Name: Syed Umar Hayat Hashmi

ID: 1566109 MBA 90

Submitted: to Dr. Arshad Haroon
 Policy Brief

China Pakistan Economic Corridor

A Chinese Dream Being Materialized Through Pakistan
 Introduction:

S ustainable growth and development in China during the last four decades has assigned the

country a special status in the world economy. The financial crisis of 2007-08 not only
strengthened the Chinese economy but also enhanced its role and say in global governance.
Though China has started re- defining its role in the 1990s, war on terror gave it an ample time
to think and devise its strategies in accordance with the new world scenario. During this period
when the world was engaged in war on terror and was hit by financial crises, China in- creased
its trade and international recognition, revisited its old relations, and ventured in new
partnerships and friendships. President Xi Jinping for the first time raised the slogan of
constructive engagements across the world.

South Asia, being the neighbour of China, has a special significance in enhancing the agenda of
constructive engagements, which is now evident from the active engagement of Chinese
leadership in South Asia. Mr. Xi visited South Asian countries, and announced huge investment
packages and trade enhancement programmes for them. China has become actively involved in
Afghanistan for peace building and development.

In line with its defined strategic order, China has now started working more closely with
Pakistan in areas of new investments and partnerships. The process started way back in the
1990s; however, a joint declaration in this regard was the concrete

outcome after a meeting between President Hu Jintao and President Gen. Pervez Musharraf in
2003 at Beijing (Fmprc, 2003). The declaration highlighted the areas of cooperation for future. A
joint statement in 2006 further strengthened the cooperation when Free Trade Agreement
(FTA) was signed during the visit of President Hu Jintao to Islamabad in 2006.
It gradually expanded the trade volume between Pakistan and China from $1 billion in 1998 to
$15.15 billion in 2015 (VANDEWALLE, 2015). This enhanced cooperation then laid the
foundation of China-Pakistan Economic Corridor (CPEC).

These days, CPEC is a hot topic and the most de- bated subject in Pakistan, South Asia, and Asia
and to some extent in other parts of the world. In Pa- kistan, there is confusion about the
corridor’s route, as provinces have shown their concern over it. South Asian countries are
divided on the sub- ject while some look at it as an opportunity for development and
prosperity. Others look at it as an alliance against their interests. Asian countries and global
community have mixed opinion. Keeping in view all the perceptions, this paper demystifies the
confusion and presents the facts.
Historical Background of Pak-China Relations
Pakistan and China have been enjoying cordial and friendly relations since 1950. The first
decade of relations was not as smooth as it were after 1960 especially after the China-
India war, and Pakistan-India war. At first, Pakistan was reluctant to ac- cept China due to
differences between communist and capitalism blocs. The two countries also did not know
much about each other, which hindered their bilateral cooperation. Fortunately, at that time
the then minister for foreign affairs, Sir Zafarullah Khan, had some knowledge about Chinese
mindset, which paved the way for Pakistan-China relations (Chaudhri, 1987).

Relations between the two countries later strengthened after the devaluation of Indian cur-
rency in 1949, which impacted Pakistan’s econo- my badly. Pakistan was importing coal for its
nas- cent industry, but the devaluation halted the trade leaving Pakistan with no choice except
to enter into an agreement with China on barter trade of coal for cotton. Pakistan also
supported the permanent seat of China at United Nations Security Council (Arif, 1984).
Relations further en- hanced after the two countries signed a trade agreement in 1953 (Dixit,
1987).

Signing of SEATO and CENTO in 19954 and 1955 respectively created some suspicion among
Chi- nese, as they conceived it as a threat to regional and national security. However, Pakistan
clarified China that it only signed these as a safeguard against the threat from India (Syed,
1974). Paki- stan also utilized the Bandung Conference to clari- fy the doubts and China
endorsed Pakistan’s sev- en pillars of peace at the conference (Chaudhri, 1970).

