Tag: China Pakistan Economic Corridor

INTRODUCTION There is a positive correlation exists between international trade and its effects on economic growth (Afonso, 2001 and Caleb et. al., 2014). International trade acts as a major factor of openness in trade relations. In recent decades, China has emerged as a potential regional trade giant of Asia. Chinese international trade has experienced rapid expansion together with its dramatic economic growth which has made the country target the world as its market. This research discusses the role of the China-Pakistan bilateral agreement of developing the China-Pakistan Economic Corridor (CPEC) on the foreign policy of Pakistan. The CPEC project will link Kashgar (China) with the warm waters of the Indian Sea at the place of Gwadar (Pakistan). The CPEC is part of China’s vision of the “One Belt One Road” (OBOR) initiative announced by President Xi Jinping of China in 2013. This initiative comprises the Silk Road Economic Belt and the 21st Century Maritime Silk Road which subsequently became a vital foreign policy for China in many aspects, mainly with the intention of promoting economic cooperation amongst countries along the “Belt” and “Road” routes. The Silk Road Economic Belt focuses on connecting China to Europe through Central Asia and Russia, the Persian Gulf through Central Asia and South East Asia, South Asia, and the Indian Ocean. The paper reviews the conception as well as the evolution of China’s international trade regime and the policy that China has taken in favor of trade sectors and how it is related to Pakistan. In addition, China’s international trade performance is analyzed extensively. This research then evaluates the effects of international trade on Pakistan’s economic growth through examining improvement in productivity as an expected result of the CPEC and then linking this bilateral agreement with the foreign policy of Pakistan. Policy implications are drawn from the empirical results accordingly. PROBLEM STATEMENT China’s international trade has experienced rapid expansion together with its dramatic economic growth which has made the country target the world as its market. The stable political system, vast natural resources, and abundant skilled labor in China have made it a modern global factory. Discussions of the role that international trade plays in promoting economic growth and productivity, in particular, have been ongoing since several decades ago. A core finding from the comprehensive literature shows that internationally active countries tend to be more productive than countries that only produce for the domestic market. Due to liberalization and globalization, a country’s economy has become much more closely associated with external factors such as openness. Thus, conducting a study on the effects of international trade on foreign policy is of great significance in this globalized era. It helps policymakers map out appropriate policies by determining the policy impacts and how to improve the trade relations to have a cordial foreign policy. China’s integration into the global economy has largely contributed to its sustained economic growth. The recent CPEC agreement between the government of Pakistan and China is one of China’s penetration in the global economy. Both of the governments are adamant that CPEC will boost not only the international trade of China and Pakistan but will also improve diplomatic relations. As Small (2015) argues that China has been Pakistan’s diplomatic protector besides the chief arms supplier and its call for last resort when every other supposed friend has left it in the lurch. This research questions that whether the foreign policy of Pakistan will be compromised in the presence of investment / Foreign Direct Investment (FDI) of China or Pakistan will maintain its foreign policy independent of any G2G agreement. RESEARCH METHODOLOGY The study will be done in a constructivist paradigm. Interpretivist position shall be taken for this descriptive study. It will be purely a qualitative research. My data sources are mostly secondary by consulting various federal government departments related to CPEC planning, projects execution and management. Scholarly articles and well researched books will be consulted. Since, the study covers a recent phenomenon, so my data limits exists. With the help of these data sources, research questions shall be answered. Content analysis will be used to analyze data. SCOPE AND SIGNIFICANCE OF STUDY The scope of the current study is confined to the G2G agreement on CPEC and seeks specific answers to the questions of neutrality of Pakistan’s foreign policy towards China ensuring its fundamental determinants i.e. size/geography, economic development, security, and advancement in technology, national capacity, political parties/leadership, ideology, and national interest, the role of press/bureaucracy, social structure, public opinion, and diplomacy. It is dealt with as an intensive case study model, to understand the challenges and opportunities associated with this development. The study will contribute to the existing body of knowledge and helping to improve the discourse prevalent on the issue. Moreover, certain technical issues are dealt with. Its relationship and impact on foreign policy are tried to be determined. THE GEOGRAPHY OF CPEC ROUTES The CPEC routes will pass through the strategic depth of Pakistan from north to south. Currently, three routes are identified (see Fig. 1) which culminate from Karakoram Highway (N35). The N35 is a common alignment from the China border to the Pakistani city of Hassanabdal in Punjab province. The CPEC will follow three route alignments throughout Pakistan to which the All Parties Conference agreed in May 2015. ROUTE 1 (WESTERN ALIGNMENT) The western alignment of CPEC will start from Brahma Bahtar (Punjab) to Dera Ismail Khan (KPK); DI Khan (KPK) to Zhob (Balochistan); Zhob to Quetta and finally linking Quetta to Gwadar via Kalat, Surab, Basima, Panjgur, Hoshab, and Turbat. ROUTE 2 (CENTRAL ALIGNMENT) The Central Alignment of the CPEC follows the same route as that of Western Alignment (from Burhan to DI Khan). It starts from DI Khan to Bhakar-Layyah-DG Khan; DG Khan to Shahdadkot. From Shahdadkot it connects with the Sukkur-Khuzdar section of Motorway (M8). ROUTE 3 (EASTERN ALIGNMENT) The Eastern Alignment, from Hassanabdal via Peshawar-Islamabad Motorway (M1) to Islamabad-Lahore Motorway (M2) then taking the route of Pindi Bhattian-Faislabad Motorway (M3); Faislabad-Multan Motorway (M4); Multan-Karachi