21 June 2016

***What is China-Pakistan Economic Corridor all about?

By Bharat Lather
19 Jun , 2016

Is China about to transform Pakistan? The unanimous consensus in Pakistan is that it is, and quite comprehensively too. Since April 2015, the term which has probably received far greater traction in the print and electronic media, more than any other, is “game changer”. The “game changer”, which government officials, military generals, diplomats, journalists and a host of other observers refer to, is the $46 billion China-Pakistan Economic Corridor (CPEC) project, an overland route which is to run from Kashgar in China via Khunjerab Pass (POK) to Gwadar in Balochistan, on the edge of the Persian Gulf, in Pakistan. This Economic Corridor has been called a “game changer” and even a “fate changer” by an overly enthusiastic Pakistani press and government; with some analysts even saying that this $46 billion “unprecedented” Chinese investment over the next decade-and-a-half will make Pakistan the next Asian Tiger.

For China, it provides an alternative route for energy supplies from the Middle East and Africa, without having to traverse through maritime route through in South East Asia, which is longer and prone to interdiction.

The China-Pakistan Economic Corridor (CPEC) consists of a package of Chinese infrastructure investments in Pakistan worth $ 46 billion, and is the flagship project of China’s “Belt and Road” development framework. Chinese Premier Li Keqiang had unveiled the CPEC concept two years earlier during his May 2013 visit to Pakistan, and its key importance for the “Belt and Road” initiative is that CPEC connects the Silk Road Economic Belt with the 21st Century Maritime Silk Road. CPEC consists of 1800 miles transportation corridor of roads, railways and pipelines, which will connect the Chinese-operated Pakistani port of Gwadar on the Arabian Sea with the Chinese province of Xinjiang via Khunjerab Pass. For China, it provides an alternative route for energy supplies from the Middle East and Africa, without having to traverse through maritime route through in South East Asia, which is longer and prone to interdiction.


CPEC, which is expected to be ready in the 15 years (2030), will eventually extend to other countries, possibly stimulating an economic boom in the region. Experts believe that the planned Gwadar-Kashgar railway will spur further rail development in Central Asia, including, for example, a possible railway from Kashgar through Kyrgyzstan to Andijan in Uzbekistan.

In his first state visit to Pakistan on April 20, 2015, Chinese President Xi Jinping signed 51 Memorandum of Understanding (MOU) and projects worth $46 billion in sectors which include energy, infrastructure, security, and broader economic development. For energy, $34 billion investment was envisaged and $12 billion in infrastructure projects. It was estimated that $15.5 billion would be spent on coal, wind, solar, and hydroelectric projects. The ambitious plan includes energy projects with a capacity close to 10,000 MW to be completed by 2018, with more to follow. Most of the money is expected to be spent on the construction of the corridor itself.

On the other hand, Pakistani military is not leaving any stone being unturned. One of the key externalities to the Chinese investment is the fact that a “Special Security Division” of the Pakistan Army, consisting of perhaps 10,000 Pakistani troops and headed by a Major General, is established, with headquarters in Diamer district of Gilgit-Baltistan (POK) to guard the Chinese workers and their investment, particularly in Balochistan, given the militancy and insurgency in the province. Moreover, Pakistan is also planning to make Gilgit-Baltistan as its 5TH province.

This network of infrastructure, including the Gwadar port, would help Pakistan grow, while pushing back against the growing power of regional competitors like India.

Significance of CPEC for China

Last year, China agreed to spend an extraordinary $46 billion in investment throughout Pakistan, far more than the annual U.S. aid budget for the entire world. This is now Beijing’s biggest commitment to any one country. Pakistan is also the largest recipient of Chinese weapons, and Beijing increasingly relies on it to help contain militants in China’s western provinces. Pakistan holds a unique position in Chinese diplomatic circles. The Chinese state media describes Pakistan as China’s only “all-weather strategic cooperation partner.” Though it is the largest beneficiary of Beijing’s investment, it is not a client state, as North Korea is. Rather, in a neighborhood where many countries either distrust China, feel beholden to it or both, Pakistan is the closest thing to a real ally and friend that Beijing possesses. This means that China and Pakistan sometimes cooperate in ways that concern the United States and India. Declaring that the Chinese-Pakistani friendship is “sweeter than honey,” and “stronger than steel,” Beijing announced last year that it would finance a 1,800-mile-long superhighway and a high-speed railway from the Arabian Sea over the Himalayas to China’s Xinjiang province. In addition, it would fund an oil pipeline route to the inland Chinese city of Kashgar. This network of infrastructure, including the Gwadar port, would help Pakistan grow, while pushing back against the growing power of regional competitors like India.

