The Rationale Behind the China-Pakistan Economic Corridor (CPEC): The View From Beijing

Abstract

This paper will answer the question of why China is developing the China Pakistan Economic Corridor (CPEC). CPEC is a multibillion-dollar development initiative that includes the construction of an ‘economic corridor’ between Kashgar in China’s restive Xinjiang region and Gwadar Port in Balochistan, Pakistan. This project now has a projected value of $51.5bn, although only about $14bn has been spent so far. The majority of this money is coming from Chinese state-owned banks and will be spent on developing infrastructure including roads, railways, energy plants and pipelines along the proposed route. CPEC has been touted as a ‘win-win’ scenario for both states and a ‘game-changer’ for the troubled Pakistan economy. This paper will look at the deeper, underlying motivations that are driving the project from the Chinese side. It argues that there are three main motivations behind the project. Firstly, China is currently conducting important economic reforms and CPEC is related to this. In an era of change for the Chinese economy, CPEC provides new economic opportunities for China’s firms and particularly its beleaguered State-Owned Enterprises (SOEs). Secondly, this paper will explore how CPEC relates to China’s restive region of Xinjiang. The relationship between Uighur militants and Islamic extremism has been an alarming development for China’s rulers in recent years. CPEC aims to bring about social stability through economic development in Xinjiang and thereby reducing anti-state tendencies in that region. Lastly, this paper will look at the geopolitics behind CPEC. With rising tensions in the Asia-Pacific region, CPEC represents not just a means to diversity the modes of China’s energy imports but bolsters its strategic alliance with Pakistan against India and the US in the Indian Ocean region.