Economic corridors benefit interconnected countries and open new vistas of economic development and prosperity; they invite investment and trade opportunities, and thus, unlock the promise of economic development for engaged countries and regions. Many an economic corridor exist in different parts of the world, such as the North-South corridor between USA and Canada; the trade corridor among Thailand, Myanmar, Laos, Cambodia, China and Vietnam ─ commonly known as Greater Mekong region corridor. Conceived in 2013 as part of China’s Belt and Road Initiative (BRI), the China-Pakistan Economic Corridor (CPEC), kick-started in 2015, and connects Gwadar in South Western Pakistan and Kashgar, in Western China, through an interconnected rail and road network.
Theoretically, CPEC offers a wide range of economic opportunities for China, Pakistan and South Asia as well as Central and West Asia, including the Middle East. Moreover, out of the six proposed economic corridors under the BRI, CPEC so far is the only bilateral project that further enhances its economic importance, not just for China and Pakistan, but also the boarder region. Importantly, CPEC has been in progress for around a decade. Operationally, CPEC projects were generally divided into two phases: early harvest projects such as infrastructure and energy (first phase) and industrial and agricultural cooperation in terms of Special Economic Zones (SEZs) ─ nine SEZs were selected to be constructed under the second phase.
As far CPEC progress is concerned, let us analyze empirically based on the official figures shared by the Ministry of Planning, Development & Special Initiatives, Government of Pakistan. Under the “energy” category, fourteen projects have been completed, of which two have been completed in 2023. In addition, two projects are under construction, while five are under consideration. In the “infrastructure” category, six projects have already been completed. However, five infrastructure projects are under construction, whereas thirteen more projects in this category are under consideration. As far as the Gwadar development is concerned, four projects have already been completed. However, six projects under Gwadar development are ongoing and four are under consideration.
Thematically and operationally, the above-mentioned energy, infrastructure and Gwadar development projects were placed under the first phase of CPEC. These first phase projects were supposed to be completed within 2-3 years of the launch of the Corridor. Nevertheless, it seems the glass is half-full. Now, if we turn to the 2nd phase projects under the Special Economic Zones (SEZs) category, out of the proposed nine SEZs, work on four is in progress. However, out of these four SEZs, ground breaking ceremony of only two SEZs - Rashakai in KP and Allama Iqbal SEZ in Punjab have been done. This means that construction work has yet to be kickstarted in the remaining SEZs located in the peripheral locations of the country.
Under the “Social Sector Development (SSD)” category, five projects have been completed, while twelve are under construction and ten projects are under consideration. Arguably, work on SEZs and SSD has been very slow.
To begin with, the factors responsible for non- (and partial) completion of these projects on time are multiple and varied in character. For instance, road and railways as well as SEZs require land acquisition from the private sector, which is a complex and time-consuming process. As per Pakistani law, a provincial government may offer financial incentives to private citizens to sell land to a government department. However, the government cannot take land forcibly, thus, delaying work on a respective SEZ since land acquisition is the first step in building infrastructure and other components of a Special Economic Zone.
Another factor affecting CPEC progress is the lack of a composite governance model to streamline land-oriented projects. Provincial and federal governments have different set of laws and procedures to, for example, acquire land for a SEZ. Another crucial factor is the lingering political crisis, which, on the one hand, has badly affected economic conditions in the country and, on the other, has diverted governmental attention to trivial matters such as intimidating the political opposition rather than working on long-term developmental projects under the CPEC. In addition, security challenges persist, though at a low scale. Pakistan is facing intermittent terrorist attacks on its security forces and state institutions, private citizens as well as some Chinese citizens working on different CPEC projects in the country. The menace of terrorism has hampered development in the country since 9/11, when Pakistan took a particular stance on Afghanistan. Consequently, a plethora of terrorist organizations such as Al-Qaeda, Tehrik-i-Taliban Pakistan (TTP) and IS-K have taken toll on innocent and unarmed civilians, as well as security personnel.
To counter terrorism, Pakistan state has established and deployed a CPEC force, comprising both civil and armed forces. However, terrorists are employing different techniques, i.e., using women as facilitators and terrorists, particularly in urban areas. Thus, it is not easy to forestall such attempts. Already in Sri Lanka, the LTTE had employed women for launching terror attacks to pressure the Sri Lankan state in the 1990s. Nonetheless, Pakistan is committed to protect CPEC projects, its human resources, particularly Chinese citizens working in various capacities in different parts of Pakistan.
