{"id":41190,"date":"2024-06-09T06:13:39","date_gmt":"2024-06-09T00:43:39","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=41190"},"modified":"2025-04-25T10:45:53","modified_gmt":"2025-04-25T05:15:53","slug":"pakistan-and-china-agree-to-upgrade-cpec-key-developments-and-implications","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/pakistan-and-china-agree-to-upgrade-cpec-key-developments-and-implications\/","title":{"rendered":"Pakistan and China Agree to Upgrade CPEC: Key Developments and Implications"},"content":{"rendered":"<h2><strong>What\u2019s in today\u2019s article?<\/strong><\/h2>\n<ul>\n<li>Why in News?<\/li>\n<li>What is China-Pakistan Economic Corridor (CPEC)?<\/li>\n<li>What are the different phases of CPEC?<\/li>\n<li>What are the reasons behind the stalled project under CPEC?<\/li>\n<li>India &amp; CPEC<\/li>\n<li>Debt burden of Pakistan and role of China<\/li>\n<\/ul>\n<h2><strong>\u00a0Why in News?<\/strong><\/h2>\n<ul>\n<li>Pakistan\u2019s Prime Minister Shehbaz Sharif is on a five-day visit to China. During this visit, Pakistan PM and Chinese President Xi Jinping agreed on the upgradation of the China-Pakistan Economic Corridor (CPEC).\u00a0<\/li>\n<li>Both the leaders also decided to advance high-quality development of this project in the second phase.<\/li>\n<\/ul>\n<h2>\n<strong>What is China-Pakistan Economic Corridor (CPEC)?<\/strong><\/h2>\n<p><img decoding=\"async\" src=\"https:\/\/vajiram-prod.s3.ap-south-1.amazonaws.com\/Route_of_CPEC_4d685e5d5a.webp\" alt=\"Route-of-CPEC\" \/><\/p>\n<p><strong>Image caption: Route of CPEC<\/strong><\/p>\n<ul>\n<li>During an April 2015 visit to Islamabad, Chinese President Xi Jinping and Pakistani PM Nawaz Sharif unveiled the $46 billion China-Pakistan Economic Corridor (CPEC).\n<ul>\n<li>CPEC quickly ballooned to $62 billion in pledges\u2014one-fifth of Pakistan\u2019s GDP\u2014covering dozens of envisioned high-profile projects.\u00a0<\/li>\n<\/ul>\n<\/li>\n<li>The corridor links Xinjiang with Gwadar, and also passes through Pakistan-occupied Kashmir (PoK) where China is investing in a number of projects.<\/li>\n<li>Often described as a flagship project of the Belt and Road Initiative, the stated goal of CPEC is:\u00a0\n<ul>\n<li>to transform Pakistan\u2019s economy by modernizing its road, rail, air, and energy transportation systems; and\u00a0<\/li>\n<li>to connect the deep-sea Pakistani ports of Gwadar and Karachi to China\u2019s Xinjiang province and beyond by overland routes.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2><strong>What are the different phases of CPEC?<\/strong><\/h2>\n<ul>\n<li><strong>First Phase<\/strong>\n<ul>\n<li>Various agreements such as energy, infrastructure, port development and the railway line construction have been signed under the first phase of this project.\n<ul>\n<li>I.e., first phase focused on infrastructure creation.<\/li>\n<\/ul>\n<\/li>\n<li>However, the progress in this phase has been patchy.\n<ul>\n<li>Data from the CPEC website show that of the 21 proposed power projects, 14 have been completed, two are under construction, and five are yet to start.<\/li>\n<li>Of the 24 proposed transport-related projects (rail and road), six have been completed, but no work has started on 13.<\/li>\n<\/ul>\n<\/li>\n<li>According to the official Chinese news agency Xinhua, CPEC had brought direct investment of $25.4 billion to Pakistan until 2022.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Second Phase<\/strong>\n<ul>\n<li>In February 2022, during the visit of Pakistani PM to China, industrial cooperation agreement was signed.<\/li>\n<li>This is being dubbed as the second phase of CPEC.<\/li>\n<li>The second phase primarily revolves around Special Economic Zones development and industrialisation.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2><strong>What are the reasons behind the stalled project under CPEC?<\/strong><\/h2>\n<ul>\n<li><strong>Chinese concerns<\/strong>\n<ul>\n<li>CPEC faces significant challenges due to Chinese concerns over corruption, bureaucratic delays, and political instability in Pakistan.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Security situation in Gwadar<\/strong>\n<ul>\n<li>The security situation in Balochistan, where Gwadar is located, is particularly problematic.<\/li>\n<li>Numerous Chinese nationals have been killed in terrorist attacks by Baloch militants since 2018.\u00a0<\/li>\n<li>The Baloch people view Gwadar as a symbol of economic injustice, as CPEC has not generated quality jobs or economic benefits for the local population.<\/li>\n<li>Pakistan&#8217;s security issues as a major concern for future Chinese investments.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Chinese approach of not partnering with local companies<\/strong>\n<ul>\n<li>The Chinese approach of not partnering with local companies limits job creation for Pakistani youth.\n<ul>\n<li>While the CPEC was expected to create over 2 million jobs for Pakistanis, government data shows that fewer than 250,000 jobs have been generated so far.<\/li>\n<\/ul>\n<\/li>\n<li>Since Chinese companies are tax-exempt and bring their own labor from China, they do not rely on Pakistani businesses, further reducing local employment opportunities.