The 3,000-km-long CPEC is aimed at connecting China and Pakistan with rail, road, pipelines and optical cable fiber network. It connects China's Xinjiang province with Pakistan's Gwadar port, providing access to China to the Arabian Sea.
The project, when completed, would enable China to pump its oil supplies from the Middle East through pipelines to Xinjiang cutting considerable distance for Chinese ships to travel to China.
"China had been in direct contact with militants in the south-western province, where many of the schemes most important projects are located," three officials were quoted as saying by the Financial Times.
"China's willingness to get involved in Pakistani politics has fuelled concerns in New Delhi, which is worried about Chinas growing political influence in neighbouring countries, including Nepal, Myanmar and Sri Lanka," the report said.
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As it seeks to boost the Chinese economy, Chinas plans for a new Silk Road has pitched China into some of the worlds most complex conflict zones, the report said.
Pakistan, which is set to be one of the biggest beneficiaries of the infrastructure initiative, is one of the riskiest parts of the world in which to do business. Last year, 10 local workers were killed by unidentified gunmen while working near Gwadar port, the linchpin of the economic corridor.
Pakistani officials have welcomed the talks between Baluch rebels and Chinese envoys, even if they do not know the details of what has been discussed.
Ultimately, if theres peace in Baluchistan, that will benefit both of us, the paper quoted an Pakistani official as saying.
One provincial tribal leader who was not identified in the report said many young men had been persuaded to lay down their weapons by the promise of financial benefits.
Today, young men are not getting attracted to join the insurgents as they did some 10 years ago, he said. Many people see prosperity as a result of the China-Pakistan corridor, he said.
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