing business, the country’s rank was at 61, which gradually slid to 110 in 2014.
The investment board chief said the board has developed an implementation plan to simplify the procedures and reduce time/cost for investment facilitation and business improvement.
For that, the board is consulting with the finance ministry, Federal Board of Revenue, Securities and Exchange Commission of Pakistan and Employees’ Old-age Benefits Institution.
Besides, said the PM special assistant, the board is focusing on improvement of the five indicators in ease of doing business index, including starting a business, dealing with construction permit, tax payment, trading across borders and enforcing contract.
“We will try to simplify them as much as possible to facilitate investors and save their time.”
He said business regulatory environment is particularly relevant for small and medium enterprises – the key driver of competition, economic growth and job creation, especially in developing countries like Pakistan.
SMEs employ some 80 percent of non-agricultural labor force and contribute about 40 percent towards the gross domestic product.
New #railway tracks to be laid from Kotri to Attock in #Pakistan under #CPEC- http://www.khaleejtimes.com/international/pakistan/new-railway-tracks-to-be-laid-under-cpec …
Some 1,254 kilometres of railway track from Kotri to Attock City via Dadu, Larkana, Jacobabad, DG Khan, Bhakkar, Kundian will also be upgraded.
Islamabad: Pakistan has planned a major installation and upgradation of railway tracks under the China-Pakistan Economic Corridor, Radio Pakistan reported on Sunday.
Under the plan, new railway tracks will be laid from Gwadar to Quetta and Jacobabad via Besima.
Five hundred and sixty kilometres of track will be laid from Bostan to Kotla Jam on main line-II via Zhob and Dera Ismail Khan, while 682km of track will be laid from Havelian to Khunjrab, the state-run broadcaster's website said.
Upgradation of 1,872km of railway track from Karachi to Peshawar via Kotri, Multan, Lahore, and Rawalpindi (including Taxila-Havelian) - along with dualisation of track from Shahdara to Peshawar - will also be carried out.
Some 1,254 kilometres of railway track from Kotri to Attock City via Dadu, Larkana, Jacobabad, DG Khan, Bhakkar, Kundian will also be upgraded.
Further, the government on Saturday gave its final go-ahead to four mega projects, including two road construction schemes under the China-Pakistan Economic Corridor (CPEC) at a revised cost of Rs862 billion - Rs214 billion or one-third higher than original estimates.
The Executive Committee of National Economic Council (Ecnec) approved the 969-megawatt Neelum Jhelum Hydropower project as well as CPEC's 118-kilometre-long Havelian-Thakot and 392-km Sukkur-Multan sections of roads. It also approved the National Highway N-70 East-West Road Improvement Project.
#Karachi-#Peshawar railway line being upgraded under #CPEC #Pakistan #China
Feasibility study for rehabilitation and up-gradation of main railway line from Karachi to Peshawar is in progress under China Pakistan Economic Corridor (CPEC) project.
Ministry of Railways sources said the project will be completed by 2020 with the help of the Chinese government. On the completion of CPEC project, speed on main line will be increased from 105 KMPH to 160 KMPH.
Apart from this, five years plan is also being prepared for rehabilitation and improvement of railways track on the network.
#China to build its first overseas naval base at #Djibouti. #India #Pakistan #Africa #CPEC #Gwadar http://reut.rs/1UHH5b7 via @Reuters
China has launched an unusual charm offensive to explain its first overseas naval base in Djibouti, seeking to assuage global concerns about military expansionism by portraying the move as Beijing's contribution to regional security and development.
The message is in stark contrast to Beijing's more bellicose stance on the South China Sea, where its claims on a vital trade waterway have raised hackles across Asia and the United States.
China has repeatedly said it does not seek a U.S.-style "hegemony" by extending its military reach, including through bases abroad.
Now that it appears it may be doing precisely that, the government has been quietly briefing on its rationale for the Djibouti base and using state media to address fears of China's aims.
"China is explaining it as part of the 'one road, one belt' strategy, to help link Ethiopia to the sea," said one Western diplomat who has been briefed by Chinese officials on the Djibouti base, referring to China's New Silk Road strategy.
That involves opening trade corridors across continents that will help bolster the Chinese economy and connect it with the rest of the world.
A $4 billion railway will connect Ethiopia's capital Addis Ababa to Djibouti's new Chinese-invested port, where a military facility will be located, according to Chinese media.
A second diplomat, also been briefed by China on the plans, said it was an "unusual" move by the normally secretive Chinese government to try and bring a degree of transparency to its plans.
"China does not want to be seen as a threat," the diplomat said.
In a lengthy statement to Reuters, China's Defence Ministry confirmed it had communicated its intentions about Djibouti to "relevant countries and international organizations", reiterating the facility was mostly for resupply purposes for anti-piracy, humanitarian and peacekeeping operations.
"What needs to be stressed is that China upholds a path of peaceful development ... and has never engaged in an arms race or military expansion. This will never change."
Djibouti, which already hosts military facilities for the United States and France, has echoed Beijing's line that the base will be used for refueling and other logistical support to fight piracy and protect trade routes.
But it also says the West should not be worried if China seeks "military outposts", given that Western nations have had them for years around the world.
Construction began in February in the country of fewer than a million people, striving to be an international shipping hub.
Djibouti's location on the northwestern edge of the Indian Ocean has fueled worries in India that it will become another of China's "string of pearls" of military alliances and assets ringing India, including Bangladesh, Myanmar and Sri Lanka.
Indian military officials told Reuters that China's naval presence in Djibouti would add another dimension to India's military contingency planning, so far confined to land and air operations stemming from a decades-old border dispute with China across the Himalayas.
