One Belt, One Road Part II

One Belt, One Road Part II

China’s ‘One Belt, One Road’ (OBOR) initiative will have a transformational impact on participating countries. In Pakistan, for instance, OBOR is a potential win-win at virtually every level.

The country may see a major infrastructural upgrade, facilitating economic growth. Meanwhile, the government may also enhance its ability to govern, as well as benefiting from new revenue sources such as oil transportation fees (as Chinese imports from the Persian Gulf cross Pakistan, instead of the traditional, but costlier and less secure sea voyage).

The Pakistan section of the project is labeled the China-Pakistan Economic Corridor (CPEC) and involves some US$64 billion of investments. Two thirds of this expenditure is on energy-related projects – including power generation and transmission and oil pipelines – but also encompasses rail and road infrastructure across the country, as well as a mega-port project in Gwadar.

Existing infrastructure in Pakistan is limited and financing constraints have previously inhibited new investment in the country. The country has also faced constraints in electricity supply for the past decade – reducing annual GDP by around 2% according to government estimates. OBOR will help remove this obstacle. Indeed, the CPEC has already delivered two 660MW power plants in Punjab, with two more in Karachi coming in June 2018.

Admittedly, most of the civil engineering and construction is being executed by Chinese companies, but there may be benefits for local companies too, albeit likely at a more ancillary level. Meanwhile international attention is building – according to the Pakistani government, 52 countries have so far registered their interest to be involved. This augurs very well for future foreign direct investment in Pakistan.


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