Helping Pakistan so dramatically also fits into China’s overall economic strategy. The Straits of Malacca provide China with its shortest maritime access to Europe, Africa, and the Middle East. Approximately 80% pass of its Middle Eastern energy imports also pass through the Straits of Malacca. As the world’s biggest oil importer, energy security is a key concern for China. Current sea routes used to import Middle Eastern oil are frequently patrolled by the United States’ Navy.

In the event that China were to face hostile actions from a state or states, energy imports through the Straits of Malacca could be cut, which in turn would paralyze the Chinese economy in a scenario that is frequently referred to as the “Malacca Dilemma.”

The currently available sea-route to China is roughly 12,000km long, while the distance from Gwadar Port to Xinjiang province is approximately 3,000km, with another 3,500km from Xinjiang to China’s eastern coast.

In addition to the vulnerabilities faced in the Straits of Malacca region, China is heavily dependent upon sea-routes that pass through the South China Sea, near the disputed Spratly Islands and Paracel Islands, which are currently a source of tension between China, Taiwan, Vietnam, the Philippines, and the United States. The Indian Navy has recently increased maritime surveillance of the Straits of Malacca region from its base on Great Nicobar Island. India could potentially impede Chinese imports through the straits. China fears India’s aircraft carrier INS Vikramaditya could lead a blockade of Chinese shipping, its aircraft MIG-29K’s increases the Indian fleet’s radius of action. Vikramaditya could also contribute offensive air power against any Chinese fleet sortied to break the blockade. Furthermore, Beijing strategists, see India’s nuclear ballistic missile submarine (INS Arihant) capability as threatening its access to the Indian Ocean through the Malacca strait, where 80% of Chinese oil trade takes place. India could use its submarine to block Chinese oil imports through the strait, causing major disruptions in the Chinese economy.

Therefore, the CPEC project will allow Chinese energy imports to circumvent these contentious areas. In other words, CPEC would provide China with a shortest and safest route to import its oil and gas from Africa and the Middle East; while bypassing the Strait of Malacca, Paracels and Spratlys in Southeast Asia. CPEC is considered central to China–Pakistan relations; its central importance is reflected by China’s inclusion of the project as part of its 13th five-year development plan. The currently available sea-route to China is roughly 12,000km long, while the distance from Gwadar Port to Xinjiang province is approximately 3,000km, with another 3,500km from Xinjiang to China’s eastern coast. As a result of CPEC, Chinese imports and exports to the Middle East, Africa, and Europe would require much shorter shipment times and distances.

China solving the problem of Pakistan’s energy crisis

Though the CPEC is often understood solely in terms of transportation infrastructure which includes developing the Chinese-controlled port at Gwadar and linking it to China via rail and road, but that’s not the only aspect of the project. Under the “1+4” cooperation framework unveiled during Chinese President Xi Jinping’s April 2015 visit to Pakistan, the CPEC is the “1,” with the “4” representing key areas of the larger strategy. Energy is one of those four areas, along with Gwadar Port, transport infrastructure, and industrial cooperation. In fact, China and Pakistan officially broke ground on five new energy projects, all of them considered part of the CPEC, during Xi’s visit to Pakistan last year. Along with the Karot hydropower project, the CPEC also includes Chinese construction of the world’s largest solar plant in Punjab Province. The first section began providing electricity in August 2015; the second portion would be completed within this year which would provide produce up to 1,000 MW of power. While, Neelum-Jhelum Hydropower project in POK would be operational by next year. The most famous joint project is the $10 billion expansion of the Karachi nuclear power plant.

Over the past decade the population of Baloch had reduced dramatically due to Pakistan’s military policy of “Kill and Dump”. It is therefore, highly unlikely that they can ever derail CPEC.