Together with China's involvement in Pakistan's Gwadar port, another potential military base, the role of China's navy would be greatly enhanced and posed a threat to the Indian navy, Indian army brigadier Mandip Singh said in a paper for the government-funded Institute for Defence Studies and Analyses.
"Djibouti also enables China to base its long-range naval air assets there. And these are capable of maintaining surveillance over the Arabian Sea as well as India's island territories off the Western coast," he wrote.
The Western diplomat briefed on the Chinese plans added: "If I were Indian I would be very worried about what China is up to in Djibouti."
#US has much bigger global agenda with #India than #Pakistan: Says US Def Sec Ashton Carter - The Economic Times http://ecoti.in/P0zksb
"With respect to Pakistan, that also is an important security partner. A whole lot of issues of which counter-terrorism looms largest. And we work with the Pakistanis all the time on that," he said.
"We are long past the point in US policy-making where we look at the India-Pakistan dyad as the whole story for either one of them. We have much more to do with India today than has to do with Pakistan," Carter said.
"The days are gone when we only deal with India as the other side of the Pakistan coin, or Pakistan as the other side of the India coin. I know that there are those in India and Pakistan who are still glued to that way of thinking. But the US put that behind us some time ago," Carter said yesterday in response to a question on impact of India-US relationship on Pakistan at the Council for Foreign Relations (CFR), a top American think-tank.
#China-#Pakistan railroad will help curb extremism: Ex-Pakistan PM Shaukat Aziz. #CPEC
The China Pakistan Economic Corridor (CPEC), a railroad which will traverse western China through Pakistan, will help job creation as well as help to curb terrorism as people grow more prosperous, Pakistan's former prime minister told CNBC on Wednesday.
The $46B deal agreed upon between China and Pakistan will allow China to avoid its current maritime sea routes to bring products into the Middle East and Europe.
It will develop connectivity and create economic activity in Pakistan, former Pakistani Prime Minister Shaukat Aziz said.
"When you build a road or a highway through an area where there is none, you create economic activity, you create jobs, secondly new cities come up along that route , thirdly you have industrial estates coming so a lot of job creation takes place," said Aziz.
Despite a warning from the Pentagon that China is looking to set up a naval base in the country, the Pakistani army chief visited Beijing earlier this week to further discuss the project and the Pakistani army's involvement.
The Pakistani army will provide 15,000 special security forces to protect the investment in Pakistan, which has suffered greatly over the years due to security and terrorism issue.
"Whenever you have empty bellies, people get more vulnerable and subject to extreme behavior. If you create economic activity and give them a reason to live, if you give them a better tomorrow than yesterday, people tend to be more peaceful," said Aziz.
"We have seen over the years that in areas that have grown fast and where economic growth is strong, extremism and terrorism reduces," Aziz told CNBC.
"This is a serious initiative and we will do all what it takes to provide security and leverage this linkage between the warm waters of the Arabian sea all the way up to China."
China To Invest $8.5 Billion To Upgrade Pakistan's Rail Network, Build Gas Pipeline: Report
China will invest about USD 8.5 billion to upgrade Pakistan's rail network and to build a key gas pipeline with Iran to meet the country's energy needs, a media report said today.
The Central Development Working Party (CDWP), a Pakistan body to authorise major projects, yesterday approved USD 10 billion worth two projects. China will provide loans equivalent to 85 per cent (USD 8.5 billion) of the cost of each project.
The cost of upgrading of Pakistan Railways existing Mainline (ML-I) and establishment of a dry port near Havelian is USD 8.2 billion, which the Chinese government will finance with a USD 7 billion concessionary loan, The Express Tribune reported.
This project is part of USD 46 billion China-Pakistan Economic Corridor (CPEC) package and is covered under the CPEC Framework Agreement, signed during the April 2015 visit of Chinese president to Pakistan.
The estimated cost of Gwadar-Nawabshah LNG Terminal & Pipeline project, also cleared in principle, is USD 2 billion including USD 1.4 billion Chinese loan. This project is strategically important for Pakistan as it will eventually link the country's gas network with Iranian system.
"The exact costs of both the projects will be firmed up after finalising financing arrangements," CDWP Chairman and Minister for Planning, Ahsan Iqbal, said.
"After finalisation of the financing arrangements, both the projects will be taken to the Executive Committee of National Economic Council (Ecnec) with firmed up cost for final approval," he said.
At present, Pakistan Railways is picking up less than 4 per cent of the traffic volume of the country, which the government intends to increase to at least 20 per cent by 2025.
The project is planned to be completed in two phases in five years by 2021 on engineering, procurement and construction (EPC) mode. Phase-I will be completed by December 2017 and Phase-II by the year 2021.
The CDWP also cleared Gwadar-Nawabshah LNG Terminal and Pipeline Project at an estimated cost of roughly USD 2 billion or Rs. 206.6 billion.
The Chinese Exim bank will provide 85 per cent of the financing under government-to-government mode. The EPC contract will be given to a Chinese company. The pipeline project will be included in the CPEC framework.
The key objective of this project is to overcome gas shortages by importing LNG and its transportation through Gwadar-Nawabshah pipeline.
In phase-I, the pipeline will follow the coastal pipeline corridor, which was formally established for the Iran-Pakistan gas pipeline. In phase-II, a 90-kilometer patch will be constructed from Gwadar to Pakistan-Iran border to tie the national network with Iranian system.
