SUBJECT :INTERNATIONAL BUSINESS

MANAGEMENTASSIGNMENT ON:

CPEC BOOSTING UP PAKISTAN’S TRADE

SUBMITTED TO:SIR MANSOOR

GROUP MEMBERS:

MAHGUL KHAN 1310-BBA012 VARDA SHAIKH 1310-BBA027 HIBA SHAIKH 1310-BBA009 MARYAM QAZI 1310-BBA015

INTRODUCTION:

Pakistan is entering into a new phase of economic development. China is a rising economic power and is a neighbour of Pakistan. Pakistan could easily benefit from China’s US$ 11 trillion economy and world’s largest in Purchasing Power Parity (PPP).

The current Chinese model is the result of its surplus wealth. The two countries enjoy cordial relations in all fields since the 1950s. An opportunity is just knocking at Pakistan’s door, where this is a game-changer and will reap benefits.

ROLE OF CPEC IN BOOSTING UP PAKISTAN’S TRADE:

This introduces a new dimension in China’s global trade. Pakistan would become a Suez Canal for China’s trade in the Middle East, providing it an alternative access as a friendly state to address its future vulnerability in the South China Sea.

In return, the economy of Pakistan would be transform from US$ 237 billion to much larger economy. The World Bank’s latest report sees positive growth of Pakistan’s economy under the CPEC investment. This would be having positive impact on Pakistan’s trade with China, which is accumulates US$ 5 billion deficit at present. In spite of unique diplomatic and political friendship, Pakistan’s trade with China had remained in doldrums from 1950s to 2007.

PAKISTAN’S ECONOMIC SURVEY (2014-15):

According to Pakistan Economic Survey 2014-15, the volume of trade between Pakistan and China has increased to $16 billion. The 3,218 kilometre route will connect Kashgar in China’s western Xinjiang region to the port of Gwadar. Currently, nearly 80 per cent of

China’s oil is transported by ship from the Strait of Malacca to Shanghai, a distance of more than 16,000 km, with the journey taking between two to three months. But once Gwadar begins operating, the distance would be reduced to less than 5,000 km.

EXPECTATIONS FROM CPEC:

“Pakistan will become an economic hub”

Along with CPEC, Pakistan will become an economic hub in South and Central Asia, an axis of regional trade. The Gwadar Port, while gaining importance as Pakistan’s economic center, will be one of the most important ports in the Arabian Sea. Businessmen of Gilgit-Baltistan who exports fresh fruits like cherries, apricots and apples, is hoping that CPEC will be a game-changer for the region. So far, the carefully packaged truckloads of fruit traverse the rundown Karakoram highway to reach the national capital Islamabad, from where they are flown to Qatar, Abu Dhabi and Dubai. According to the Asian Development Bank (ADB), Gilgit-Baltistan produces over 100,000 metric tonnes of fresh apricots annually.

Gwadar has a 200,000 tonne tanker capacity, which presents unmatched opportunities for boosting global economic interactivity within Pakistan. Located strategically at the tail of the Corridor, yet at the confluence of most of the world’s oil-producing states, Gwadar automatically becomes one of the largest transshipment ports. It is envisaged to have an international airport, crude oil refineries and the ability to dock larger ships, turning it into a robust trade and transportation hub.

CONCULSION:

The CPEC will affect Pakistan’s trade flows through multiple channels. First, it will reduce behind- the- border trade costs and bring about a shift in the modes of transportation. Second, it will strengthen economic integration with the world’s largest trading nation, China. Finally, it was give a boost to intra-country trade within Pakistan.

The CPEC project will provide a network of road and railways to link remote manufacturing facilities to the Karachi and Gwadar seaports.

The improved connectivity will reduce the costs of transportation and curtail travel time.

Furthermore not only will it enhance competitiveness of existing firms, it will also incentivise exports.

Moreover the project will also lead to the expansion of the export product set.

For instance, Pakistan’s northern areas produce vegetables and fruits, such as apples, apricots and cherries. But due to a lack of good connectivity, most of this produce cannot be exported. The CPEC will link the northern areas to airports in Peshawar, Rawalpindi, and Lahore. This will give a boost to the export of agricultural commodities, as most of these products are transported by air owing to their perishable nature. This improved connectivity to sea port and airports is just one aspect of the CPEC’s influence on trade flows. Another important change would occur in the modes of shipment The reduction in behind-the-border trade costs will give a boost to trade flows and increase integration with China.

“However, to exploit the full potential of the CPEC, the country needs to focus on reducing trade costs at the border by rationalising tariffs, and

those beyond the border, by negotiating trade agreements.”