Global politics has assumed a new demeanor in the twenty-first century. This century is not merely one of competition – rather, competitors are now more interdependent than ever. The world has transitioned away from Cold War bipolarity and post-Cold War uni-polarity. Now, regional actors matter more and regional integration is considered key to global peace and prosperity – and economic interdependence is vital for regional integration. To achieve this, regional states must be brought together for trade and development with trade unions, political unions, free trade areas, or customs unions.
South Asia is one of the most troubled regions of the world. Conflicts are the main feature of the region, which is exacerbated by the arms race between Pakistan and India. South Asia is one of the least economically integrated regions in the world – Sub-Saharan Africa, the Middle East, and North Africa all have higher intra-regional trade. Intra-regional trade is only 3-5% of the total trade of the region, representing just over 1% of regional GDP, while this percentage is 7% in East Asia. India’s trade with its neighbors is less than 3% of its total trade. The region’s salient features are under-development, increasing population, energy scarcity, struggling economies, extremism, militancy, terrorism, water scarcity, and climate change. These challenges have an immense impact on South Asia’s economies. However, China, with the second largest economy in the world, wants to use its economic influence in the region.. The China-Pakistan Economic Corridor (CPEC) is one of the key components of China’s plan. The agreement, signed between Prime Minister Nawaz Sharif and President Xi Jinping, includes $46 billion in investments from China. This includes $15.5 billion in coal, wind, solar, and hydropower projects which will increase Pakistan’s national grid capacity by 10,400 MW. It also includes a project to build a $44 million fiber-optic cable.
Currently, China heavily depends on shipping routes that pass through the Strait of Malacca. The trip takes at least 45 days. With CPEC, China could route trade through the Kashgar-Gwadar route, which would take only 10 days. This project aims to join Gwadar Port with China’s Xinjiang region through highways, railways, and pipelines to transport oil and gas. CPEC is a significant component of the Silk Road vision, running about 3,000 kilometers from Gwadar to Kashgar. The China-Pakistan Economic Corridor is being called a game changer, despite apprehensions about potential security challenges as the route passes through volatile regions of both countries. This is one prong of China’s “One Belt, One Road” vision, which aims to join South Asia and Central Asia. This project has the potential to transform regional trade routes. China’s “One Belt, One Road” policy will a boon for South Asia’s economy. China has planned road and rail infrastructure and oil and gas pipelines joining X’ian in Central China to Central Asia and Moscow, Rotterdam, and Vienna. China will also establish a maritime route that joins South Asia, Southeast Asia, North Africa, and the northern Mediterranean Sea. This will connect South Asia with some of the most important regions in the world.
Central Asia, an emerging region rich in untapped resources, will also benefit. Being landlocked is one of the greatest barriers to increasing Central Asia’s exports. South Asia is an energy-hungry region which can use Central Asia’s huge gas and oil resources to help address its energy deficits. Pakistan intends to connect Gwadar Port with Central Asia for trade and energy transportation. Once the way is open to Central Asia for bi-lateral trade, the markets of Europe will also be accessible.
India was dismayed by CPEC and it was vociferous in its opposition. Prime Minister Modi termed the agreement “unacceptable” and raised the issue with the Chinese government. India also objected to the corridor passing through Kashmir, which China dismissed by stating that it was merely a commercial project. India has a large economy and is trying hard to become a global power. It aspires to reach out to Central Asia for trade and energy transportation. Pakistan blocks the way, which can be opened up with CPEC. India has taken keen interest in Iran’s Chahbahar Port. Pakistan’s land routes can be utilized for trade through Chahbahar if the two countries can enhance trust through economic integration.
The looming question is whether militancy in Afghanistan and neighboring border regions of Pakistan will affect the security of CPEC. Pakistan has launched military operations to secure the region and is determined to clear these areas of local and foreign militants. Afghanistan’s President Ashraf Ghani is also determined to bring peace. China and India are investing heavily in Afghanistan, so they too want peace in the region. The negotiation process between the main faction of the Taliban and the Afghan government has been reinitiated after negotiations halted in 2013. China and Pakistan have hosted talks; and China and the United States seem to play a greater role than just facilitators and may become guarantors in any final outcome. CPEC is a step forward toward Chinese aspirations of economic dominance in Asia and beyond. This project will connect China to the world and will have a significant impact on the Chinese economy. But its role in bringing prosperity to the region cannot be ignored. Economic prosperity is vital to solving important issues and challenges in South Asia. Through CPEC, states in South Asia can converge their interests. Once their interests are combined, they will have an incentive to sit together to create solutions to regional problems.
Image: Mani Rana-Bloomberg, Getty