Moonlight
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My first attempt on CPEC, I hope you will like it
By Moonlight
From Strait of Hormuz to Strait of Malacca
China imports about 7 million barrels of oil per day, over 80% of its oil passes through the strait of Hormuz located near Gwadar with total value estimates of about $400 million dollars a day at reasonable price of $70 dollar per barrel. After the oil is loaded from one of the oil exporting nations in strait of Hormuz (Kuwait-Saudi Arabia-Qatar-UAE-Iran and Oman) it passes through Pakistan-India-Sri Lanka-Malaysia-Singapore-Indonesia-Vietnam and ultimately reaches its destination at port cities of Hong Kong, Shanghai and Shenzhen crossing over 16,000KM in 3 months. By the time CPEC is fully operational in 2030, it is most likely that the demand of oil must have increased.
China have various challenges in this route such as the dispute in South China sea might escalate and effectively neutralise China’s sea route with support of USA, Japan, India and other major players in South China sea.
The other challenge is the strait of Malacca which at its narrowest point of just 2.8km is neither deep enough to accommodate large vessels nor able to meet future demand of China, Japan, South Korea and rest of East Asia with current vessel traffic of over 77,000 per year.
From Kashgar to Gwadar
CPEC is specifically intended to boost the economy of autonomous region of Xinjiang which at $150 Billion USD is about 60% of Pakistan’s economy but most of the Western China will benefit from CPEC as evident from the first shipment that came to Pakistan being dispatched from the province of Yunnan and not from Xinjiang. The western china consists of 55% of the land area of China with approximately 20% population and largely remains under developed compared to North and East China.
China wishes to bridge the gap between western China and rest of the country and came with ambitious plan of “Western Development Strategy” of 1999 under which she invested $512 Billion USD in western China to boost the economy of this region however despite major achievements such as West Triangle Economic Zone, the province of Xinjiang remains less developed due to internal conflict, extreme weather conditions, comparatively low population and poor transportation connectivity as well as lack of access to sea despite being naturally blessed with mineral resources and surplus in energy requirements.
In order to address these problems China envisioned CPEC to boost the economy of Xinjiang by establishing Special Economic Zones (SEZ), Industrial parks, road and rail projects worth billions of dollars to integrate Xinjiang with rest of the country and opening up the province by giving access to warm waters of Karachi and Gwadar at approximately 2700km from Kashgar compared to 5100km from the nearest Chinese port of Shanghai or 5400km of Hong Kong saving in 50% of transportation cost. Besides Pakistan, the autonomous region of Xinjiang also shares border with Russia, Kazakhstan, Kyrgyzstan, Tajikistan, Mongolia and Afghanistan.
Gwadar and China
The port of Gwadar is likely to play more important role for development of Xinjiang than the whole of Pakistan. The port of Gwadar is situated on the mouth of strait of Hormuz and can effectively cut the sea route from 16,000km to just 5000km with only half the journey by road.
The cheapest method for transportation of energy is pipeline followed by sea route and railways. China have repeatedly shown interest in laying the oil pipeline to divert about 17% of her oil imports or about 1 million barrel of oil per day from Gwadar to Kashgar. If such initiative materialises it means China will be importing $25 billion dollar of oil each year from Gwadar to Western China through oil pipeline effectively cutting the cost of transportation by manifold besides other strategic benefits of reducing her reliance on South China sea.
The port of Gwadar will also be used for transportation of goods from Western China to East Asia, Africa and Europe by land and sea routes reducing the travel distance from 3 months to just few days. To achieve such goal China is pursuing to upgrade Main Line 1 of Pakistan Railways, new rail links between Gwadar to Karachi and Havelian to Kashgar besides establishing 3 corridors for transportation of goods by road.
There is no second opinion that sea is the cheapest method of transportation of goods however no nation in the world solely relies on sea route. If such was the case, then China would never have built rail link between China and Spain. The rail route between most part of western China will be cheaper between Gwadar and Western china due to proximity of sea port however it is highly likely that many regions of China will prefer Gwadar over Chinese ports where technically Gwadar is more expensive compared to Chinese ports because of time efficiency. If Gwadar is 20% more expensive compared to existing ports in China, it still makes a lot of sense for many businesses to use such route if it also cuts the cost from 3 months to few days.
Power Projects
China is financing $34 billion dollars of power projects in Pakistan to generate 17,045MW of electricity besides commitment to add more hydro power projects in future. China knows that no nation in the world would give them high rate of return with current reserves of over 3 trillion USD hence they are trying to invest in under developed nations that are likely to agree with higher rate of return due to their own economic needs.
One of the example is the financing of transmission lines between Matiari to Lahore and Faisalabad that is likely to cost $3 billion dollar. According to National Transmission and Despatch Company (NTDC) if the transmission line was financed from internal resources, it would require 6 years to recover the cost of the project and won’t need to pay Chinese company for 25 year.
