cpec opportunities & challenges

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Page 1: CPEC Opportunities & Challenges
Page 2: CPEC Opportunities & Challenges

CPECChina’s Perspective

Page 3: CPEC Opportunities & Challenges

China GDP Growth Trend

2010 2011 2012 2013 2014 2015 2016 20170%

2%

4%

6%

8%

10%

12%

Source: Knoema

“At present, China’s economy has entered a state of new normal – the gear of growth is shifting from high speed to medium to high speed.” --- Li Keqiang, Premier of China, World Economic Forum, Davos 2015

Page 4: CPEC Opportunities & Challenges

Challenges For China

• Ensure Sustained Economic Growth– Create new domestic demand– Ensure cost effectiveness for international trade– Focus on Africa

• Assume A Bigger Role In Global Affairs– Create secure, cost effective alternate route for energy and trade– Create large economic block on its western periphery– Establish strong influence in Africa

Page 5: CPEC Opportunities & Challenges

71.4% Area

28.8% Population

(2002)

20% GDP(2009)

Western China Growth Challenge

Page 6: CPEC Opportunities & Challenges

Western Development StrategyInitiated in 1999-2000

1. Development of infrastructure 2. Enticement of foreign investment 3. Focus on ecological protection 4. Promotion of education 5. Retention of talent

As of 2006, a total of 1 trillion yuan has been spent building infrastructure in western China

The combined GDP of the western regions reached 3.33 trillion

yuan in 2005, compared with 1.66 trillion yuan in 2000

Page 7: CPEC Opportunities & Challenges

One Belt One Road Initiative

China – Pakistan

China – Indonesia

China – B’ Desh – India - Myanmar

China – Mangolia - Russia

New Eurasian Land Bridge

China – Central Asia – West Asia

Page 8: CPEC Opportunities & Challenges

CPECLogistics Opportunities For Pakistan

Page 9: CPEC Opportunities & Challenges

CPEC ProjectsCoal Mining /Power plant

Hydro

Wind

Source

Sector Est Cost in $ BlnEnergy 33.79Road 5.9Rail 3.69Mass Transit in Lahore 1.6Gwadar Port 0.66China Pakistan Fiber Optics 0.04Total 45.69

Coal Mining /Power plant

Hydro

Wind

Page 10: CPEC Opportunities & Challenges

China – SS Africa Rising Trade

2004 2005 2006 2007 2008 2009 2010 2011 2012 20130%

5%

10%

15%

20%

25%

Share of China in SSA's total trade Share of SSA in China's total trade

Source: World Bank

2004: $ 15 Bn2015: $170 Bn

Page 11: CPEC Opportunities & Challenges

Direct OpportunitiesFreight Forwarding / Customs Clearance Services

Seaport, Airport, Dryport Operations

Bulk Terminal Operations

Marine Haulage

Cross Border / Domestic Logistics

Warehousing & Value Added Services

Manufacturing Activity In Proposed Economic Zones

Page 12: CPEC Opportunities & Challenges

Coal Logistics

Proposed Coal Power Projects MWEstimated

Coal ConsumptionSahiwal, Huaneng Shandong 1,320 5,184,168

Muzafargarh 1,320 5,184,168

Thar Engro 660 2,592,084

Thar Other 1,320 5,184,168

Port Qasim 1,320 5,184,168

Gwadar 300 1,178,220

Total 6,240 24,506,976

Page 13: CPEC Opportunities & Challenges

2018 2019 2020 2021 2022 20230

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

0%

10%

20%

30%

40%

50%

60%

70%

Up Traffic Down Traffic Annual Growth Factor

TEU

p.a

Freight Traffic PotentialGwadar - Kashgar

Page 14: CPEC Opportunities & Challenges

Estimated CPEC Trucking Potential(Estimated China transit trade traffic only, Assuming no railway movement)

Estimated Truck Requirement

Trucks required 0

5,000

10,000

15,000

20,000

25,000

2018 2019 2020 2021 2022 2023

Projected Truck Freight Revenue

Freight Revenue 0

102030405060708090

2018 2019 2020 2021 2022 2023

PKR

Bln

Page 15: CPEC Opportunities & Challenges

Indirect OpportunitiesForeign Direct Investment

Formation of International Alliances

Rise in Aggregate Domestic Demand

Growth in Manufacturing Sector

Growth in Fisheries & Agri Sectors

Improvement in Productivity

Incremental 2-3% GDP Growth

Page 16: CPEC Opportunities & Challenges

CPECChallenges for Pakistan

Page 17: CPEC Opportunities & Challenges

Grabbing A Share Of The Pie

• Two Way Transit Transportation• Trucks vs Freight Train • Domestic Trucking & Warehousing• International Shipping & Freight Forwarding• Supply of Raw materials• Supply of Finished Goods• Services

No Legislation To Ensure Market Share For Local Businesses

Page 18: CPEC Opportunities & Challenges

Handling Coal Logistics1.5 – 2.0 Million Tons p.a.

By Road?• Pollution • Truck Availability• Congestion• Adherence to Standards

– Safety– Traffic laws– Highway deterioration

By Rail?• Capital Availability• Railway Tracks• Rolling Stock Availability

– Quantity– Quality

• Impact of Circular Debt• Impact On Passenger Trains• Pollution• Efficiency and Effectiveness

Page 19: CPEC Opportunities & Challenges

TIR Carnet

• Pakistan signed TIR Carnet in 2015• Cross border movement of trucks across all

signatory countries• Strict conditions, – financial guarantees, – vehicle quality

• Iran and Turkey are Biggest Players

Page 20: CPEC Opportunities & Challenges

Ensuring Employment For Locals

• What share of jobs will go to Pakistanis ? – Managerial– Engineering– Skilled– Unskilled

• What share will go to Baloch people?– Number & Type Of Jobs– Educate / Upgrade / Elevate– Sense Of Deprivation / Alienation

Page 21: CPEC Opportunities & Challenges

Legislation

• Directing Opportunities Towards Local Businesses

• Guaranteeing Employment For Locals • Ensuring Use Of Locally Available Raw

Materials• Transparency

Page 22: CPEC Opportunities & Challenges

THANK YOU