CPEC 2.0: expanding horizons

This month marks a significant milestone as Pakistan and China celebrate the 11th anniversary of the China-Pakistan Economic Corridor (CPEC), a cornerstone of China’s Belt and Road Initiative (BRI).

Over the past decade, this partnership has witnessed a remarkable surge in China’s dedication to enhancing Pakistan’s economic landscape, solidifying a robust bond between the two nations. China has emerged as Pakistan’s foremost benefactor, providing substantial investments, loans, and grants that have been crucial in driving Pakistan’s growth.

Since its inception on July 5, 2013, when the MoU was signed, CPEC has represented a transformative journey for both countries. The initiative has not only strengthened connectivity but has also fostered long-term collaboration. China’s investment has rejuvenated Pakistan’s infrastructure, energy, and production sectors, especially at a time when traditional international donors were reluctant to engage.

The corridor has become a symbol of mutual prosperity and enduring camaraderie, demonstrating China’s strategic commitment to its friend. Its impact on Pakistan’s economic development and the deepening of Sino-Pakistani ties continue to highlight the strategic significance of this enduring partnership.

CPEC represents a visionary commitment that has significantly shaped the trajectory of Pakistan’s economic landscape. Launched with an ambitious plan, CPEC united Pakistan and China in their pursuit of shared prosperity, connectivity, and enduring friendship. China’s pledge of $60 billion in investments aimed at revitalizing Pakistan’s infrastructure, energy, and production sectors arrived at a critical juncture when traditional international donors were hesitant and Pakistan’s economy faced severe challenges.

CPEC’s potential impact on Pakistan is often likened to the Marshall Plan, which transformed post-war Europe. By fostering substantial economic growth, CPEC was projected to create over 2.3 million jobs between 2015 and 2030 and contribute an additional 2.0 to 2.5 percentage points to Pakistan’s annual economic growth rate. This corridor is not merely an investment but a strategic catalyst poised to revitalize Pakistan’s economy. Its role in providing a lifeline at a time of economic vulnerability underscores the corridor’s transformative power and highlights the deepening Sino-Pakistani partnership.

Over the past 11 years, China’s investment of over $25.4 billion in Pakistan has profoundly impacted key sectors such as transport, energy, and infrastructure, all central to the Belt and Road Initiative (BRI). This significant commitment reflects Beijing’s focus on improving connectivity and promoting economic growth. Beyond direct investments, China’s support includes a substantial 30 billion Chinese yuan in loans and the creation of a currency swap arrangement.

This strategic partnership has been a crucial lifeline for Pakistan, shielding its financial stability and strengthening its debt management capabilities. The assistance has not only eased the pressure of debt repayments but also allowed Pakistan to diversify its trade practices, decreasing its dependence on the dollar and improving its foreign exchange reserves. The impact of this support highlights the deepening economic ties between the two nations and underscores China’s role in bolstering Pakistan’s economic resilience.

CPEC is reshaping Pakistan’s economic landscape with its extensive network of roadways linking rural and urban areas. A pivotal element of this initiative is the strategic placement of nine Special Economic Zones (SEZs) along these critical routes, designed to attract substantial investment and drive economic growth. Four of these SEZs are nearing operational status, marking a significant milestone in the project’s development. The remaining five SEZs are expected to become fully functional by 2030.

This ambitious timeline underscores the transformative potential of CPEC, signaling a potential overhaul of Pakistan’s economic environment. The SEZs are more than just industrial hubs; they represent a strategic vision to stimulate investment, foster industrialization, and catalyze regional development. By harnessing the power of these economic zones, Pakistan aims to leverage its position within the CPEC framework to unlock new opportunities and drive sustained economic advancement. As the SEZs come online, they promise to be pivotal in reshaping the economic future of Pakistan, cementing CPEC’s role as a game-changer in regional development.

This mega project exemplifies a forward-thinking approach to energy infrastructure, integrating a broad spectrum of power projects. From coal and hydro to solar and wind power plants, CPEC has made significant strides in expanding Pakistan’s power generation capacity. This comprehensive energy strategy not only addresses the immediate demands but also sets the stage for a more sustainable and environmentally conscious future.

By diversifying its energy sources, CPEC is transforming Pakistan into an energy-surplus nation, a crucial development for a country long plagued by power shortages. This transformation is more than just a technical upgrade; it represents a strategic shift that fosters industrial growth and enhances economic stability. The promise of reliable and diversified energy sources is proving to be a magnet for foreign investment, highlighting CPEC’s role in reshaping Pakistan’s economic landscape.

It has significantly impacted Pakistan’s growing blue economy, with Gwadar port standing out as a central success. Once a modest vision, Gwadar has transformed into a thriving maritime hub, actively facilitating global trade and commerce. This evolution highlights the port’s critical role in Pakistan’s economic strategy and underscores the tangible benefits of CPEC for both nations. Initially designed to connect Gwadar Port with China’s Xinjiang region, CPEC has expanded into a comprehensive initiative that includes energy projects, infrastructure development, and industrial collaboration.

The development of nine Special Economic Zones (SEZs), particularly the burgeoning Gwadar Free Economic Zone, is reshaping the economic landscape, positioning CPEC as a leading investment hub in the region. The transformation of the Gwadar Port into a fully operational trade centre is a testament to CPEC’s ambitious scope and its potential to drive significant economic growth. This expansion reflects a broader vision, where infrastructure improvements and strategic investments not only elevate Pakistan’s economic standing but also reinforce the bilateral ties between China and Pakistan.

During Prime Minister Shehbaz Sharif’s recent visit to China, the announcement of CPEC’s second phase, often referred to as CPEC 2.0, marked a significant expansion of the initiative. This new phase broadens the project’s scope beyond its original focus, incorporating agriculture and information technology into its ambit. By venturing into these sectors, CPEC 2.0 aims to enhance economic collaboration and technological integration, reflecting a strategic evolution in China’s ambitious Belt and Road Initiative.

This expansion underscores the growing significance of CPEC as a comprehensive framework for fostering bilateral ties and advancing mutual economic interests. As both neighbours embark on the second phase of CPEC, Beijing’s promise of an additional $1 billion grant to Pakistan underscores a deepening partnership rooted in shared prosperity. Notably, over 30,000 Pakistani students are currently benefiting from educational opportunities in China, reflecting the rich cultural and academic exchange between the countries.

Looking ahead, the second phase of CPEC plans to complete 63 new projects, with an estimated value of $35 billion by 2030. This ambitious expansion highlights a mutual commitment to not only enhancing regional connectivity but also to fostering economic integration that reaches into Afghanistan and Central Asia.

The future of CPEC promises significant transformation, as both China and Pakistan work together to realize a vision of comprehensive development and cooperation. This evolving partnership is set to redefine economic landscapes and reinforce the strategic importance of their collaboration on a global scale.

The writer is a freelance contributor.