Analyzing CPEC

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svinayak
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Re: Analyzing CPEC

Postby svinayak » 26 Nov 2016 10:05



True nature of CPEC is shown here

China has put lot of emphasis on its supply lines

SSridhar
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Re: Analyzing CPEC

Postby SSridhar » 26 Nov 2016 18:30

Two killed in gun attack on oil exploration company's vehicle in Gwadar - DAWN
Militants attacked a vehicle of an oil exploration company and killed two of its security guards in Balochistan's Gwadar district on Saturday.

Mansoor Gichki, a senior administration officer, told DawnNews that armed militants opened fire at the vehicle of a private oil exploration company in Pasni tehsil of Gwadar.

He said two private security men guarding the officials of the company were killed on the spot. The assailants escaped unhurt from the spot

"The private oil exploration company was engaged in conducting survey of the area when the vehicle of the company was attacked by miscreants," he added.

Levies and police personnel reached the incident site as an investigation into the incident went underway.

"The incident seems to be an act of targeted killing," Gichki said.

There has been no immediate claim of responsibility for the attack. Militants in the area have been attacking security forces and pro-government politicians for more than a decade.

SSridhar
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Re: Analyzing CPEC

Postby SSridhar » 28 Nov 2016 15:55

CPEC: Corridor of Discontent - Priyanka Singh, IDSA
The flagship project under the Belt and Road Initiative - the China Pakistan Economic Corridor (CPEC), has been seen as a ‘game changer’ in the regional geopolitical discourse since its formal unveiling in April 2015. It has become the foremost bilateral initiative between China and Pakistan, entailing a budget above $46 billion. CPEC has captured popular imagination in Pakistan, at a time when it is struggling to get its economy back on track. Through the successful execution of the CPEC, China looks forward to adding a significant brand value to its overseas developmental initiatives enunciated as One-belt-One-Road. {That is why China desperately wants CPEC to succeed}

With a spectacular GDP having trillions of dollars in reserve, China is seeking to invest in projects abroad that can enhance connectivity, utilise idle capital and sustain its economic growth. In this context, CPEC is conceived as a project that will give China overland access to the Arabian Sea through the Pakistani port of Gwadar, bring development and prosperity to Pakistan - a long-time friend and ally, and cement strategic ties between the two. Innocuous as it may appear, with its passage through the disputed territory of Gilgit-Baltistan and its access and control of Gwadar port - situated in close proximity to the energy-rich Western Asian region, CPEC has provoked the regional/sub-continental security debate ever since it was announced with great gusto by China and Pakistan.

Enveloped in a geopolitical chimera, the focus of the emerging discourse on CPEC is clearly tilted towards its economic and strategic imperatives. However, the flip side of the project concerning its political viability is being ignored. Considering that the CPEC is set to traverse through Xinjiang, Gilgit Baltistan and Balochistan simmering with large-scale political discontent, there are lurking uncertainties facing the future prospects of the project, widely hailed as a harbinger of enhanced regional connectively and trade.

The staple factors put forth to justify the CPEC include China’s geographical constraints vis-à-vis southern waters in the Indian Ocean as well as Pakistan’s ever intensifying energy crisis. The idea of connecting China to the strategically important waters of the Arabian Sea though has evolved over a period of time, way back to when the Karakoram Highway was constructed during the 1960’s and 1970’s. The strategic highway built through the only land link between China and Pakistan (read Gilgit Baltistan) in many ways blueprinted the idea of an intensive connectivity network of what is today envisaged as the grand CPEC project.

The issue brief is an attempt to assess the CPEC on the viability quotient as it stands on the plank of long-raging political questions and evaluate the level of concord in the three major geographical segments of the corridor. Premised on the fact that the political conflict in these regions has received comparatively lesser attention in the overall CPEC discourse, the issue brief seeks to un-layer strands of commonalties in these regions vis-a-vis political unrest and collate the larger complexities of prolonged neglect and abject exclusion. Parallel to the political prism, the brief takes into account the geopolitical discontent triggered by the CPEC, whilst looking at likely impacts to be incurred on the complex triangular geopolitical equations between India, Pakistan and China in general and CPEC in particular.

Across Contested Geographies

The CPEC stretches across zones witnessing conflict, subjugation and political exclusion. These regions continue to be tarred in raging political discontent and are inflicted by deep seated deficit of trust. Slated to originate in Kashgar in the Xinjiang Uighur Autonomous Region (XUAR), the corridor is designed to enter Gilgit Baltistan via the Khujerab Pass before spreading out in parts of Pakistan. In Pakistan, the CPEC travels through Khyber Paktunkhwa, Punjab before culminating at the warm water deep sea port at Gwadar, situated at the southern edge of the restive Balochistan province. While Xinjiang for long has witnessed an incessant ethnic strife offering stiff resistance to Han dominance, Gilgit Baltistan is reeling under lack of constitutional status and political ambiguity since the region’s violence-embroiled accession to Pakistan in 1947. Balochistan in Pakistan is infested by insurgency and prominent political groups led by ethnic Balochs have directly challenged the writ of the state during multiple phases of extreme violence and conflict.

All three regions - Xinjiang, Gilgit Baltistan and Balochistan - share rather conspicuous parallels concerning territorial contestations, rejection of state apparatus by the local populace who claim a legitimate right over local resources. Similarly, all these geopolitically key regions contain vast expanses of landmass - Xinjiang is the largest administrative division of China, Balochistan forms 46 per cent of Pakistan while Gilgit Baltistan forms the major portion of what is referred to as Pakistan-Occupied Kashmir (POK). It is rather intriguing that the CPEC which is riding high on the developmental, network-connectivity agenda, boasting of a mammoth multi-billion budget, is traversing regions where the state has allegedly been deeply involved in altering demographics to diminish/wipe their exclusive ethnic characters. As a result, strong undercurrents of rebellion and dissidence prevail in these geographical entities.

Xinjiang: Xinjiang, the western most part of China where the CPEC originates, has been reeling under strife owing to political and ethnic reasons. The political discontent stems from ethnic/identity issues and of late has been triggered by relentless subjugation of the majority Uighur population in the province (and a minority in China). Groups such as Turkistan Islamic Party (formerly the East Turkestan Islamic Movement-ETIM) advocate Xinjiang’s independence from China. They have refused to accede to the Chinese control on the region obtained in 1949, challenging it on the pretext that the origin of the state lay somewhere else and it does not belong to the Peoples Republic of China (PRC).

Gilgit-Baltistan: As noted earlier, Gilgit Baltistan is part of POK. While under Pakistan’s territorial control, the region is still not considered a part of it either constitutionally or politically after almost seven decades. More significantly, the region is claimed by India as part of the erstwhile princely state of Jammu and Kashmir (J&K) ever since the Instrument of Accession was signed in India’s favour by Maharaja Hari Singh in October 1947. An inordinate wait for political rights and identity has been aggravated by a prolonged phase of political neglect and state apathy. Nationalist sentiments have spawned in Gilgit Baltistan over the years and have found vent in an array of nationalist/political groups some of whom are defiant to the extent of seeking independence from Pakistan.

Balochistan: Balochistan did not immediately accede to the newly formed Pakistan in 1947. Its formal accession to the latter in March 1948 was preceded by a spell of uncertainty and intervention by the Pakistan military. Ever since then, the region has been embroiled in a perpetual state of turmoil and political tussle with the Pakistani state. The insurgency in Balochistan has refused to recede even after military’s stringent measures to tide over violence. The Balochistan situation has degenerated especially since 2003-04 under a patently ruthless regime involving indiscriminate state action against individuals, institutions and political groups refusing to comply with Pakistan’s control. Draconian tales of forced disappearances, death squads and extra-judicial killings have continuously poured out of Balochistan on a regular basis.

Disenchanted Populations

The CPEC covers expanse of populations that are inflicted by political angst - ones that have challenged directly the writ of the state controlling them. These people for decades continue to be been at odds with the state authority concerning issues of political rights, resource ownership, economic rights and power sharing. A significant section of population in these region remains disenchanted, more so, disengaged to the mainstream processes.

