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Pakistan and China agree to Extend CPEC

  • 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.
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