14 Chinese-constructed energy projects in Pakistan tied to the CPEC are supposed to provide anadditional 10,400 MW of electricity by March 2018 – more than enough to make up for Pakistan’s 2015 energy shortfall of 4,500 MW. And that’s not the only part of the story. There are a total of 21 planned energy projects in the works under the CPEC framework. Altogether, these projects should eventually produce 16,400 MW of power, roughly the same as Pakistan’s current capacity. The sheer scale of China’s energy plans for the CPEC ensures that it has a chance to be a game-changer for Pakistan, where rolling blackouts are common due to energy shortages.

Balochistan’s context

Many Baloch nationalist parties have accused the federal government of systematically converting the Baloch population into a minority in the province. The presence of a large number of Afghan refugees has had a weighty impact on the demographics of Balochistan. In the aftermath of the Soviet invasion in 1979, Afghan refugees came to Pakistan in the millions. This created a substantial demographic imbalance between the majority Balochs and the Pashtuns. According to some reports, more than 4 million Afghan refugees have settled across Balochistan and a large number of them have obtained citizenship and other rights.

According to the United Nation High Commission for Refugees (UNCHR), around 80 % of Afghan refugees in Pakistan are Pashtuns and the majority of them live in Balochistan. With the development of the Gwadar port and CPEC, a large number of people from other areas of the country are likely to settle in Balochistan, becoming voters in the province. The development of Gwadar port city is almost certain which would result in a huge influx – estimates run as high as 5 million – of non-Baloch into the Province’s southern districts. The migration and settlement of people into the province from outside is expected to further dwarf the Baloch population. Besides, to contain the Baloch insurgency through militarily, there have been many planned demarcations.

For instance, during the 1960s, the Baloch population opposed the inclusion of three Pashtun-majority districts from the North-West Frontier Province (NWP) into Baluchistan and the separation of a few Baloch majority areas from Baluchistan into Punjab and Sindh. The demarcation of these new boundaries resulted in a reduced Baloch majority in Balochistan. Numbers do play an important role in any type of revolution or independence, but the balochis are no-way near to it, in fact they are itself a minority in their own province which might also get vanished in the near future. The Pakistan military has got a firm grip over entire Balochistan which had also prevented Baloch rebels from sabotaging Gwadar port development in the past.

Moreover, over the past decade the population of Baloch had reduced dramatically due to Pakistan’s military policy of “Kill and Dump”. It is therefore, highly unlikely that they can ever derail CPEC.

Military context of CPEC

Apart from the infrastructural investment agenda, China and Pakistan also formalized their “all-weather” strategic defense partnership during Xi Jinping’s visit in April, 2015. Pakistan agreed to a $ 5 billion purchase of eight Yuan-class (Type-41) submarines from China. These submarines will provide Pakistan with much-needed Anti-Access/Area Denial (A2/AD) capabilities against the Indian Navy in case of war. This would be especially useful in case of an Indian blockade of Pakistan’s coast and could give New Delhi grounds to pause before deploying its planned new aircraft carrier, the INS Vikrant.

Since October 2008, it has deployed its warships and submarines in 20 anti-piracy patrols, each lasting over three grueling months.

A Yuan-class submarine is undoubtedly a great piece of kit. It is China’s first class of submarines to incorporate an indigenously designed- and constructed Air-Independent Propulsion system (AIP), giving it a cruise speed of 18 knots and an operational range of 8,000 nautical miles. Combined with the AIP, this makes the Yuan-class the quietest non-nuclear sub in the PLAN (People’s Liberation Army Navy), making them less vulnerable from being detected by US-made P-81 planes.

Furthermore, the Yuan has an impressive set of teeth. Aside from six tubes firing standard 553mm torpedoes, there are plans to equip the Yuans with the YJ-18 ASCM. These missiles have a reported range of 537 km and, represent a real A2/AD “force multiplier” for the Yuan. Whether Pakistan will attempt to acquire these missiles, or opt to go for another option (such as their indigenously produced Hatf VII Babur-700km) is unknown. If Pakistan equips them with Babur cruise missiles, then it would also give Pakistan for the very first time with an assured but limited 2nd strike capability from under the sea. Moreover, Pakistan already has three Agosta 90B (AIP) Khalid Class submarines.

