China, Pakistan signed an agreement on Economic Corridor plan worth 46 billion US dollars

China and Pakistan on 21 April 2015 signed an agreement on China Pakistan Economic Corridor (CPEC) plan worth 46 billion US dollars. The agreement was signed by China's President Xi Jinping and Pakistan Prime Minister Nawaz Sharif. 

As part of the agreement, China will provide up to 37 billion US dollar in investment for energy projects to generate 16400 MW of power. Concessional loans will cover nearly 10 billion US dollar of infrastructure projects.

China's government and banks, including China Development Bank and the Industrial and Commercial Bank of China Ltd, will lend to Chinese companies, which will invest in projects as commercial ventures.

The planned Chinese spending exceeds that of the United States, which has given 31 billion US dollars to Pakistan since 2002.

Besides, during the visit of Chinese President Xi to Pakistan, the two sides also agreed to strengthen cooperation in civil nuclear energy, space and maritime technology, counter-terrorism and defense.

CPEC plan and its benefits

The CPEC plan is a network of roads, railways and pipelines aimed to build energy and infrastructure projects in Pakistan by establishing an economic corridor between Pakistan's southern Gwadar port on the Arabian Sea and China's western Xinjiang region.

The corridor would transform Pakistan into a regional hub and give China a shorter and cheaper route for trade with much of Asia, the Middle East and Africa. Also, the investment will strengthen the struggling economy of Pakistan and help end chronic power shortages.

While on the Chinese part, the plan is part of China's aim to forge Silk Road land and sea ties to markets in the Middle East and Europe. The projects will give China direct access to the Indian Ocean and beyond.