President Ayub Khan’s statement in 1959 about Tibet again created problems for Pakistan with
regard to relations with China (Jain, 1981). Fortunately, the damage was controlled by the then
Foreign minister Zulfikar Ali Bhutto and foreign secretary S. K. Dehlavi. Signing of agreement on
border demarcation by Mr. Bhutto in 1963 gave an impetus to Pak-China relations. Moreover,
China also helped Pakistan during the war of 1965, which brought two nations very close to
each other. However, China’s neutral stand during 1971 was conceived by many Pakistani
leaders as a sign of no interest (Javaid and Jahangir, 2015).
From 1970s onwards, the relations between Paki- stan and China strengthened more in all
sectors. China has generously supported Pakistan in mili- tary, missile and nuclear program, and
economic sector, even during the sanctions imposed by the US. This led to confidence building
between Paki- stani and Chinese policy makers and people. As a result of this long-
standing friendship, we see a big achievement in the form China-Pakistan Eco- nomic Corridor
(CPEC).

China Emergence as Global Leader :

China has been working since decades to restore its lost glory. Since Mao’s time, China has
devised a policy of cosmopolitanism and made it the most important pillar of its all policies.
First, China worked with group of Non-Allying countries and gradually enhanced its role.
Bandung Conference as launching pad and strengthened its relations with many developing
countries. China also re- mained neutral in international affairs and focused gradually on the
economic development and building economic relations with the world.

The first step on this direction was its economic assistance for South East Asian Countries
during the economic and financial crises of 1990. It was also the beginning of change of
relations with South East Asian Countries (Vaughn and Morrison, 2006). President Hu Jintao,
during his tenure, re- mained focused on economic development oppor- tunities and building
more close ties. During that period, China emphasized its relations with Mid- dle East, Central
Asia and Africa.

President Xi, gave a new direction to foreign policy and initiated “Constructive Engagement”
policy. Economic engagement was given the prime focus to move forward the agenda of
constructive engagement.

Mr. Xi is aggressively pursuing this idea through the Silk Route, which comprises roads, rail net-
works and maritime routes. It is also known as “One Belt One Road”. China is promoting Silk
Route as a trade and financial initiative. However, many experts believe that it is not only a
trade or economic initiative but also a plan for the expansion of China’s role in the world. China
is building its leading role in Asia and beyond for economic and political cooperation through
“One Belt One Road” (Wang. 2015). Asian Infrastructure and Development Bank, and Naval
bases in different countries are being quoted as examples. Crea- tion of Asian Infrastructure
and Development Bank is being taken as competitive to existing fi- nancial system and
supremacy of USA in the inter- national financial sector (Xu, 2015).

String of Pearls, a term which is being used to describe a series of Sea Ports, i.e. Sri Lanka,
Bangladesh, Burma and Pakistan has been considered as strategic investment to curtail India
(Kabraji, 2012). Construction of Djibouti base is another example. Moreover, recently China also
marked the vast area in South China Sea as its territory and claimed it as part of China. USA
(State Depart- ment) has strongly opposed this move along with South East Asian partners.
However, China is mov- ing ahead on this. International media, academicians, many western
countries and India believe that CPEC is a strategic corridor, which covers the trade and
development needs of Pakistan. It has become one of the highly debated issues within the
country and interna- tionally. Debate has generated some controver- sies among different
stakeholders in Pakistan, which is negatively impacting the CPEC progress.

China-Pakistan Economic Corridor

The history of Pak-China relations can be traced back since 1950. Both China and Pakistan
managed their relationship in a very productive and articu- lated way. Although confusion over
some issues, especially during the first half 1950s and 1970s, impacted the ties but the two
nations never let them altogether spoiled. Both of them helped each other at the crucial times.
Pakistan helped China to connect to the world. Pakistani air space was opened for Chinese
airline and PIA made trav- el easy for Chinese.

Pakistan also advocated and supported the admission of China in UN system and permanent
mem- ber of UN Security Council. Furthermore, Pakistan played the role of facilitator to arrange
visit of Henry Kissinger to China, which laid the foundation for the visit of President Nixon in
1972.

On the other hand, China also supported Pakistan during the times of need and helped Pakistan
built its military and economic capabilities, especially Heavy Mechanical Complex, Taxila in
1968, Ordi- nance Factory in East Pakistan in 1970 and Aero- nautical Complex (Javaid and
Jahangir, 2015). Dur- ing the sanctions imposed by USA in 1980s, 1990s and 2000s, China
helped Pakistan in every field.

USA also left Pakistan after the Afghanistan war and Pakistan had to face many problems on
economic front. At that time China came forward to help Pakistan. During the 1990s, USA
imposed sanction on Pakistan and China after the alleged deal on missile and nuclear
programme. China resisted to this pressure and continued to help Pakistan.

