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Joint Economic Aims Secure BRI Funds for Pakistan's Development

With Pakistan and China's long-term economic objectives seen as coinciding, Beijing has agreed to funnel substantial BRI funding into ensuring its neighbour's largest ever infrastructure development project is successfully implemented.

Photo: The China-Pakistan border: A gateway to beneficial co-operation or a conduit for China’s global ambitions? (Shutterstock.com)
The China-Pakistan border: A gateway to beneficial co-operation or a conduit for China's global ambitions?
Photo: The China-Pakistan border: A gateway to beneficial co-operation or a conduit for China’s global ambitions? (Shutterstock.com)
The China-Pakistan border: A gateway to beneficial co-operation or a conduit for China's global ambitions?

Summer 2018 is set to see construction work begin on the New Gwadar International Airport, a key element of both the China-Pakistan Economic Corridor (CPEC) and the Belt and Road Initiative (BRI), China's hugely ambitious international infrastructure development and trade facilitation programme. The final go-ahead on the project was given on 21 November, with both sides agreeing to put aside a number of concerns that have dogged the development and to push on with its speedy delivery.

Representing an investment of around US$230 million, the airport is expected to play a key role in facilitating enhanced trade between China and Pakistan and several Southern Asian, Middle Eastern, African and European countries. Construction is expected to take up to 30 months, with the completed airport having the capacity to accommodate the largest passenger and cargo aircraft currently in use.

Once completed, the airport will also form an integral part of the $57 billion CPEC project, alongside a series of new Pakistan-sited power plants, ports, highways, railways and special economic zones, all of which are scheduled to be completed by 2030. Assuming the development is fully implemented, it will be Pakistan's largest single infrastructure project since it became fully independent in 1947.

Overall, the Corridor has been largely funded by state-backed grants from China, loans from Chinese financial institutions and support from the Asian Development Bank. In essence, the project has been designed to tackle a number of problems that have long-hampered Pakistan's economic development, most notably a series of energy, logistical and transportation bottlenecks. Once these particular hurdles have been overcome, it is hoped that the country's export-oriented/manufacturing sectors will benefit from a substantial surge in inward investment.

The New Gwadar Airport sits at the heart of the CPEC project and will benefit from direct access to the vast Gwadar Deep-water Port and a proposed economic-development zone in Balochistan province, strategically set on the coast of the Arabian Sea. Ultimately, the redeveloped port, the airport and the economic-development zone, together with the adjoining city of Gwadar, will form a new integrated logistics hub, which the Pakistani government hopes will become one of the region's most significant trading interchange points.

In order to help realise this, plans are also in place to construct a 19km expressway, including a 4.5km sea bridge, which will act as a direct and rapid land link to the port. The expressway, as with the port itself, is to be funded and developed by Chinese corporations. In return, China Overseas Port Holdings, the state-owned logistics and construction conglomerate, has been granted a concession to run the port for the next 40 years.

The overall significance of the Gwadar project for both Pakistan and China should not be underestimated. At present, Pakistan's two primary seaports, Karachi and Qasim, which handle around 95% of the country's marine-routed imports and exports, are already working at maximum capacity. Given the limitations imposed by their geographical locations, it has not been feasible to increase their throughput, putting something of a lid on Pakistan's ambitious economic expansion plans.

By contrast, Gwadar's strategic location on the west coast is seen as offering considerable growth potential, especially as it is the closest major Pakistani port to both the Strait of Hormuz and the Persian Gulf. It also has the advantage of being able to offer direct port access to many of the landlocked Central Asian states, while functioning as a strategic transhipment hub between China, Asia, Africa and the Middle East.

As has been the case with many of the other countries co-opted into the BRI programme, there have been local concerns as to the extent of China's role in deciding Pakistan's economic future, as well as alarm over the size of the financial burden imposed by the requirements of the vast CPEC project. The country's government, however, maintains that the long-term benefits of the programme more than justify the outlay, with the success of the initiative representing a real opportunity to reduce poverty across the country, currently home to the world's sixth-largest population.

Geoff de Freitas, Special Correspondent, Islamabad

Content provided by Picture: HKTDC Research
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