The strategic ties between Pakistan and China have been on an upward trajectory with moved thrust on economic interaction after the initiation of China Pakistan Economic Corridor (CPEC) project since 2013. CPEC is a revolution in the field of economics. Under CPEC, China would invest $46 billion in Pakistan for the development of infrastructure and energy. CPEC is a futuristic economic dimension of Pakistan in the 21st century. This multi-dimensional project has opened Pakistan’s rebalancing options from geopolitics to geo-economics. It includes four pillars i.e. the infrastructure, the energy requirements, workforce development and economic progress. CPEC project is not an economic aid given to Pakistan but it is an investment for the next 15 years. This time frame is important for Pakistan as it is the duration in which Pakistan by utilizing all of its resources and manpower could bring Pakistan into global economic mainstream. It has been said that if CPEC utilized properly would rebound the economy of Pakistan three to four times.
China and Pakistan have a very strong friendship, and this Chinese initiative will further strengthen that relationship, by making China a stakeholder in Pakistan’s future. This will ease some of Pakistan’s security concerns in regards to both its neighbors in the East and West. Pakistan will become the most strategically important country in the region because it will improve trade and economic connectivity between Asia, the Middle East and Europe. The energy projects announced, as part of the CPEC agreement will end Pakistan’s energy crisis once and for all.
Major proportion of investment under CPEC (US$33.79 billion) is directed towards the construction of power projects to produce 17045?MW of electricity in Pakistan in which 10,400?MW of electricity generation capacity is to be installed on priority basis. This huge investment is planned to be undertaken with the view of utilizing existing energy resources and tackle the energy crisis in Pakistan. Fourteen power projects are on the priority to be completed by 2020 while the remaining eight projects have been actively promoted but their completion time is yet to be decided. Most of these electricity generation projects are based on Coal and Hydel technologies. All coal prioritized power projects will run on imported coal except two power projects, which will run on local coal with the capacity of 1980?MW. Along with the power projects, CPEC involves the development of transmission line on urgent basis from Matiari to Lahore with the length of 878?km. This transmission line will have the load capacity of 4000?MW and fifty percent of this transmission line has already been completed. Matiari to Faisalabad transmission line project is also under construction. Within the highly prioritized energy projects, 7 projects have been completed and remaining projects are under construction. 19 billion USD have been invested in energy projects as FDI and at the end of 2018, 3240?MW of electricity has been added to national grid. With the establishment of all power projects by 2020 and energy imports by energy tunnels will increase the energy supply security in Pakistan. With this supply of energy, CPEC is expected to add 2.5% into the current GDP and its growth to 7.5%. Due to this CPEC related investment, thirty thousand jobs have been created by energy projects alone.
CPEC related projects are also aimed at constructing new routes and overhauling existing road infrastructure to facilitate the trade and increasing accessibility to markets. Transport infrastructure will involve the road network, railways, highways and energy tunnels. 2500–3000?km roads will connect Gwadar port with Kashgar with the cost of 9784 million USD. In the eight projects related to road and railway infrastructure, one railway project has been completed and operational and 70% work on Karachi-Lahore motorway has been completed. CPEC investment in transport infrastructure will boost the trade within Pakistan and increase trade and economic cooperation with China. Pakistan will shift the trade routes with China and other countries from sea and air to cheapest land transportation. This will increase the export of agricultural products in the global market, which was previously discouraged due to high transportation costs. Hence, efficient transport infrastructure in CPEC will reduce the internal transportation cost and time consequently achieving comparative advantage in international market.
Establishment of free industrial zones is one of the key areas of economic cooperation under CPEC and are considered as a trustworthy strategy to foster the economic growth and employability into an economy [17,18]. Nine special economic zones characterized by specific products or services, will be established in all of the provinces in Pakistan along the corridor. Local production accompanied by local raw material and labor under the economic zones will speed up the urbanization process and the employability (expected 2 million jobs) with expected increase into high standard of living, reduced imports and price stability [19]. Due to the establishment of stainless steel and petrochemical industries, energy consumption in the economy is expected to growth at a higher pace (World steel association, 2016). Owing with the CPEC development, the growth rate of FDI during FY-17 stood at 12.75% (Economic survey of Pakistan 2016–17). It is expected that with the completion of CPEC the FDI will be much higher in Pakistan due to increased industrial activity, energy supply security and strengthened infrastructure to support the markets.
The China-Pakistan Economic Corridor (CPEC) was initially intended to promote mutual development of China and Pakistan by enhancing bilateral exchanges and cooperation in transportation, energy and marine sector.
The corridor would be an economic linkage to connect Kashgar in China’s northwestern autonomous region of Xinjiang to Gwadar Port in Pakistan.
The corridor not only funds and supports the construction and connectivity of transportation infrastructures, but more importantly aims to promote bilateral cooperation in multiple areas of major projects, as well as information and communication technology, and to set up more industrial parks and FTAs. Under CPEC, China will invest $34 billion in thermal, solar and wind power generation facilities and projects to address Pakistan’s energy and infrastructure problems; as a result it will empower the country’s economic growth with visible and real economic benefits.
Along with CPEC, Pakistan will become an economic hub in South and Central Asia, an axis of regional trade. The Gwadar Port, while gaining importance as Pakistan’s economic center, will be one of the most important ports in the Arabian Sea. CPEC is a life-time development opportunity for Pakistan. The government and the people need to support the smooth implementation and sustainable operation of CPEC projects.
