May 2018

A review of national, bilateral and regional dynamics

CONTENTS

EXECUTIVE SUMMARY

A NATIONAL PERSPECTIVE ON CPEC

B BILATERAL (PAK-CHINA) PERSPECTIVE

C REGIONAL / INTERNATIONAL DYNAMICS

D ANALYSIS

CPEC Monitor | May 2018

Executive Summary

While much of the older news about CPEC was about representation of smaller provinces in the project, the new development pertain to settling issues of rights and disputes emerging out of CPEC. The most significant was a national judicial conference on CPEC, which discussed dispute resolution mechanisms from CPEC projects.

Lately, there have been concerns over the rights of Pakistanis working on CPEC. For one, there are recommendations that the government should draft “labor policy” to ensure laborer’s rights are protected under the CPEC. It needs to be seen why such demands have come now. Are there concerns or issues that rights are violated?

Then, a proposal has come of establishing “special courts” that will rely on Alternate Dispute Resolution (ADR) mechanism to resolve issues that may arise under CPEC. This is an innovative idea. Any project is bound to raise legal issues; CPEC, being a mega project, is not an exception. But proper steps can resolve them.

Similarly, as if to allay concerns that the CPEC projects will damage environment, there are suggestions of cooperation

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CPEC Monitor | May 2018

between Pakistan and Chinese environmental protection agencies at the provincial level too.

Much of the news on CPEC is old: while government officials continue to flag it as a mega development project and of ironing out internal differences, smaller provinces especially western ones keep on asking for their share. In Balochistan, the apprehensions did not die down with change in chief minister; the new one too questioned the province’s share. More worrisome has been reports from Gilgit Baltistan where local traders, expressing their inability to use the newly-introduced online clearance system, abandoned trade with China via Khunjerab and even threatened to block Karakoram Highway (KKH) for traffic.

A new development in the security arena has been the projected launch of two remote sensing satellites by China in June 2018 to geo-monitor the CPEC developments from space. Pakistan’s National Logistic Cell (NLC) has decided to introduce a truck tracking system to control the transportation along CPEC routes and avoid incidents caused by heavy traffic on roads.

Interestingly, delays continue to mar Mainline-1 (ML-1) and Karachi Circular Railway (KCR) projects. Until now, it was thought the issue was more because of financial distribution issue between federal and governments. Now, it emerged, as per Pakistan’s government, that these projects got delayed as some projects switched from China’s Ministry of Commerce to a new “Chinese aid agency.”

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CPEC Monitor | May 2018

In what appears to Pakistan’s clear-cut welcoming of Afghanistan to CPEC, Pakistan’s National Security Advisor Naseer Khan Janjua termed CPEC and Afghanistan “two halves of BRI.”

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CPEC Monitor | May 2018

A

NATIONAL PERSPECTIVE ON CPEC

1. Politico-economic The SourceStatementsFederal Minister for Information and Broadcasting, Mariyum Aurangzeb, emphasized that youth engagement in CPEC execution is vital to get maximum advantages from this flagship project.

The Nation, May 9, 2018;The Express Tribune, May 11, 2018

Senator Sherry Rehman said CPEC would accelerate socio-economic development of Pakistan, while the Chinese Ambassador to Pakistan Yao Jing declared that the development of local residents would be prioritized in all CPEC linked projects.

The Nation, May 12, 2018

Chairman Parliamentary Committee on CPEC, Senator Mushahid Hussain Syed, termed CPEC a “mega national project” for socio-economic development of Pakistan.

Daily Times, May 13, 2018;Pakistan Observer, May 14, 2018

Deputy Chairman Planning Commission Sartaj Aziz said CPEC will ensure “shared progress and prosperity.”

The Nation, May 15, 2018

A report said that Pakistan tends to obtain “$01-02 billion from China for keeping into safe deposit” to address the issue of hike in “current account deficit.”

Mehatb Haider, The News, May 19, 2018;Drazen Jorgic, Reuters, May 25, 2018;Australian Financial

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CPEC Monitor | May 2018

Review, May 26, 2018;The Hindu, May 26, 2018;Khaleej Times, May 26, 2018South China Morning Post, May 26, 2018;Gulf Times, May 27, 2018

Chairman Pakistan Tehreek-e-Insaf Imran Khan said CPEC would be a “game changer” for Pakistan only if “it put its house in order.”

The Express Tribune, May 20, 2018

State Bank of Pakistan (SBP) Governor Tariq Bajwa made it clear that Pakistan got the loan from “China-backed banks on good rates” to address the issue of declining foreign exchange reserves.

Dawn, May 23, 2018

The Multan Chamber of Commerce and Industry (MCCI) president Malik Asrar Ahmed said that the CPEC Special Economic Zones (SEZs) would open vistas of investment opportunities for “domestic and foreign investors.”

The News, May 23, 2018

Minister for Finance, Miftah Ismail said the execution of CPEC would not be halted after change in government.

Parvez Jabri, Business Recorder, May 24, 2018;The Nation, May 24, 2018;Daily Times, May 24, 2018

Vice Chief of Naval Staff Pakistan Vice Admiral Kaleem Shaukat stated that CPEC offers great opportunities to the state owned organizations like shipping.