#Pakistan to launch $US 8.2bn upgrading #railway track project. International Railway Journal #CPEC http://www.railjournal.com/index.php/main-line/pakistan-to-launch-dolus-82bn-line-upgrading-project.html?channel=524 … via @railjournal
THE Pakistan government has approved a $US 8.2bn project to upgrade the 1872km Karachi - Peshawar main line by 2021, 85% of which will be funded by a concessionary loan from China the terms of which will now be negotiated.
The project is part of the $US 46bn China-Pakistan Economic Corridor, a framework agreement for which was signed in April 2015 during a visit to Pakistan by China's president Mr Xi Jinping.
The work will be carried out in two phases, with the first due for completion in December 2017 and the second in 2021. The project will include track relaying, and upgrading of bridges, tunnels, and culverts, with the objective of increasing the axleload from 22.8 tonnes to 25 tonnes. A dry port will also be constructed at Havelian and the 55km line from there to Taxila will be upgraded.
Pakistan Railways currently has a 4% share of national traffic and the government wants to increase this to at least 25% by 2025.
#China to lend $5.5 B and ADB another $2.5 billion for #Pakistan's $8 B #Rail link project. #CPEC http://ecoti.in/z8wb4Z via @economictimes
About 75 per cent of the country's (rail) cargo and passenger traffic passes through the 1,687 km-long Peshawar-Karachi rail line.
Earlier, China had agreed to provide $3.7 billion out of the $46-billion CPEC program for the ML-I project and "now it has decided to increase its contribution to $5.5 billion," Iqbal said.
The Asian Development Bank (ADB) would provide $2.5 billion t ..
The Peshawar-Lahore section of the ML-I will be built with the ADB loan.
The rail project would be completed in five to six years after which the rail speed would double to 180 kilometres per hour.
Regional cooperation forum: #CAREC offers avenues for deeper economic links among Stans #CentralAsia #Pakistan #CPEC
ISLAMABAD: Pakistan recently hosted the 15th meeting of the Central Asia Regional Economic Cooperation (Carec), a body working for the collective benefit of the region by promoting economic cooperation.
Pakistan is increasingly looking at Central Asian states in an effort to forge trade links and give a fillip to its dwindling exports. However, so far, it has not been able to tap the full trade potential because of lack of infrastructure for connecting the South and Central Asia regions.
Carec is also pushing ahead with plans to encourage regional connectivity to enhance the trade volume.
In the Carec meeting, more than 200 participants from 10 member states and multilateral development partners participated. The member countries included Afghanistan, Azerbaijan, China, Kazakhstan, Kyrgyzstan, Mongolia, Pakistan, Tajikistan, Turkmenistan and Uzbekistan while Georgia took part as an observer.
Carec is an important forum that encourages regional countries to develop physical networks and infrastructure and ensure peace, stability and economic development.
Strategies and initiatives were highlighted at the huddle to stimulate much-needed investment in energy sector of the member states. After a briefing on selected case studies undertaken by Carec members including Pakistan, prominent investors shared their insights to identify and make investments in energy projects.
Addressing the meeting, Prime Minister Nawaz Sharif appreciated that Carec had mobilised $29 billion for pouring into regional development projects and voiced hope that a mid-term review of the regional body in the next 10 years would prove to be an opportunity to fast-track economic cooperation.
The regional connectivity may lead to economic development and prosperity of the region. In this connection, Pakistan is working on energy projects such as the Central Asia-South Asia 1,000-megawatt (Casa-1,000) power import project and the Tapi gas pipeline that will start from Turkmenistan.
The Casa-1,000 is also going to pave the way for digital connectivity between the two regions through a fibre optic cable network called Digital Casa-I, which will link Tajikistan, Afghanistan and Pakistan.
The existing cable reaches Pakistan after going through a long route. It first goes to Russia, extends to Europe and then comes to Pakistan.
The new project will provide a good route to connect the two regions. It will allow regional countries to become independent while tapping the international internet channels.
In his welcome address at the Carec ministerial meeting on the theme “Linking connectivity with economic transformation”, Finance Minister Ishaq Dar said the China-Pakistan Economic Corridor (CPEC) programme, which Pakistan had undertaken, would complement regional connectivity initiatives of Carec members.
He stressed that the CPEC offered a massive opportunity for connectivity between Central Asia, Middle East and Africa and was bound to play a defining role in economic development of the two regions.
Dar said improving the transport corridor was not an end in itself but it was an investment in establishing sound infrastructure and complementary frameworks for shared prosperity of the present and future generations in the region.
The markets of Central Asian states and Russia are open and this is the area where Pakistan needs to increasingly focus on.
With an air of distrust between Islamabad and Washington over the latter’s inclination towards Delhi, China and Russia could not only support Pakistan’s economy, but they will also block India’s efforts to isolate Pakistan in the international arena. To achieve all that, Pakistan needs to forge deeper links with the Central Asia region and Carec can play a decisive role in that connection.
CPEC to strengthen CAREC by expanding north-south corridor:
The primary north-south transport corridor in Pakistan runs from Torkham on the northern border with Afghanistan and passes through primary production and population centres such as Peshawar, Islamabad, Faisalabad, Multan, and Khanewal, before reaching the port city of Karachi in the south. The corridor serves the economy of an area that accounts for 80 percent to 85 percent of the country’s GDP and in the regional context, forms an integral part of the Central Asia Regional Economic Cooperation (CAREC) corridors 5 and 6 after Pakistan's accession to the CAREC Programme in 2010.
The M-4 Motorway, linking Faisalabad with Khanewal, would be completed by July 2018, said National Highway Authority (NHA) member Mansoor Ahmed Sirohey on Friday.