Andrew Small (2015) was of the view that most of the deals and cooperation were kept secret
in efforts to avoid criticism. He coined a term “Cooperation in Shadows” to describe the
relation. Over the years both countries developed a strong bond of trust. Trust always has been
key element of strong relations. Building on the past, Chinese foreign policy gives a special
focus to Pakistan in future endeavors of China. China-Pakistan Economic Corridor is one of the
most prominent examples of that.

The two governments had been working on the concept for a long time (almost two decades).
Both countries tried to move on bit-by-bit and smooth the process to implement the final
phase. Joint De- celeration of 2003, after the visit of President Musharraf, is first document,
which outlined the future cooperation plans of two countries. Later, Free Trade Agreement was
signed in 2006, which helped boost the trade. Trade reached to $15.15 billion in 2015 from $1
billion in 1998 (VANDEWALLE, 2015). Further both the govern- ments have plans to increase the
trade up to $18 billion till 2018 (See Annexure).

Former President Asif Ali Zardari also pursued the whole development very actively to secure
CPEC and cooperation from China during the last PPP- led government. Present government has
been keeping the momentum and is actively engaged with Chinese government.
President Xi during his visit inaugurated some projects along with Prime Minister Nawaz Sharif.
Econom- ic significance of the CPEC is very high. It will give an impetus to economic growth and
development. BMA capital did an analysis of CPEC on national economy. First they disintegrate
the total investment in two categories, Local and Chinese investment (Table-1 and Graph-1).
Table-1: Estimation of Local Component in CPEC
Investment (US$ bn) Domestic Share Domestic Share
(US$ bn)
Energy (Breakup is given below) 33.8
Coal 7560 MW 8.8 20% 1.8

Wind 200 MW 0.5 20% 0.1

Hydel 1590 MW 4.2 50% 2.1

Solar 1000 MW 1.7 0% 0

Second Phase 6445 MW 9.5 20% 1.9
Mining Expenditure 9 50% 4.5
Road 5.9 80% 4.7

Rail 3.7 50% 1.8

Mass transit in Lahore 1.6 50% 0.8

Gwadar Port 0.7 50% 0.3

China Pak Fiber Optics 0 0% 0

Total 45.7 18.1

Graph-1: Estimation of Local Component in CPEC

Second, they analyzed the potential impact of investment on national GDP. According to a
study, for one unit incremental growth in GDP, there is need for 3.6 units of incremental
investment. CPEC will increase GDP growth rate at 1.5 per cent in next three years. Moreover, it
will also enhance the private investment due to positive environment, economic opportunities,
improved infrastructure, stable economy and generation of much needed energy. Private
investment will add 0.5 per cent to the GDP of country (Table-). Cumulative impact of
investment would be 02 per cent during 2016-2018. It is expected that growth rate during that
period would be beyond 6 per cent (Naseem , 2015)per year1.

Table-2: Impact on GDP growth potential

GDP-FY15 US$ bn 287
 Total Investment Size US$bn 46
Total Investment Size % of GDP 16%
Time Period Years 3
Annual Addition to Inv/GDP ratio % of GDP 5.30%

Addition GDP growth Potential (ICOR=3.6x) " 1.50%

increment Private Sector Investment " 1.80%

Addition GDP growth Potential (ICOR=3.6x) " 0.50%

Total Increase in GDP Growth Potential Percentage Points 2.00%

Despite this enormous potential, CPEC is surrounded by the controversies on the route.
Baluchistan and KPK argue that the government has changed initial route. Controversy started
to emerge by the end of 2013 and start of 2014. PSDP allocation in 2014-15 made it sharper
and the government remained silent on the issue. Later, the government insisted that there
would be no change in route and maintained this stance for quite a while. Meanwhile, an
advocacy campaign started that there would be two routes, Eastern and Western, and Western
route will be given the priority.
Budgetary allocations were/are contrary to the government claims for giving the priority to
western route. Allocation shows that the government is focusing more on Eastern route and is
giving less prefer- ence to the Western route. Dr Qasir, tried to sum up the debate and
presented rationale for action on any route. He did an analysis on basis of land, population and
production factors (Table-). He also includ- ed the central route in the debate. According to him,
the first presentation on the subject in 2005 only contained the central route.

