China to Invest Billions in Pakistan
By admin October 27, 2015


Gwadar, a city located on the arid coastline of the Arabian Sea in Pakistan, suffers from high unemployment, poor health systems, weak infrastructure, and a poor education system. Despite these drawbacks, China is looking to invest billions of dollars in this area to re-create a “silk road” trade route. The Chinese President, Xi Jingping, views Gwadar as part of a network of paths that links China to the world’s markets and energy reserves. Gwadar is at the mouth of the Persian Gulf where much of the world’s products sail by. However, this route is time consuming as it takes weeks to navigate the South China Sea.

That being said, Pakistan and China signed an agreement on April 20th, 2015 to speed up the transportation of goods by providing $46 billion in investment and loans to Pakistan to develop “an economic corridor” running the length of its territory, through the Himalayas, and eventually to western China. The plan is to create a 1,700 mile path through Pakistan, to the saltwater port where freight can then be put on ships bound for markets in Africa, the Middle East, and Europe.

This new Pakistan-China Economic Corridor will move from Gwadar and continue down the Karakorum Highway into central Pakistan. Analysts say that the Chinese investment provides a major opportunity for Pakistan to jump-start an economy thought to be primed for growth. Pakistan has a population of more than 180 million, two-thirds of whom are younger than 30. However, Pakistan currently suffers from severe electricity shortages that increases the cost of doing business in the region. According to Ahsan Iqbal, Pakistan’s minister for planning and development, the Pakistan-China Economic Corridor includes energy projects that consists of hydroelectric dams, solar packs, and coal-fired power plants. These projects are estimated to add 16,600 megawatts to Pakistan’s national grid.

Some Pakistani economists are still skeptical as to how beneficial the Pakistan-China Economic Corridor will be for Pakistan as Pakistan still needs to overcome a 50% trade imbalance with China. Hussain Wadheela of the Balochistan National party also fears that the local natives of Gwadar will be marginalized by Pakistan’s other ethnic groups if Gwadar starts booming and people begin moving into the area.

Despite the skepticism, China is already spending hundreds of millions of dollars to upgrade highways in the northern region of Pakistan by adding bridges, guardrails, and concrete overhands to funnel landslides and avalanches away from travel lanes. These highways are also considered to be one of the most dangerous highways in the world. That being said, Chinese engineers are smashing through mountains to build dozens of miles of tunnels to make the route safer to transport goods.

Furthermore, the Gwadar Development Authority have high hopes for the development of, and improvements in, the area. Officials have already set aside areas for suburban housing, luxury beachside hotels, restaurants, and a marina. However, the gains of China’s proposed project are too far away to properly predict as the corridor will be based on a 40-year lease at the port of Gwadar. Moreover, despite a highly ambitious economic development project, Pakistan still suffers from corruption and bad governance and is at risk of a volatile Afghanistan that can cause spillover effects in Pakistan. Only time will tell how successful the Pakistan-China Economic Corridor will be.


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