He told journalists that the Asian Development Bank (ADB) is the leading financer in M-4 Motorway, as the bank disbursed $170 million (77 percent share of the project) in 2009 for construction of a 58km four-lane motorway M-4, connecting Faisalabad to Gojra (section I). This section was completed in December 2014.
Similarly, the ADB would provide 56.15 percent share of the funding of the section II of the M-4, which will construct the 62km four-lane access controlled motorway connecting Gojra and Shorkot. Meanwhile, government of the United Kingdom would provide grant of 29.02 percent and Pakistan would release share of 14.83 percent. The project is expected to complete by 2018, he added.
Sirohey said that contract for section-III of the motorway linking Shorkot to Khanewal has been signed and construction is expected to commence in December 2016. The ADB noted that M-4 Motorway in Punjab, linking Faisalabad with Khanewal, will cut travel time and support the government's broader goal of improved investment and trade flows along the country's vital north-south corridor route. Once fully completed, the M-4 Motorway will provide a faster, safer, more cost-effective north-south route to the currently overburdened national highway 5 and other existing narrow and congested routes.
#GE Transportation in #Eerie #Pennsylvania to build 20 #locomotives for #Pakistan, creating new jobs for #Americans
GE Transportation workers in Erie will have more work to do, thanks to a new order for 20 locomotives from Pakistan Railways.
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This latest order, announced this week, represents an expansion of a 2015 order for 55 Evolution series locomotives, 32 of which are already in service.
At about 2,000 horsepower, the locomotives being built for Pakistan are lighter and less powerful than the 4,600 horsepower locomotives the company builds for North American customers.
“These lighter-weight locomotives,” according to a statement from GE Transportation, “are designed to better maneuver difficult access roads.”
For Pakistan, the purchase is part of a strategic move to increase the percentage of freight moved by rail from 4 percent to 20 percent in the next 10 years.
For the Erie plant, which has been building about two locomotives per week, the order represents a small but important boost that could represent a certain amount of security at a plant where about 1,500 jobs were cut in the first half of 2016.
“Any work is good news,” said Scott Slawson, president of Local 506 of the United Electrical, Radio and Machine Workers at GE Transportation. “We are in a downturn that we are hoping to turn around.”
There have been some positive signs lately.
Slawson said a handful of people on the layoff list have been called back to work recently. While some of those employees will be taking the jobs of workers who have retired, Slawson said a number of others will provide labor in areas of specific need within the company.
Workers in Erie recently wrapped up work on the first two locomotives in an order of 1,000 locomotives for Indian Railways. The first 40 locomotives will be built in Erie, followed by 60 so-called kits that will be built in Erie and then shipped to India for final assembly. The remaining 900 locomotives will be built in India over the next 10 years.
Slawson said the employment situation at the Erie plant, which builds locomotives for the international market, might be substantially different if the Indian Railways order, the largest in the company’s history, was to be built exclusively in Erie.
“That would have been huge,” he said.
The spatial competition between containerised rail and sea transport in Eurasia
The competition in space between rail and sea transport is of great significance to the integration of Eurasia. This paper proposes a land and sea transport spatial balance model for container transport, which can extract a partition line on which transport costs by rail and sea are equal given a destination. Four scenarios are discussed to analyse the effects of different factors on the model. Then the model is empirically tested on current rail and sea transport networks to identify the transport competition pattern in Eurasia. The location of destinations, the freight costs, and time costs are the three main factors affecting the model. Among them, time costs are determined by the value of a container and its contents, the interest rate, and by time differences between land and sea transport. The case study shows that Eurasia forms a transport competition pattern with a land area to sea area ratio of about 1:2; this ratio, however, changes to 1:1 when time costs are considered. Further, the land and sea transport balance lines are consistent with the theories of geopolitics, which indicate that the same processes may exist in the spatial pattern of geo-economics and geopolitics in Eurasia. According to the balance lines, we get a spatial partition, dividing Eurasia into the land transport preferred area, the land–sea transport indifference area, and the sea transport preferred area. The paper brings a new perspective to the exploration of geopolitical economic spatial patterns of Eurasia and provides a practical geographic theory as an analytic basis for the implementation of the Belt and Road Initiative.
There are some limitations in the case study too. First, it is based on the precondition of using Beijing and Berlin as the destinations, and the current fluctuated values of speeds, goods and freight rates are all set unique. According to the simulation under different scenarios, preferential policies for transportation could be carried out by governments or transport companies in different places, which could further strengthen the practicality of our model. Specifically, some countries (such as India) oppose China’s BRI (Blah, 2018; Pattanaik, 2018). Therefore, we could add evaluations of the strategies for infrastructure construction, of such countries, in the future. Second, container transportation is a complex process. The extent to which the cross-border transportation between countries is frictionless will affect the land transport pattern. Moreover, these factors are difficult to quantify and have not been considered in this paper, such as unequal freight cost rates in different countries, different capabilities and widths of rails, time spent at ports, tariffs, insurance costs and so on, which may also influence actual costs. Third, in not considering the road network, this paper presents a basic possible pattern of land and sea transport balance based on the current railway and maritime networks, which may bias our results. At a strategic level, the results can offer positive suggestions to influence a better approach for transportation. It will, however, be necessary for individual decision-makers to make accurate calculations of the costs of different routes at a micro-level. Additionally, container shipping on the northern sea route is a potential transport corridor (Verny and Grigentin, 2009), it could be included in the future study. Moreover, because of the organisational system and mature development of transport companies, the related data of container transport are easy to obtain, which helps determining the costs and speeds more easily. In contrast, it is hardly to collect datasets of bulk transport. However, the effect of bulk transport may be significant because it is likely to form a large proportion of global maritime trade (J.P.Morgan Asset Management, 2019). This may render some ports more economically viable.