The News, May 24, 2018

Chief Justice Pakistan (CJP) Mian Saqib Nisar ensured judiciary support to CPEC and ensured that issues arised between business parties will be settled to promote the transparent and smooth execution of CPEC.

The News, May 24, 2018;The Nation, May 25, 2018;Jang, May 25, 2018;

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Dawn, May 25, 2018CJP Mian Saqib Nisar declared that government will establish special courts to address the business conflict likely to arise under CPEC through a mechanism called “Alternate Dispute Resolution (ADR)” mechanism.

Pakistan Today, May 26, 2018;Hasnaat Malik, The Express Tribune, May 26, 2018;Terence J Sigamony, Business Recorder, May 26, 2018

Sindh Governor Mohammad Zubair said that Chinese are confident about the execution of CPEC under “secure democracy” in Pakistan.

Afshan Subohi, Dawn, May 28, 2018

Prime Minister Shahid Khaqan Abbasi said that CPEC has boosted the economic development of Pakistan.

Chengcheng, Xinhua, May 29, 2018;Global Times, May 29, 2018

Report/AnalysisBusiness community in Sindh has expressed its concerns that growing Chinese influence in the market under CPEC would hurt domestic industrial growth.

Bilal Hussain, The Express Tribune, May 2, 2018

An economic expert believed CPEC has provided a new dimension to the economic development of Pakistan and suggested international political economy reforms to get the maximum benefit out of it.

Asma Kundi, Dawn, May 4, 2018

While reports maintained Pakistan will face debt burden for repayments of CPEC loan, President Asian Development Bank (ADB) appreciated the bilateral economic cooperation and declared that ADB is waiting for IMF evaluation report of Pakistan’s economic growth to provide its “budgetary support required for an interim period.”

The News, May 4, 2018

Asian Development Bank’s (ADB) former country director (Manila) Werner Liepach is quite optimistic about the economic development of Pakistan and increased imports linked to CPEC projects.

Maidah Haris, The Express Tribune, May 4, 2018

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CPEC Monitor | May 2018

A report said that CPEC loans caused Pakistan’s total debt rise to Rs 22.8 trillion in last year December 2017.

Maidah Haris, The Express Tribune, May 5, 2018

During the National Judicial Policy Making Committee (NJPMC), senior officials of law community and federal government discussed CPEC related issues like sales tax and dispute resolution mechanism and suggested to consider already available bilateral investment treaties (BITs).” They emphasized the need of “special courts” for CPEC related issues.Chairman Federal Board of Revenue said some orders issued by the Supreme Court of Azad Jammu and Kashmir could infringe upon CPEC projects. Similarly,the law secretary said that “some arbitration clauses proposed in CPEC” had not been reviewed by the law ministry.

Khaleeq Kiani, Dawn, May 7, 2018;Pakistan Today, May 7, 2018

Government has earmarked Rs 486.726 million to improve the mobile internet services along Karakoram Highway (in support of CPEC) in Gilgit Baltistan (GB).

The Nation, May 7, 2018

As per media report, Pakistan’s energy planning commission has agreed on costly Power Purchase Agreements (PPA), with China that caused the higher prices of two CPEC power projects i.e. Port Qasim and Sahiwal coal power project. This was realized when Asia Development Bank (ADB) led Jamshoro coal power project achieved one megawatt (MW) at $0.578 million in the International Competitive Bidding (ICB) while the cost of abovementioned two CPEC project is $1.21 million per MW.

Syed Akhter Ali, The Express Tribune, May 7, 2018;Khalid Mustafa, The News, May 9, 2018;Khaleeq Kiani, Dawn, May 19, 2018

Political leaders at the National Assembly called for executing KCR and include Bhasha Dam in CPEC.

Qadeer Tanilo, May 8, 2018

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CPEC Monitor | May 2018

Due to the enhanced development of auto mobile industry under CPEC, JW Forland, Chinese largest automobile firm is all set to invest in Pakistan’s auto parts sector.

China Pakistan Economic Corridor, May 7, 2018;The Express Tribune, May 12, 2018

Former governor of the State Bank of Pakistan (SBP) Dr. Ishrat Husain wrote a book titled “CPEC & Pakistan Economy: An Appraisal,” to address some CPEC related concerns like transparency issue and financial procedure. He said Pakistan will not be liable for $45 billion as only half of this total amount has been utilized for CPEC till now. He projected socio-economic development of Pakistan under the CPEC.

Daily Times, May 11, 2018;The Nation, May 15, 2018;Pakistan Observer, May 15, 2018;Daily Times, May 16, 2018

Official of the Industrial and Commercial Bank of China (ICBC) organized “Renminbi Awareness Session” in association with the Pakistan Banks’ Association (PBA).

The Nation, May 11, 2018;The News, May 11, 2018

Pakistan China Investment Corporation (CPIC), a private company exploring real estate opportunities under CPEC has been presented the Best Real Estate Developer’s Award under CPEC.

