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CPEC a game changer ?

Japanese are providing huge loans at negligible interest rates.For instance,for Mumbai-Ahmedabad bullet train,they are providing loan of 79,000 crore rupees @0.1% interest rate to be paid over 50 years starting from 2033.Also they will make 85% of the components of the project in India. Compare these terms to what China is providing(double digit interest rates,work done by Chinese firms)
 
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@That Guy i think this thread needs you :) btw is it really true that we've to payback to china at 18% interest rate?
 
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Mega dams and nuclear plants are part of CPEC if you dont think they can change Pakistan than you are just a troll
 
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neighbour with a ferrari has 300 million children who dont even get a square meal a day, but he has money for a ferrari. jealousy indeed.
 
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I am not able to post links.. but it is dawn newspaper on multiple articles relating to CPEC.

I can't find any article that mentions the interest rates.

Can anyone else confirm what interest rates are attached with CPEC with source.
 
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I can't find any article that mentions the interest rates.

Can anyone else confirm what interest rates are attached with CPEC with source.

sorry it is n't interest.. it is the sovereign guarantee of 18% return on investment for 45 years given by Pakistan to china.
 
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@A-Team First I need to compliment you for opening this thread. One look at the map and it is very obvious that Afghanistan is as tied into the fate of the CPEC as Pakistan for the simple fact (Indian's need to note this) that major portion of Afghan population live adjacent to Peshwar. In fact Kunduz - Kabul - Peshawar - Islamabad - Lahore lie on the same transport axis. Indeed Kabul and the region around it with very high population falls within the Indus Basin catchment area via the Kabul River. Below. Population density map.

Afghan_Pop.jpg


CkK7abO.jpg


The above map shows the transport corridor that connects the high density areas of Afghanistan (including Kabul) to high density areas of Pakistan (including Islamabad). Of course the eastern point on this terminus is Lahore which is adjacent to Amritsar in Indian Punjab and I don't think that border is going to open anytime soon.

The Af-Pak corridor is marked red. However what is interesting is that one of the alignments of the CPEC (marked green) running from China to Islamabad (where it meets the Af-Pak corridor) on south to Gwadar and Karachi. This means that potentially CPEC could impact Afghanistan as much as Pakistan. This is plainly obvious by looking at the maps. That this potential will actualized very much depends on regional politics which is something that hot heads on both sides need to bear in mind. Over the long term those Afghan refugees everybody complains so much about might turn out to be asset for Pakistan as their presence will reinforce the Af-Pak corridor which links into the CPEC near Islamabad/Taxila.

The real question that needs answering and OP brought that up was "what is CPEC all about". I can't believe that after so much song and dance about this CPEC the real question as to what it is all about has not been resolved. So here is my take on it. Imagine this desert below.

desert-test.jpg


There is almost no economic activity. It is almost disconnected from the vibrant pulsating centres of world economic powerhouses. Now imagine your going to build a canal through it. What would you look forward to? Charging transit fee for the water discharge along the canal? Or emergency supply of drinking water to some town downstream?

Well you could just dream of those two benefits that the canal would bless the desert inhabitants. Or you could think big. You could think of the canal as offering huge potential to bring about revolution to the backward desert.

(i) The desert could be irrigated to become huge farming country.
(ii) massive agriculture exports
(iii) towns develop to service the farms
(iv) industries develop to service agriculture
(v) exports connect you to markets far way. Imports come from far away.
(vi) You are now connected to the world which brings new ideas and ways of doing things.

In the same way do not regard the CPEC as strip of tarmac. Regard it as corridor to China which is pulsating economic powerhouse. Down that corridor will come cascading Chinese goods, ideas, industrial investment. Yes of course the Chinese economic wind will kill many industries in Pakistan. But why should anybody care? Do you guy's want rackets run by corrupt rentier class to continue milching the Pakistani customer?

As much as Chinese influence will kill many decrepit industries inside Pakistan it will also hasten new investment by Chinese companies which will bring their way of doing business to Pakistan. This is comparable (to a degree) how new entrants to European Union go through after joining. As they join the old inefficient industries are wiped out as western products flood the market. However soon enough those western companies start moving some of thier operation over to those countries because of cheap labour.

So it all depends on Pakistan. If it does this properly Pakistan will get flooded by Chinese products followed by Chinese companies moving in. A common market could come about out of CPEC. Will CPEC potential be exploited by Pakistan. My concern is that Pakistan's fascination with run awy religion might trip CPEC. If Pak can muzzle the mullahs and instead create pragmatic business climate than this could be game changer and Afghanistan being next door could also be sucked into this.

@nang2 Excellant points you make. If Pakistan can follow China in letter and spirit then CPEC would turn into 21st century success story. In thirty years time if Islamabad Airport is recieving 10 million visitors from China and the airport is linked daily to every major Chinese city than CPEC will have been a "game changer".

Excellent commentary on the subject, provided a better understanding on the subject.

Thank you!

PS : Hope this project will turn Pakistan into a giant of an economy which of course will have positive implications on Afghanistan.

/Peace
 
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Japanese are providing huge loans at negligible interest rates.For instance,for Mumbai-Ahmedabad bullet train,they are providing loan of 79,000 crore rupees @0.1% interest rate to be paid over 50 years starting from 2033.Also they will make 85% of the components of the project in India. Compare these terms to what China is providing(double digit interest rates,work done by Chinese firms)

again where is the source for double digit interest rate or 18% ?? Or it coming out of ur asre bcoz of butthurt...
 
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- What does Pakistan gain from it apart from transit fees ?