Ethnic and political exclusion: The regions face ethnic exclusion against dominant majoritarian groups - Uighurs against the Han Chinese, Shias of Gilgit Baltistan versus Pakistan’s Sunni dominance and ethnic Baloch people against Punjabi patronization. In Xinjiang, China has subjected ethnic population to high handedness and freak elements of control. The state has used possible tools of discrimination against the ethnic Uighurs, who constitute about 90 per cent of the local population. Popular outbursts have frequently resulted in widespread ethnic riots in Xinjiang as manifested grossly in 2009.1 Recently, there were extensive reports that the Chinese government resorted to extreme measures at times by forbidding the ethnic Uighurs from observing fast during the holy month of Ramzan.2

Balochistan has witnessed similar persecution of ethnic Baloch and brazen discrimination by the Pakistani state. Since 1947-48, Pakistan’s equations with Balochistan have been patchy and rough. Resistance against Pakistan has persisted through several phases in 1950s, 1960s, and so on. The military has been at the helm of Pakistan’s equations with the Balochi people. Autocratic practices such as death squads, forced disappearances, wrongful detention and extrajudicial killings allegedly perpetrated by the state continue unabated even as the region remains one of the flashpoints of human rights advocacy and international attention at large.3

Similarly in Gilgit Baltistan, the sense of political alienation and malaise is extremely deep-rooted. The lack of a political status and constitutionality in Gilgit Baltistan has ratcheted up popular sentiments against Pakistan. Complementing the popular attitudes, a number of political groups exist in the region dissenting Pakistan’s highhanded rule, while others seek autonomy or even complete independence. Politics in Gilgit Baltistan has remained subservient to Pakistan’s larger agenda against the region - one that has reduced it to be a mere pawn in Pakistan’s dubious Kashmir gambit.

Outsourced resources: Coincidentally, the three in-focus regions are rich in natural resources. Designated as ‘‘national energy strategy base’’4 , Xinjiang houses oil reserves that run in billions of tons, accounting for 1/5th of China’s aggregate oil reserves. Besides, coal reserves are about 40 per cent of the total followed by the largest gas reserves within China.5 Irrespective of ethnic strife, China has engaged in expanding refineries and extraction activities in the region. Gilgit Baltistan has vast reserves of minerals and hydro power potential while Balochistan is blessed with significant gas reserve.

The availability of resources unfortunately does not reflect as much in the development indexes concerning these regions. For long, these resources remained untapped before the states in question decided to harness these by either outsourcing them to external players like China (in Balochistan and Gilgit Baltistan) or diverting the resource wealth towards purposes other than local development. Sustained neglect of local interests has accentuated popular angst in these regions which has frequently led to protests and disruptive activities.

Trepidation against China: A common strand of widespread China-centric apprehensions is visibly prevalent in Xinjiang, Gilgit Baltistan and Balochistan with strong undercurrent of anti-China trepidations. While in Xinjiang, the anti-China sentiments is attributed to marginalization and suppression of ethnic Uighurs, in Balochistan the quest against the Chinese revolves around the fear that local resources are being exploited to serve Chinese interests. Notably, the broader understanding is that the immediate trigger for the outbreak of the current spell of insurgency in the region was due to the award of the Saindak mining field contract in the Chagai hills to the Chinese.6 Similar sense of apprehensions and resistance overcast the handing over of the Gwadar Port administration to China in 2013 after the previous Singaporean enterprise decided to withdraw.
Elements Of Dissonance

Apart from the geography-driven factors as discussed above, the CPEC has already unleashed a series of discord both at the political and geopolitical level. In Pakistan, the CPEC is emerging as the latest flashpoint of inter-provincial tussle after the controversial Kalabagh dam project. On the other side, CPEC has been at the centre of bilateral/trilateral discord between India, China and Pakistan. Some of the broad drivers of discontent already playing out, well before the CPEC could actually culminate.

Political dissonance: In Pakistan, the CPEC is currently hailed by metaphorical adjectives such as ‘game changer’, and being advertised as a fountainhead of peace, stability and development.7 The corridor that spreads across several parts of Pakistan has spiralled inter-provincial rivalry and discord regarding share and benefits. Such dynamics have previously marred the pace of development-oriented infrastructure projects, glaring examples being the Kalabagh dam and the Diamer Bhasha dam project.8 The interprovincial ties within Pakistan have perennially been fragile and equally precarious - explicit during the Kalabagh dam controversy, wherein a much wanted hydropower project was shelved owing to discord between Sindh, Khyber Pakhtunkhwa and Punjab.9 It is important to note that had the Kalabagh dam project reached fruition, the much pronounced energy woes in Pakistan today would have largely been averted.

Years down the line, the ghosts of Kalabagh appear to hover on the CPEC route controversy. There is much bad blood between the provinces over preferred route options and share in the proceeds from several projects within. For instance, there were several routes floating in the public domain and consensus on zeroing in on a particular route had been eluding ever since. For a long time, there was uncertainty whether Balochistan to the extent possible would be avoided in the CPEC routing. This was mainly due to concerns on continuing political strife and cyclical occurrence of violence in the region.

Likewise in Gilgit Baltistan (part of POK), people are oblivious to their role and share in the CPEC.10 In August 2015, the Gilgit Baltistan Legislative Assembly passed resolutions demanding setting up of economic zones in the region under the CPEC stable. At the same time, the house also demanded Gilgit Baltistan’s participation in the Consultative Committee on the CPEC.11 Seething under lack of a constitutional status, popular opinion in the region seems incrementally driven towards knowing their actual stakes in the multi-billion corridor. Concerns on getting a rightful share in the CPEC harvest have also resonated in the so called Azad Jammu and Kashmir (‘AJK’) - the other name for POK, where the newly appointed President Masood Khan contended before the Standing Committee of the National Assembly on Kashmir and Gilgit-Baltistan that the region too should get its ‘due share’ being a ‘natural part’ of the CPEC.12

The overbearing Punjabi component in Pakistani politics and the army has spurred apprehensions with some sections referring to the CPEC as the ‘China Punjab Economic Corridor’.13 Such views gravely overshadow the popular enthusiasm involving the sheer size and volume of the over $46 billion Chinese-aided development corridor.

Geopolitical/strategic discord: The CPEC is slated to cut through swathes of territory in POK on which India has a standing claim. India’s rather underplayed policy on POK has, nevertheless, featured several objections to Chinese involvement in building hydropower projects and infrastructure in parts of POK. In sync with its official stance, India has been opposed to the idea of a connectivity corridor being built through a contested territory i.e., Gilgit Baltistan - geographically an essential part of India’s extant claim. India’s concerns have been taken up at the highest level with China, including during Prime Minister Narendra Modi’s visit to the PRC in May 2015. India’s reservations on the CPEC have also been emphasised in the bilateral parleys with China and Pakistan. While the public opinion on the CPEC in India is still shaping up, it appears somewhat divided with a sizeable constituency viewing the corridor as a potent challenge for India’s long term security interests.

India-Pakistan ties have yet again hit a rough patch in the wake of the Uri attack and subsequent cross Line of Control (LoC) strikes. This was in the immediate aftermath of the spate of violence in J&K in July 2016 followed by Prime Minister Modi’s Independence Day speech in which he boldly expressed gratitude to the people of POK and Balochistan.14 India not only appears to substitute the policy rut on POK with proactive forthrightness but also looks prepared to harden its stance on POK and Balochistan, if need be. India-China ties have been on test due to the Nuclear Suppliers Group (NSG) episode and China’s gambit in obstructing Jaish e Mohamed chief Masood Azhar’s proscription at the United Nations. Disturbing trends such as these afflict triangular dynamics between the three countries. Coupled with India’s freshly acquired Balochistan pitch, constellation of forces such as these may impact the feasibility/viability of the CPEC in some, if not considerable measure.

The Road Ahead

It is essential that the discussion on these three regions is also contextualized in the development versus discontent paradox. The debate on the correlation between development and political stability - on how the two propositions impact each other or remain diametrically opposed, is wide. Correspondingly, there is also the dilemma regarding what comes first - political stability or economic development. Considering the extent of political instability and economic lag in the regions the CPEC travels through, it would be interesting and worthwhile to observe the prospects of medium and long term impact of the CPEC over these lands.

