Dr Amjad Ali

The China-Pakistan Economic Corridor (CPEC) is a flagship project of the Belt and Road Initiative (BRI), a global infrastructure development strategy launched by Chinese President Xi Jinping in 2013. CPEC aims to establish a network of infrastructure, energy, and industrial projects in Pakistan, with a focus on improving transportation links, energy production, and overall economic development.

Positive Impacts of CPEC

CPEC is expected to have a significant positive impact on Pakistan’s economy and social development for several reasons:

• Improved infrastructure: CPEC includes the construction of roads, railways, and ports, which can improve connectivity within Pakistan and enhance trade routes with China. This improved infrastructure can lead to increased economic activity and development in previously underserved regions.
• Increased energy production: The development of energy projects, including power plants, is crucial for addressing Pakistan’s energy deficit and ensuring a more reliable and consistent power supply, which is essential for economic growth.
• Industrialization and job creation: CPEC envisions the establishment of special economic zones and industrial parks to attract both local and foreign investment, fostering industrialization and creating employment opportunities. The development of these zones can contribute to the overall economic transformation of the country.
• Economic growth: The improved infrastructure and trade routes created by CPEC can stimulate economic growth by facilitating trade not only between China and Pakistan but also with other countries in the region. This increased trade can boost Pakistan’s economy and create new opportunities for businesses.
• Job creation: The development of infrastructure, industrial zones, and other projects under CPEC can lead to the creation of jobs in various sectors. This is particularly important for addressing unemployment issues and improving the livelihoods of the population.

Examples of CPEC’s Positive Impacts:

• Through CPEC, Pakistan has attracted more than $25 billion of investment in three years, which has helped modernize infrastructure and build a new road network to connect several regions.
• Under the CPEC projects, more than 8,000 megawatts of electricity was added to the national grid, helping the country overcome power shortages.
• Nine special economic zones have been identified in different areas of the country, providing all regions with an equal opportunity to participate in and benefit from CPEC.
• The Gwadar Port and Economic Zone are developing rapidly, which is expected to bring about investment from China to speed up the industrialization process and contribute significantly to the structural transformation of the economy.

Challenges and Concerns:

While CPEC has the potential for significant positive impacts, there have also been concerns and criticisms:

• Environmental concerns: Some projects under CPEC have raised concerns about their potential environmental impacts, such as deforestation and water pollution.
• Debt sustainability: Pakistan has taken on significant loans to finance CPEC projects, raising concerns about the country’s ability to repay these loans.
• Geopolitical considerations: CPEC has geopolitical implications, as it passes through a region with a complex history of rivalry and conflict.

Future of CPEC. 

Despite these challenges, CPEC remains a significant opportunity for Pakistan and the region. The Chinese government has expressed its commitment to continuing to support CPEC projects, and the Pakistani government is taking steps to address the concerns that have been raised.

Experts believe that the next stage of CPEC should focus on ensuring an environment of peace, stability, and continuity of policies in Pakistan. Pakistan’s young and educated population can provide a valuable resource for investments in industry and technology sectors.

The recently established Special Investment Facilitation Council (SIFC) aims to attract foreign direct investment to Pakistan. Chinese Ambassador to Pakistan, Jiang Zaidong, has outlined three key points for future cooperation between the two countries: consolidation of the current phase of CPEC, deepening cooperation in agriculture and mining, and improving livelihoods through small but impactful projects.

CPEC has the potential to transform Pakistan’s economy and improve the lives of millions of people. By addressing the concerns that have been raised and working together to ensure the project’s success, China, Pakistan, and other countries in the region can maximize the benefits of CPEC and create a more prosperous future for all.

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The China-Pakistan Economic Corridor (CPEC) is a flagship project of the Belt and Road Initiative (BRI) that aims to enhance regional connectivity and cooperation between China and Pakistan. CPEC has the potential to bring significant economic and social benefits to both countries, such as improving infrastructure, energy security, trade, and cultural exchange. However, CPEC also faces some major challenges that need to be addressed and overcome in order to achieve its full potential. Some of these challenges and their possible solutions are:

Infrastructural mismatches: CPEC involves the construction of roads, railways, ports, and pipelines across different terrains and regions, which may pose technical and logistical difficulties. Moreover, the existing infrastructure in Pakistan may not be compatible or sufficient to support the increased traffic and demand from CPEC. Therefore, there is a need to upgrade and harmonize the infrastructural standards and capacities of both countries, as well as to ensure the quality and safety of the projects. This can be done by enhancing coordination and communication between the relevant authorities and stakeholders, adopting best practices and technologies, and ensuring adequate funding and maintenance.