China had already signaled about its naval ambitions in its Defense White Paper i.e. to breakout from “offshore water defense” to “open sea protection”. The last time China ventured so far was in the 16th century when Admiral Zheng He sailed the Ming imperial fleets into the Indian Ocean. The Chinese are certainly following his legacy. Zheng’s wooden ‘treasure ships’ have been replaced by sophisticated missile destroyers and, worryingly for its uneasy neighbor, stealthy submarines. Since October 2008, it has deployed its warships and submarines in 20 anti-piracy patrols, each lasting over three grueling months.

The veneer of ‘anti piracy operations’ wears thin as China demonstrates its ability to protect its sea lanes of communication (SLOC) and interdict the enemy. Moreover, China even went on to deploy four submarines in the Indian Ocean conventional as well as nuclear, respectively. Another defense-strengthening has already been taken by Beijing by establishing a permanent naval base in Djibouti close to Gulf of Aden. This base would allow Beijing to establish a strategic foothold in close proximity to the oil trade routes from the Middle East and to the Indian Ocean. At the time of War, this base would further allow Beijing to impose a blockade against its adversaries.

China can indeed use the KKH network to watch over Indian activities in the region through listening posts and advanced surveillance bases in POK.

China-Pakistan Economic corridor ($46 billion) also involves transformation of KKH into an economic corridor, also referred to as the Karakoram Corridor (KC), by making it into an all-weather expressway. 577km tunnels have been constructed to ensure year-round land connectivity. In September 2015, the Pakistani Prime Minister Nawaz Sharif inaugurated the tunnels, also called Also called the Pakistan-China Friendship Tunnels. Fears have been expressed in New Delhi that these tunnels could be used not only for rapid movement of troops and materials from China and Pakistan but also for stationing missiles (Anti-Air, Ballistic, Cruise) in POK (Pakistan occupied Kashmir).

China can indeed use the KKH network to watch over Indian activities in the region through listening posts and advanced surveillance bases in POK. The 5 air fields (Gilgit, Skardu, Chilas, Chitral and Muzaffarabad) in POK also might be used against India by the People’s Liberation Army Air Force (PLAAF) to its benefit. Moreover, in August 2010, the New York Times had reported about the influx of 7000-11000 PLA troops in Gilgit-Baltistan (POK). Under CPEC, China is building tunnels in leepa valley in the POK to build an all weather road that will serve as an alternative route to reach Karakoram Highway. Moreover, under the fig leaf of CPEC, Chinese are secretly building all-weather compact bunkers and numerous airstrips for the Pakistan military in POK.

On the other hand, Gwadar port of Pakistan occupies an important position in CPEC. China, which has received the right to operate Gwadar port for 40 years, is expected to invest a further $ 1.62 billion in Gwadar, including an international airport and a new expressway connecting the harbor with the coast. Gwadar’s development began in May 2001, when China’s then-Premier Zhu Rongji announced China’s investment in Gwadar during his state visit to commemorate the 50th anniversary of Sino-Pakistani relations. A Chinese delegation inaugurated its sparkling new container port in early April, 2016; as part of a deal by which China will build and have rights over the Gwadar port.

China has now signaled the creation of a West Asia dilemma for India as well as for its very old foe – Japan.

Gwadar port would allow Chinese submarines to have a permanent presence in the Indian Ocean. Moreover, an international airport in Gwadar in the near future would further exacerbate the situation. It would allow Chinese air force (PLAAF) to station some of its advanced fighter jets along with AWACS (Airborne warning and control system) planes in order to have a complete surveillance on the activities at Indian Ocean. The stationing of an aircraft carrier by PLAN (People’s Liberation Army Navy) near Gwadar too cannot be overruled in the next 10-15 years; in order to have complete hegemony over the Indian Ocean.

These developments were long in the making. In May 2001, then Pakistani president General Pervez Musharraf during a press conference in Islamabad said that the main objective of letting China develop the Gwadar port in Balochistan province was to counter India’s nuclear submarines. “As and when needed, the Chinese navy would be in Gwadar to give a befitting reply to anyone,” he warned. Nearly 15 years later, Musharraf’s dream has become a reality.