More significantly, any approximate analysis concerning the contours of CPEC’s future course must essentially factor in two drivers of prime significance – Pakistan’s grim international security parameters and China’s risk averse behaviour. CPEC’s arterial spread inside Pakistan as well as POK make it dependant on Pakistan’s internal security situation, which has witnessed a steep downslide despite the army’s projected resolve to purge militancy and violence. In view of recurring incidents of mass killings abetted by several militant groups across Pakistan, especially Balochistan, the prospects of the CPEC acting as a harbinger of stability and development appear more than dismal. Before this happens, Pakistan needs to shed its long standing affinity to militancy as an instrument of state policy and inspire confidence amongst provinces thereby creating an environment conducive for economic development and stability.

As the corridor charts across hotbeds of unrest and instability, through lands of contested statuses, it will litmus-test China’s risk-averse investment behaviour. China in the past has steered clear of politically contentious projects such as the Diamer Bhasha dam (in Gilgit Baltistan) - a controversial project territorially challenged by India and also the scene of an existing boundary discord between Khyber Pakhtunkhwa and Gilgit Baltistan. Whether or not China is able to take a deep plunge in the risk-ridden investment landscape remains to be seen.

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Analyzing CPEC

Postby Peregrine » 29 Nov 2016 05:12

CPEC: The devil is not in the details

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The first outgoing shipment of containers carrying Chinese goods departed from Gwadar port on November 13, 2016. The media event was attended by Pakistan’s top policymakers as well as a high-level Chinese delegation. Despite this important first step for the China-Pakistan Economic Corridor (CPEC), many people in Pakistan still approach this project with a sense of cautious optimism.

Nearly all will say CPEC is a game-changer, but some will ask for whom? Others will flag that CPEC is the largest foreign investment into Pakistan, but many will question whether the country will be able to bear the debt burden resulting from it. Some will talk up how the various sub-routes could lift under-developed cities and towns, but others will question whether these sub-routes will even materialise as China is really only interested in the direct route from Kashgar to Gwadar.

To understand the policy motivation behind OBOR, one must realize that China is desperate to maintain its growth momentum, especially with the uncertain outlook for the global economy

This confusion exists because fresh information on CPEC is mostly anecdotal, rather than from a credible official source. People will highlight the increasing number of Chinese in the country (on flights, hotels, shopping malls, etc); the rapid pace of development at Gwadar port; and how the first Chinese shipment moved through different ports of Pakistan to reach Gwadar. Other than the recent shipment, concrete details are scarce.

Even so, Pakistanis feel the partnership with China is critically important for the country, though they are unsure whether it will materialise fully. On the other hand, the global reaction to China’s One-Belt-One-Road (OBOR) – of which CPEC is a part – falls into one of two categories: those who think the project is simply not feasible in terms of scale, or the resources needed or the timeline; and those who fear that OBOR is China’s master plan for global domination in the 21st century (see map below).

Observers concerned about OBOR’s feasibility flag the sheer scale of this undertaking, and the apparent disconnect with available funding sources. Bankers will highlight the inherent risks in long-term infrastructure projects, which are compounded by the large number of participating countries. They will focus on financial/trade guarantees, regulatory reach/enforcement, and legal cover and recourse.

While none of these misgivings are unreasonable, we believe they fail to consider several key points. But the basic issue raised by sceptics is entirely legitimate.

So the 46 billion dollar question is whether these fine-print concerns could sink the project. Is the devil really in the details?

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What China seeks from OBOR

To understand the policy motivation behind OBOR, one must realise that China is desperate to maintain its growth momentum, especially with the uncertain outlook for the global economy. In fact, if China’s economic growth slows significantly, there are legitimate fears this could spark social unrest and political instability.

In our view, the challenges facing Chinese policymakers could be ranked as follows:

1. Secure shipping lanes. As the world’s largest importer of oil and gas, China needs to ensure that its shipping routes are not vulnerable at the choke point – the Malacca Straits. Hence, Corridors 1 and 2 of OBOR have immense strategic value for China, not just for fuels and minerals, but also to access Central Asia, the Middle East and Africa.

2. Develop Western China. While the coastal areas are largely developed, Western China is somewhat neglected. For political harmony, policymakers need to focus on Western China, which explains why Corridors 1, 2 and 3 of OBOR originate out of the Western provinces.

3. Use China’s spare capacity. Building physical infrastructure has fueled China’s economic growth. With growing concerns that policymakers may have over-invested, China’s installed capacity in steel, cement, bulk chemicals and heavy machinery, is now under-utilised. Building infrastructure in neighbouring countries would be a convenient way to use this spare capacity.

4. Create new export markets. China perhaps realises that exports to the member countries of the Organisation for Economic Co-operation and Development (OECD), which have been driving its economic growth, may continue to fall. In effect, it needs to cultivate new markets in Africa and Central Asia, which have significant growth potential.

5. Create goodwill with neighbouring countries. OBOR entails establishing training institutes and schools in participating countries, which should support the project and be mutually beneficial.

While it is clear that China has to be ambitious, OBOR may not be quite as ambitious as it appears. For example, China may not deliver all six corridors, these corridors may not extend as deeply as envisaged, and each corridor may not include roads, railroads and pipelines as currently planned. But even half of the currently planned OBOR network would go a long way towards securing what China needs.

In fact, we believe there is a latent priority within the six OBOR corridors, with Corridor 1 and 2 on top of the list for strategic reasons. This may be why Corridor 1 (CPEC) has been the first order of business for China under OBOR. Taking a staggered approach makes sense, as it limits the resources that have to be committed upfront. Furthermore, negotiating the first two corridors is likely to be less problematic for the Chinese (compared to Corridors 5 and 6) as there are fewer participating countries in Corridors 1 and 2 (Pakistan, Kazakhstan, Uzbekistan, Turkmenistan and Iran) -- and some of these countries do not enjoy close ties with the United States.

China’s unique approach to economic reforms

Many third world countries were more developed than China in the 1970s. In light of this, China’s current standing in the global economy clearly reveals why its economic transformation is considered a miracle. After Tiananmen Square in 1989, China embraced economic reforms with even greater fervour.

The architect of this accelerated growth was Deng Xiaoping. In 1978, Deng challenged the Chinese to double China’s economy by 2000 and make China a middle-income country by 2050. China far exceeded his expectations when it overtook Japan to become the second-largest economy in 2010. Deng’s heuristic (learning-by-doing) approach to economic reforms defied the collective wisdom of the World Bank and the International Monetary Fund (IMF).

It is somewhat ironic that the development strategy advocated by the Washington Consensus, under which the World Bank and IMF operate, is far more ideologically burdened than the one used by Communist China to reform its own economy. Compared to Pakistan, the Chinese were far more practical – and result-oriented – in their approach to economic reforms.

Most importantly, China displayed the political will to change. But political will, while essential for the success of reforms, is not enough. An effective strategy is also needed and China used a novel one that yielded unprecedented results.

Bo Qu, a visiting scholar at Princeton University, highlights two key characteristics of China’s economic reforms since 1978.

It is somewhat ironic that the development strategy advocated by the Washington Consensus, is far more ideologically burdened than the one used by Communist China to reform its own economy.

First, economic reforms do not proceed according to a well-defined blueprint. Qu states that experimentation is a fundamental part of China’s policy formulation, and the process is primarily driven by specific problems encountered during implementation. In effect, the real focus should be on solving practical problems, instead of persisting with ideologically appealing, but ineffective institutional arrangements.

Second, China’s reforms were gradual and incremental, without hard timelines. Qu states that incremental reforms reduce adjustment costs as policymakers are able to balance the pace of reforms with social stability.

Despite starting as an under-developed agrarian economy in the late 1970s, China did not approach the international financial institution (IFIs) for policy advice or financial assistance. The stark contrast between this approach and Pakistan’s experience since the late 1980s cannot go unnoticed. Although Pakistan has been working to restructure its economy for the past 25 years, many would argue that little has been achieved.

China’s Family Production Responsibility System (FPRS) is a good example of the heuristic approach to economic reforms. Before this, China had communal farms with strict production quotas, where even meals were a group activity. The FPRS (which is still in force) allowed individual farmers to rent arable land from the government, in exchange for a specific quota of produce/crops. The rent was paid to the local government.

This simple idea, which effectively permitted farmers to sell surplus produce in village markets, was first implemented in specific provinces in the mid-1970s. When positive results were realised, these experiments were carried out with different crops, and then replicated in other provinces of China.

The FPRS was formalised as policy in 1978 – by 1984, 99 per cent of China’s total agricultural production was incentivised by the private gains of individual farmers. The scale of this change can only be appreciated when one realises that China’s rural population was about 800 million to 850 million people at the time.

