Major CPEC Railway Proceeds to Next Round of Approvals; China’s Vision for Connecting Xinjiang to Indian Ocean Moves Closer to Reality

On June 6, reports emerged that, after nearly four years of deliberation, Pakistan’s Central Development Working Party approved a $7.2 billion project to rehabilitate and dualize the Karachi-Peshawar railway line (ML‑1).  The 1,872-km railway is seen as a critical transport artery of the China-Pakistan Economic Corridor (CPEC) that would link the northern and southern parts of the country, traversing a route where 70% of Pakistan’s population lives.

The project is also expected to be a significant contributor to one of China’s overall objectives for CPEC, which is to establish connectivity between landlocked Xinjiang province and Pakistan’s coastal cities situated on the Indian Ocean, such as Karachi and Gwadar.  At Gwadar, China already operates a major strategic port, where Beijing is widely suspected to be laying the groundwork for a military presence.

With these upgrades, ML‑1 is expected to increase the annual transport of goods by 15 million tons and the transport of people by 30 million, as per local media reports. Travel time between Peshawar and Karachi is also expected to be reduced by half.  News of government approval was disclosed on Twitter by retired Lieutenant General and current Chairman of the China-Pakistan Economic Authority, Asim Saleem Bajwa.  Final approval for the ML‑1 project is still pending from the Executive Committee of Pakistan’s National Economic Council, after which point negotiations on project financing are expected to commence with Chinese counterparts.  China is expected to fund approximately 85% of the project through a concessional loan.

The World Bank has reportedly warned that the ML‑1 upgrades may not be financially tenable, given the enormous debt that would be required to carry out this project, the country existing debt burden and the significant reforms that are still not implemented concerning Pakistan’s railway governance.  Still, the project is viewed as politically, economically and strategically beneficial by Islamabad and Beijing.  Pakistan is reportedly targeting full completion of the rail line by 2026.