Pakistan Observer, May 13, 2018

A report said that increased construction activities under the CPEC has accelerated the sale of Hinopak and Isuzu motors in Pakistan.

Dawn, May 12, 2018;Daily Pakistan, May 12, 2018

The economists from Planning Commission and Zarai Taraqiati Bank Limited (ZTBL) are convinced about efficient management and reforms of State-owned Entities (SoEs) for CPEC rather privatizing all financial SoEs.

Istaqbal Medi, Arshad Zaman, Dawn, May 14, 2018

As per a media report, a Chinese company that provides coal to Sahiwal Power Plant, initially ignored Rs 1.12 billion taxes on CPEC related imports but later was guilty of evading taxes and paid Rs1.2billion. Nonetheless, the Federal Board of Revenue (FBR) is hesitant to register a case against it keeping in mind the sensitivity of Chinese firms under CPEC.

Shahbaz Rana, The Express Tribune, May 15, 2018;Business Standard, May 16, 2018

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CPEC Monitor | May 2018

State Bank of Pakistan has observed increased in Chinese investment in Pakistan especially due to CPEC.

Usman Hanif, The Express Tribune, May 16, 2018;State Bank of Pakistan, March 2018

The Information Technology (IT) industry of Pakistan made projection about the development of IT sector under CPEC.

Usman Hanif, The Express Tribune, May 21, 2018

Ministry of Information Technology and Telecommunication believed that CPEC would enable Pakistan to become “a regional hub of trade and commerce.”

The Express Tribune, May 22, 2018

According to Moody services, the account deficit in the first half of fiscal year 2018 widened mainly due to CPEC related imports. The reports envisaged CPEC potential to stimulate the economic development of Pakistan but at the same time cautious of infrastructure constraints and security related issues that may hinder the fast pace of CPEC projects. However, report projected Pakistan’s stable economic outlook that illustrated “balanced risks to the country’s credit profile.”

The News, May 21, 2018;Moody’s Investors Service. May 22, 2018;Xinhua, May 22, 2018;Daily Times, May 22, 2018;Imran Ali Kundi, The Nation, May 22, 2018Tahir Amin, Business Recorder, May 22, 2018;Dawn, May 22, 2018

The Hub Power Company (Hubco), working on CPEC projects has collaborated with a UAE-based construction firm.

Salman Siddiqui, The Express Tribune, May 27, 2018

“A Chinese state-owned automobile company tends to launch its products in Pakistan due to potential investment opportunities in Pakistan under the CPEC.

The Nation, May 28, 2018

Chief Justice Mian Saqib Nisar has instructed civil courts to not grant stay orders to one party ignoring the other in CPEC linked projects and emphasized on cooperation among Pak-China judiciaries and establishment of “smart courts and information centers” for execution of CPEC.

Daily Times, May 29, 2018;The Express Tribune, May 29, 2018;The Nation, May 29, 2018

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2. Provincial/regional developments and concerns

The Source

StatementsBalochistan National Party (BNP) President, Former Chief Minister Akhtar Mengal has highlighted the water shortage in Balochistan vital to CPEC.

Muhammad Zafar, The Express Tribune, May 3, 2018

Deputy Chairman Senate Saleem Mandviwalla stated Balochistan and Khyber Pakhtunkhwa (KP) would get its due share of CPEC after People’s Party of Pakistan (PPP) come into power.

Dawn, May 4, 2018

Planning Commission and Reforms Secretary Shoaib Ahmad Siddiqui said all stakeholder’s concerns related to transport and logistics under CPEC would be addressed as government has drafted “1st national transport policy.”

The Express Tribune, May 10, 2018

Chairman Senate Muhammad Sadiq Sanjrani stated that development of CPEC and Gwadar are linked together. He inaugurated a desalination plant at the Gwadar port and termed it as a “gift from Chinese” to address the issue of water shortage in the region.

Behram Baloch, Dawn, May 16, 2018;The Express Tribune, May 16, 2018;Pakistan Today, May 16, 2018;The News, May 16, 2018;Balochistan Express, May 16, 2018

Balochistan Chief Minister Mir Abdul Quddus Bizenjo said that CPEC has not benefited Balochistan but it has been beneficial to Punjab only.

Saleem Shahid, Dawn, May 21, 2018

Chinese Ambassador to Pakistan Yao Jing termed Balochistan “the connecting gateway” under the CPEC.

Pakistan Today, May 24, 2018

Chief Minister and Governor Balochistan Abdul Quddus Bizenjo and Muhammad Khan Achakzai stated that with the execution of CPEC, Balochistan will become hub of trade and economic activities. The Chief Minister further said provincial government has prioritized the

Parvez Jabri, Business Recorder, May 24, 2018;Mohammad Zafar, The Express Tribune, May 24, 2018;

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CPEC Monitor | May 2018

execution of CPEC and expected Balochistan the equal beneficiary of it to end the local grievances.

Saleem Shahid, Dawn, May 24, 2018;Dawn, May 25, 2018

Provincial Minister for Local Government and Rural Development Haji Mir Ghulam Dastagir termed CPEC “a game changer project” that would accelerate the economic development of Pakistan and the whole region.