This policy alone lifted most of China’s population out of poverty.

China’s success with large-scale economic transformation suggests that it would be an ideal partner to execute CPEC. But even more importantly, China’s tried-and-tested approach to reforms, which is incremental and open to change as the situation evolves, suggests that a lack of concrete details is not cause for alarm. This appears to be how the Chinese prefer to work.

Is OBOR a plan for global domination?

We disagree with the perception that OBOR aims for global domination. First, the specific focus on Asia (effectively ignoring Africa and Latin America) does not reveal global ambitions; and, secondly, since China is the third-largest country by landmass and the second-largest economy in the world, any of its long-term strategy – by definition – will be on a “global” scale.

What is harder to explain is China’s policy in the South China Sea. For a country trying to downplay the perception that it seeks to challenge the US for global domination, China’s strategy in Asia Pacific is surprisingly aggressive. However, changing one’s perspective could explain China’s orientation on this issue.

The Asia Pacific region has a significant US military presence. American bases in Japan and South Korea can be traced back to WWII and the Korean War, but have lost their tactical importance with the end of the Cold War. Furthermore, the continued US presence in Australia, the Philippines, Thailand and the Indian Ocean has the potential to disrupt trade flows destined for – and originating from – China. Since China’s hard power comes from its trade flows, the Chinese are justifiably concerned that a stand off with the US, on any issue, could easily strangle its domestic economy.

The geopolitical dimension of CPEC


While OBOR may not be a plan for global domination, it does seek to change the global status quo. Creating a physical corridor to the Arabian Sea will give China direct access to a deep-sea port that is close to the largest hydrocarbon exporters and a shortcut to Europe, the Middle East and Central Asia.

One must consider how this project challenges the global status quo, the US control of global shipping lanes and India’s ambitions to control the Indian Ocean. The growing tension between the Asian giants (China and India) and the hostility between Pakistan and India explains why CPEC is so strongly opposed by India.

The resistance to Gwadar becoming a fully functioning port is perhaps being reflected by the troubles in some parts of Balochistan — specifically targeting the Pakistan Army and local law enforcement agencies. These terrorist attacks may be an effort to undermine CPEC.

For a country trying to downplay the perception that it seeks to challenge the US for global domination, China’s strategy in Asia Pacific is surprisingly aggressive.

Although Pakistan’s support for CPEC is clear from the army’s active role in guaranteeing security and the endorsement by Pakistan’s main political parties, if the placement of the various routes is hampered by bureaucratic red tape and provincial self-interests, the key Gwadar-Kashgar corridor could be the only route that will be built.

This “CPEC-lite” will fulfill China’s needs, but will not create the economic spillovers the other routes promise.

In the context of the geopolitical prize that is Gwadar, the following is a simplistic assessment of CPEC: China finances and builds the project, while Pakistan pays in terms of social and political disruption, and the loss of innocent lives. Given the strategic importance of the Gwadar-Kashgar corridor to China, this component of OBOR will surely be completed because it is motivated by more than just economics.

This is about securing China’s trade routes and allowing it to position itself in the Arabian Sea.

We believe this partnership with China could be the key factor that will place Pakistan’s economy on a more sustainable path forward. As China targets Central Asia, the Middle East and Africa as part of its strategy for the 21st century, it simply cannot afford to have an economically unstable partner in CPEC.

This geopolitical compulsion should generate the political will to undertake tough economic reforms in Pakistan and also ensure that CPEC is sustainable and profitable for the country.


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Analyzing CPEC

Postby Peregrine » 30 Nov 2016 03:58

The following YouTube presentation might be already posted on other Threads but since the First Part - about 19 Minutes - pertains to CPEC I am posting it on this Thread.

Ho Kya Raha Hai - 30-08-2016 - CPEC


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Re: Analyzing CPEC

Postby ashbhee » 30 Nov 2016 09:44

India needs to invade and liberate POK.

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Re: Analyzing CPEC

Postby ashbhee » 01 Dec 2016 05:22

Next time Pak escalates like a Kargil, why can't IA march into POK and liberate Gilgit-Baltistan, open a land route to central Asia and call Pak's Nuclear bluff. Blocking CPEC will be a plus.

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Re: Analyzing CPEC

Postby Prem » 01 Dec 2016 05:41

http://www.usip.org/events/will-cpec-be ... r-conflict
Will CPEC Be a Force for Peace or Conflict?

The China-Pakistan Economic Corridor is a mainstay of China’s “One Belt, One Road” strategy to build its trade routes and influence westward through Asia. Nineteen months after China and Pakistan signed a series of CPEC deals, the project is underway—a sprawling collection of energy projects, road construction, special economic zones, and industrial parks. But questions remain pressing. Armed dissidents in Pakistan’s Balochistan province resist the project as an unfair exploitation of their region. A recent speech by Indian Prime Minister Narendra Modi has raised questions about how energetically his government might oppose it. What is the U.S. response to CPEC, and what should it be? Could China’s project complement U.S. efforts to stabilize Afghanistan by building trade routes from Central Asia to the Indian Subcontinent? The December 1 USIP panel will examine the progress of CPEC so far, and its costs and benefits for Pakistan, South Asia and the United States.


Live stream in tomorrow evening.Panelists Hussain Nadim
Senior Pakistan Expert, Asia Center, U.S. Institute of Peace
Former Special Assistant to Federal Minister of Planning, Development, and Reforms, Government of Pakistan
Arif Rafiq President, Vizier Consulting, LCCFellow, Center for Global PolicyNon-Resident Fellow, Middle East Institute
Sarah Watson Associate Fellow, Wadhwani Chair in U.S.-India Policy Studies, Center for Strategic and International Studies
Hai Zhao Research Fellow, National Strategy Institute, Tsinghua University, China
Jennifer Staats, Moderator Director, China Program, Asia Center, U.S. Institute of Pe

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Re: Analyzing CPEC

Postby Dipanker » 01 Dec 2016 06:20

ashbhee wrote:Next time Pak escalates like a Kargil, why can't IA march into POK and liberate Gilgit-Baltistan, open a land route to central Asia and call Pak's Nuclear bluff. Blocking CPEC will be a plus.


Why wait for a Kargil. Just take it back. If China wants to CPEC/trade with Pakistan then it can pay transit to India in G/B.

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Re: Analyzing CPEC

Postby ashbhee » 01 Dec 2016 06:24

Dipanker wrote:
ashbhee wrote:Next time Pak escalates like a Kargil, why can't IA march into POK and liberate Gilgit-Baltistan, open a land route to central Asia and call Pak's Nuclear bluff. Blocking CPEC will be a plus.


Why wait for a Kargil. Just take it back. If China wants to CPEC/trade with Pakistan then it can pay transit to India in G/B.


I do not think GOI would want to escalate it to that level and risk a nuclear exchange. I was hoping few military experts would comment on the feasibility of this.

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Re: Analyzing CPEC

Postby Dipanker » 01 Dec 2016 06:45

I do not think GOI would want to escalate it to that level and risk a nuclear exchange. I was hoping few military experts would comment on the feasibility of this.


If we are going to worry about a nuclear exchange then we will never be able to take back what rightfully belongs to us unless and until G/B people revolt and join us. Paki will not have guts to escalate to that level as that would mean the end of Pakistan for good.

Anyway OT for this thread, so I will stop.

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Re: Analyzing CPEC

Postby svinayak » 01 Dec 2016 14:17

Prem wrote:http://www.usip.org/events/will-cpec-be-force-peace-or-conflict
Will CPEC Be a Force for Peace or Conflict?

The China-Pakistan Economic Corridor is a mainstay of China’s “One Belt, One Road” strategy to build its trade routes and influence westward through Asia. Nineteen months after China and Pakistan signed a series of CPEC deals, the project is underway—a sprawling collection of energy projects, road construction, special economic zones, and industrial parks. But questions remain pressing. Armed dissidents in Pakistan’s Balochistan province resist the project as an unfair exploitation of their region. A recent speech by Indian Prime Minister Narendra Modi has raised questions about how energetically his government might oppose it. What is the U.S. response to CPEC, and what should it be? Could China’s project complement U.S. efforts to stabilize Afghanistan by building trade routes from Central Asia to the Indian Subcontinent? The December 1 USIP panel will examine the progress of CPEC so far, and its costs and benefits for Pakistan, South Asia and the United States.