Table-3: Routes of CPEC

Central Eastern Western
Route Route Route
Average Population Density 156 264 98
Total Area under cultivation (000 ha) 5829 10322 2933
Production of four major crops (000 tonnes) 13754 30928 7430
Source: Dr Qasir Bengali, Paper for Chief Minister of Baluchistan

1Assumption is based on the growth rate of 2014, (4.1) www.sdpi.org

7
He concluded that Eastern route would be costly on the basis of production loss, population
displacement and loss of productive land (Bengali, 2015). He also talked about the Central route
and according to him Central route original route. This route was pro- posed and presented by
Deputy Chairman of Planning commission, in his first ever presentation to President Musharraf in
2006. He emphasized on the revival of first route. Moreover, he proposed that in the present
debate of Eastern and Western routes, priority should be given to Western route or at least it
should be treated like Eastern route.

Apart from the importance of CPEC for Pakistan, there is another dimension. It also has a
special significance for China and its future role as great pow- er at global level. China considers
regional connectivity as a fundamental element and first step to rise at global level. President
Xi, during his address to Foreign Affairs committee at Communist Party meeting in 2014, said
that we will give priority to neighbours in our diplomacy on all fronts (Xi Jinping, 2014). Other
part of policy is to build relations with developing countries and resource rich, including energy
rich, countries. It will help china brand as the development partner and non- interfering ally
(Godement, 2014).

President Xi’s visit to Saudi Arabia and Egypt (and Iran will be final destination) is another step
to en- hance the periphery of friend, on the lines defined in foreign policy. China has offered to
invest $55 billion to the Middle East as loan for development of industry, road, infrastructure,
and energy explo- ration. Mr. Xi was present at the opening of joint oil refinery venture in Saudi
Arabia. Both countries have agreed to work on “Comprehensive Strategic Partnership”
framework. However, the most im- portant statement of Mr. Xi was in Egypt, as he said: “We
are not setting up proxies or building a sphere of influence in the region” (abc, 2016). This is
exact- ly in line with the policy of China to enhance the constructive engagement. These
investments in re- gion will boost trade ties and Chinese products would be in great demand.

After having a brief look at above-mentioned devel- opments, it would be easy to understand the
im- portance of CPEC. Strategic location of CPEC is corti- cal, as it is located at the meeting point of
Road Belt and Maritime Belt (Shah, 2015). It will provide op- portunity to China to establish and
strengthen its position in Indian Ocean. It will also help secure the
energy route from Middle East and Africa, which is critical for China’s future development.
Route of energy will also be shortened considerably (Bhattacharjee, 2015). It would also be
easy and cost effective for China to reach the Middle East and North African Markets, along
others.
Analysis of facts and figures shows that CPEC is criti- cally important for both countries. Pakistan
needs it to overcome its economic, development, social and energy problems. China needs it to
expand its pe- riphery of influence, consolidate its global presence and securing future supply
routes of energy and trade goods. However, important point to note here is that concept was
developed by China, as part of its policy “Go Global 2001”. Pakistan is one of the beneficiaries of
Chinese dream. Therefore, it is ad- visable for Pakistan to remain focused on develop- ment of the
country rather than wasting time on petty issues. Provincialism should not be given the chance to
hijack the development agenda by any stakeholder, including the federal government.

Infrastructure
The CPEC, the construction period for which is from 2014 to 2030, has integrated links with
the Chinese One Belt, One Road and an extension of China’s proposed 21st century Silk Road
initiative. Implementation of the projects under the CPEC has been divided into three phases.
The short-term projects are estimated to be completed by 2017 midterm-term by 2025, and
the long-term by 2030. The overall construction costs are estimated at $46 billion. It is the
network of highways, railways and pipelines to transport oil and gas. The first phase comprises
development at Gwadar Port and the construction of an international airport. It will be
completed in 2017. The Karakoram Highway connecting the two countries will also be widened,
while the rail network between Peshawar in the north and Karachi in southern Pakistan will be
upgraded. The two countries also have a plan of fiber-optic communication links.