The Express Tribune, May 26, 2018

Balochistan Chief Minister Abdul Quddus Bizenjo has highlighted the issue of scarcity of clean water in region decisive to CPEC.

Mohammad Zafar, The Express Tribune, May 27, 2018

Prime Minister Shahid Khaqan Abbasi said that Gilgit Baltistan “(GB) is the central to CPEC and it will be more beneficial for the development of its people and region.

Shabbir Mir, The Express Tribune, May 27, 2018;Ghulam Abbas, Pakistan Today, May 27, 2018;The Nation, May 27, 2018

Prime Minister Shahid Khaqan Abbasi asserted that CPEC western route and Gwadar port have potential to accelerate economic development of Balochistan.

The Nation, May 30, 2018;The Express Tribune, May 31, 2018

Action/VisitsThe labor community in Haripur has urged the government to frame labor policies to ensure laborer’s right under the CPEC.

Dawn, May 2, 2018

To protest against online clearance system introduced by federal government in GB, the local traders has abandoned trade with China via Khunjerab. President GB Chamber of Commerce and Industry (GBCCI) Nasir Hussain Raki declared that if the online clearance system is not discarded, traders’ community will continue protest by blocking Karakoram Highway (KKH) for traffic.

Jamil Nagri, Dawn, May 4, 2018;Arab News, May 5, 2018

Barrister Zafarullah Khan of Watan Party has expressed his concerns about the preferential treatment of Chinese investors in Pakistan under

The Economic Times, May 8, 2018;The Nation, May 8,

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CPEC Monitor | May 2018

the CPEC and filled a petition in Supreme Court against lending land to Chinese under CPEC.

2018;The News, May 8, 2018

Sindh government has urged federal government to “make laws” that would allow provincial government the registration of Chinese nationals. It also mentioned that “unregistered Chinese will obtain a no-objection certificate from the Sindh home department” for residence or conducting any private activity.

Imran Ayub, Dawn, May 21, 2018

Report/Analysis Apart from Khyber-Pakhtunkhwa (K-P), all

other provinces including Gilgit Baltistan and FATA have rejected the incentive package, subsidized loans, and land on concessionary terms federal government offered for the establishment of CPEC Special Economic Zones (SEZs).

A report said that China is also interested in the establishment of 2 or 3 SEZs, and for this federal government chose Faisalabad, Dhabji Sindh, and Rashakai K-P sites. It got positive response from KP and Punjab government but no response has yet been noted from Sindh government.

Shahbaz Rana, The Express Tribune, May 1, 2018

Rubina Irfan, member of the Pakistan Muslim League (PML) in Balochistan has expressed its dissatisfaction over CPEC and said it has not been beneficial for the socio-economic development of Balochistan.

Yousaf Ajab Baloch, Balochistan Point, May 19, 2018

The Cabinet has decided to set the “federal Special Economic Zone (SEZ) at Gwadar and called the “concerned authorities to identify the land for the federal SEZ.”

Mehtab Haider, The News, May 26, 2018

Government has decided to acquire 260 acres of land in Haripur for execution of the Havelian Dry Port project under CPEC. The landowners in region has warned of protest for not getting the market rates of their land. They said government

Dawn, May 29, 2018

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should either “provide market rates or relocate the project”

3. Socio-cultural The SourceStatements

Action/VisitsDuring a CPEC conference in Pakistan, a Chinese theatre Company Baoji Art staged the “Spirit of the New Silk Route,” to promote awareness much about Tang Dynasty among Pakistani’s.

Sarwat Ali, The News on Sunday, May 27, 2018

Report/AnalysisPakistan’s hotel and restaurant industry has been growing due to the large number of Chinese national influx mainly under the CPEC.

The Nation, May 1, 2018

Allama Iqbal Open University (AIOU), in association with Chinese universities, has decided to set Chinese language center in Pakistan along CPEC routes.

Sarfraz Ali, Daily Pakistan, May 27, 2018;The Express Tribune, May 28, 2018

4. Security The SourceStatementsInterior Minister Ahsan Iqbal said Pakistan’s adversaries have been sponsoring terrorist activities to sabotage the CPEC and stability of Pakistan.

Khyber News, May 5, 2018;The Nation, May 5, 2018;Parvez Jabri, Business Recorder, May 5, 2018

Balochistan Levies Director General Tariq Rehman stated that CPEC has added to their responsibilities and duties.

The Express Tribune, May 16, 2018

Vice Chairman of Chinese Central Military Commission (CMC) General Zhang Youxia said that the role of Pakistan army is commendable in fight against terrorism and ensuring the security of CPEC.

The News, May 18, 2018;Business Standard, May 18, 2018;The Express Tribune, May 18, 2018;Dawn, May 18, 2018;

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The Nation, May 18, 2018

Security Incidents

Action/VisitsThe Sindh government has “announced around 2,782 posts in the financial year 2018-19” budget to ensure the security of CPEC linked projects.

