Presently, China-Pakistan Economic Corridor (CPEC) has become a household word in Pakistan. It has attained significant milestones through joint efforts of the governments, enterprises, and people of both countries-Pakistan and China. The economists of Pakistan record that the economy of Pakistan was moving towards stabilization. Business confidence was recovering and prices have started settling down, twin deficits were under control and economy was slowly moving towards sustainable growth when the shock of the COVID-19 outbreak hit the economy. As far as the CPEC is concerned it is very important to increase the economic growth of Pakistan.
The economists also mention that the second phase of CPEC would improve the export oriented production capacity that would lead to economic development of Pakistan. It has now entered its second phase, with the planned emphasis shifting from infrastructure development to industrial development, agriculture mechanization, tourism, high-tech finance, and social development. Various Special Economic Zones (SEZs) were going to be organized that could improve Pakistan’s productive capacity, expand the exports base, and offer a main impetus for economic and social development by their backward and forward linkages with the rest of the domestic economy.
The Government of Pakistan has carried out various reforms under IMF’s Extended Fund Facility (EFF) program to improve trade and investments through enhancing business climate. Historically during 2013, the Chinese President Xi Jinping unveiled the Belt and Road Initiative (BRI), previously One Belt One Road (OBOR). It is an investment program which envisages to improve the economic integration of nearly 70 transcontinental states, representing greater than two-third of world’s population, along the route of the historic Silk Road. BRI aims at the connectivity of diverse countries in the Asian, European and African continents along with their adjacent seas. Although it is a worldwide project, it chiefly focuses on the states in Central Asia, Eastern Africa, Eastern Europe, and Middle East. It will develop and strengthen the partnership among these states by composite connectivity networks and independent and sustainable development. CPEC is a crown jewel of the BRI as it will offer the shortest access to the markets of Central Asia, Africa, Middle East and Europe through the deep sea Gwadar port. A research study reveal that a 40-foot container from Kashgar by CPEC route, i.e. Gwadar port, to destination ports in the Middle East and Africa will cost lesser by about 1,450 US dollar and for destination ports in Europe by US $ 1,350. Further, travel time will be reduced by 24 and 21 days respectively. The distance is estimated to be declined by 11,000 to 13,000 km. CPEC will revive the ancient Silk Route that was oldest trade route pre-existing the Han Dynasty of China. The Silk Route connected China with Britain through Indian subcontinent, Asia Minor, Africa, Greece and Rome. CPEC is though a bilateral project its benefits will be spilled over to different regions. It will provide an easy access to cheap Chinese market through Gwadar port.
No doubt, Pakistan is bestowed with numerous natural gifts and the most significant one is its highly strategic geographical location that will make it hub of foreign trade and connectivity. Pakistan is a gateway to Central Asian Republics and Afghanistan and it has been learnt that Central Asian countries are approaching Pakistan for trade facilitation in Gwadar and Bin Qasim seaports. On the other hand, Iran-Pakistan-China cooperation offers an opportunity for optimistic trilateral cooperation under BRI initiative. Financial & other forms of cooperation have a potential of increased development. CPEC would provide a new route for Iranian oil & gas resources to China. Despite the disruptions caused by Covid-19, CPEC is not only being implemented as outlined but also appears to have picked up pace after the launch of CPEC Authority in October 2019. The experts also reveal that CPEC related activities witnessed an impetus and it is evidenced from the approval of PC-I for Main Line-I from ECNEC, operationalization of KKH Phase-II, approval of PC-I for M-6, signing of concession contracts for 1,124 mw Kohala HPP and 701 mw Azad Pattan HPP, commencement of power generation through China Hub 1,320 mw and 660 mw Engro Thar power plants, approval of Master Plan for Gwadar Smart City, groundbreaking of Allama Iqbal Industrial City, signing of Development Agreement of Rashakai SEZ and significant developments on numerous Socio-Economic, Agricultural and Gwadar related projects. After overcoming the important energy and other infrastructure related deficits, the second phase of CPEC focuses on the industrial cooperation, agricultural development and other socio-economic related projects aimed at improving the livelihood of local masses.
According to the World Bank’s current report on the impact of the Covid-19 on South Asian economies has predicted that Pakistan’s economy would only increase through only 0.5 percent in the upcoming fiscal year. Furthermore Pakistan, also other states in the region, has been badly affected through the Covid-19, causing a downturn in economic activity. The restrictions imposed to stop the spread of the Covid-19 last year, and Pakistan’s previous economic woes are said to have caused a 1.5 percent contraction in the country’s economic growth rate in the previous fiscal year. The World Bank also predicts an average growth of 1.3 percent for the economy in the next two years, which is an improvement on previous expectations. However, this still falls significantly below growth potential sans-pandemic. The weak economic prospects for Pakistan through the World Bank hinge on factors like a crippled services sector, which makes up half of Pakistan’s economic output and is particularly vital to lower income household. This is also the reason behind a projected increase in poverty in the nation as lower-class citizens find themselves without work or a stable source of income.