Analysts say a naval base in Gwadar has enormous implications for over 80 % of India’s energy supplies (expected to surpass 90% by 2020) that flow in from West Asia. China worries about the Malacca dilemma-where 80 % of its oil imports flow through the narrow Malacca Strait vulnerable to naval blockades. By enhancing Pakistan’s naval capabilities (through frigates, submarines, anti-ship missiles, aircraft carrier killer missiles) as well as by taking over the Gwadar port for 40 years on lease, eventually allowing its submarines to dock and many more military deployments still awaited; China has now signaled the creation of a West Asia dilemma for India as well as for its very old foe – Japan.

Apart from signing CPEC agreement in April 2015, the cooperation between Pakistan and China has increased dramatically in the past 5-10 years, both in terms of purchasing military hardware as well as joint exercises.

Since, Gwadar is now under the control of China; Pakistan has shifted their valuable naval assets to Ormara Jinnah naval base, Balochistan (Pakistan). Therefore on one base (Gwadar) Chinese are sitting, while on the other (Ormara), the Pakistanis are sitting.

Conclusion

Meanwhile, China’s influence is not just limited till Pakistan; the Chinese are present in Iran as well, significant amount of Chinese investment in developing infrastructure as well as their presence in Iran would help Chinese to keep a strong vigilance over Chabahar port. As Iran celebrates the lifting of sanctions and cranks up its oil production, the biggest winner is clearly China, Iran’s new best friend. Chinese President Xi Jinping paid a visit to Tehran in January, meeting Iranian President Hassan Rouhani and signed a 25-year economic, political and military cooperation pact. The two leaders announced the signing of 17 deals—including agreements on oil drilling, nuclear energy and a vast infrastructure project linking China to the Mediterranean, known as One Belt, One Road. Rouhani predicted the deals would boost bilateral trade tenfold to an annual $600 billion in the next decade. Moreover, Iran exports 500000 barrels of oil per day to China, making China the largest importer of oil from Iran.

Militarily, besides Russia; Iran too sees China as its major strategic partner to contain U.S. hegemony. Iran already deploys a full array of so-called anti-access/area denial (A2/AD) resources purchased from China, including tactical, ballistic and HY-2 Silkworm anti-ship missiles, anti-ship mines and Houdong fast-attack boats. Both seem to be working together also by conducting joint naval exercise in the Persian Gulf to counter U.S. It’s quite clear that for both Pakistan and Iran; China is their most reliable partner economically as well as militarily, respectively.

‘Shaheen’, which is specifically designed with an objective of securing complete aerial supremacy vis-à-vis India, by neutralizing aerial threats as well as destroying India’s strategic airbases through ‘preemptive’ strikes in no time.

Apart from signing CPEC agreement in April 2015, the cooperation between Pakistan and China has increased dramatically in the past 5-10 years, both in terms of purchasing military hardware as well as joint exercises. Pakistan accounts for more than a third of Chinese weapons sales. Pakistan’s notable purchases from China includes ZDK-03 Karakoram (AWACS) planes, SD-10 BVR (Beyond visual range) missiles, CM-400AKG (Aircraft carrier killer missile), C-802 (anti-ship missiles), HQ-7B (Surface-to-Air missile) systems, Z-10 attack helicopters, anti-submarine warfare (ASW) frigates and the recent one being the conclusion of 8 Yuan-class (Type-41) submarines.

Talking about the joint exercises, since 2011, Pakistan’s JF-17s and ZDK-03 Karakoram Eagle (AWACS) planes have also been conducting joint Air Force exercises with PLAAF in the remote areas (POK, Xinjiang and Punjab province) of their respective countries; code-named as ‘Shaheen’, which is specifically designed with an objective of securing complete aerial supremacy vis-à-vis India, by neutralizing aerial threats as well as destroying India’s strategic airbases through ‘preemptive’ strikes in no time. Many in India and the United States are alarmed about what they see as a China-Pakistan axis. They worry that China’s largesse means that Western nations will have little leverage to shape Pakistan’s actions on militants or nuclear weapons, or in supporting peace in Afghanistan. Another concern is that China would protect Pakistan when, for example, it refuses to cooperate with India and the West on handing over dangerous militants.
© Copyright 2016 Indian Defence Review

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