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2><strong>India &amp; CPEC<\/strong><\/h2>\n<ul>\n<li><strong>CPEC and the Sovereignty of India<\/strong>\n<ul>\n<li>This corridor is not only passing through India\u2019s territory but also posing a threat to the sovereignty of India.\u00a0\n<ul>\n<li>It passes through Gilgit-Baltistan area of Kashmir which is occupied by Pakistan.<\/li>\n<li>The corridor enters into Gilgit-Baltistan through Khujerab Pass.\u00a0<\/li>\n<li>This area is a part of the erstwhile princely state of Jammu and Kashmir and claimed by India.<\/li>\n<\/ul>\n<\/li>\n<li>India believes that CPEC violates the sovereignty and the territorial integrity of India.<\/li>\n<\/ul>\n<\/li>\n<li><strong>CPEC and Security threat to India<\/strong>\n<ul>\n<li>Ever since the construction of the corridor is started, the Chinese military presence in the area is also embarked.\u00a0<\/li>\n<li>In 2017, Chinese troops marched in the parade of Pakistan\u2019s day in Islamabad.\u00a0\n<ul>\n<li>This was the first time when Chinese military took part in any parade outside its country<\/li>\n<\/ul>\n<\/li>\n<li>Apart from the naval vessels deployed in Pakistan, eight submarines are also delivered to it by China.<\/li>\n<li>China is planning to build its second a naval base in Gwadar port after Djibouti in 2017.\n<ul>\n<li>These activities of China are a serious security threat to India since China is encircling India into the Indian Ocean.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2><strong>Debt burden of Pakistan and role of China<\/strong><\/h2>\n<ul>\n<li><strong>China&#8217;s Growing Hold on Pakistan&#8217;s Debt<\/strong>\n<ul>\n<li>According to the International Monetary Fund (IMF), China&#8217;s share of Pakistan&#8217;s external debt has risen from $4 billion in 2013 to roughly $30 billion of the current $126 billion.<\/li>\n<li>Between July 2021 and March 2022, more than 80% of Pakistan&#8217;s bilateral debt service payments went to Beijing.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Concerns Over Debt Dependency<\/strong>\n<ul>\n<li>There are concerns both within and outside Pakistan that this debt burden is unsustainable and may turn Pakistan into a client state of China.\u00a0<\/li>\n<li>Critics liken CPEC to a neo-colonial project, similar to the British East India Company\u2019s control over the Indian Subcontinent.<\/li>\n<\/ul>\n<\/li>\n<li><strong>IMF\u2019s Bailout Package and Debt Obligations<\/strong>\n<ul>\n<li>In March 2024, the IMF released a $1.1 billion tranche of a $3 billion bailout package to Pakistan.\u00a0<\/li>\n<li>The government is negotiating a new package of $6-8 billion, but debt obligations to China are a major hurdle.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Conditions for Further Assistance<\/strong>\n<ul>\n<li>The IMF has stipulated that its resources should not be used to service Chinese debt.\u00a0<\/li>\n<li>The IMF has indicated that any new agreement will require rescheduling the maturities of Chinese debt instruments due in the next three years to prevent a positive net outflow from Pakistan to China during the program period.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<hr \/>\n<h3><strong>Q.1. What is Xinjiang province?<\/strong><\/h3>\n<p>Xinjiang, an autonomous territory in northwest China, is a vast region of deserts and mountains. It&#8217;s home to many ethnic minority groups, including the Turkic Uyghur people.<\/p>\n<h3><strong>Q.2. What is the International Monetary Fund (IMF)?<\/strong><\/h3>\n<p>The International Monetary Fund (IMF) is an international organization that promotes global economic growth and financial stability, encourages international trade, and reduces poverty.<\/p>\n<p><strong>Source: <\/strong><a href=\"https:\/\/www.thehindu.com\/news\/international\/pakistan-pm-shehbaz-sharif-president-xi-jinping-agree-to-upgrade-cpec\/article68266520.ece#:~:text=Pakistan%20Prime%20Minister%20Shehbaz%20Sharif,project%20in%20the%20second%20phase.\" target=\"_blank\" rel=\"nofollow noopener\"><u>Pakistan PM Shehbaz Sharif, President Xi Jinping agree to upgrade CPEC<\/u><\/a><\/p>\n<p><a href=\"https:\/\/indianexpress.com\/article\/explained\/explained-global\/as-shehbaz-visits-china-the-hope-and-unfulfilled-promise-of-cpec-9376912\/\" target=\"_blank\" rel=\"nofollow noopener\"><u>Indian Express<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Discover the latest developments in the CPEC as Pakistan and China agree to advance its 2nd phase.<\/p>\n","protected":false},"author":5,"featured_media":41191,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[],"class_list":{"0":"post-41190","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/41190","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=41190"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/41190\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/41191"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=41190"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=41190"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=41190"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}