The China-Pakistan Economic Corridor (CPEC) & The Future of the Digital Yuan

The China-Pakistan Economic Corridor (CPEC) & The Future of the Digital Yuan

The future of the Digital Yuan invariably lies in the future of business within and around China. This said, one of our main focuses for picturing the future of world trade should be the Belt & Road Initiative (BRI). A foremost link in the BRI is the China-Pakistan Economic Corridor (CPEC).

Beginning in Kashgar in Xinjiang Uyghur Autonomous Region and ending in Gwadar, in the Balochistan Province, Pakistan, the CPEC will be paramount in creating a bustling, lucrative, and mutually beneficial trade route connecting East and West.
The China-Pakistan Economic Corridor is first focused on the long-awaited revitalization of connecting cities in terms of trade, finance, technological exchanges, and green growth.
A prerequisite for uninterrupted and powerful trade and economic growth in any region is functional infrastructure.

The CPEC’s initial focus will be on fundamental power generation projects and building the main road, rail, and air linkages within the region.

This will serve to bring better people-to-people connectivity, and create an environment of trust for development-oriented investments. Needless to say, trade and economic co-operation along the China-Pakistan Economic Corridor will directly play a part in the growth and nurturing of highly-skilled personnel throughout the region. Very soon, citizens of connecting regions will find more openings to learn new skills, and take part in making technological advancements.

The CPEC in Detail

The China-Pakistan Economic Corridor serves to benefit many more than just the peoples of China and Pakistan.  It is a framework for crucial regional connectivity, to promote upliftment and poverty-alleviation even in surrounding Iran, Afghanistan, and the Central Asia. The growth in regional economies along CPEC would give rise to an expanded network of strong trading partners, reducing business risks, and expanding business opportunities. 

The China-Pakistan Economic Corridor is a vital branch in the construction of a truly multi-polar world. Growth within the CPEC will expand into the rest of South Asia, and the Middle East. 

Some key CPEC projects include:
1320 MW Coal-Fired Power Plant in Port Qasim, Karachi
1000 MW Quaid-e-Azam Solar Park
Orange Line Metro Train – Lahore
Karot Hydropower Project – Jhelum River

and many more.
Of those mentioned above, the Power Plant in Port Qasim, Quaid-a-Azam Solar Park, and the Orange Line Metro have been completed.

In the future, an additional project for building a pipeline and terminal for Liquefied Natural Gas (LNG) maybe added to CPEC.

The Ministry of Planning, Development and Reform of Pakistan and the National Development and Reform Commission of China are the main authorities overlooking CPEC currently.

Why was the CPEC Proposed? 

Historically, the India-Pakistan region enjoyed great prosperity, and was once one of the leading economies in the world. Pakistan is also endowed with a wealth of natural resources such as coal, gold, copper, copper, iron ore, modest oil reserves, and vast natural gas reserves.

While such a wealth of natural resources should spell immense economic and trade benefits for Pakistan and its people, the lack of infrastructure, technology, and investments needed to monetize them, is a pressing problem.

Because of this the Government of Pakistan decided to collaborate with the People’s Republic of China in building Special Economic Zones (SEZs) to attract both Foreign Direct Investments (FDIs) and Local Investments. In this regard, the CPEC is a paramount milestone in rejuvenating Pakistan’s economy and its more than 220 Million people. The China-Pakistan Economic Corridor will help Pakistan develop its EODB (Ease of Doing Business) indicators, which include consistent power supply, straightforward cross-border trading routes, and ease of starting a business.

CPEC will address the requirements for transforming Pakistan’s SEZs into bustling hubs of sustainable long-term economic development.

Goals of CPEC

For China, the China-Pakistan Economic Corridor will be an important complement for the country’s Great Western Development Strategy. 

Western China, of which Xinjiang is a major area, has entered a historic phase of economic and social development.

The Chinese Government is working tirelessly to open up West China’s economy and improve opportunities for the diverse groups of the Chinese population living in the area. In 2021,the government invested USD 37 Billion on 350 key projects in Xinjiang alone. 

As mentioned earlier, the CPEC is a landmark step in building a more vibrant and prosperous Pakistan. The development of solid trade routes between China, Pakistan, and connecting cities comes with a firm promise of economic prosperity.

As two resource rich regions, both Western China and Pakistan can together build mutually beneficial cooperation through a strong link such as CPEC. 

The purpose is to lay the foundation for strong development industries between both regions in a sustainable manner, that will later on bring colorful cultural exchange, peace, and trust between the peoples.

Above all, the aim is to improve the livelihoods of people living in CPEC and surrounding regions.

The Green CPEC

It is understood that advancements in trade and business are essential for uplifting the lives of millions of people and mass poverty alleviation.

Currently, CPEC has several Coal-Fired Power Plants scheduled for construction to address the grave energy shortages that exist in Pakistan. Coal is abundantly available to the country, and it is efficient in bringing a consistent power supply to more than 200 Million Pakistanis. It is a crucial and immediate need.

At the same time, power from green energy sources cannot be efficiently carried over long distances.
Pakistan’s infrastructure needs to be more advanced to facilitate high-demand green energy solutions in the country.

Large global players like US and the European Union have not been able to make a significant move towards 100% renewable-energy powered economies either due to steep demands for power in these countries.

Expecting an upcoming economy like Pakistan’s to immediately go green in unreasonable.
However, this does not stop CPEC from taking firm green initiatives. All of the proposed and constructed coal-power plants are emission-controlled. This cuts down pollution caused by the plants significantly. All projects have been approved by ESIA (Environment and Social Impact Studies).

Besides this, several wind, solar, and hydropower plants are in the agenda. Among these, the Karot Hydropower Plant in Jhelum River is of particular significance.

Dedicated afforestation efforts are also being made in CPEC project premises and surrounding areas.

Initiatives under the China-Pakistan Economic Corridor will first focus on economic revitalization of the two peoples. Such progress can pave the way for Pakistan to develop Green-Energy solutions with strength.

The Future of Digital Yuan in CPEC

Bilateral business between China and countries around the CPEC is very like to switch to Yuan payments for many reasons. 

In 2022, with uncertainty looming around the Dollar-Dominated global financial system, countries like Pakistan, Afghanistan, and Iran are very likely to switch to cross-border transactions carried out in Renminbi in the near future. 

Recently, Saudi Arabia decided to accept Yuan payments for Chinese purchases of its oil, seriously impacting the status of the petro-dollar. And of course, China is currently the world’s largest trading partner. 

Payments in E-CNY, with no dollar intermediary is going to reduce the cost of international payments significantly. 

Once the Digital Yuan is approved for cross-border use, these costs will go down even further, since there will be no go-between bodies involved in the transactions. 

The CPEC is going to introduce many predominantly China-Pakistan trade collaborations in the future. With a potentially large trade volume building in-between the two countries, the use of E-CNY may become mainstay.

What To Expect From CPEC

Prosperity and mutually beneficial cooperation is the main and welcome goal of the China-Pakistan Economic Corridor. It is an essential milestone in moving towards a more economically diverse multipolar world.