Impacts of China-Pakistan Economic Corridor on Oil Rich Gulf States

Gwadar Port, as a part of China-Pakistan Economic Corridor (CPEC), has become a centre of gravity for future’s economic scenario of this region. Albeit whole world is eyeing Gwadar but South Asian countries and Gulf States are keener about its developing potential due to their closer proximity to this port. Many analysts believe that this small fishing town has potential of becoming new Dubai after decades.

Gwadar port is being linked with China, Russia, Central Asian Republics and many other countries via huge infrastructure of railways, roads and other facilities under the Chinese initiative of ‘One Belt One Road’.

How this $62 billion joint venture of China and Pakistan is going to affect oil rich Gulf States -sometimes referred as petro states- is summarized here:

Fall in Fuel Consumption:

CPEC will provide short land route as an alternative to long circular and spiral sea route from Gulf of Oman to China’s main land and similarly to Central Asian Republics. That short route will not only save time but also mitigate the fuel consumption. Less fuel usage will cause less demand for fuel, so oil market may suffer a blow.

Alternative port to Gulf Ports:

After getting fully operational, Gwadar port will provide a good alternative for ships to dock here rather than docking at Port Rashid or Jabel Ali Port of Dubai. Marine Traffic will be slightly affected because Gwadar would be garnering its share.

Another International City:

Due to huge trade activities, Gwadar would join the ranks of leading International cities of Asia just like Singapore and Dubai. Singapore is far off but Dubai is not so far from Gwadar. A new international city near Dubai will attract business tycoons to this new destination.

Less leverage of Gulf States over Pakistan:

Historically, Pakistan remained heavily dependent on Gulf Nations because of its crumbling economy. CPEC would be a boost to Pakistan’s economy. If Pakistan will no longer remain dependent on financial aids from Saudi Arabia and United Arab Emirates (UAE), then these countries will lose leverage over Pakistan.

Massive Trade Activities in vicinity:

At present, huge trade activities are at ports of UAE. China has become export giant. Its products are reliable, cheap, and are liked all over the globe. When Chinese products would start landing in ships at Gwadar Port, there will be massive trade activity here. A large number of international firms will rush towards Gwadar to get fitted here for their financial prospects.

Effect on Tourism:

Tourists from all over the world are attracted towards Dubai. In fact, Dubai’s economy receives huge chunk of money from its tourism industry. Saudis have also started developing tourist attractions. If Pakistan succeeds in maintaining security, then Gwadar may dwarf other tourist attractions found nearby, because Pakistan is full of natural scenarios and historic places.

Quick access to Chinese Products:

Gwadar will provide many benefits to Gulf also. Gulf nations import a lot of Chinese products. Via Gwadar, they will get delivery of Chinese products in short span of time.

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  1. Sami says

    Very nice article written… Pakistani government must focus on the rapid development of Gwadar.

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