Live stream in tomorrow evening.Panelists Hussain Nadim
Senior Pakistan Expert, Asia Center, U.S. Institute of Peace
Former Special Assistant to Federal Minister of Planning, Development, and Reforms, Government of Pakistan
Arif Rafiq President, Vizier Consulting, LCCFellow, Center for Global PolicyNon-Resident Fellow, Middle East Institute
Sarah Watson Associate Fellow, Wadhwani Chair in U.S.-India Policy Studies, Center for Strategic and International Studies
Hai Zhao Research Fellow, National Strategy Institute, Tsinghua University, China
Jennifer Staats, Moderator Director, China Program, Asia Center, U.S. Institute of Pe


Why is GOTUS interested in CPEC

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Re: Analyzing CPEC

Postby Rudradev » 02 Dec 2016 00:55

svinayak wrote:
Prem wrote:http://www.usip.org/events/will-cpec-be-force-peace-or-conflict
Will CPEC Be a Force for Peace or Conflict?


Why is GOTUS interested in CPEC


There is a major propaganda push under way by Beijing to convince US Deep State entities that CPEC (in fact, OBOR) is a positive development for the US as much as China.

I recently met a US academic who informed me that he believes Xi Jinping is "committed to international stability". Why? Because of OBOR. This is the traditional Hamiltonian thinking whereby OBOR will increase trade ties, enmeshing the interests of transnational corporate entities more closely together, and eventually yielding dividends in terms of a "peaceful" Asian order that both Beijing and Washington will have a profound mutual interest in maintaining.

It will also increase globalization, which the US still sees as primarily an advantage to itself, because it has the most effective soft power machinery by far and is best placed to expand its cultural influence wherever globalization occurs.

Meanwhile the view of this academic (and many like him) is that the countries who complain of Chinese expansionism in the Western Pacific and Indo-China Sea are spoilers with an overblown sense of entitlement. In opposing the Chinese project of OBOR (and its maritime counterpart) they are trying to undermine "stability". Moreover they are taking advantage of misplaced GOTUS priorities to make the USA do the heavy lifting for them, invoking defunct treaties to force America into a confrontation with China that is not in the interests of "stability".

This is how deeply the Chinese narrative has already found its way into a good section of the Washington establishment. Nowadays the Chinese propaganda highlights CPEC as a "flagship" pilot project for OBOR, a benchmark proof-of-concept whose success is critical for the furtherance of OBOR as a wider project. They are doing everything they can to convince the US that CPEC is in the interests of "stability" and must not be opposed.

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Analyzing CPEC

Postby Peregrine » 02 Dec 2016 02:58

The giddy brigade

The kind of childish enthusiasm that is growing around the China-Pakistan Economic Corridor (CPEC) needs to be tempered with a little dose of reality. The project is a good one, but people really need to understand that it is a very long-term proposition, not something that is about to start happening within a few years.

Take a couple of examples from the recent past. A few days ago, reports began circulating that Russia had asked to join CPEC and had been granted permission by the Pakistani government. This sounded odd to me, considering the land route to Gwadar port is hardly economically viable for Russia given the enormous distances.

The reports claimed that a senior official from “the Russian Intelligence Agency” (which one?) was on a visit to Pakistan and engaged in “secret negotiations” and “met with military high ups”. During this visit, he reportedly expressed an interest for his country to join CPEC, and the request was quickly granted.

A closer look at the reports revealed something odd. None of them had a clearly identifiable source, not even unofficial statements given off the record, which are traditionally put in quotes when being reported without attribution. Moreover, it didn’t appear right at all. What does “joining CPEC” really mean? Access to the roads and port? If so, an intelligence official will not be the conduit for such a request. Use of Gwadar port for refuelling and stocking up on supplies for Russian ships, whether military or civilian? Perhaps, but Gwadar is so far away from having that kind of infrastructure that it would make more sense to talk about using Karachi for that sort of operation for the time being.

And in any case, this is not how those kind of talks are held, in secret, between officials from “the Russian Intelligence Agency” and the military. There are formal channels for such talks.

The rumours became intense as they were picked up by TV channels, citing anonymous officials, and sparked some heavy-duty analysis, including from the Indian side, where a former diplomat actually wrote a lengthy column weaving a fantastic scenario around the development. Geopolitical minds were spinning like the wheels of a bullet train, imagining a giant bloc including China, Pakistan and Russia arrayed against India and America simultaneously. I’m always amazed at the speed with which people conjure up geopolitical scenarios of this sort in this country.

Then came the denial to stop the party before things really got out of hand. “Moscow is not discussing the possibility of joining the China-Pakistan Economic Corridor project with Islamabad,” the foreign affairs ministry in Russia tweeted, adding that “Pakistani media reports about ‘secret negotiations’ between Russia and Pakistan on the implementation of projects as part of the China-Pakistan Economic Corridor are not true to the facts.”

But some amount of damage had already been done. The tale had grown with the telling, with reports appearing that France wanted to join, that Boris Johnson had alluded to Britain’s interest in becoming a part, that Turkmenistan wanted in.

Ask yourself a simple question: what exactly does ‘joining CPEC’ mean? Use of the port? Use of the roads to drive cargo to the port? Contracts for construction of the infrastructure? Refuelling rights at Gwadar? None of the reports cared for these details. A simple runaway list of one country after another lining up to “join CPEC” was presented as some sort of game-changing moment that is about to alter the course of Pakistan’s history.

I often end up playing the role of spoiler in such giddy moments, and then get accused of being a RAW agent, a traitor, a sell-out and every other accusation that people habitually toss at those who hold views different from their own. So let me run that risk one more time. CPEC is a good thing for Pakistan, but as a road project alone, it is not viable for long-distance trade at the moment.

It connects the economy of Pakistan with the economy of Xinjiang province in China, not the total economy of China because most of that is located on the East coast where there are already multiple sea ports available for a fraction of the cost of overland freight.

So how large is the economy of Xinjiang? Answer: $150 billion. Meaning, the project is actually connecting us with an economy that is smaller than our own. I see no sense in the argument that Chinese oil imports could be diverted through Gwadar. Overland cost of transporting oil is multiple times what the sea cost is, and the province of Xinjiang is already surplus in oil, meaning they are not likely to be importing oil through Gwadar, only to transport it overland, across a 16,000-foot mountain pass.

As a strategic proposition, there may yet be more merit to CPEC, but as a commercial proposition, the trade possibilities it is opening up will be decades before they become viable and grow to any appreciable volume. The project should be pursued, but the giddiness needs to be tempered and a more realistic approach is necessary.

I read with sadness the statement by our railway minister that when he asked the Chinese about a bullet train for Pakistan as part of CPEC, “they laughed at us”. I believe there is some amount of snickering in Moscow, London and Paris as well about the reports we’ve been reading lately.

We are approaching the project more as a customer with a credit card in a shopping mall rather than a country with a policy direction and vision of where it wants to go over the next 25 years. If urging a little maturity in our thinking about projects of national importance makes me an agent of foreign powers in the minds of the giddy brigade, then so be it.

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Re: Analyzing CPEC

Postby SaiK » 02 Dec 2016 03:26

Why allow even Chinese step into PoK? They have no right

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Re: Analyzing CPEC

Postby Prem » 02 Dec 2016 06:58


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Re: Analyzing CPEC

Postby pankajs » 02 Dec 2016 20:13

Peregrine wrote:The giddy brigade
<snip>
CPEC is a good thing for Pakistan, but as a road project alone, it is not viable for long-distance trade at the moment.

It connects the economy of Pakistan with the economy of Xinjiang province in China, not the total economy of China because most of that is located on the East coast where there are already multiple sea ports available for a fraction of the cost of overland freight.

So how large is the economy of Xinjiang? Answer: $150 billion. Meaning, the project is actually connecting us with an economy that is smaller than our own. I see no sense in the argument that Chinese oil imports could be diverted through Gwadar. Overland cost of transporting oil is multiple times what the sea cost is, and the province of Xinjiang is already surplus in oil, meaning they are not likely to be importing oil through Gwadar, only to transport it overland, across a 16,000-foot mountain pass.

As a strategic proposition, there may yet be more merit to CPEC, but as a commercial proposition, the trade possibilities it is opening up will be decades before they become viable and grow to any appreciable volume. The project should be pursued, but the giddiness needs to be tempered and a more realistic approach is necessary.

