Zafar Iqbal
The renewed commitment between Pakistan and China to advance the China-Pakistan Economic Corridor (CPEC) into its second phase presents an important opportunity to reshape Pakistan’s economic future. This new phase of the project aims to address critical infrastructure gaps, promote industrial growth, and create employment opportunities, positioning Pakistan for long-term economic stability. Both nations have pledged to focus on infrastructure development, energy projects, and industrial cooperation as part of CPEC 2.0, signaling a promising path forward for Pakistan’s fragile economy. However, the success of this phase hinges not only on the ambitious goals outlined but also on effective governance, transparent execution, and the equitable distribution of benefits.
Pakistan stands to benefit greatly from the expanded scope of CPEC. One of the most significant advantages will be the improvement in infrastructure. Modernising and expanding the country’s transportation networks will enhance connectivity, reduce logistics costs, and make it easier for businesses to operate. These developments could also attract much-needed foreign direct investment, particularly in sectors like manufacturing, logistics, and energy.
Additionally, the focus on energy projects, especially renewable energy, has the potential to address Pakistan’s longstanding energy crisis. Pakistan has long struggled with electricity shortages, which have hindered industrial growth and contributed to economic instability. By prioritising renewable energy sources, CPEC 2.0 could provide sustainable solutions that would support industrialisation while reducing Pakistan’s dependency on imported energy.
Another major benefit of CPEC 2.0 is the creation of employment opportunities. Thousands of jobs are expected to be generated across multiple sectors, from construction and energy to manufacturing and technology. This job creation, particularly in Pakistan’s underdeveloped regions, will contribute to socio-economic upliftment, providing much-needed economic opportunities to those who have been left behind by previous development initiatives.
For China, CPEC is not just an economic investment—it is a strategic move to secure access to the Arabian Sea via the Gwadar Port. This port, located in the southwestern part of Pakistan, serves as a vital link between China and international maritime trade routes, providing China with a direct gateway to the Middle East, Africa, and Europe. By enhancing the Belt and Road Initiative (BRI), CPEC strengthens China’s influence in South Asia and allows it to bypass traditional maritime chokepoints like the Strait of Malacca.
Furthermore, investing in Pakistan’s industrial sector allows China to diversify its economic partnerships and reinforce its geopolitical alliances in the region. As a major player in global trade, China is keen to expand its economic footprint, and the infrastructure and energy investments in Pakistan are integral to this strategy. With CPEC 2.0, China is not only deepening its economic ties with Pakistan but also enhancing its strategic presence in a key part of the world.
The Pakistani government deserves recognition for its proactive approach in securing the future of CPEC 2.0. Despite facing significant economic challenges, including rising debt levels, inflation, and a sluggish economy, the government has worked hard to maintain and strengthen this partnership with China. The leadership’s focus on long-term solutions rather than short-term fixes is commendable and necessary for addressing Pakistan’s systemic economic issues.
However, the real test for Pakistan will lie in the effective execution of these ambitious plans. Past phases of CPEC have faced challenges such as delays, cost overruns, and governance issues. Moving forward, Pakistan will need to ensure transparent and accountable governance throughout the execution of CPEC 2.0. This includes ensuring that funds are used effectively, projects are completed on time, and the benefits are equitably distributed across the population.
For CPEC 2.0 to live up to its potential, Pakistan must tackle several key issues, primarily related to governance and project execution. In the past, there has been criticism of the lack of transparency and accountability in some CPEC projects. To avoid these pitfalls, the government must ensure that all parties involved in the projects—ranging from contractors to local authorities—are held accountable for their roles.
Additionally, equitable distribution of the benefits of CPEC 2.0 is crucial. While major infrastructure projects and energy investments are expected to generate significant economic growth, it is essential that the economic benefits reach all regions of Pakistan. This includes addressing the needs of rural areas, which have historically been left behind in terms of development. Special economic zones (SEZs), one of the core features of CPEC 2.0, should be strategically placed in underdeveloped regions to create jobs and spur industrial growth outside the major urban centers.
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Another area of concern is the environmental impact of some CPEC projects. The construction of large-scale infrastructure and energy projects has the potential to cause environmental damage, particularly in areas with sensitive ecosystems. The government must prioritize sustainable development practices to ensure that the long-term benefits of CPEC 2.0 do not come at the expense of the environment.
The potential of CPEC 2.0 extends beyond economic growth—it could also contribute to regional stability. By fostering closer ties between Pakistan and China, the project strengthens the broader framework of regional cooperation in South Asia. It also has the potential to serve as a model for other nations in the region, particularly those facing similar development challenges. If implemented successfully, CPEC 2.0 could pave the way for greater regional integration and cooperation, helping to ease tensions and promote peace in a historically volatile region.
Moreover, the emphasis on renewable energy projects within CPEC 2.0 aligns with global goals for sustainable development. As climate change becomes an increasingly urgent issue, Pakistan’s focus on clean energy will not only help address domestic energy shortages but also contribute to the global transition toward a more sustainable energy future. CPEC 2.0, with its focus on renewable energy, presents an opportunity for Pakistan to position itself as a leader in green development in the region.
As CPEC enters its second phase, Pakistan stands at a critical juncture. The promise of improved infrastructure, energy solutions, industrial growth, and job creation is undoubtedly a step in the right direction for the country’s economic revival. However, for CPEC 2.0 to reach its full potential, the Pakistani government must ensure effective governance, transparency, and a focus on equitable development.
China’s strategic interest in Pakistan, through Gwadar and industrial investments, enhances the project’s regional significance. Ultimately, the success of CPEC 2.0 will depend on how well Pakistan manages this partnership and ensures that its benefits reach all corners of society. If done right, CPEC 2.0 could serve as a cornerstone for Pakistan’s long-term economic resilience, offering sustainable growth and development for future generations.