Defence
It’s a secret
By Moonlight
CPEC for China
CPEC is one of the 6 proposed economic corridors of China under the vision of One Belt, One Road (OBOR). The idea is to establish new maritime silk route by enhancing regional connectivity and linking 3 billion people of 64 countries of the world in Europe, Asia and Africa by cost effective road, rail and sea links to boost industrial sector and to sustain future economic challenges. China has immense economic and strategic benefits from CPEC and I have highlighted some of them belowFrom Strait of Hormuz to Strait of Malacca
China imports about 7 million barrels of oil per day, over 80% of its oil passes through the strait of Hormuz located near Gwadar with total value estimates of about $400 million dollars a day at reasonable price of $70 dollar per barrel. After the oil is loaded from one of the oil exporting nations in strait of Hormuz (Kuwait-Saudi Arabia-Qatar-UAE-Iran and Oman) it passes through Pakistan-India-Sri Lanka-Malaysia-Singapore-Indonesia-Vietnam and ultimately reaches its destination at port cities of Hong Kong, Shanghai and Shenzhen crossing over 16,000KM in 3 months. By the time CPEC is fully operational in 2030, it is most likely that the demand of oil must have increased.
China have various challenges in this route such as the dispute in South China sea might escalate and effectively neutralise China’s sea route with support of USA, Japan, India and other major players in South China sea.
The other challenge is the strait of Malacca which at its narrowest point of just 2.8km is neither deep enough to accommodate large vessels nor able to meet future demand of China, Japan, South Korea and rest of East Asia with current vessel traffic of over 77,000 per year.
From Kashgar to Gwadar
CPEC is specifically intended to boost the economy of autonomous region of Xinjiang which at $150 Billion USD is about 60% of Pakistan’s economy but most of the Western China will benefit from CPEC as evident from the first shipment that came to Pakistan being dispatched from the province of Yunnan and not from Xinjiang. The western china consists of 55% of the land area of China with approximately 20% population and largely remains under developed compared to North and East China.
China wishes to bridge the gap between western China and rest of the country and came with ambitious plan of “Western Development Strategy” of 1999 under which she invested $512 Billion USD in western China to boost the economy of this region however despite major achievements such as West Triangle Economic Zone, the province of Xinjiang remains less developed due to internal conflict, extreme weather conditions, comparatively low population and poor transportation connectivity as well as lack of access to sea despite being naturally blessed with mineral resources and surplus in energy requirements.
In order to address these problems China envisioned CPEC to boost the economy of Xinjiang by establishing Special Economic Zones (SEZ), Industrial parks, road and rail projects worth billions of dollars to integrate Xinjiang with rest of the country and opening up the province by giving access to warm waters of Karachi and Gwadar at approximately 2700km from Kashgar compared to 5100km from the nearest Chinese port of Shanghai or 5400km of Hong Kong saving in 50% of transportation cost. Besides Pakistan, the autonomous region of Xinjiang also shares border with Russia, Kazakhstan, Kyrgyzstan, Tajikistan, Mongolia and Afghanistan.
Gwadar and China
The port of Gwadar is likely to play more important role for development of Xinjiang than the whole of Pakistan. The port of Gwadar is situated on the mouth of strait of Hormuz and can effectively cut the sea route from 16,000km to just 5000km with only half the journey by road.
The cheapest method for transportation of energy is pipeline followed by sea route and railways. China have repeatedly shown interest in laying the oil pipeline to divert about 17% of her oil imports or about 1 million barrel of oil per day from Gwadar to Kashgar. If such initiative materialises it means China will be importing $25 billion dollar of oil each year from Gwadar to Western China through oil pipeline effectively cutting the cost of transportation by manifold besides other strategic benefits of reducing her reliance on South China sea.
The port of Gwadar will also be used for transportation of goods from Western China to East Asia, Africa and Europe by land and sea routes reducing the travel distance from 3 months to just few days. To achieve such goal China is pursuing to upgrade Main Line 1 of Pakistan Railways, new rail links between Gwadar to Karachi and Havelian to Kashgar besides establishing 3 corridors for transportation of goods by road.
There is no second opinion that sea is the cheapest method of transportation of goods however no nation in the world solely relies on sea route. If such was the case, then China would never have built rail link between China and Spain. The rail route between most part of western China will be cheaper between Gwadar and Western china due to proximity of sea port however it is highly likely that many regions of China will prefer Gwadar over Chinese ports where technically Gwadar is more expensive compared to Chinese ports because of time efficiency. If Gwadar is 20% more expensive compared to existing ports in China, it still makes a lot of sense for many businesses to use such route if it also cuts the cost from 3 months to few days.
Power Projects
China is financing $34 billion dollars of power projects in Pakistan to generate 17,045MW of electricity besides commitment to add more hydro power projects in future. China knows that no nation in the world would give them high rate of return with current reserves of over 3 trillion USD hence they are trying to invest in under developed nations that are likely to agree with higher rate of return due to their own economic needs.
One of the example is the financing of transmission lines between Matiari to Lahore and Faisalabad that is likely to cost $3 billion dollar. According to National Transmission and Despatch Company (NTDC) if the transmission line was financed from internal resources, it would require 6 years to recover the cost of the project and won’t need to pay Chinese company for 25 year.
Defence
It’s a secret