Gwadar port
Gwadar is actually the tail of the silk belt, which will connect Kashgar through different
communication networks. Gwadar holds central place in the project of the China Pakistan
Economic Corridor because without making the Gwadar Port fully functional, it would be
difficult to see the anticipated corridor as an energy corridor that appears as one of its main
objectives behind the construction of the CPEC. Located near the Strait of Hormuz, which
channels about one third of the world's oil trade, Gwadar could play a key role in ensuring
China's energy security as it provides a much shorter route than the current 12,900km route
from the Persian Gulf through the Strait of Malacca to China's eastern seaboard.12 It has been
said that Gwadar will also put China and Pakistan in a strategically advantageous position along
the Arabian Sea compounding the existing Indian concerns that stem from ‘China's involvement
in nearby ports such as Hambantota in Sri Lanka, Sittwe in Myanmar and Chittagong in
Bangladesh.13 On the other hand, as India is also energy hungry it looks forward to developing
Iran’s Chabahar Port. In October 2014, India decided to develop Chabahar Port, which many
believe is to open up a route to landlocked Afghanistan, where India has developed close
security ties and economic interests.14 The port has the potential to serve as a secure outlet as
well as a storage and trans-shipment hub for the Middle East and Central Asia oil and gas
suppliers through a well-defined corridor passing through Pakistan.15 The operational control
of the port will enable China’s access to the Indian Ocean, which is strategically important for
China as it expands its influence across the region. Gwadar port will be connected with China’s
western province of Xingjiang through rail and road links. China eastern seaboards are 3,500 km
away from the city of Kashgar in western China while the distance from Kashgar to Gwadar port
is only 1500 km

CPEC Benefits for Pakistan

Pakistan has been playing a significant role in South Asia. After the completion of China
Pakistan Economic Corridor; economic, commercial as well as geostrategic environment will
improve in Pakistan. It will help Pakistan in dealing with the problems of poverty,
unemployment and inequities of undeveloped provinces. During his meeting with President Xi
Jinping, President Mamnoon Hussain said the China Pakistan economic Corridor would prove to
be a game-changer in the whole region by generating massive trade and economic activity and
opening new vistas of progress and prosperity for the people of the two countries and about
three billion people of the region.48 CPEC from all counts will prove a game changer and will
make China a real stakeholder in Pakistan’s stability and security. It is a win-win situation for
both. It will greatly expand the scope for the sustainable and stable development of China’s
economic development. Investments by China will boost Pakistan’s $274 billion GDP by over 15
%.Corresponding progress and prosperity in Pakistan and China’s patronage will help Pakistan
in getting rid of the decade old labels of ‘epicenter of terrorism’, ‘most dangerous country’ and
a ‘failing state’. Pakistan enjoys a more favorable fiscal situation compared to India by reducing
its budget deficit to 4.7% of GDP in 2014 (as against India’s 7%) and Pakistan is both
competitive and cheaper as an emerging market. China’s economic and military assistance will
help Pakistan a great deal in narrowing its ever widening gap in economic-military-nuclear fields
with India and in bettering its defense potential. 49 Ambassador of China to Pakistan Sun
Weidong while talking about the corridor said that the setting up of energy, transport,
infrastructure and industrial projects under China Pakistan Economic Corridor (CPEC) would
benefit all the provinces of Pakistan. He said that the CPEC was not limited to just a road but it
will connect the country with a number of motorways and infrastructure projects. He explained
that infrastructure projects included Gwadar port, the second phase of the upgrading project of
Karakoram Highway, motorway project between Karachi and Lahore, Thakot-Havelian
motorway, Gwadar port expressway, Gwadar international airport and Karachi Sukkur
motorway, adding further that the project will increase collaboration in areas of energy,
finance, commerce, banking, industry and education.50 Here are some benefits which Pakistan
will take after the completion of CPEC.

Challenges for Pakistan

Pakistan faces several challenges in the implementation of the China Pakistan Economic
Corridor (CPEC) project. These challenges can be identified as external and internal. The Vice
Director General of Policy Research Office at the International Department of the Central
Committee Communist Party of China, Dr. Luan Jianzhang is of the view that political unrest,
security situation and administrative issues are some of the greatest challenges in the way of
successful completion of the corridor. The construction of the corridor has been defined by
many as a strategic moment such that Pakistan has assumed the position of economic pivot for
the whole region. This paradigm shift in circumstances is a cause of great worry for the enemies
of Pakistan both within and outside. India, Israel and the US are unhappy. For India, CPEC is a
thorn in its paw. They have put their heads together to work out new strategies to block the
project forward march. RAW has opened a special office in Delhi and has been allotted $300
million to disrupt CPEC. Already one can notice sudden upsurge in the acts of terror in the three
restive regions and activation of certain NGOs and think tanks all trying to air misgivings and
create fear psychosis
 Recommendation
1.Government must make decision on the basis of economic gains and multiplier im- pact on the
economy
2.Route prioritization must decided on the basis of population density (directly re- lates to
population displacement), pro- ductive land under the route, loss of pro- duction
3.Strategic importance and its relevance for Pakistan in short and long run must given due
importance
4.Transparency must be ensured for smooth functioning and equal distribution of benefits
5.Government must use the existing institu- tions (Council for Common Interest) for resolving all
controversies related to CPEC