Moreover, China and Pakistan need to work in tandem to overcome security challenges. On its part, Pakistan ought to learn from the Sri Lankan experience in countering the new wave of terrorism where women are playing a crucial role. Moreover, regional networks that facilitate local elements need to be eliminated through coordinated efforts among different law enforcement departments and the civil society.
On its part, China needs to equip Pakistan with the state-of-the-art technology for the collection and analysis of layered information. Importantly, an inclusive growth model should be followed in the areas adjacent to CPEC. Local populations should be involved in the economic activities alongside the corridor. Vocational training institutions should be established, particularly in peripheral areas, i.e. interior Sindh and South Punjab to equip the people with modern skills vis-à-vis a respective program. Politically, Pakistan ought to ensure political stability for the sustained development of CPEC projects.
Diplomatically, Pakistan and China can utilize the Shanghai Cooperation Organization (SCO) ─ which now counts Iran as its ninth member ─ to build a pro-development regional consensus. The SCO is getting dynamic thematically, geopolitically, commercially, as well as organizationally. India and Pakistan joined as full members in 2017, and Iran has obtained full membership only recently. With Belarus about to become a member, the SCO is set to gain more members and, thus, political and economic influence in the near future. Being strategic partners, Pakistan and China can play a pivotal role in fostering regional peace, security and commercial cooperation through the SCO with reference to China’s BRI.
Similarly, the South Asian Association for Regional Cooperation (SAARC), of which Afghanistan is a full member and China is a regular participant, can be invoked to realize regional peace and prosperity by offering economic incentives to the regional players particularly Afghanistan. However, given SAARC’s lethargic past, it is easier said than done.
Last but not the least, China and Pakistan need to take measures to further promote bilateral trade. Comparted to China-India trade, which amounts to more than $135 billion US by the end of 2022, and China-Thailand bilateral trade, approximately $107 billion US last year, China-Pakistan bilateral trade is less than $40 billion US. With a long-lasting strategic partnership spanning six decades and 10 years of CPEC with multiple projects at its core, the China-Pakistan bilateral trade volume is comparatively very low, with Pakistan facing a huge trade deficit. Thus, the two countries’ leadership need to put their head together to devise strategies to promote bilateral and multilateral trade, and economic cooperation in a win-win manner. Finally, Pakistan must put its house in order in terms of political stability and structural reforms to get more foreign direct investment as well as technology to expedite its export output, without which economic recovery and stability will remain a distant dream.
Theoretically, CPEC offers a wide range of economic opportunities for China, Pakistan and South Asia as well as Central and West Asia, including the Middle East. Moreover, out of the six proposed economic corridors under the BRI, CPEC so far is the only bilateral project that further enhances its economic importance, not just for China and Pakistan, but also the boarder region. Importantly, CPEC has been in progress for around a decade. Operationally, CPEC projects were generally divided into two phases: early harvest projects such as infrastructure and energy (first phase) and industrial and agricultural cooperation in terms of Special Economic Zones (SEZs) ─ nine SEZs were selected to be constructed under the second phase.
These first phase projects were supposed to be completed within 2-3 years of the launch of the Corridor. Nevertheless, it seems the glass is half-full.
As far CPEC progress is concerned, let us analyze empirically based on the official figures shared by the Ministry of Planning, Development & Special Initiatives, Government of Pakistan. Under the “energy” category, fourteen projects have been completed, of which two have been completed in 2023. In addition, two projects are under construction, while five are under consideration. In the “infrastructure” category, six projects have already been completed. However, five infrastructure projects are under construction, whereas thirteen more projects in this category are under consideration. As far as the Gwadar development is concerned, four projects have already been completed. However, six projects under Gwadar development are ongoing and four are under consideration.
Thematically and operationally, the above-mentioned energy, infrastructure and Gwadar development projects were placed under the first phase of CPEC. These first phase projects were supposed to be completed within 2-3 years of the launch of the Corridor. Nevertheless, it seems the glass is half-full. Now, if we turn to the 2nd phase projects under the Special Economic Zones (SEZs) category, out of the proposed nine SEZs, work on four is in progress. However, out of these four SEZs, ground breaking ceremony of only two SEZs - Rashakai in KP and Allama Iqbal SEZ in Punjab have been done. This means that construction work has yet to be kickstarted in the remaining SEZs located in the peripheral locations of the country.
Under the “Social Sector Development (SSD)” category, five projects have been completed, while twelve are under construction and ten projects are under consideration. Arguably, work on SEZs and SSD has been very slow.
Pakistan must put its house in order in terms of political stability and structural reforms to get more foreign direct investment as well as technology to expedite its export output, without which economic recovery and stability will remain a distant dream.