The Bakis know how to push our buttons and some Indians fall for it EVERYTIME.

No one does any thinking before starting wailing .... o-baba ... o-mama. The cycle repeats every six months and some times even faster.

The Trumpet speaking to Nawaz too falls in the same bucket.

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Re: Analyzing CPEC

Postby yensoy » 02 Dec 2016 22:45

I watched the USIP video.

- The Pakis gave a spiel about CPEC; lots of business facts - which would have happened anyway whether CPEC existed or not. Lots of fluff. Some reference to the fantastic inauguration of Gwadar - misrepresenting the empty containers as stuff being shipped out from Pakistan.

- The Chinese guy was obviously full of himself. Clearly he is a star in Beijing, impeccable English, good looks and seemingly intelligent. He alluded to China having surplus investible funds, and of provinces (Xinjiang for CPEC & Yunnan for BCIM) taking the lead on regional initiatives (ya, right!). Openly said that with Han Chinese population decreasing to around 3% in Kashgar, it was a security threat! But he BSes too. A cabbie in China having on opinion on CPEC? No bloody way, their cabbies couldn't recognize an Indian if they saw one. They are fed the government line through all the rags, so even if they have an "opinion", it's likely the government's. This guy was quite derisive of India, with little fact. Of course Indian goals are different, so the road alignments would be different.

- The apology of an academic "representing" India (with many references to her sidekick "Sid" to give her legitimacy) did a piss poor job. Nowhere did she mention that Indian objections to the CPEC were primarily because it was transgressing Indian (claimed) territory - this is an important fact because guess what, it's the official GoI reaction. And for some "equal-equal" she showed a map of India's proposed routes - which obviously were insubstantial; and used that fact to undermine India, Indian abilities to pull off projects and Indian strategy.

Moeed Yusuf, a USIP fellow, was in the audience. He is bilingual and bats both ways - when he speaks in English, he is conciliatory towards India, but switch to Urdu and he is a typical Paki. In this meeting, maybe he was miffed with not being on the panel, so he actually spoke in India's favour, asking why CPEC was being so closely guarded and monopolized by China when it could be a cooperative venture open to all (no panelist gave a good reason). Specifically he batted for allowing India to trade with Afghanistan.

There was mention of BCIM road. In my opinion, the only real thing we gain from BCIM is that it gives us access to trade with India. Yes, India-India trade will be faciliated by BCIM by allowing access to NE states via Bangladesh, and I think that's why the Government is pushing for it. Under a multilateral framework, Bangladesh will be forced to allow transit in return for access to Myanmar & China.

Coverage of strategic aspects was very weak, obviously Pakis and Chinese don't want to rattle unkil.

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Re: Analyzing CPEC

Postby yensoy » 02 Dec 2016 23:21

Let's look at the claims and reality of CPEC. First, understand Western China - Xinjiang in particular. Xinjiang has a good degree of agricultural activity - a lot of cotton, grapes and dried fruits, and spices are produced here. Some of the grapes are processed into haram alert! cheap wine. Sheep are aplenty, so presumably some meat & wool is produced. And then Xinjiang has oil.

CPEC connects 3 parties: (Middle-East/Africa)<-->(Pakistan)<-->(Western China, mainly Xinjiang) Xinjiang extends about a third of the way into China - for most of China beyond Xinjiang, the existing shipping routes via Eastern China would be fine.

What commodity or processed product from Xinjiang can be sold beyond Pakistan? Precious little, at least nothing in large volumes. Xinjiang cotton powers the Chinese textile industry. Some agricultural produce may be viable for export through Pakistan, but that could use the existing motorway network and Karachi port.

What commodity or processed product from Xinjiang can be sold to Pakistan? A lot - cotton, fruits, foodstuff, meat, wool, high-value petroleum products. Even finished goods from as far as Central China can be pushed through this route. But the target will be Pakistan; it gets less attractive to trans-ship these containers, with a long drive and long wait at a small port (of Gwadar).

What commodity or processed product from Pakistan or beyond can be imported into Xinjiang? Again, nothing really. China isn't going to set up industrial units in Xinjiang which rely on imported feed stock. Will China import consumer goods or machinery into Xinjiang? Yes but again not in any major volumes (China doesn't import much except what is needed for its manufacturing powerhouse). If it did, it could use Karachi port & the existing motorway network.

All this talk of CPEC being an alternative to Malacca is BS. China has ample strategic reserves of crude; it has its own oilfields; it has offshore fields; it has pipelines from CIS countries - all these will be more than sufficient during war. CPEC won't make a dent on peacetime consumption. A VLCC can carry about 2million barrels of oil; at 100barrels/truck you would need 20,000 trucks. That number is probably more than the total number of tanker trucks in Pakistan.

Industrial corridor is a non-starter, already discussed. You need peaceful, educated/trained and motivated employees which you aren't going to get in the wild west in big numbers. At best there will be some clusters of heavy industry with labour brought in from outside; nothing is going to provide large-scale employment. Among other challenges is lack of water in the Baluchistan area.

As an economic vehicle, there is possibly some value in CPEC. Under its umbrella, permits & financing could be granted faster for setting up power plants and petrochemical units. But we have seen the usurious rates being demanded by the Chinese; driving Pakis to bankruptcy would be a good outcome.

All the above are minor benefits, so what is the real benefit here? We all know, but I wanted to spell out that the other advantages are marginal.

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Re: Analyzing CPEC

Postby Peregrine » 04 Dec 2016 02:01

yensoy wrote:Let's look at the claims and reality of CPEC. First, understand Western China - Xinjiang in particular. Xinjiang has a good degree of agricultural activity - a lot of cotton, grapes and dried fruits, and spices are produced here. Some of the grapes are processed into haram alert! cheap wine. Sheep are aplenty, so presumably some meat & wool is produced. And then Xinjiang has oil.
.
.
All this talk of CPEC being an alternative to Malacca is BS. China has ample strategic reserves of crude; it has its own oilfields; it has offshore fields; it has pipelines from CIS countries - all these will be more than sufficient during war. CPEC won't make a dent on peacetime consumption. A VLCC can carry about 2million barrels of oil; at 100barrels/truck you would need 20,000 trucks. That number is probably more than the total number of tanker trucks in Pakistan.
yensoy Ji :

Cheenawala has already Malacca "redundant" by developing the port of Kyaukpyu in Myanmar - about 60 South East of Sitwe (Old name Akyab) - which can handle VLCC vessels for Crude from PG - Red Sea - W. Africa etc. :
With Oil And Gas Pipelines, China Takes A Shortcut Through Myanmar - Eric Meyer
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Re: Analyzing CPEC

Postby Prem » 05 Dec 2016 10:07

Gwadar Poak bloat joke

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Re: Analyzing CPEC

Postby svinayak » 10 Dec 2016 01:53

https://www.youtube.com/watch?v=2NJlCZMeIws


Look at the more details on the water depths in Charbahar and Gwader. China is using India map to show CPEC
Also the speaker has delusion about Kashmir with CPEC

Too much responsibility to the PLAN to take care of SLOC

PRC has to have a peace agreement with India if it has to use POK. There was an article by a westerner

Pak are pretending to be a large trading nation and maritime state
Last edited by svinayak on 10 Dec 2016 01:59, edited 1 time in total.

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Re: Analyzing CPEC

Postby svinayak » 10 Dec 2016 01:59

Rudradev wrote: ="svinayak"

Why is GOTUS interested in CPEC

There is a major propaganda push under way by Beijing to convince US Deep State entities that CPEC (in fact, OBOR) is a positive development for the US as much as China.

I recently met a US academic who informed me that he believes Xi Jinping is "committed to international stability". Why? Because of OBOR. This is the traditional Hamiltonian thinking whereby OBOR will increase trade ties, enmeshing the interests of transnational corporate entities more closely together, and eventually yielding dividends in terms of a "peaceful" Asian order that both Beijing and Washington will have a profound mutual interest in maintaining.


Does not explain much
Why are Americans interested in CPEC?