The spatial competition between containerised rail and sea transport in Eurasia
In the future, the BRI will be significant to the integration of economic trade in Eurasia, following the premise that land and sea transport should find a spatial balance. In fact, analysis of the competition and cooperation between land and sea transport can also be of theoretical significance for transport geography. This paper presents a LSTSB model based on the conceptualised Eurasia and simulates different land–sea transport scenarios. We then identify the transport balance lines by applying the model to Eurasia and present the partition of land and sea transport dominated areas in line with the theories of geopolitics.
The main insights are as follows:
Four scenarios based on different locations of destination, different freight costs, different values of a container’s goods and different speeds of transport are simulated using the theoretical model. They show that these basic factors influence the spatial balance lines of transportation. The results indicate that land transport is relatively competitive with sea transport but that this depends on different factors. Land transport may be undervalued at present due to long-term cooperation behaviour between governments or enterprises with maritime companies.
The case study shows that in terms of freight costs, maritime transport has an obvious advantage in Eurasia. The transport spatial balance line divides the Eurasian continent into a land and sea transport competitive pattern with an area ratio of 1:2. However, this ratio changes to 1:1 when we take time costs into consideration. Results show that the Economic Belt on road has economic feasibility and rationality.
Furthermore, the spatially competitive pattern of land–sea transport in Eurasia is highly consistent with geopolitical theories. This paper presents a partition of transport areas based on the calculation of balance lines, showing the land transport preferred area, the sea transport preferred area and the land–sea transport indifference area. The partition shows that the China–Russia–EU region, located in the land transport preferred area and the land–sea transport indifference area, is the key pivot area of integration influencing the current economic geographic imbalance in Eurasia. Further, it can serve as the analytic basis underpinning the necessity of increasing cooperation between China and the EU under the BRI, which is in the land–sea indifference area. Thus, the LSTSB model can bring a new perspective to the discussion of the spatial pattern of geopolitics and geo-economics in Eurasia.
Impact of Transport Cost and Travel Time on Trade under China-Pakistan Economic Corridor (CPEC)
Khalid Mehmood Alam
China is the second biggest economy in the world and almost 40% of its trade in 2016 is transported through the South China Sea. China needs a small, secure, and low-cost path to trade with Europe and the Middle East and China-Pakistan Economic Corridor (CPEC) is a feasible solution to this requirement. This research analyzes the effect of CPEC on trade in terms of transport cost and travel time. In addition, the study compares the existing routes and the new CPEC route. The research methodology consists of qualitative and descriptive statistical methods. The variables (transport cost and travel time) are calculated and compared for both the existing route and new CPEC route. The results show that transport cost for 40-foot container between Kashgar and destination ports in the Middle East is decreased by about $1450 dollars and for destination ports in Europe is decreased by $1350 dollars. Additionally, travel time is decreased by 21 to 24 days for destination ports in the Middle East and 21 days for destination ports in Europe. The distance from Kashgar to destination ports in the Middle East and Europe is decreased by 11,000 to 13,000 km.
Transportation is the shifting of goods by truck, rail, road, and sea and is reasoned as an important indicator for economic development . Transport has two main parts. The first part represents vehicles that are either van, truck, rails, airplanes, or ships and second part represents the transport infrastructure such as roads, highways, seaways, airways, and railway tracks on which transport runs smoothly. In the recent days, both parts of transportation are considered as an important factor of trade and help in reducing transportation cost and travel time. The selection of transport mode for delivery of goods within less time and minimum cost is important to maximize the profit. Every state tries its best to discover short trade routes that can reduce trade cost and transfer time. To enhance their trade, countries invest in transport infrastructures like roads and rails and adequate transport infrastructure can potentially reduce transport cost and travel time. Transport cost and travel time are considered as the most important among all factors .
Shipping industry plays an significant part in the development of trade and about 80% of world trade is transported by the international shipping industry [3, 4]. The import and export of goods on large scale are not possible without shipping . China is the second biggest economy and energy user in the world and safety of the oil supply chain stay the essential idea of China’s strategies . China is importing about 83% of oil supplies by sea, out of which 77% are functioning through the Strait of Malacca, a possible bottleneck for China . There are some factors like China’s regional disputes, pirate incidences, and geopolitics that make the Strait of Malacca as an attentive weakness for China and may stop economic development in case of any unanticipated events [8, 9]. About 60% of world pirate occurrences take place in the Strait of Malacca and presence of the Indian and US armadas in the seaway rises serious security concerns and in case of any unforeseen actions can affect trade and economic supplies of China [10–12]. To overcome these challenges, China wants to get access to deep water through Pakistan. The China-Pakistan Economic Corridor will link the city of Kashgar in Western China and the Gwadar Port in Pakistan by developing a transport infrastructure network comprising road and rail. Kashgar has great economic opportunities for the shortest land access to the local markets of Pakistan, Afghanistan, Iran, India, Uzbekistan, Kyrgyzstan, and Kazakhstan .
#Pakistan, #China agree to execute ML-1 #Railway Up-gradation Project under #CPEC on a priority basis. The agreement was reached at a virtual held meeting between the CPEC Authority and the National Development and Reforms Commission (NDRC) of China. #Transport- Business Recorder
ISLAMABAD: Pakistan and China agreed to execute the much-awaited mega ML-1 Pakistan Railway Up-gradation Project under the China-Pakistan Economic Corridor (CPEC) on a priority basis.