Internal and external exclusive growth: CPEC may create uneven development and distribution of benefits among different regions and sectors of Pakistan, which may lead to social and political discontent and instability. Moreover, CPEC may also face opposition and interference from external actors who perceive it as a threat to their interests and influence in the region. Therefore, there is a need to ensure that CPEC is inclusive and balanced, and that it promotes the welfare and participation of all segments of society, especially the local communities and the less developed areas. This can be done by implementing policies and programs that address the needs and concerns of the people, such as providing education, health, employment, and environmental protection. Furthermore, there is a need to engage and cooperate with the regional and international partners, and to foster a positive and constructive image of CPEC, as a win-win proposition for all.

Institutional capacity gaps: CPEC requires effective and efficient management and coordination of various institutions and agencies, both at the national and provincial levels, as well as between China and Pakistan. However, there may be gaps and weaknesses in the institutional capacity and performance of these entities, such as lack of expertise, transparency, accountability, and coordination. Therefore, there is a need to strengthen and streamline the institutional mechanisms and processes, and to enhance the capacity and capability of the personnel involved in CPEC. This can be done by providing training, education, and exchange programs, establishing clear roles and responsibilities, and creating platforms and forums for dialogue and collaboration.

Awareness lack: CPEC is a complex and multifaceted initiative that involves various aspects and dimensions, such as economic, social, cultural, and environmental. However, there may be a lack of awareness and understanding of CPEC among the general public, as well as among some of the stakeholders and decision-makers. This may lead to misconceptions, misinformation, and mistrust, which may hamper the smooth and successful implementation of CPEC. Therefore, there is a need to increase and improve the awareness and knowledge of CPEC, and to disseminate accurate and timely information and data about its objectives, benefits, and challenges. This can be done by conducting research, surveys, and studies, publishing reports and articles, organizing seminars and workshops, and using media and social media platforms.

Governance laps: CPEC involves a large amount of investment and resources, as well as a long-term and strategic vision and planning. However, there may be lapses and shortcomings in the governance and oversight of CPEC, such as corruption, mismanagement, delays, and disputes. These may undermine the credibility and efficiency of CPEC, and may result in losses and damages. Therefore, there is a need to ensure good governance and accountability of CPEC, and to monitor and evaluate its progress and performance. This can be done by establishing and enforcing rules and regulations, creating and implementing mechanisms and indicators, and involving and empowering the civil society and the media.

Free trade agreements negotiations: CPEC aims to enhance the trade and economic cooperation between China and Pakistan, as well as with other countries and regions. However, there may be challenges and barriers in negotiating and implementing free trade agreements (FTAs) that are conducive and beneficial for both parties, as well as compatible and consistent with the existing trade regimes and frameworks. Therefore, there is a need to conduct thorough and comprehensive analysis and assessment of the trade potentials and impacts of CPEC, and to negotiate and implement FTAs that are fair and mutually advantageous. This can be done by engaging and consulting with the relevant stakeholders and experts, addressing the trade issues and concerns, and harmonizing the trade policies and standards.

Irrelevant currency conversion exercise: CPEC involves the use of different currencies, such as the Chinese yuan, the Pakistani rupee, and the US dollar, for the transactions and payments of the projects and activities. However, there may be difficulties and inefficiencies in the currency conversion and exchange, such as fluctuations, risks, and costs. These may affect the profitability and sustainability of CPEC, and may create financial and economic instability. Therefore, there is a need to adopt and implement a suitable and stable currency arrangement for CPEC, and to avoid unnecessary and irrelevant currency conversion and exchange. This can be done by using the local currencies of the host countries, or by using a common or a basket currency, or by using digital or virtual currencies.

Sustainable habilitation of special SEZ’s: CPEC involves the establishment and development of special economic zones (SEZs) along the corridor, which are expected to attract and facilitate investment, trade, and industrialization. However, there may be challenges and risks in the sustainable habilitation of the SEZs, such as environmental degradation, social displacement, and security threats. These may affect the viability and attractiveness of the SEZs, and may create negative externalities and impacts. Therefore, there is a need to ensure that the SEZs are sustainable and habitable, and that they adhere to the principles and standards of green and inclusive development. This can be done by conducting environmental and social impact assessments, implementing mitigation and compensation measures, and providing security and protection.

The CPEC is a complex and ambitious project with the potential to transform Pakistan. However, the project also faces some challenges. It is important for the Pakistani government to carefully manage the project to ensure that it benefits all Pakistanis and that it is implemented in a sustainable and environmentally friendly way.

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