To begin with, the factors responsible for non- (and partial) completion of these projects on time are multiple and varied in character. For instance, road and railways as well as SEZs require land acquisition from the private sector, which is a complex and time-consuming process. As per Pakistani law, a provincial government may offer financial incentives to private citizens to sell land to a government department. However, the government cannot take land forcibly, thus, delaying work on a respective SEZ since land acquisition is the first step in building infrastructure and other components of a Special Economic Zone.
Another factor affecting CPEC progress is the lack of a composite governance model to streamline land-oriented projects. Provincial and federal governments have different set of laws and procedures to, for example, acquire land for a SEZ. Another crucial factor is the lingering political crisis, which, on the one hand, has badly affected economic conditions in the country and, on the other, has diverted governmental attention to trivial matters such as intimidating the political opposition rather than working on long-term developmental projects under the CPEC. In addition, security challenges persist, though at a low scale. Pakistan is facing intermittent terrorist attacks on its security forces and state institutions, private citizens as well as some Chinese citizens working on different CPEC projects in the country. The menace of terrorism has hampered development in the country since 9/11, when Pakistan took a particular stance on Afghanistan. Consequently, a plethora of terrorist organizations such as Al-Qaeda, Tehrik-i-Taliban Pakistan (TTP) and IS-K have taken toll on innocent and unarmed civilians, as well as security personnel.
On its part, China needs to equip Pakistan with the state-of-the-art technology for the collection and analysis of layered information. Importantly, an inclusive growth model should be followed in the areas adjacent to CPEC.
To counter terrorism, Pakistan state has established and deployed a CPEC force, comprising both civil and armed forces. However, terrorists are employing different techniques, i.e., using women as facilitators and terrorists, particularly in urban areas. Thus, it is not easy to forestall such attempts. Already in Sri Lanka, the LTTE had employed women for launching terror attacks to pressure the Sri Lankan state in the 1990s. Nonetheless, Pakistan is committed to protect CPEC projects, its human resources, particularly Chinese citizens working in various capacities in different parts of Pakistan.
Moreover, China and Pakistan need to work in tandem to overcome security challenges. On its part, Pakistan ought to learn from the Sri Lankan experience in countering the new wave of terrorism where women are playing a crucial role. Moreover, regional networks that facilitate local elements need to be eliminated through coordinated efforts among different law enforcement departments and the civil society.
On its part, China needs to equip Pakistan with the state-of-the-art technology for the collection and analysis of layered information. Importantly, an inclusive growth model should be followed in the areas adjacent to CPEC. Local populations should be involved in the economic activities alongside the corridor. Vocational training institutions should be established, particularly in peripheral areas, i.e. interior Sindh and South Punjab to equip the people with modern skills vis-à-vis a respective program. Politically, Pakistan ought to ensure political stability for the sustained development of CPEC projects.
Diplomatically, Pakistan and China can utilize the Shanghai Cooperation Organization (SCO) ─ which now counts Iran as its ninth member ─ to build a pro-development regional consensus. The SCO is getting dynamic thematically, geopolitically, commercially, as well as organizationally. India and Pakistan joined as full members in 2017, and Iran has obtained full membership only recently. With Belarus about to become a member, the SCO is set to gain more members and, thus, political and economic influence in the near future. Being strategic partners, Pakistan and China can play a pivotal role in fostering regional peace, security and commercial cooperation through the SCO with reference to China’s BRI.
Pakistan ought to ensure political stability for the sustained development of CPEC projects.
Similarly, the South Asian Association for Regional Cooperation (SAARC), of which Afghanistan is a full member and China is a regular participant, can be invoked to realize regional peace and prosperity by offering economic incentives to the regional players particularly Afghanistan. However, given SAARC’s lethargic past, it is easier said than done.
Last but not the least, China and Pakistan need to take measures to further promote bilateral trade. Comparted to China-India trade, which amounts to more than $135 billion US by the end of 2022, and China-Thailand bilateral trade, approximately $107 billion US last year, China-Pakistan bilateral trade is less than $40 billion US. With a long-lasting strategic partnership spanning six decades and 10 years of CPEC with multiple projects at its core, the China-Pakistan bilateral trade volume is comparatively very low, with Pakistan facing a huge trade deficit. Thus, the two countries’ leadership need to put their head together to devise strategies to promote bilateral and multilateral trade, and economic cooperation in a win-win manner. Finally, Pakistan must put its house in order in terms of political stability and structural reforms to get more foreign direct investment as well as technology to expedite its export output, without which economic recovery and stability will remain a distant dream.