China-Pakistan Economic Corridor


Introduction: What is CPEC?

China-Pakistan Economic Corridor (CPEC) is the flagship project of the multi-billion dollar Belt and Road Initiative (BRI), a pet project of Chinese President Xi Jinping.

BRI aims to enhance Beijing’s influence around the world through China-funded infrastructure projects.

CPEC is a 3000 km long corridor consisting of highways, railways and pipelines.

It aims at linking the city of Gwadar in South Western Pakistan to China’s North Western region Xinjiang through a vast network of highways and railways.

The project will be financed by heavily-subsidised loans, disbursed to the Government of Pakistan by Chinese banking giants such as Exim Bank of China, China Development Bank and the Industrial and Commercial Bank of China.

The project aims to create an alternative route to transport oil and gas to China to spurt economic growth and development across its remote western regions.


Significance for India:

The CPEC cuts through Pakistan-Occupied Kashmir (POK) and the trans-Karakoram tract of Shaksgam, which was illegally ceded by Pakistan to China on March 2, 1963 under a provisional boundary settlement.

The entire region of Gilgit-Baltistan (GB) through which the highway passes is located close to the Siachen Glacier as well as to Ladakh, the current flashpoint between India and China.

Following the effective nullification of Article 370 of the Indian Constitution on August 5, 2019, India has reiterated its long standing claim to GB in POK.

China seeks to use the CPEC to consolidate its presence in a disputed region.

India has maintained that it opposes CPEC as it violates India’s sovereignty and territorial integrity.

For India POK remains an emotional and sensitive issue.

CPEC provides China a foothold in the Western Indian Ocean with Gwadar port located near strategic Strait of Hormuz where Chinese warships and a submarine have surfaced.

Chinese access to this point gives it a leverage to control maritime trade through this region, a vulnerable point for India which sources more than 60% of its oil supplies from the Middle East.

China is facing Malacca dilemma- its over-reliance on the Malacca Straits for the transport of its energy resources.

CPEC resolves this dilemma for China to a greater extent providing it a greater operational space to advance its unilateral interests in maritime matters.

This would be detrimental for the freedom of navigation and the trade-energy security of several states in the Indian Ocean Region including India.

The project will enhance Chinese stature in the Arabian Sea and the Indian Ocean.

This project makes China an indirect stakeholder in Kashmir conflict between India and Pakistan.

Like all its projects, OBOR and CPEC lack transparency as it is not participatory and collaborative in nature.

CPEC adds another dimension to China’s policy of encircling India.

String of Pearls policy forms its maritime dimension.

China is using economic as well as coercive measures to exert influence over India’s neighbourhood.

China has also deployed 30000 security personnel (military deployment) to protect the project.

There are certain positive sides to this project as well. In future, Indian regional development initiatives can use the physical development of CPEC to enhance India’s connectivity to the Central and West Asia and Gulf Region.

CPEC can benefit Afghanistan, India and Iran also.

The project would have a profound effect on the constitutional status of Gilgit Baltistan region in Pakistan.

The economic development that it would bring could foment discontent in Gilgit Baltistan over the growing gap between the region and other provinces.

The project would help transform Pakistani society and strengthen moderate forces.

Peaceful development in Pakistan can have a positive influence in the region.

The project may bring a lasting solution to the Kashmir dispute.



China realizes that Indian support for the project is imperative for its regional success.

India’s non-participation would only lead to unacceptability of the project especially with respect to the disputed Jammu and Kashmir region.

But the project was initiated without consulting India and thus the concerns raised by India are genuine.

Another concern of China trapping Pakistan in debt trap financing is also legitimate.

The project is also seeing resistance from Pakistani citizens as they are apprehensive of the country getting indebted to China.

Indian government is of the firm belief that connectivity initiatives must be based on universally recognized international norms.