The agreement was reached at a virtual held meeting between the CPEC Authority and the National Development and Reforms Commission (NDRC) of China to follow up on the decisions taken during the recent visit of the prime minister to China.
Special Assistant to Prime Minister (SAPM) on CPEC Affairs Khalid Mansoor and Director-General NDRC co-chaired the meeting.
The ambassador of Pakistan in China also participated.
The meeting decided that Pakistan Railways would immediately contact the National Railway Administration (NEA) to work out further details of the project.
ML-1 project: design fault, inadequate consultancy cause delay
The meetings also discussed the schedule for holding of meetings of Joint Working Groups (JWG) for various sectors. It was decided that meetings of the Joint Working Groups for Industrial Cooperation, Information Technology, Science and Technology and Agriculture would be held in the near future.
The NDRC director-general said that the relevant Chinese institutions were already taking the necessary actions to implement the understandings reached during the visit.
The SAPM CPEC Affairs stated that the prime minister’s meeting with the Chinese leadership had been extremely fruitful and the relevant institutions of the two countries were fully geared to take the necessary steps to translate the understandings reached at the highest level into actual actions on the ground at the earliest.
The NDRC director general stated that the relevant Chinese institutions were already taking the necessary actions to implement the understandings reached during the visit. He said that the Chinese side attaches the utmost importance to the ML-1 project and several internal meetings between the National Railway Administration and other relevant institutions have been held to work out the modalities and prepare for execution of the first phase of the project.
The meeting also discussed projects in the power sector including the 300MW Power Project in Gwadar and the 1,320 MW Thar Coal Block-1 Power project. It was noted that all actions relating to these projects had been completed on Pakistan side. It was decided that the Chinese side would expedite the next steps relating to these projects.
The meeting expressed satisfaction at the pace of implementation of various projects in Gwadar such as the East Bay Expressway, New Gwadar International Airport, Pak-China Friendship Hospital, etc.
The SAPM on CPEC Affairs expressed his gratitude to the NDRC for their support and facilitation in forwarding the agenda of the CPEC.
China, Pakistan Agree to Launch $10 Billion Railroad Project
Two countries plan to upgrade line from Karachi to Peshawar
Pakistan officials have said they expect funding from China
By Faseeh Mangi
Chinese President Xi Jinping and Pakistani Prime Minister Shehbaz Sharif agreed in a meeting in Beijing to launch a high-speed rail project that could cost $9.85 billion, a move that comes as the world’s No. 2 economy moves to slow some of its lending due to growth concerns.
The two nations agreed to get started on the Main Line-1, according to a statement from Sharif’s office, which described it as “a project of strategic importance.”
That project involves upgrading a 1,163-mile, colonial-era track from Karachi to Peshawar to carry high-speed trains. Earlier this week, Pakistan formally approved the project, which has been in discussion for years, without saying where the funding would come from or providing technical details.
Officials in Pakistan have previously said they expected to get loans from China for the upgrade.
The US has in the past criticized China for using what it calls “debt diplomacy” to make developing nations more dependent on Beijing. Still, earlier this year China delayed a bailout for Pakistan as its debt soared, and it has been scaling back lending in Africa as its economy slows.
About 30% of Pakistan’s foreign debt is owed to China, including state-owned commercial banks, the International Monetary Fund said in a report in September.
In June, Moody’s Investors Service downgraded its outlook on Pakistan to negative from stable, citing financial concerns.
See: Xi Kicks Off Third Term With Flurry of Diplomatic Activity
In their talks, Xi and Sharif agreed to finalize details on an inner-city rail line in Karachi. The Chinese leader also said his nation would provide 500 million yuan ($68.7 million) to Pakistan to help it rebuild after flooding over the summer that displaced more than half a million people.
Also Wednesday, the two countries’ central banks signed a memorandum of cooperation on a yuan clearing in Pakistan, the People’s Bank of China said in a statement. It didn’t give more details.
Sharif is wrapping up a two-day visit to Beijing. China is hosting a flurry of foreign leaders this week, as Xi kicks off a norm-busting third term during which he’s vowed to increase his nation’s global influence.
Vietnam’s Communist Party chief Nguyen Phu Trong became the first foreign leader to meet Xi since the Chinese president removed rivals and installed loyalists at a leadership reshuffle last month.
Xi and his top officials are then expected to hold talks in the capital with German Chancellor Olaf Scholz and Tanzanian President Samia Suluhu Hassan. Later this month, he will likely travel to Indonesia and Thailand for major summits attended by global leaders including President Joe Biden and Russia’s Vladimir Putin.
Pakistan taps Chinese credit for railway upgrade despite debt crisis
Islamabad says $10bn revamp of colonial-era line is essential even as it faces risk of default and forex reserves plunge
Ahsan Iqbal, Pakistan’s planning minister, said the ML1 upgrade was vital to keep trains running and an example of the transformative work that Chinese credit had made possible.
“If we do not undertake this project, in a couple of years Pakistan will lose its railway logistics,” Iqbal told the Financial Times.
“The whole railway system will break down, this main line will break down. It will be very risky to run commercial operations on this track. It is no longer a choice. It is an imperative.”
Iqbal, who oversees Pakistan’s involvement in the Belt and Road Initiative, China’s international infrastructure scheme, said it would take six to nine years to complete the ML1 upgrade. The work will include replacing track, modernising signalling, converting level crossings into underpasses or flyovers and building fences to stop cattle crossing the line.
The planning minister said the project would proceed in phases “to make it more manageable”, with an initial cost of $3bn. The loan from China would be repayable over 20 to 25 years and would be “concessional”, he said, without providing further details.