Last, but the most important aspect, all stake- holders must have good understanding of
Chinese needs, as China is investor of the project.

Top Ten biggest ports in the World

Seven of the 10 biggest ports in the world by cargo volume are in China. The remaining three
are in Singapore, the Netherlands and South Korea.

The world's ten biggest ports based on 2012 cargo volume.

South Korea's Port of Busan, the tenth biggest in the world, handled 298 million tonnes of cargo
in 2012. United Nations Photo.

Port of Shanghai handled record 744 million tonnes of cargo in 2012. Image courtesy of Bert
van Dijk.

Port of Singapore handled 537.6 million tonnes of cargo and crossed the record 30 million TEUs
volume in 2012. Image courtesy of Vinko T.

Tianjin Port handled 476 million tonnes of cargo in 2012, witnessing a 5.3% increase in cargo
throughput. Image courtesy of Gerald Byrnes.

World's largest container vessel ELLY MAERSK enters Guangzhou Port, he fourth biggest port in
the world based on cargo throughput. Image courtesy of Guangzhou Port Group.

Container ship CMA CGM Marco Polo docking at Ningbo Port on its maiden voyage. Image
courtesy of Ningbo Port Company.
The first phase of Maasvlakte 2 opened in May 2013, increasing the capacity of Port of
Rotterdam. Image courtesy of Port of Rotterdam Authority.

Qingdao Port, the eighth biggest port in the world, is also the world's largest importing port for
iron ore and China's largest importing port of crude oil. Image courtesy of Klaus Ottes.

Dalian port handles around 70% and 90% of Liaoning province's cargo and container
transportation respectively. Image courtesy of dmytrok.

Port of Shanghai handled record 744 million tonnes of cargo in 2012. Image courtesy of Bert
van Dijk.

Port of Shanghai

The Port of Shanghai is the biggest port in the world based on cargo throughput. The Chinese
port handled 744 million tonnes of cargo in 2012, including 32.5 million twenty-foot equivalent
units (TEUs) of containers.

The port is located at the mouth of the Yangtze River covering an area of 3,619km². Shanghai
International Port Group (SIPG) owns the port facility. Wusongkou, Waigaoqiao and Yangshan
are the three main container port areas.

The port comprises of 125 berths with a total quay length of about 20km. It serves more than
2,000 container ships on a monthly basis and accounts for a quarter of China’s total foreign
trade.

Port of Singapore

The Port of Singapore, which handled 537.6 million tonnes of cargo in 2012, is the second
biggest port in the world. The port’s container throughput crossed the 30 million TEUs mark for
the first time in 2012.

The port terminals are located at Tanjong Pagar, Keppel, Brani, Pasir Panjang, Sembawang and
Jurong. The terminals are managed by PSA Singapore and Jurong Port.

The port receives an average of 140,000 vessels on an annual basis and connects to 600 ports
globally. It is equipped with 204 quay cranes and a number of gantry cranes.

A major terminal expansion project is currently underway at the Port of Singapore, which, when
fully commissioned in 2020, will add 15 more berths.

Port of Tianjin
The third biggest port in the world is the Port of Tianjin (formerly Tanggu), which in 2012
witnessed remarkable increase of cargo and container throughputs by 5.3% and 6.2%
respectively. It handled 476 million tonnes of cargo and 12.3 million TEUs of containers in 2012.

Located in the mouth of Haihe River in northern China, the port covers an area of 336km² of
water and 131km² of land. It connects to more than 500 ports and serves 189 countries. Tianjin
Port Group Companies is the operator.

The port features 159 berths and is made up of the northern port, southern harbour, Dongjiang
Port, an economic zone in the southern region, the south-east region and other auxiliary
harbours.