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Re: Analyzing CPEC

Postby svinayak » 10 Dec 2016 02:26


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Re: Analyzing CPEC

Postby panduranghari » 10 Dec 2016 15:05

OBOR is more like the European Hanseatic League. City states like Genoa, Venice, Copanhagen who maintained their own sovereign armies and traded with each other. If we think about it, eleven thinks this is actually beneficial to Chinese interests. China the benevolent master and the city states who make money thus making the rulers of these city states richer. The Chinese navy would give them additional protection and the league will sell the ChinkCrap at even lower prices to the rest of the world through their network.

Worth Wray posts on twitter is a avid Sinophile American who promotes OBOR. He along with a group of academic journalists like Christopher Balding, Simon Rabinovitch, Michael Pettis seem to be all invested in OBOR. Perhaps they have been given a job to sell OBOR to the Americans.

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Re: Analyzing CPEC

Postby anupmisra » 10 Dec 2016 18:46

I repeat, CPEC is a classic land grab scheme on a grand scale (that the chinese came up with to get access to a free warm water port at the head of the Arabian Sea). Bakis (being the usual self-serving, tactically-minded idiots) have fallen for it - hook, line & Sinker.

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Re: Analyzing CPEC

Postby surinder » 10 Dec 2016 20:21

Interesting analysis of CPEC.

To me it seems that CPEC is based on a very, very flimsy foundation. A slight change in the ground realities could render the whole plan worthless. PRC should know this, and maybe to some extent at least they do, but they have put this plan more as a gamble knowing that it may fail. The seeds of the failure of this plan is inherent. We should discuss the weaknesses and vulnerabilities of the CPEC strategy.

(Posting after a very long time. Good to see familiar names posting here.)

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Re: Analyzing CPEC

Postby Guddu » 10 Dec 2016 21:47

My take on CPEC is that China is building multiple back ups to bypass the Malacca Straights and secondly, they are looking to create a military/naval base at Gwadar. If the road route takes off, great from the Chinese pov, its only a back up route that may never be fully operational. So the 11 B$ they plan to spend may happen over decades or not. Their real goal is a naval base as their bases in SriLanka etc have not been very useful, inview of the pressure that India can exert on those nations. The industrial aspects of CPEC with supposedly 27 % returns are designed so that no sane paki will even want to start such a project...ie in other words its a non-starter (37 B$). At some point the paki opp parties will demand details and the govt will provide them, at which point the 37 B$ investment dreams come to a stop. Overall, China might spend a billion or so on the Gwadar port...that's it.

As a bit of background, from what Trump is saying, he will partner with Russia, and get tough on China. This is because Trump recognizes that there is no possibility to fight both Russia and China at the same time, Russia got closer to China because of all the sanctions that the US put on them. Now with issues in the South China Sea, the US can only push China if the Russians remain neutral.

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Re: Analyzing CPEC

Postby sudeepj » 10 Dec 2016 22:13

Guddu wrote:My take on CPEC is that China is building multiple back ups to bypass the Malacca Straights and secondly, they are looking to create a military/naval base at Gwadar. If the road route takes off, great from the Chinese pov, its only a back up route that may never be fully operational.


This is the most likely scenario. Further, this is a long term project that makes strategic sense only if the Chinese up the ante in South China Sea. After all, freedom of navigation is almost a guarantee in this Pax Americana. Unless the Chinese junta is planning to fight, where is the need for these economically unviable road projects? Some kind of super power conflict.. cold/warm/hot is coming in the next decade.

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Re: Analyzing CPEC

Postby pankajs » 10 Dec 2016 22:20

Anyone who thinks that CPEC is a backup should share what % of the Chinese Malacca trade can be routed via the 2 lane road that is supposed to be broadened to 4 lane winding its way through one of the most treacherous mountain range. One or even a million containers will not create a bypass.

Will CPEC carry 100% or 10% or 1% or much lower portion of the Chinese Malacca trade?

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Re: Analyzing CPEC

Postby Guddu » 10 Dec 2016 23:53

Backup=Plan B, multiple backups=multiple Plan B's (eg via Myanmar). It is not designed to be the primary route, not designed to be profitable. The main push will be to obtain a naval base.....the rest is maya onlee

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Re: Analyzing CPEC

Postby pankajs » 11 Dec 2016 00:06

My post did not talk of profits and Mayanmaar route has NO relation to CPEC capacity. My question was limited to CPEC capacity when compared to Chinese Malacca trade volume for which it is supposed to be a backup.

A One or a million container capacity means nothing unless the context/benchmark is clearly stated.

pankajs wrote:Will CPEC carry 100% or 10% or 1% or much lower portion of the Chinese Malacca trade?


The rest is maya ....

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Re: Analyzing CPEC

Postby svinayak » 11 Dec 2016 01:57

pankajs wrote:My post did not talk of profits and Mayanmaar route has NO relation to CPEC capacity. My question was limited to CPEC capacity when compared to Chinese Malacca trade volume for which it is supposed to be a backup.

A One or a million container capacity means nothing unless the context/benchmark is clearly stated.


The rest is maya ....

CPEC is not connected to other routes. It is not even connected to OBOR. You see that maps dont show the road connections in TIbet much for China. They show all other roads in China and OBOR road to Europe.

CPEC is an access to southern route and used as an excuse to keep engaged in the region with Pak army.
CPEC gives geo political advantage to China and its Maritime strategy
CPEC gives advantage to Pakistan and its relations to major countries even though it is a client state of multiple nations.
CPEC gives geo political advantage to Russia and its Eurasian strategy
CPEC gives geo political advantage to US and its pivot to Asia strategy and keeps it interest in the region

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Re: Analyzing CPEC

Postby srin » 14 Dec 2016 00:13

CPEC gives India leverage over the Chinese investment in TSP. We can squeeze their b@ll$ very hard when necessary.
It also pretty much screws the Pak economy, which is a very good thing.

Tactically brilliant, but strategically stupid.

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Re: Analyzing CPEC

Postby Rudradev » 14 Dec 2016 01:12

CPEC gives other powers a chance to deliver to China a harsh, prolonged lesson on the consequences of imperial overreach. It is a monkey trap in which Beijing has proudly inserted its hand. Why would the West not be watching this with interest?

Like the US in Vietnam (and Iraq, and Afghanistan) or the USSR in Afghanistan... once China has committed itself with much public fanfare to a project that is the flagship of OBOR, it has invested an enormous quantity of *face* in the project.

What happens if... like those other powers in the throes of imperial overreach, China finds CPEC a difficult, costly, even deadly adventure with diminishing chances of success?

It will not be able to quit easily or quickly because its leadership has an enormous fear of losing "face". So it will have to remain in Pakistan and continue bleeding for a long time, perhaps years, until catastrophic internal events (like the removal of Mr. Eleven) allow it to accept a humiliating reversal and go home. After that, it will never be the same again.

saurav_jha
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Re: Analyzing CPEC

Postby saurav_jha » 14 Dec 2016 04:05

Are we not being too optimistic with CPEC ? China is seducing Iran to join CPEC and link Gwadar with Chahbahar. Unless huge anti-Shia movement starts in Pakistan, we may find China sitting pretty in Gwadar.

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Re: Analyzing CPEC

Postby chetak » 15 Dec 2016 00:00

China trucks snaking thru #GilgitBaltistan bringing Chinese men, goods, pollution, congestion

Robbing locals of jobs


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Peregrine
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Analyzing CPEC

Postby Peregrine » 15 Dec 2016 02:59

Our bets on CPEC may not necessarily pay off

In Pakistan, China-Pakistan Economic Corridor (CPEC) has been trending for a few months. Like ‘Brexit’, CPEC is also a big step. Hence, any news related to CPEC spreads like fire. If you are attending an intellectual gathering, be up-to-date with the project. I’ve observed that CPEC is a hot topic at these get-togethers.

There’s no doubt that CPEC is important for Pakistan and it plays a pivotal role in regional politics, but it has been blown out of proportion thanks to print and electronic media. It seems that clock manufacturers in Switzerland are more concerned about CPEC than the precision of their clocks. And drug dealers in Mexico are planning to relocate their businesses to Gilgit-Baltistan so they can benefit from the project. Everything that happens or does not happen, all relies on CPEC.

Our regime uses this hysteria-type approach for a reason; it provides them a lollypop that can be fed to the masses for all the right and wrong reasons. For example, Balochistan has experienced the worst terrorist activities in recent months, and the government’s main point of discussion seems to remain CPEC – that too in this regard. It looks like all the enemies of Pakistan are targeting Balochistan only to destroy CPEC. CPEC-hysteria has aggravated to such intensity that we’ve failed to realise the obvious – was Balochistan peaceful before CPEC was initiated?

