The China-Pakistan Economic Corridor is more than just an infrastructure project: it connects the small port of Gwadar with western China and is intended to give Pakistan’s economy new momentum. But behind the vision of a new beginning lie major questions about debt, security and geopolitical influence.
What is the CPEC?
The China-Pakistan Economic Corridor is a 1,875-mile (3,000 km) Chinese infrastructure and economic project in Pakistan. It is part of China’s Belt and Road Initiative and is considered one of the most developed land corridors and a ‘flagship project’ of the BRI.
China’s goal is to connect Xinjiang (western China) with the port of Gwadar on the Arabian Sea. This would provide China with a safer and shorter route for energy imports from the Middle East, allowing it to bypass the Strait of Malacca, which is a so-called ‘chokepoint’ due to its narrowness and the volume of traffic that passes through it. The Chinese government fears that in the event of a conflict, the US and its allies would block this strait, thereby paralysing China’s energy supply. In this way, the Chinese government wants to strengthen its own global trade accessibility and thus stabilise its own economy through a sustainably secured energy supply.
Originally, 46 billion US dollars were planned, but the amount of Chinese investment subsequently grew and the project now has an investment volume of 62-65 billion dollars.
The project’s infrastructure is primarily focused on the port of Gwadar and its land connection to China. This ‘corridor’ is to be created in the form of motorways, rail networks, airports and pipelines for oil and gas. The Chinese government benefits in two ways. On the one hand, economically, as trade and foreign investment are strengthened, but on the other hand also strategically, as this would give it access to the Indian Ocean.
Impact on supply chains
In general, the project is operating in a rather uncertain environment. Political instability in Pakistan, which is particularly evident in changing governments, shifts in policy and slow decision-making processes, makes long-term supply chain planning difficult. Added to this are security risks in Balochistan, Pakistan’s largest province in terms of area in the south-west of the country, which is considered rich in natural resources but underdeveloped. Separatist groups such as the Balochistan Liberation Army (BLA) and other militant organisations repeatedly carry out attacks on infrastructure and transport routes, disrupting the flow of goods and deterring investors. For potential supply chains, this means no guaranteed reliability for transport corridors and risks of disruption.
Geopolitical tensions also mean that conflicts could arise in key regions. India, for example, rejects the CPEC because it passes through the disputed region of Kashmir. The US sees Gwadar as a potential lever for China’s military presence in the Indian Ocean and fears possible sanctions, trade conflicts and restrictive measures against companies. For supply chains, this could mean the risk of being drawn into geopolitical tensions. The expansion of coal-fired power plants included in the project also carries the risk of putting pressure on companies that would demand sustainable routes.
Potential and opportunities for supply chains
The port of Gwadar offers direct access to the Arabian Sea and is located near the Strait of Hormuz, one of the world’s most important oil routes. This would allow goods from China to be transported more quickly to Europe and Africa. These new logistics corridors would shorten the oil transport route from 12,000 km to approximately 2,400 km, saving around US$2 billion in costs annually.
The CPEC also links China, Pakistan, Afghanistan and Central Asia, creating new routes away from established sea lanes. This diversifies supply chains and reduces dependence on traditional bottlenecks such as the Strait of Malacca and the Suez Canal.
For Pakistan itself, this would be an opportunity to develop from a transit country into a logistics hub and become a junction for Asian and global trade. China would gain strategic access to the Indian Ocean, enabling it to create new global supply chain networks that are more strongly oriented towards Asia. For Western companies, this would be both a challenge and an opportunity to get involved in these new corridors at an early stage.
Conclusion
The CPEC offers Pakistan the opportunity to take its economy and logistics infrastructure to a new level. With investments of around 62 to 65 billion US dollars and the expansion of roads, railways, pipelines and energy supply networks, the project, if fully implemented, could not only alleviate Pakistan’s energy problems, but also make the entire flow of trade in the region more efficient. For companies, this opens up the prospect of shorter transport routes, lower costs and faster overall processing of goods flows. According to estimates, shortening oil transport alone could save up to US$2 billion annually. Nevertheless, these advantages are offset by considerable uncertainties. Political instability in Pakistan, security risks in the affected regions and geopolitical tensions, particularly with India and the United States, raise the question of whether the corridor can really become a reliable trade route. Ultimately, its success depends on whether it is possible to secure the infrastructure in the long term, ensure political stability and build trust among international players.
