- Pakistan and China agree to extend CPEC to Afghanistan.
- Pakistan, China and Afghanistan have agreed to forge closer economic ties.
What’s the news ?
- The Countries are jointly organized to extend economic relations by extending the Beijing-backed China-Pakistan Economic Corridor (CPEC) to Afghanistan.
- The aim is to fully harness the country’s potential as a hub for regional connectivity.
- They underlined the need to prevent any group from using their territories for terror activities against any nation.
What is this CPEC?
- It was launched on 20 April,2015.
- CPEC is a 3000 kms Chinese infrastructure network project undertaken in Pakistan.
- Developing a deep water port at Gwadar in Arabian Sea also a well built road and rail line from this port to Xinjiang province in western China
- This will lead to a shortcut for boosting the trade between Europe and China.
- Over $33 billion worth of energy infrastructure to be constructed by private help which will alleviate Pakistan’s chronic energy crisis.
- A network of pipelines to transport liquefied natural gas from Gwadar to Nawabshah and eventually transport gas from Iran.
What will China take with CPEC?
- This project will reduce the estimated logistics and transportation cost of $2 billion per year.
- In 2022, the Chinese investment in Pakistan increased to $65 billion.
- China refers to this project as the revival of the Silk Route.
- Chinese monetary offer for Pakistan under CPEC being a combination of Debt and Equity instruments.
- It is evaluated that the Debt instrument will be serviced at 7%-8% interest per annum.
- Equity component is expected to deliver an estimated Return on Equity(ROE) of 17% per annum.
What will Pakistan take with CPEC ?
- The CPEC will result in the creation of upwards of 2.3 million jobs between 2015 & 2030.
- It also adds 2 to 2.5 percentage points to the country’s annual economic growth.