Port of Guangzhou

The Port of Guangzhou handled more than 460 million tonnes of cargo in 2012, making it the
fourth biggest port in the world based on cargo traffic. The port is located in the middle of the
Pearl River Delta.

It is operated by Guangzhou Port Authority and handled the first 100 million tonnes of cargo in
1999. The cargo traffic has increased significantly since then.

The port comprises four main areas including Downtown Port, Huangpu Port, Xinsha Port and
Nansha Port Area. It is currently the largest loading and discharging port for coal in China.

Port of Ningbo

Port of Ningbo, which handled more than 453 million tonnes of cargo in 2012, is the fifth
biggest port in the world. The port’s TEU capacity also reached 15.6 million tonnes in the same
year.

The port is located in the coastal province of Zhejiang and is comprised of Beilun Port Area,
Zhenhai Port Area, Ningbo Port Area, Daxie Port Area and Chuanshan Port Area. Ningbo Port
Group is the operator of the port.

Comprising of 309 berths, the port connects to more than 600 ports in more than 100
countries. It was recently been merged with the Port of Zhoushan. The combined TEU capacity
of the two ports reached 16.83 million tonnes in 2012.

Port of Rotterdam

The Port of Rotterdam is currently the biggest port in Europe and the sixth biggest in the world
by annual cargo throughput. The port handled 441.5 million tonnes of cargo in 2012.
The port, including an industrial complex within its vicinity, stretches across a length of about
42km, covering an area of approximately 12,426ha. It is managed and operated by the Port of
Rotterdam Authority (PoRA).

It is the only port in north-western Europe that offers unrestricted access to ships with the
deepest draughts. A major port expansion project, dubbed as Maasvlakte 2, was launched in
2008. The first phase of the expansion was opened in May 2013 and will eventually double the
port’s container transfer capacity.

Port of Suzhou

Port of Suzhou, which achieved a cargo throughput of 428 million tonnes in 2012, an increase of
12.61% from 2011, is currently the seventh biggest port in the world by cargo throughput. It is
also one of the busiest inland river ports in the world.

The port is owned by Suzhou Municipal Government. It comprises of Zhangjiagang, Changshu

and Taicang ports, located on the lower reaches of the Yangtze River in Jiangsu province.

The port features 224 berths and deals with hundreds of international and domestic shipping
lines. It mainly trades in cargo including coal, steel and construction materials. The port
authority is with Suzhou Harbour Administration Department.

Port of Qingdao

Port of Qingdao, located at the entrance to Jiaozhou Bay on the south coast of Shadong
Peninsula, overlooking the Yellow Sea, handled more than 400 million tonnes of cargo in 2012.
It currently ranks as the eighth biggest port in the world.

The port is touted as the world’s largest port for iron ore and China’s largest port of crude oil.
The port merges Qingdao Old Port, Huangdao Oil Port and Qianwan New Port, and is connected
to more than 450 ports in more than 130 countries and regions across the world.

Qingdao Economic and Technological Development Area, Qingdao Free Trade Zone and
Qingdao High-tech Industrial Zone are located within the vicinity of the port. The port is
operated by Qingdao Port Group.

Port of Dalian

Port of Dalian, located in the Liaodong Peninsula in Liaoning province, handled more than 303
million tonnes of cargo in 2012 ranking as the ninth biggest port in the world.
Owned and managed by Dalian Port Company, the port comprises of seven areas, namely
Daliangang, Dalianwan, Xianglujiao, Nianyuwan, Ganjinzi, Heizuizi, Si’ergou and Dayaowan.

The port handles around 70% of the region’s cargo and 90% of the region’s container
transportation. It features approximately 80 berths and is connected to approximately 99
shipping lines around the world.

Port of Busan

Port of Busan, located in mouth of the Naktong River in South Korea, is the tenth biggest port in
the world based on cargo throughput. The port handled 298 million tonnes of cargo in 2012.

Managed and operated by the Busan Port Authority (BPA), the port is made up of North Port,
South Port, Gamcheon Port and Dadaepo Port, an international passenger terminal and six
container terminals.

The South Korean port handles 40% of the total marine export freights, 80% of container
freights and 42% of fisheries production of the entire nation. It is spread over an area of
840,000m² and is capable of handling 169 vessels simultaneously