Pakistan Herald, May 10, 2018;Aftab Channa, Pakistan Today, May 10, 2018;Imran Ayub, Dawn, May 11, 2018

Report/AnalysisThe National Logistic Cell (NLC) tends to start a truck tracking system to keep a check on transportation along CPEC routes. The CPEC project director Daud Butt mentioned different techniques would be introduced to ensure the road safety and transportation.

The Express Tribune, May 10, 2018

China tends to launch “two remote sensing satellites for Pakistan in June 2018” to keep check on all the CPEC linked developments.

Dawood Rehman, Daily Pakistan, May 26, 2018

5. Progress on CPEC-linked projects The SourceStatementsOfficial Ministry of Planning, Development, and Reform Asim Khan declared CPEC projects being implemented in Balochistan and Khyber Pakhtunkhwa have created employment opportunities for domestic youth.

China Pakistan Economic Corridor, May 8, 2018

Secretary Ministry of Planning, Development, and Reform Shoaib Ahmad Siddiqui stated that Karachi Circular Railway (KCR) and upgradation of Mainline 1 (ML-1) will be started shortly and would require skilled professionals to expedite its execution.

Kalbe Ali, Dawn, May 9, 2018;China Pakistan Economic Corridor, May 9, 2018

Minister for Power Awais Ahmad Khan Leghari announced that a power plant at Haveli Bahadur

The Nation, May 10, 2018;

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Shah with world’s highest productivity “rate of 62.5 %” became operational.

The Express Tribune, May 10, 2018

Dr Nafisa Shah from Pakistan’s People’s Party (PPP) underlined the need for “level playing field” for Pakistani and Chinese companies under the CPEC.

Qadeer Tanoli, The Express Tribune, May 11, 2018

Prime Minister Shahid Khaqan Abbasi said that a “Deep-Water Container Terminal” launched in at the Karachi Port Trust (KPT) would play a significant role in the development of CPEC.

Salman Siddiqui, The Express Tribune, May 12, 2018;Khurshid Ahmed, Arab News, May 12, 2018

Sindh Chief Minister Syed Murad Ali Shah said the execution of Karachi Circular Railway (KCR) facing a setback due to the “delayed approval from Executive Committee of the National Economic Council (ECNEC).”

Abdullah Zafar, The Nation, May 12, 2018

Project Director of CPEC, Ministry of Planning, Hassan Daud stated that true information broadcasting of CPEC is vital to the successful execution of this mega project. He further informed that the “western alignment had been nearly completed, Mail Line-1 will be upgraded shortly and upgradation of ML-II and ML-III had been included in CPEC Long Term Plan.”

The Nation, May 14, 2018

Federal Minister for Planning, Development, and Reforms Ahsan Iqbal revealed that to expedite CPEC execution, the new ‘China Aid’ (Chinese aid agency) would take care of CPEC related matters instead of the Ministry of Commerce of People's Republic of China.Government of Pakistan has urged China to provide concessional loans for ML-1 while gave Sindh government and Railway Ministry “4 weeks” to resolve their unsettled issues. He said CPEC related projects like KCR and ML-1 were delayed “due to transfer of concessional loans subject from the ministry to China-Aid.”He further stated that the Special Economic Zone will be established near new Islamabad

Fawad Yousafzai, The Nation, May 22, 2018;Shahbaz Rana, The Express Tribune, May 22, 2018;Mehtab Haider, The News, May 22, 2018

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airport. Chinese ambassador to Pakistan has assured the provision of concessional loans committed under the CPEC.Action/VisitsPakistan’s Prime Minister Shahid Khaqan Abbasi inaugurated the Ghulam Khan Trade Terminal in North Waziristan Agency and asserted that communication infrastructure in region would link this terminal to CPEC.

Pazir Gul, Dawn, May 1, 2018

Project Director CPEC Hassan Daud declared total 2.39% interest on CPEC projects which Pakistan would pay back to China by the next 25 years.

The Nation, May 3, 2018

Pakistan Ambassador to China, Masood Khalid has appreciated the fast pace of CPEC projects and stated CPEC linked projects have helped to address the energy crisis and accelerated the economic development of Pakistan.

China Pakistan Economic Corridor, May 9, 2018

The government has decided to divide the trial run test of Lahore Orange Line Metro Train into two parts one from “Dera Gujjran to Chwok station” and other from “Ali Town to Scheme Mor.”

Dawn, May 10, 2018

China Railways Construction Corporation (CRCC) has shown willingness to conduct feasibility study of “Main Line (ML-II Kotri-Attock) and ML-III Rohri-Chaman railways tracks” under the CPEC.

The News, May 10, 2018;The News on Sunday, May 10, 2018

Islamabad mayor Sheikh Anser Aziz has urged Ministry for Planning, Development, and Reforms to include Ghazi Barotha water supply project in CPEC in order to address the issue of water shortage in Islamabad.

Amir Yasin, Kashif Abbasi, Dawn, May 14, 2018

China and Pakistan agreed to set a “bi-pole transmission line from Matiari to Lahore” under the CPEC.

