CPEC Opportunities & Challenges
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China's economy has transitioned to medium-high speed growth, and China faces challenges in sustaining growth and taking a larger global role. The China-Pakistan Economic Corridor (CPEC) initiative aims to address these through infrastructure projects in Pakistan, including energy, road, rail, and port projects totaling $45.69 billion. CPEC provides opportunities for trade, logistics and other industries, but also challenges for Pakistan in ensuring local participation and benefits.
CPEC Opportunities & Challenges
- 3. China GDP Growth Trend 0% 2% 4% 6% 8% 10% 12% 2010 2011 2012 2013 2014 2015 2016 2017 Source: Knoema “At present, China’s economy has entered a state of new normal – the gear of growth is shifting from high speed to medium to high speed.” --- Li Keqiang, Premier of China, World Economic Forum, Davos 2015
- 4. Challenges For China • Ensure Sustained Economic Growth – Create new domestic demand – Ensure cost effectiveness for international trade – Focus on Africa • Assume A Bigger Role In Global Affairs – Create secure, cost effective alternate route for energy and trade – Create large economic block on its western periphery – Establish strong influence in Africa
- 5. 71.4% Area 28.8% Population (2002) 20% GDP (2009) Western China Growth Challenge
- 6. Western Development Strategy Initiated in 1999-2000 1. Development of infrastructure 2. Enticement of foreign investment 3. Focus on ecological protection 4. Promotion of education 5. Retention of talent As of 2006, a total of 1 trillion yuan has been spent building infrastructure in western China The combined GDP of the western regions reached 3.33 trillion yuan in 2005, compared with 1.66 trillion yuan in 2000
- 7. One Belt One Road Initiative China – Pakistan China – Indonesia China – B’ Desh – India - Myanmar China – Mangolia - Russia New Eurasian Land Bridge China – Central Asia – West Asia
- 9. CPEC Projects Coal Mining /Power plant Hydro Wind Source Sector Est Cost in $ Bln Energy 33.79 Road 5.9 Rail 3.69 Mass Transit in Lahore 1.6 Gwadar Port 0.66 China Pakistan Fiber Optics 0.04 Total 45.69 Coal Mining /Power plant Hydro Wind
- 10. China – SS Africa Rising Trade 0% 5% 10% 15% 20% 25% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Share of China in SSA's total trade Share of SSA in China's total trade Source: World Bank 2004: $ 15 Bn 2015: $170 Bn
- 11. Direct Opportunities Freight Forwarding / Customs Clearance Services Seaport, Airport, Dryport Operations Bulk Terminal Operations Marine Haulage Cross Border / Domestic Logistics Warehousing & Value Added Services Manufacturing Activity In Proposed Economic Zones
- 12. Coal Logistics Proposed Coal Power Projects MW Estimated Coal Consumption Sahiwal, Huaneng Shandong 1,320 5,184,168 Muzafargarh 1,320 5,184,168 Thar Engro 660 2,592,084 Thar Other 1,320 5,184,168 Port Qasim 1,320 5,184,168 Gwadar 300 1,178,220 Total 6,240 24,506,976
- 13. 0% 10% 20% 30% 40% 50% 60% 70% 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 2018 2019 2020 2021 2022 2023 TEUp.a Up Traffic Down Traffic Annual Growth Factor Freight Traffic Potential Gwadar - Kashgar
- 14. Estimated CPEC Trucking Potential (Estimated China transit trade traffic only, Assuming no railway movement) Estimated Truck Requirement 0 5,000 10,000 15,000 20,000 25,000 Trucks required 2018 2019 2020 2021 2022 2023 Projected Truck Freight Revenue 0 10 20 30 40 50 60 70 80 90 Freight Revenue PKRBln 2018 2019 2020 2021 2022 2023
- 15. Indirect Opportunities Foreign Direct Investment Formation of International Alliances Rise in Aggregate Domestic Demand Growth in Manufacturing Sector Growth in Fisheries & Agri Sectors Improvement in Productivity Incremental 2-3% GDP Growth
- 17. Grabbing A Share Of The Pie • Two Way Transit Transportation • Trucks vs Freight Train • Domestic Trucking & Warehousing • International Shipping & Freight Forwarding • Supply of Raw materials • Supply of Finished Goods • Services No Legislation To Ensure Market Share For Local Businesses
- 18. Handling Coal Logistics 1.5 – 2.0 Million Tons p.a. By Road? • Pollution • Truck Availability • Congestion • Adherence to Standards – Safety – Traffic laws – Highway deterioration By Rail? • Capital Availability • Railway Tracks • Rolling Stock Availability – Quantity – Quality • Impact of Circular Debt • Impact On Passenger Trains • Pollution • Efficiency and Effectiveness
- 19. TIR Carnet • Pakistan signed TIR Carnet in 2015 • Cross border movement of trucks across all signatory countries • Strict conditions, – financial guarantees, – vehicle quality • Iran and Turkey are Biggest Players
- 20. Ensuring Employment For Locals • What share of jobs will go to Pakistanis ? – Managerial – Engineering – Skilled – Unskilled • What share will go to Baloch people? – Number & Type Of Jobs – Educate / Upgrade / Elevate – Sense Of Deprivation / Alienation
- 21. Legislation • Directing Opportunities Towards Local Businesses • Guaranteeing Employment For Locals • Ensuring Use Of Locally Available Raw Materials • Transparency
- 22. THANK YOU
Editor's Notes
- #10: https://www.linkedin.com/pulse/china-pakistan-economic-corridor-cpec-silk-road-m-ali-rizvi