Chinese lending to Pakistan goes back years, part of an effort to forge economic and military ties that will help to counter their mutual rival India. The ML1 upgrade is part of the China-Pakistan Economic Corridor, a BRI centrepiece with an estimated total cost of $60bn.
The CPEC also includes Chinese development of a deep-sea port at Gwadar in south-western Pakistan, among other projects. Beijing is separately supplying Pakistan’s military with eight submarines and advanced J-10 C fighter jets.
A western diplomat in Islamabad said that for such projects to have continued even as Beijing saw growing financial distress in BRI recipient countries pointed to the importance it put on ties with Pakistan.
“Even if the rest [of BRI] lags behind, China wants to stay the course with Pakistan,” the diplomat said, adding that the relationship had “important military aspects developed over the long term”.
The projects — and Chinese financing — have also stoked domestic tensions. Police in Gwadar last month imposed emergency measures and dismantled a protest camp that had obstructed operations at the port with demands, among others, for Chinese nationals to leave.
Projects such as ML1 have also fuelled analyst concerns over whether excessive Chinese lending is exacerbating strains on Pakistan’s precarious finances. Chinese state lenders are together among the largest creditors to Islamabad, accounting for about $30bn of its outstanding debt.
Sakib Sherani of advisory firm Macro Economic Insights said it was unfair to single out China’s role in Pakistan’s debt woes, with the largest repayments in the current financial year actually due to multilateral lenders.
But Chinese loans tend to carry higher interest rates than multilateral or other bilateral creditors, according to the AidData research lab at William & Mary college in the US. Chinese annual interest is typically 3-4 per cent compared with 1-2 per cent from OECD lenders, AidData said.
Even as it taps Beijing for the ML1 project, Pakistan is looking elsewhere for funds to help stabilise its shrinking reserves. The finance ministry is in talks with the IMF to secure the next tranche of a $7bn assistance programme, and has said it will approach “friendly” countries such as Saudi Arabia for more loans.
Sharif’s government is betting it can steady the economy in time for parliamentary elections that must be held before the end of this year.
Iqbal said he was confident the country would pull through. “Pakistan is facing economic [and] fiscal difficulties, but it is not in the range that it is a default economy yet. We are managing very prudently.”
ML-1, KCR (Karachi Circular Railway) upgrade projects to start in March
He (Ambassador Non Rong) recalled that under the CPEC, 192,000 jobs were created, 6000MW of electricity was generated, 510 km of highway was constructed and 886 km of transmission was set up, which laid a solid foundation for Pakistan’s socio-economic development. “In fact, Pakistan’s trade surplus of agricultural products is expected to exceed a record high of $1 billion in 2022,” the ambassador said.
The Chinese sources said the ML-1 is the largest infrastructure project of CPEC worth $6.86 billion. The project involves the up-gradation and dualization of ML-1 to increase the operating speed from the current 60 km/h and 105 km/h to a proposed 160 km/h. The project also involves the establishment of a dry port near Havelian. ML-1, the Karachi to Peshawar line, is one of four main railway lines in Pakistan, operated and maintained by Pakistan Railways. The line begins from Karachi City Station or Kiamari station and ends at Peshawar Cantonment Station. The total length of this railway line is 1,687 kilometers. There are 184 railway stations from Kiamari to Peshawar Cantonment on this line. The line serves as the main passenger and freight line of the country. 75 percent of the country’s cargo and passenger traffic uses the ML-1. The existing timeline for the completion of ML-1 extends to December 2024. Under the umbrella of this project, level crossing will be converted into flyovers or underpasses so that the speed can be increased by getting rid of the obstacles.
The project could not be started during the PTI government due to China’s concerns over debt repayment plan, the sources pointed out. ML-I railway line project is very important to achieve connectivity between Gwadar (Pakistan) and Kashgar (China) through a train track that will provide the easiest and safest way to transport oil between China and the Middle East, saving China travel costs. The railway line upgrade will provide faster travel facilities to the people of Pakistan and commercial benefits like bringing raw materials to the Special Economic Zone (SEZ) and faster delivery of finished goods to remote areas of the country as well Gwadar port. Another great benefit is that coal will be delivered for fuel to the power plants through the railway track, which will also generate good revenue for the railways. Due to unnecessary delays, the cost of this historic project has increased. The Imran’s PTI government failed to convince the IMF and the Chinese government to start the project. Another reason for the increase is the recent floods in Pakistan, which has destroyed the railway lines of most parts of the country. As soon as the new government was formed in April, 2022, Pakistan’s Minister for Planning Ahsan Iqbal restarted the discussion with the Chinese authorities on revival of the project.
The revived KCR operation is intended to become an inter-regional public transit system in Karachi, with an aim to connect the city centre with several industrial and commercial districts within the city and the outlying localities. In May 2017, the then government approved Rs27.9 billion ($120 million) restoration package for the KCR. However, delays and disputes with the Sindh provincial government ultimately led to cancellation of the funding. KCR would be constructed with the cost of Rs294 billion and used by 500,000 passengers/day, which would increase to 1 million in later years. KCR will have 250 modern driverless electric bullet trains, which would run 17-hours a day throughout a week. The KCR project would be run by the Sindh government through Karachi Urban Transport Corporation (KUTC) and likely to be completed by 2025.