Nawa-i-Waqt, May 15, 2018;Dawn, May 15, 2018

Director of Pakistan Water Partnership, Dr. Pervaiz Amir urged the government to add projects linked to “climate change” in CPEC.

Amar Guriro, Daily Times, May 16, 2018

The first trial run of Lahore Orange Line Metro Khalid Hasnain, Dawn,

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Train was successfully carried out and government revealed that its public service will start within “upcoming three and a half months.”

May 17, 2018;Business Standard, May 17, 2018

A private gas company Ghani Gases Limited will set its “4th plant” in Pakistan to meet the expected increased demand of industrial and medical gases under the CPEC related activities.

Abrar Hamza, Daily Times, May 22, 2018

The Central Development Working Part (CDWP) has assigned upgradation of ML-1 to the Executive Committee of the National Economic Council (ECNEC).

Khaleeq Kiani, Dawn, May 25, 2018;Shahbaz Rana, The Express Tribune, May 25, 2018;Arab News, May 25, 2018

In the wake of delayed power transmission from Matiari-Lahore transmission line, the commercial operationalization of “two Thar Coal Power Plants i.e. Thar Energy Ltd and MW Thal Noa Thar Power Limited” has got three months extension from December 2020 to March 2021 from the Private Power and Infrastructure Board (PPIB).The PPIB has also extended the “financial close of Matiari-Lahore transmission line under the CPEC.”

Fawad Yousafzai, The Nation, May 26, 2018;Khaleeq Kiani, Dawn, May 26, 2018

The 1st section of Multan-Sukkur (M5) motorway project i.e. Multan-Shujaabad motorway has been successfully inaugurated.

Fawad Maqsood, Business Recorder, May 26, 2018;Liangyu, Xinhua, May 27, 2018;Dawood Rehman, Daily Pakistan, May 27, 2018

Pakistani Prime Minister Shahid Khaqan Abbasi has inaugurated the” Gojra-Toba Tek Singh Section of Faisalabad-Multan Motorway (M-4), and Sharqpur-Rajana Section of Lahore-Abdul Hakeem Motorway (M-3) at Rajana town of Toba Tek Singh.”Experts believed that these highways under CPEC would promote regional connectivity.

Arif Ghias, The News, May 29, 2018;The Nation, May 29, 2018;Chen Qingqing, Global Times, May 30, 2018

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Prime Minister Shahid Khaqan Abbasi has inaugurated “20-km long Havelian-Thakot Motorway” under the CPEC.

The News, May 29, 2018

Report/AnalysisNational Highway Authority (NHA) has decided to start forestation along the CPEC highway projects for environmental improvement.

The News, May 5, 2018

The 8th Judicial Conference included discussion on the “environmental protection and economic integration, and effective dispute resolution mechanism pertaining to CPEC. Based on Pak-China mutually agreed environmental policies, the conference suggested cooperation of environmental protection agencies at provincial level to achieve environmental standard during the implementation of CPEC.

Hasnaat Malik, The Express Tribune, May 5, 2018;Sohail Khan, The News, May 6, 2018;Nasir Iqbal, Dawn, May 6, 2018;Business Recorder, May 8, 2018

A report said that the National Highway Authority (NHA) has awarded Package-I of Zhob-Mughalkot Road (N-50) of CPEC to a construction company ignoring the other lowest bidder. Also, report revealed that dents were found on the “11km part of the 41km Zhob-Killi Khudae Nazar road (Package-I)”, to which the NHA official responded as “such issues are fully addressed before the project is completed and opened to traffic.”

Dawn, May 7, 2018

A report said that establishment of a pipeline for oil shipment from Gwadar to Kashgar is in process under the CPEC.

Salman Siddiqui, The Express Tribune, May 9, 2018

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B

BILATERAL (PAK-CHINA) PERSPECTIVE

1. Bilateral relations SourceStatementsPakistan’s Ambassador to the United Nations, Maleeha Lodhi termed CPEC “the greatest economic initiative of the 21st century that will help to realize the UN’s 2030 global development agenda. ”

Daily Times, May 1, 2018

Deputy Speaker National Assembly Murtaza Javed Abbasi said “Pak-China bilateral relations had no parallel in international relations” and said Pakistan is keen to the timely execution of CPEC. While the Vice President of Chinese People’s Association for Peace and Disarmament. Zhou Li said that enhanced bilateral collaboration is important to deal with regional and international issues.

Mohammad Arshad, Pakistan Observer, May 15, 2018

Senator Mushahid Hussain Sayed said CPEC is nucleus of Pak-China bilateral “strategic relations,” while Chinese official ensured their continued support to CPEC and enhancing bilateral relations.

Dawn, May 23, 2018;The News, May 23, 2018;Shafqat Ali, The Nation, May 23, 2018;Parvez Jabri, Business Recorder, May 23, 2018;Pakistan Observer, May 23, 2018

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Chairman Senate Sadiq Sanjrani said it is vital to have a “joint strategy to counter a narrative against Pak-China bilateral relations and the CPEC.”