Another senseless claim made by the government is how CPEC is a ‘game-changer’ for the poor, deprived and neglected people of Balochistan. It seems that episodes of natural gas exploration from Sui and Reko Diq mine are on repeat telecast, which were also declared as ‘fortune-turners’ for the largest province of Pakistan.

Years – in fact, decades – have passed and the living conditions of the local people are getting worse day by day. In my opinion, CPEC will be yet another addition to this list of game-changers that have brought nothing but loot and plunder for the people of Balochistan. You may call me the promoter of provincial disharmony, but it’s a brute fact that Balochistan has always been treated as an unimportant, trivial and sometimes, unwanted part of Pakistan.

Keeping all pessimistic analysis aside, even if I look ahead with the hope of the CPEC dream coming true, I do not see Pakistan becoming a regional leader. CPEC is actually designed by China, for China. It will use Pakistan as a pathway to increase its access to global markets. The local industry of Pakistan will face a huge blow which, in current condition, will prove fatal. Cheap products from China have already elbowed out local products from almost every household. I still remember the Picasso ball point pen from Shahsons that became an instant hit and its tick-tock sound was everywhere. A few years down the line, you barely see it being used as Chinese pens are now available at less than half the price. Local entrepreneurs do not stand a chance at competing with an economy-of-scale manufacturer like China. With CPEC, China can access all of Pakistan, resulting in Chinese goods becoming even cheaper.

CPEC is a trade route. If trade routes can turn the tables for nations, Egypt would have been the world’s biggest power as it controls the Suez Canal which alone generates billions of dollars in revenue. The world is run by those who use that route – not by those who collect the toll tax.

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Re: Analyzing CPEC

Postby Rudradev » 15 Dec 2016 03:11

saurav_jha wrote:Are we not being too optimistic with CPEC ? China is seducing Iran to join CPEC and link Gwadar with Chahbahar. Unless huge anti-Shia movement starts in Pakistan, we may find China sitting pretty in Gwadar.


That will be interesting.

The incoming US administration is conciliatory towards Russia. It has postured aggressively towards China, but (through the good offices of the Russians, the compulsions of corporate America, and other factors) may yet be mollified into preserving status-quo with Beijing. Depending on how much of a profit motive is discernible, it might even lean towards tacit support of One Belt, One Road (and by extension, CPEC).

However, it is implacably anti-Iran, especially its NSA and Secretary of Defense. They are already hopping mad about Obama's nuclear deal with Iran, and consider dropping the crippling US-led economic sanctions on Tehran to have been a terrible mistake.

If Iran demonstrates an interest in CPEC, it will draw the Trump Administration's immediate opprobrium, particularly because it will be seen to detract from any potential leverage that the US might derive by re-imposing sanctions.

Once that happens I can see a situation whereby the Culinary Institute, in concert with various Salafi tanzeems in Pakistan (helpfully funded by Saudi and GCC countries) begins to cultivate exactly this sort of huge anti-Shia movement in Pakistan.

India may not even have to do as much as we would if Iran didn't get on board with CPEC.

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Analyzing CPEC

Postby Peregrine » 15 Dec 2016 17:49

X Posted on the STFUP Thread

Lesson from Sri Lanka

Our acquaintance with Sri Lanka has more to do with cricket than its history or geography. But recently, two avenues of further commonality have emerged in unexpected ways.

The first common feature arises in the form of Sri Lanka’s total debt, especially its external one. As usual, the government’s figures tend to be on the lower side while independent estimates are on the higher side. The second common feature comes in the form of Sri Lanka’s dream to establish a port like Gwadar (Hambantota) and an arrangement like the CPEC with the help of China. Its present predicament, however, offers an interesting insight into public policy and economic management.

Sri Lanka’s external debt, as per independent reports, is around $58 billion, and its debt payments are more than 90 percent of its total income from taxes. A major part of this colossal debt can be attributed to Sri Lanka’s dream of moving forward through large infrastructure investments, one of which is Hambantota. Between 2008 and 2014, its domestic debt tripled and foreign debt doubled (sounds familiar, does it not?). Its prime minister recently admitted in parliament that the government does not have an exact figure for its total debt. Earlier this month, a few government departments in Pakistan were also asked to get together in order to come up with a single figure on its total debt.

Hambantota was a sleepy port town with little noticeable economic activity till Mahinda Rajapaksa was elected as Sri Lanka’s president. Hambantota was his home town and he envisioned grand plans for it. These plans included a deep sea port, an airport of international standard, a cricket stadium, an LNG plant, tourist resorts and an industrial zone. But financing these grandiose plans was a problem. In came China with a promise of $8 billion in soft loans and a chance to expand on its ‘one road, one belt’ policy. And so development of infrastructure in this area began.

Today, the Mattala airport in Hambantota is sitting idle – hardly two flights a day are scheduled. Cricket stadium and conference centres are rarely used, brand new roads are almost empty, business at the port is sparse and the industrial state has yet to take shape. Everything is in place – except users. This also means there’s little revenue for the government which still has to bear the heavy maintenance expenditure of these facilities.

The government’s estimates, as is usually the case, turned out to be overoptimistic. And guess who’s footing the bill for these monuments of little use? The Sri Lankan taxpayers, of course, who were not even part of the decision to initiate these grandiose ventures. It has been reported that the present government wanted to sell the various infrastructure facilities to lenders but it was more interested in getting its money back rather than operating a loss-making venture.

What went wrong? For a start, the plans for Hambantota were based on political considerations rather than economic necessity. It was Rajapaksa’s home constituency and he wanted to take as much political mileage out of his position as possible. His idea of doing that came in the form of building a concrete city, despite the place being a rural outpost known more for migrating elephants than its business potential. But Rajapaksa aimed to turn logic on its head with the help of Chinese money. Unfortunately, his plans for squeezing political eminence turned to dust as he lost the elections.

Gwadar and the CPEC represent some interesting comparisons. Gwadar is an outpost in the middle of nowhere – a rural setting which lacks modern facilities. It is located in a province which is almost half the size of Pakistan but is sparsely populated. It is from this province that the main arteries of the CPEC will pass and it is in Gilgit-Baltistan where they will ultimately end. But both provinces lack the population density to initiate or sustain a business surge. Simply put, there are not enough customers or producers to make it a business metropolis which can attract business and freight transport from all around the world. While all this is clear to most analysts, infrastructure of every kind is still emerging and more grandiose plans are in the offing.

As in Rajapaksa’s case, our leadership is making a very concerted effort to take political mileage out of this by terming the CPEC a victory of their ‘vision’. That is, of course, not true since if it were not for China, nobody had any interest in Gwadar and the Pakistani state by no means has any capacity to undertake such an extensive venture. And like Hambantota, the CPEC dreams are built upon Chinese loans (which mind you, will have to be paid back). The recent celebrations surrounding the first CPEC trade convoy are a bit far-fetched since the event cost us heavily. What makes our policymakers and leaders so sure that trade and related activities will blossom to an extent that we will not only pay back the loans but that the infrastructure projects will pay for themselves in the future?

Building the infrastructure of the CPEC or Hambantota is a major long-term venture which requires technical and administrative competence, patience and continuous cash flows. Pakistan’s government machinery possesses none of these attributes. But, undeterred by its poor capacity and ability to undertake these projects, we still latch on to infrastructure projects as our saviours. The new planned motorways (financed by loans) and projects like the Metro-Bus project (running in losses) are a recent, poignant reminder.

An important lesson that policymakers in Pakistan can learn is that copying other countries in how they run their economy is not necessarily a recipe for success. I have observed people from all walks of life in Pakistan, including economists, making allusions to the Chinese state’s large footprint in its economy in order to advocate the same case for Pakistan. But they rarely realise that the Chinese state has enough fiscal space to sustain such an undertaking. Whether it’s uninhabited ghost cities or the danger of lower growth rates, the Chinese government has enough fiscal muscle to prevent these kinds of instances from turning into failures. We, on the other hand, are living on borrowed money.

With our fingers crossed, we will wait for all the wonderful dreams shown to us to come to fruition in reality. We will hope that the CPEC doesn’t turn into a Hambantota-like disaster. Otherwise, guess who’s going to foot the bill?
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