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CPEC changing Pakistan’s economic fate

It must be remembered that CPEC (China-Pakistan Economic Corridor) is not just a transit route for Chinese exports but it holds a comprehensive plan to overcome economic issues such as unemployment, the energy crisis, the underdevelopment of national infrastructure.

In the past five years, China-Pakistan trade has continued to grow rapidly, with the annual growth rate of 18.8 percent on average. Bilateral investment has also been soaring, and China has become one of the biggest sources of foreign capital for Pakistan.

International economic and technological cooperation has shown strong momentum. The flow of economic factors in both countries along the CPEC will substantially improve the resource allocation efficiency. It will bring into full play the comparative advantage of each country with respect to the industrial sector specifically.

Pakistan lagged from the very inception in the production and manufacturing processes. At present the industrial is pushed by consumerism and construction. The growth initiatives are at present is largely CPEC related. Pakistan must now take full advantage of the country’s abundant labor force, abilities processes and market access etc.

The State Bank in its latest quarterly report 2018 has elaborated that how the country can achieve industrial growth in this mega project under CPEC. It noted that the China-Pakistan Economic Corridor (CPEC) provides the industrial sector of Pakistan with an opportunity to modernize and become more efficient and competitive.

Pakistan can have surplus growth in industries through various energy projects, infrastructure improvement and development of Special Economic Zones (SEZs). However the economic growth will mostly will depend on how the industrial renewal presently in China creates opportunities for Pakistan.

The industrial revolution and alteration aims to turn China into competitive manufacturing powerhouse, focusing on new and upgrading manufacturing processes, technological enhancement, and research and innovation efforts.


China is moving towards cleaner energy, therefore in this context the plants and associated machinery in the energy sector can be transferred to Pakistan. This will bill a favourable step up for the Pakistan as regards to modernization and technological advancement.

It is likely that smart phone and laptop assembling may relocate to Pakistan as China increases its focus on the high-class manufacturing. There is every possibility that some infrastructure relevant industries in China like steel might find better utilization of their excess capacities in Pakistan under CPEC.

Some allied industries like fertilizer, petrochemical, plastic might also find home in Pakistan. Apart from the inflow in the auto and spare part sector, there might be some inexpensive machinery transfer into Pakistan like that in food processing sector as China moves up the global supply chain operation.

Due to its close proximity as well as CPEC being part of the greater vision the One Belt One Road (OBOR) initiative Pakistan stands at a higher chance to benefit from this transfer of technology.

State Bank of Pakistan (SBP) has pointed some gaps that can lessen the return from these opportunities. Dearth of skilled labor force requires the need for more skill development policy and vocational training programs. Governance and coordination between provincial and federal government for consistent and comprehensive support, and competitive environment are compelling.

Trade openness and facilitation where the existing tariff structure of the economy needs liberalization are necessary to benefit fully from the opportunities provided by CPEC, according to the SBP.

Water availability needs to be addressed as increased industrial activity, urbanization, coal power projects, coupled would further add pressures on the already vulnerable supply of water. Ongoing construction of physical infrastructure (both under CPEC and otherwise) and progressing huge housing schemes are, and will remain, main users of cement and iron and steel products.

This year was also important for the CPEC as Gwadar Port started operations, although presently a few vessels are docking at this port. Once the CPEC projects are completed, more goods will be flowing from China to this port. Construction works of motorway between Kashgar and Gwadar are moving at a reasonable pace in this year.

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