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CPEC – How It Can Benefit Pakistan in Short & Long Term

CPEC

China has always worked as a loyal partner to Pakistan. The history of friendship between both the countries has set many examples in the past. Despite what the world thinks or speaks about Pakistan, China has always stood by its side. A number of initiatives have been taken in the past to support and boost the friendship of both the countries.

An upcoming brainstormed initiative taken by China and Pakistan is the China-Pakistan Economic Corridor- popularly known as the CPEC. Being a mutually advantageous project for both the nations, this initiative is expected to reduce costs of transportation to the Middle East and Europe, for China. The project of CPEC offers both long and short term benefits for Pakistan and China.

CPEC Route Map

Importance of CPEC

We can evaluate the importance of CPEC to China by the fact that it is included in China’s 13th five-year development plan. The CPEC projects are believed to be offering China with an alternate route for supply of energy and a new route to Western China that will support the trade processing. Pakistan also stands to earn benefits with the upgraded infrastructure and the introduction of a reliable, uninterrupted and long-lasting energy supply.

Forbes has claimed that the CPEC is a part of the vision of China to write down the rules of next era of globalization and to help the exports as well as investment engines of China to run, uninterrupted, for years. It is also believed that the project of CPEC is a project that has strategic and economic consequences that demand methodical evaluation.

Now let us move towards overviewing the short-term and long-term benefits this project has in the bag for the bonding countries!

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Short-Term Benefits

As per the short-term benefits of this initiative, one of the most important is the fee that Pakistan can charge for transportation of products and goods, which will commence through this trading corridor.

Such benefits are quite similar to which are being reaped by Panama through the Panama Canal, as well as Egypt in the form of the Suez Canal. On top of that, if Pakistan is able to offer the Chinese workers wwith a comfortable and suitable working environment, in order to relocate their labour-intensive industries, the rewards can be higher for the country’s economic condition.

The Long-Term Benefits

When we speak about the long-term benefits which both parties will gain from this initiative we can say that they are concerned with the health and skills indicators as well as the educational development of Pakistan. At the same time they are focused to initiate more investment and funds to the hi-tech industries which are set-up in Pakistan.

Currently, the goods which are being shipped from Central China to Europe have to travel a total distance of 19,132 miles, out of which 16,507 is through the sea, while 2,625 miles are covered by land; which is basically the distance from the Shanghai port to Central China. After CPEC is completed, the goods will only have to travel a total distance of 9,579 miles, out of which 7,847 will be by sea, while 1,750 miles on land,  which is the distance from Karachi to Central China.

Apart from the drastic reduction in the mileage, the time which is needed to ship products and the goods from the already existing route to the route developed after CPEC will be reduced by 50 percent; that is from 50 days to 25 days.

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The Expenses for Businessmen

At the time, the freight charges for every 40 feet container transported from Hamburg to Shanghai are around $2,500 to $3,000. Once the CPEC initiative is complete, these charges for a 40 feet container would drop down to around $1,000. It means that the businessmen would be able to save around 50 to 65 percent of the freight chargers they have to pay, and they Chinese exporters would be able to get their payments in half the time they had to wait before CPEC.

As for the shipment which is coming from the Middle East would also be able to achieve substantial benefits, in terms of time and the transportation costs. Speaking about the Middle East, currently a 40 feet container transported from Central China to the Middle East takes about 12,537 miles to reach its destination, out of which 9,912 miles are by sea and 2,625 are by road. Once CPEC has been completed, the same 40 feet container would take 2,295 miles to reach the destination, in which 545 miles would be from the seaway, while 1,750 are by road. This means that the distance between the Middle East and Central China would be reduced by around 80 percent.

Similar to Europe, the reduced distance of transportation would also cut down the charges for the shipment. Currently, the freight charges from Shanghai to Abu Dhabi are around $2,000 for specifically a 40 feet container, whereas through this route, it takes around 16 days for this shipment to reach its destination. With the development of CPEC, these prices will come down to $200 to $250 for a 40 feet container, and the time would also be reduced to about 2 to 3 days maximum.

Moreover, the CPEC will also be able to offer the shortest route to landlocked nations, such as Afghanistan to China, the Indian Ocean and India itself. On top of everything else, the distance compared to the nearest port of Chabahar would be around 600 kilometers lesser!

Short or long, the CPEC has potentially laid the foundation of benefits for both the parties and is expected to open doors of opportunities in coming future as well. Both the countries are currently working on a number of developmental projects and investments that are focused on reaping long run fruits as the CPEC will touch its completion.

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