#Chinese Gov't Commissioned Study: #China-#Pakistan #railway ‘worth it’ at estimated US$58 billion. It should proceed because of its #strategic significance. It has the potential to reshape #trade and #geopolitics across the Eurasian continent. #CPEC https://www.scmp.com/news/china/science/article/3218413/china-pakistan-railway-worth-it-estimated-us58-billion-study
Belt and Road Initiative’s most expensive transport infrastructure project ‘has potential’ to reshape trade and geopolitics
The rail link is part of a broader plan to revive ancient Silk Road connections and reduce reliance on Western-dominated routes
The China-Pakistan railway – China’s largest Belt and Road Initiative transport project – will cost an estimated 400 billion yuan (US$57.7 billion), but should proceed because of its strategic significance, a government-commissioned feasibility study has found.
The proposed railway, connecting Pakistan’s port of Gwadar to Kashgar in China’s Xinjiang Uygur autonomous region, was assessed by scientists from the state-owned China Railway First Survey and Design Institute Group Co Ltd.
The team, led by the institute’s deputy director of capital operations Zhang Ling, said the project was the belt and road plan’s most expensive transport infrastructure.
Despite the cost, the project had the potential to reshape trade and geopolitics across the Eurasian continent and should be supported, the team said in a report published by the Chinese-language journal Railway Transport and Economy in April.
“The government and financial institutions [in China] should provide strong support, increase coordination and collaboration among relevant domestic departments, strive for the injection of support funds and provide strong policy support and guarantees for the construction of this project,” they said.
The institute is one of the largest of its kind in China and has been involved in many major railway projects at home and internationally, including Indonesia’s Jakarta-Bandung high-speed rail line.
The 3,000km (1,860-mile) railway will link China’s western regions with the Arabian Sea, bypassing the Strait of Malacca and reducing dependence on the South China Sea.
Connections with other transport networks – including in Iran and Turkey – would also provide a more direct route to Europe for Chinese goods, while Pakistan is forecast to get a much-needed boost from the improved infrastructure and easier trade with China.
The scheme is a key component of Beijing’s broader belt and road plan to promote economic cooperation and connectivity among the countries along the ancient Silk Road trade routes.
Previous studies by Chinese government researchers have suggested the infrastructure initiative could have significant geopolitical implications, helping to shift the balance of power away from traditional Western-dominated trade routes.
As well as encouraging a more multipolar world order, the belt and road plan could also help to promote economic development and stability in countries along the route by creating jobs, boosting infrastructure investment and increasing trade, the studies said.
Most belt and road transport infrastructure construction projects had received a significant proportion of funding from the host countries, and the scale of investment was much smaller, Zhang and his colleagues noted.
For example, total investment in Kenya’s Mombasa-Nairobi standard gauge railway was US$3.8 billion, with China providing 5 per cent of the funding and Kenya paying for the rest.
#Chinese Gov't Commissioned Study: #China-#Pakistan #railway ‘worth it’ at estimated US$58 billion. It should proceed because of its #strategic significance. It has the potential to reshape #trade and #geopolitics across the Eurasian continent. #CPEC https://www.scmp.com/news/china/science/article/3218413/china-pakistan-railway-worth-it-estimated-us58-billion-study
The project connects the port city to the Kenyan capital and is part of a larger plan to link East African countries by rail. Similarly, China contributed 30 per cent of the US$4 billion funding for the Addis Ababa-Djibouti rail line in Ethiopia.
China covered 75 per cent of the Jakarta-Bandung high-speed railway’s costs of US$5.9 billion, with Indonesian state-owned enterprises providing the remainder.
But Pakistan is unable to make a similar contribution. Its GDP last year was US$370 billion – just six times the estimated cost of the project.
“Due to energy shortages, poor investment environment and fiscal deficits,
Pakistan’s economic growth rate has come under pressure,” the team said.
“In terms of railway investment and construction, Pakistan is unable to provide sufficient financial and material support and mainly relies on Chinese enterprises for investment and construction.”
One reason for the hefty cost is the mountainous and geologically complex terrain along the route. There could be technical challenges to overcome in the construction and operation of the railway, the researchers said.
The project also required supporting infrastructure – such as ports and logistics facilities – that might not be immediately available in Pakistan, they said.
The study said Pakistan’s labour policies could be unpredictable, which could potentially affect the railway’s construction and operating costs.
The team also noted that Pakistan had experienced security challenges in recent years, including in its western region where the railway will pass through. Balochistan province, for instance, has been plagued by separatist violence for decades.
This could potentially disrupt construction and operation of the railway and pose a risk to Chinese workers and investments, the researchers said.
The study also pointed out the railway’s potential impact on neighbouring countries, such as India. With each country having its own priorities and interests, there could be disagreements or delays in decision-making related to the project, it said.
Zhang’s team suggested that a build and transfer (BT) model would provide the best investment and financing strategy for the project.
They considered BT against build-operate-transfer, public-private partnerships, and the engineering, procurement, construction mode that are becoming more popular in belt and road projects.
In the BT model, a contractor would be responsible for designing, building and financing the railway, with payment on completion and ownership transferred to the government or other commissioning entity.
The researchers said BT would allow the risks associated with the railway’s construction and operation to be allocated more effectively between China and Pakistan, potentially reducing the financial risks for both parties.
By ensuring that ownership of the railway was transferred to Pakistan, BT could also help to build trust between China and Pakistan by showing China’s commitment to supporting Pakistan’s long-term economic development, they said.
China and Pakistan have been talking for years about the railway, a crucial part of the China-Pakistan Economic Corridor (CPEC) that was launched in 2015 and aims to connect Gwadar port to Xinjiang through a network of roads, railways and pipelines.
The researchers said the China-Pakistan relationship was complex, with both countries having different priorities and interests.
Negotiating agreements related to financing, labour policies, and other issues would require careful consideration of each country’s priorities and interests, they said.
In conclusion, Zhang and his team said their recommendation could help to move negotiations forward.
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