CPEC is a 3,218-kilometer long route, to be built over next several years, consisting of highways, railways, and pipelines. The actual estimated cost of the project is expected to be US$75 billion, out of which US$45 billion plus will ensure that the corridor becomes operational by 2020. The remaining investment will be spent on energy generation and infrastructure development.
The China-Pakistan Economic Corridor (CPEC) is a project which is beneficial for both Islamabad and Beijing, and it’s immediate
the benefit to China would be the drastic reduction in the transportation cost to Europe and the Middle East.
The CPEC will open doors to immense economic opportunities not only to Pakistan but will physically connect China to its markets in Asia, Europe and beyond. Almost 80% of the China’s oil is currently transported from Strait of Malacca to Shanghai, (distance is almost 16,000 km and takes 2-3 months), with Gwadar becoming operational, the distance would reduce to less than 5,000 km. If all goes well and on schedule, of the 21 agreements on energy– including gas, coal and solar energy– 14 will be able to provide up to 10,400 Megawatts (MW) of electricity by March 2018. According to China Daily, these projects would provide up to 16,400 MW of electricity altogether.
The current freight charges of a 40 feet container Hamburg to Shanghai ranges from $2,500-$3,000. After CPEC becomes operational,
the cost of 40 feet container would reduce to $1,000. This means the saving would be of 50-65 percent in freight charges.
The Chinese exporters would get their payments in half time.
The shipment to and from the Middle East would also gain substantial benefits in transportation costs and time. Currently,
the goods dispatched from central China to the Middle East have to travel a cumulative distance of 12,537 miles, of which 9,912 miles is by sea and 2,625 miles through road.
After completion of the CPEC, the distance would be drastically reduced to 2,295 miles, of which 545 miles would be from the sea,
and 1,750 miles on the road. The distance between central China and the Middle East would thus be reduced by 80 percent.
The reduced distance would also cut the cost of transportation.
For now, freight charges from Abu Dhabi to Shanghai are $2,000 for a 40 feet container.
It takes 16 days to reach the destination from this route. These charges would reduce to $200-250 per 40 feet container when CPEC route becomes operative, and the time taken to reach the destination would be 2-3 days.
CPEC would also provide the shortest and most cost effective route for landlocked Afghanistan to China, India and Indian Ocean.
The distance would be approximately 600 kilometers less as compared to the other nearest port of Chabahar.
According to experts, the $46 billion Chinese investment would result in additional GDP growth of 1.5 percent.
The total investment in CPEC was increased to $56 billion recently after the addition of few more projects.
The indirect impact would be the rise in the GDP potential of the country.
The CPEC projects would attract incremental private sector investment; both domestic and international.
Pakistan can expect to take its overall GDP growth to above 6-7 percent in the medium term.
Benefits for Pakistan are also immense if the proposed special industrial zones are established along the CPEC route.
After completion, the CPEC related projects would add over 16,000MW in the national grid, of which over 10,000MW would be available by the first quarter of 2018.
The Chinese would be financing 832km of roads, 1,736 km of the railway line. They would also make Gwadar fully operational and lay cross-border optic fiber all along the CPEC route.