Prelims Level
Mains Level
Prelims Syllabus : Mains Syllabus : Paper-II Effect of policies and politics of developed and developing countries on India’s interest

Why in news?

  • Saudi Arabia will be the third “strategic partner” of the $50 billion China-Pakistan Economic Corridor (CPEC), a senior Pakistani Minister announced, soon after Prime Minister Imran Khan returned from his first foreign trip to the cash-rich kingdom.

CPEC:

  • China-Pakistan Economic Corridor(CPEC), massive bilateral project to improve infrastructure within Pakistan for better trade with China and to further integrate the countries of the region.
  • The project  was  launched  on  April  20,  2015  when  Chinese President  Xi  Jinping and Pakistani Prime Minister Nawaz Sharif
  • The goal of CPEC is both to transform Pakistan’s economy—by modernizing its road, rail, air, and energy transportation systems—and to connect the deep-sea Pakistani ports of Gwadar and Karachi to China’s Xinjiang province and beyond by overland routes. (Xinjiang borders the countries of Mongolia, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, Afghanistan, Pakistan, and India, and the ancient Silk Road ran through its territory.)
  • This would  reduce  the  time  and  cost  of  transporting  goods  and  energy  such  as natural gas to China by circumventing the Straits of Malacca and the South China Sea.
  • The announcement  of  joint  space  and  satellite initiatives between  Pakistan  and  China,  spurred by CPEC, followed in 2016. CPEC is part of the larger Belt and Road Initiative—to improve  connectivity,  trade,  communication,  and  cooperation  between  the  countries  of Eurasia—announced by China in 2013.
  • CPEC has  been  compared  to  the Marshall  Plan for  the  rebuilding  of  post-World  War II Europe  in  its  potential  impact  on  the  region,  and  numerous  countries  have  shown interest in participating in the initiative.

India’s Going to Be Affected When CPEC Changes World Trade:

  • The much-vaunted USD 54 billion economic corridor in Pakistan that connects the Xinjiang region in western China with the southern Pakistan port of Gwadar is gradually rolling off operations, with the Chinese cargo being loaded onto the merchant vessels docked at the port.

1. India’s Sovereignty

  • India has continuously opposed the project since it passes through the Pakistan-occupied Kashmiri territory of Gilgit-Baltistan – a claim opposed by Pakistan.
  • The 1,300-km  corridor  is  also  perceived  to  be  an  alternative  economic  road  link  for  the Kashmir Valley lying on the Indian side of the border. Most key players in the Indian state of Jammu and Kashmir, including CM Mehbooba Mufti, have expressed optimism about the project.

2. Chinese Control Over Trade Via Sea

  • Major US ports on the East Coast depend on the Panama Canal to trade with China. Once CPEC becomes  fully  functional,  China  will  be  in  a  position  to  offer  a  ‘shorter  and  more economical’ trade route (avoiding travel through the entire Western Hemisphere) to most North and Latin American enterprises.
  • This will give China the power to dictate the terms by which the international movement of goods will take place between the Atlantic and the Pacific oceans.

3. Chinese String of Pearls

  • China has  been  increasing  its  presence  in  the  Indian  Ocean  with  the  ‘String  of  Pearls’ ambition: A term coined by the Americans and often used by Indian defence analysts to refer to a Chinese game-plan of encircling India through a network of airfields and ports.
  • With an existing presence in Chittagong port (Bangladesh), Hambantota port (Sri Lanka), Port Sudan  (Sudan),  Maldives,  Somalia  and  Seychelles,  a  control  of  Gwadar  port establishes complete dominance of the Indian ocean by the Communist nation.

4. Emergence of Pakistan as an Outsourcing Destination

  • Often referred  to  as  the  ‘Marshall  Plan’  of  China  –  named  after  a  historic  US  plan  to provide financial aid  to western Europe in the aftermath of World War 2, which  helped Europe rebuild itself – CPEC is poised to speed up Pakistan’s economic progress.
  • Development of  commercial  towns  adjoining  the  corridor  and  better  rail  and  road connectivity  enabling  the  movement  of  a  skilled  workforce  from  the  hinterlands  to  the urban centres can help Pakistan emerge as a key destination for contract-manufacturing-outsourcing  for  the  Eastern    This  is  more  probable  at  a  time  when  India  is becoming  costlier  and  Bangladesh  has  performed  poorly  on  quality  and  regulatory standards.

5. Stronger OBOR and Chinese Dominance in Trade Leadership

  • China’s one-belt-one-road (OBOR) project that focuses on the trade connectivity between China and the rest of Eurasia through a network of ports, roads and railways has been often seen as China’s plan to dominate the region politically. CPEC is one giant step in the same direction.
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