- Is the term "game changer" being used without being backed by concrete facts and figures ?

- What is the main Pakistani export to China that is currently not being undertaken using the current road networks

Answer 1:- China committed a $46 billion investment which has increased by billions of dollars and will keep on increasing till China uses CPEC. The transit fees which Pak will earn will be more than your country's GDP, which means that transit fees will be more than that of many small countries GDP. After 2018 Pakistan is gonna see a boom when Gwadar Port will be operational. China has came closer to Pak becauase of CPEC. China the next superpower considers Pakistan its best friend and is offering Pakistan its best. China committed to invest $30 billion for energy generation in Pakistan due to which Pak will overcome its energy crisis till 2018. China will assist Pak to manufacture 8 submarines from which four will be constructed in Pakistan and four in China.
This question answer requires time so i just mentioned a few things which can assist you in understanding what CPEC is.

Answer 2:- "Game changer" is definitely backed by concrete facts because not only China but many countries will use gwadar port and will rely on Pakistan strategically.

Answer 3:- I don't have information about it so m not gonna reply it.

Peace
 
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I dont think they are going to get any transit fee... Roads are built by them and pakistan has to repay at a rate of 18% on dollar value... Gwadar is leased for 40 years as of now and chinese have all rights on port.. no fees for Pakistan as per my understanding... power plants are also chinese companies, chinese engineers and chinese maintenance... but pakistan has to payback at 18% interest rate... i am not sure what pakistan will gain...

local businesses will thrive.. enterpreneurs will bloom in SMEs mostly... those will generate taxes.. but wil they offset the loss and compensate for 18% annual interest rate ?? Big question.

and NO, there might not be any major exports from pakistan except mangoes.
for yr info most loans are at 1.6% maybe 1 or 2 loans are at higher rate
china has indicated that it will charge 1.6 percent interest on loans for establishing infrastructure projects under the China-Pakistan Economic Corridor (CPEC). However, Pakistan would like the interest rate to be lowered to one percent, says a news item published in this newspaper. Pakistan, it appears, is basing its view on interest rate it particularly pays to a Bretton Woods institution, the World Bank, for similar project financing.
Under CPEC, China has pledged $11.8 billion in infrastructure projects and $33.8 billion in various energy projects to be completed by 2017. The World Bank charges half-a-percent on a 30-year tenor under IDA loan and a higher rate for middle income countries such as Pakistan. The average of two kinds of loans works out to be one percent. However, when Pakistan goes to International Finance Corporation (IFC) - a World Bank affiliate that lends to the private sector - a higher rate of interest is charged. Similarly, when cash funds are obtained from the International Monetary Fund (IMF), as well as money raised through bonds issued in the international capital market. Thus, private sector money comes at a higher rate of interest than multilateral loans. However, loans provided under the CPEC will go exclusively to the Chinese government-owned entities
 
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I dont think they are going to get any transit fee... Roads are built by them and pakistan has to repay at a rate of 18% on dollar value... Gwadar is leased for 40 years as of now and chinese have all rights on port.. no fees for Pakistan as per my understanding... power plants are also chinese companies, chinese engineers and chinese maintenance... but pakistan has to payback at 18% interest rate... i am not sure what pakistan will gain...

local businesses will thrive.. enterpreneurs will bloom in SMEs mostly... those will generate taxes.. but wil they offset the loss and compensate for 18% annual interest rate ?? Big question.

and NO, there might not be any major exports from pakistan except mangoes.
The engineers are not all chinese...Pakistani engineers will run these projects...My friends have been selected for the Sahiwal project of 1320 MW....they will get one year training in China and then will run the project on their own or with collaboration of chinese engr.
 
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The engineers are not all chinese...Pakistani engineers will run these projects...My friends have been selected for the Sahiwal project of 1320 MW....they will get one year training in China and then will run the project on their own or with collaboration of chinese engr.

Btw do u know the selection process ?
 
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The total installed capacity of pakistani ports is 6 million teu. The volume of Chinese trade that sails in front of Pakistani shore is > 200 million teu. Even if Jiwani, ormara (doubt that army will give it up), pasni become full scale ports, pakistani infra-structure cannot handle so much volume. Iran sees all this and wants in on the action. This is why they requested that their port be linked to gwadar and are working towards it.

To handle so much cargo, the main thing is man-power and this is where karachi comes in. For China, karachi is the key. The amount of money China has spent in Karachi is far greater than the money spent in Gwadar. The new terminal China is building in Karachi, will increase the pakistani capacity by 2 million teu (Gwadar is just 0.5 million). This is also the reason why the army is cleaning up Karachi (upon chinese request). Gwadar will have a role, but in future. For now it is just there to distract attention. The chinese are also dredging the existing Karachi port channel and are building a U-Turn facility for ships to speed up cargo unloading.

Iranian's supplied fresh water and Fuel to the chinese working on Gwadar port (just google it). They offered pak-china role in their port. That road india is building goes directly into the heartland of the Taliban, their base of power.

Finally, when the tunnel underneath the strait of hormuz is built (by germany, google it), then this whole network will really come to life. A freight train carrying agriculture products from Karachi/Mumbai can reach Duabi within 18 hours.

There is huge opportunity for all!

Pakistan needs to urgently build a rail track along the mekran coastal highway and connect the ports. The real trade is done on rail.
 
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@That Guy i think this thread needs you :) btw is it really true that we've to payback to china at 18% interest rate?
Most of the loans have low interest rate, due to sovereign guarantees. I don't know where that 18% came from, but it's either cherry picked, or is completely wrong.
 
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