Balochistan Express, May 23, 2018;Dawn, May 23, 2018;Pakistan Today, May 23, 2018

Chinese ambassador to Pakistan Yao Jing stated that CPEC execution is based on the “principle of mutual interests.” He further said lately Pakistan’s trade deficit under CPEC will not last forever but it will accelerate the industrial development of Pakistan in future.

Global Village Space, May 25, 2018

Action/VisitsA delegation of Yunnan Provincial government visited the “Trade Development Authority of Pakistan (TDAP)” to promote the bilateral trade relations.

The Nation, May 12, 2018

Government of Pakistan honored Vice Chairman of Chinese Central Military Commission (CMC), General Zhang Youxia with Nishan-e-Imtiaz (Military).The CMC met Chief of the Naval Staff, Admiral Zafar Mahmood Abbasi and both interpreted CPEC would stimulate economic development of the whole region.

The News, May 18, 2018;The Nation, May 19, 2018;Pakistan Today, May 18, 2018

Chinese State Councilor Zhao Kezhi and Pakistan's National Security Adviser Naseer Khan Janjua emphasized on the enhanced cooperation for secure and smooth execution of CPEC.

The Nation, May 22, 2018;Yurou, Xinhua, May 22, 2018

Yang Jiechi, member of the Political Bureau of the Communist Party of China (CPC) Central Committee and Pakistan's National Security Advisor Naseer Khan Janjua emphasized on promoting bilateral relations and execution of

Xiang Bo, Xinhua, May 23, 2018;China Pakistan Economic Corridor, May 25, 2018

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CPEC.To strengthen the bilateral trade relations, China and Pakistan have decided to “extend the currency swap arrangement (CSA) for next three years and also increased its amount from Yuan 10 billion to 20 billion.”

Times of India, May 24, 2018;Salman Siddiqui, The Express Tribune, May 25, 2018

Report/Analysis

2. People-to-people relations The SourceStatementsAction/VisitsReport/Analysis

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C

REGIONAL / INTERNATIONAL DYNAMICS

3. On CPEC and Geo-economic Connectivity

The Source

StatementsNational Security Advisor Lt General (r) Nasir Khan Janjua has declared Pakistan is all set to include India in CPEC while Chinese Ambassador to Pakistan Yao Jing said they it is fine to expand CPEC but as “CPEC is a joint project of China and Pakistan, so decision should be bilateral in this regard.”

Fawad Yousafzai, The Nation, May 4, 2018

Swiss Consul General Philippe Crevoisier stated that CPEC would improve the economic outlook and positive image of Pakistan at the international level. He expected enhanced Pak-Switzerland trade relations after the completion of CPEC.

The Express Tribune, May 4, 2018

Indian High Commissioner to Pakistan Ajay Bisaria said “the country’s (India) position is very clear on CPEC for certain reasons. However, it is good to establish connectivity in the region.”

Dawn, May 6, 2018;The Nation, May 6, 2018

Pakistan’s Chief of Naval Staff Admiral Zafar Mahmood Abbasi believed that the Belt and Road Initiative (BRI) and CPEC would promote the regional development. While Prime Minister

The Nation, May 7, 2018;Muhammad Irfan, Daily Pakistan, May 7, 2018;The Express Tribune, May 7, 2018;

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Shahid Khaqan Abbasi applauded Pakistan’s Navy effort for ensuring maritime security of CPEC. He emphasized the significance of Special Economic Zones (SEZs) and projected the “economic growth to 9% mark” via successful execution of CPEC. He further declared that the Chahbahar Port was not a threat to CPEC.

Pakistan Observer, May 7, 2018;

Fawad Maqsood, Business Standard, May 7, 2018;Daily Times, May 8, 2018;Arab News, May 8, 2018

Chairman Joint Chief of Staff Committee General Zubair Mahmood Hayat termed CPEC “game changer” that will promote the regional development.

The Express Tribune, May 7, 2018

National Security Advisor Lt Gen (r) Nasser Khan Janjua said China’s dream of regional connectivity under the Belt and Road Initiative including CPEC is incomplete without having Afghanistan in it. He termed CPEC and Afghanistan two halves of BRI. Also, SDPI Executive Director Dr Abid Qaiyum Suleri said a peaceful Afghanistan is vital to CPEC.

Daily Times, May 11, 2018;The Express Tribune, May 11, 2018;The Express Tribune, May 13, 2018;Ikram Junaidi, Dawn, May 14, 2018

Commenting about India’s perspective of CPEC, Indian media official stated that “India has various routes for trade and has its own policies in this regard.”

Sehrish Wasif, The Express Tribune, May 12, 2018

Qaumi Watan Party (QWP) Chairman Aftab Ahmed Khan Sherpao stressed upon the need of including Afghanistan in CPEC for regional peace and stability.

Mubashir Ali Shah, Pajhwok, May 14, 2018

China has celebrated 5 years of BRI contributing to “global support” of CPEC.

The News, May 15, 2018

Ambassador of France to Pakistan Marc Barety expressed his willingness to explore potential opportunities under the CPEC.

Parvaiz Ishfaq Rana, Dawn, May 16, 2018

Tajikistan Ambassador to Pakistan Sherali Jononov is interested to join

Zafar Bhutta, The Express Tribune, May 17,

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CPEC Monitor | May 2018

CPEC for enhanced regional cooperation.

2018

Senator Mushahid Hussain said at the Asia-Europe Political Forum that “Pakistan is the hub of regional connectivity due to CPEC.”

Pakistan Observer, May 20, 2018

Senior Vice President (SVP), Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Syed Mazhar Ali Nasir stated that Pakistan’s Shanghai Cooperation Organization (SCO) membership would help to enhance the regional connectivity under the CPEC.

China Pakistan Economic Corridor, May 25, 2018

Foreign Ministry representative Hua Chunying asserted that China will not change its stance towards Kashmir issue due to CPEC.

Embassy of People’s Republic of China in the Czech Republic, May 29, 2018;The Frontier Post, May 29, 2018;The Economic Times, May 29, 2018;Gulf Today, May 30, 2018

The Minister for Planning, Development, and Reforms Ahsan Iqbal has declared the completion of two more corridors based on CPEC that will connect China and Pakistan with Central Asia.Peshawar, Kabul, and Tajikistan would be linked under one corridor while Quetta, Herat and Turkmenistan will be linked under the second corridor.

Waqar Ahmad, The News, May 31, 2018

Azad Jammu and Kashmir President Sardar Masood Khan emphasized on enhanced connectivity under the VRI and CPEC. he said that “Both the BRI and CPEC are a conscious effort to reach out to Europe.”

The Express Tribune, May 31, 2018

Pakistan’s Prime Minister Shahid Khaqan Abbasi stated that Central Asia

The Nation, May 30, 2018

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CPEC Monitor | May 2018

will be included in CPEC via network of railways.Action/Visits

Report/AnalysisCentral Asian Republics are interested to join CPEC.

Daily Times, May 1, 2018;Zubair Qureshi, Pakistan Observer, May 1, 2018

Federal Minister for Communications Dr. Hafiz Abdul Karim briefed ambassador of Morocco to Pakistan Mohamed Karmoune about CPEC projects development and mentioned that completion of the western route is a priority.

The News, May 3, 2018;Daily Times, May 3, 2018

Kyrgyz Ambassador to Pakistan is optimistic about the potential economic opportunities under CPEC that will “connect Pakistan to Kyrgyz Republic via rail networks.”

Muhammad Arshad, Pakistan Observer, May 15, 2018;The News, May 15, 2018

A report has lauded Pak-China cooperation in banking sector and said that “Chinese and non-Chinese companies will easily invest in CPEC related projects.”

MENAFN, May 17, 2018;Pakistan Observer, May 18, 2018

Indian media has reported that the government of Pakistan is all set to raise the “constitutional status” of Azad Jammu and Kashmir and Gilgit Baltistan (GB) to improve the legality of CPEC opposed by India.

The Economic Times, May 20, 2018;Times of India, May 20, 2018;Kallol Bhattacherjee, The Hindu, May 27, 2018

A report said that India opposed Pakistan’s decision to grant GB provincial status due to CPEC passing through this region.

Mohammad Irfan, Daily Pakistan, May 28, 2018

4. Regional Dynamics and CPEC Security

The Source

Statements

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CPEC Monitor | May 2018

Action/VisitsReport/Analysis

D ANALYSISPolitical Development

Despite the fact that governments on both sides have reaffirmed the development of domestic people of Balochistan under CPEC, they have been facing issues like acute water shortage. Even their quest for a due share in CPEC seems to be ignored since long.

Furthermore, government’s reluctance to provide locals the market rates for their land being acquired for CPEC has provoked may cause a halt to the fast pace of CPEC execution. Meanwhile, labor community felt their rights are violated and called for a certain clear labor policy.

However, the 8th judicial conference held this month included one complete session on mainstreaming the legal issues likely to arise under CPEC. it may resolve the FDI related legal conflicts

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CPEC Monitor | May 2018

and improve the transparency and efficiency of CPEC. Yet, it is to see that how far the introduction of dispute resolution mechanism and establishment of special courts and would help to address the regional provincial grievances.

Project Implementation and New InitiativesAmid fast pace of CPEC projects implementation, government of Pakistan could not realize that institutional changes like switching responsibility of CPEC from one Chinese Ministry to the other aid agency would cause delay in KCR and ML-1 execution. Though it is unknown that why China has transferred the responsibility of CPEC to other aid agency.

Regional contextOn geostrategic front, regional connectivity seems to be enhancing under BRI and its flagship project CPEC, yet no different response has been observed from the Indian side. India is still wary of CPEC execution via GB and now speculated that Pakistan’s decision to grant GB provincial status is to support CPEC.

CPEC securityCPEC security is improved as no single incident related to CPEC workers or project has been noted this month. Geo monitoring of CPEC via satellites showed advancement in CPEC security.

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CPEC Monitor | May 2018

(Note: This report is compiled by the Senior Research Analyst Safdar Sial and Research Associate Anam Fatima, at Pak Institute for Peace Studies (PIPS), Islamabad.)

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