CPEC: A Roadmap to Proesperity or a Debt Trap?

Introduction:

“The road to success is always under construction.” — Lily Tomlin

Few initiatives in contemporary history have captivated global attention like the China-Pakistan Economic Corridor (CPEC). Dubbed as a “fate-changer” for Pakistan, this multibillion-dollar project is more than just roads and bridges—it represents a vision for connectivity, economic transformation, and development. It is a massive bilateral initiative aimed at improving infrastructure within Pakistan and enhancing trade with China and other South Asian countries.

Inaugurated in 2015 as part of China’s Belt and Road Initiative (BRI), CPEC seeks to link China’s western province of Xinjiang to Pakistan’s deep-sea port of Gwadar.

“CPEC is a game changer not just for Pakistan, but for the entire region.” — Nawaz Sharif

Labeled the “Project of the Century” by President Xi Jinping, CPEC promotes prosperity and mutual growth for both countries. Beyond its economic significance, CPEC has attracted both praise and criticism from global stakeholders. While proponents see it as a boon, skeptics raise concerns about debt dependency and geopolitical challenges. The key question remains: Is CPEC truly a golden ticket for Pakistan’s growth, or does it carry long-term risks?

According to research by the Pakistan Institute of Development Economics (PIDE), CPEC has the potential to significantly boost Pakistan’s economy—with projections indicating the creation of approximately 700,000 jobs over the next 15 years and an estimated 5% increase in social welfare, especially in underdeveloped regions.

Regional Markets and Connectivity:

CPEC positions Pakistan as a critical trade corridor linking South Asia, the Middle East, Central Asia, and China. Gwadar Port is envisioned as a major transshipment hub, and by 2030, it is projected to handle approximately 400 million tons of cargo annually, making it a key player in global trade.

The expansion of rail and road networks is another major component of CPEC. The Karachi–Peshawar Railway Line, a $6.8 billion project, aims to revamp Pakistan’s railway system. Modern highways and expressways—such as the Hakla–Dera Ismail Khan Motorway—play a crucial role in improving connectivity, boosting regional trade, and reducing travel times by facilitating smoother freight mobility across the country.

“CPEC is not a project; it’s a journey towards economic regionalization in the globalized world.” — Ahsan Iqbal

CPEC transforms Pakistan into a trade hub by linking domestic markets with international supply chains. It boosts exports, reduces costs, and attracts investment. However, the success of CPEC depends on critical institutional reforms, such as enforcing the rule of law, strengthening governance, and ensuring political stability.

Pakistan must also diversify its sources of Foreign Direct Investment (FDI) beyond China to reduce financial risks and improve economic resilience. Security threats—particularly in Balochistan—are well known. Gwadar, envisioned as “Pakistan’s Dubai,” has encountered significant hurdles. The influx of Chinese investments has led to heightened security measures and restrictions on local activities, notably affecting fishermen. These changes have fueled local discontent and intensified tensions, including attacks by the Balochistan Liberation Army (The Guardian).

“The essence of CPEC lies in its ability to facilitate trade and boost market connectivity, making it a cornerstone of regional integration in Asia.” — Zahid Hafeez Chaudhri

Sustainable Development:

Sustainable development involves meeting present needs without compromising the ability of future generations to meet theirs. CPEC, in this regard, promises long-term prosperity for both current and future generations.

“Alone we can do so little; together we can do so much.” — Helen Keller

According to extensive research by PIDE, equitable development opportunities can be achieved through CPEC if tailored strategies ensure that all participating regions benefit fully. Despite acting as a catalyst for growth, PIDE emphasizes the need to overcome challenges such as rising external debt, low national savings, insufficient tax revenue, and declining exports. Overreliance on CPEC alone could limit the effectiveness of broader economic progress.

Productivity and Trade:

CPEC has significantly stimulated Foreign Direct Investment, with a notable 56% increase (PMC). The project envisions a 3,000 km network of highways, railways, and pipelines, connecting Gwadar to China’s Xinjiang region (World Bank). Improved connectivity is expected to enhance domestic production, especially in the agricultural sector. Notably, sectors like rice, fruits, and beverages are projected to grow by 2.13%, 1.20%, and 1.04%, respectively.

CPEC also contributes to regional trade by reducing transportation distances and delivery times (PMC).

Energy and Infrastructure:

Addressing Pakistan’s energy deficit has been a top priority. For example, the Port Qasim Coal-Fired Power Plant contributes over 3.2 billion kWh of electricity annually, powering around 5 million households and creating nearly 45,000 jobs each year (PMC).

Project Name	Capacity (MW)	Type	Status
Sahiwal Coal Power Plant	1,320	Coal	Operational
Port Qasim Coal Power Plant	1,320	Coal	Operational
Thar Coal Power Project	660	Coal	Operational
Hub Power Plant (HUBCO)	1,320	Coal	Operational
Karot Hydropower Project	720	Hydropower	Operational
Dawood Wind Power Plant	50	Wind	Operational
Quaid-e-Azam Solar Park	1,000	Solar	Partially Operational
Kohala Hydropower Project	1,124	Hydropower	Under Development

These projects not only address the energy crisis but also shift the country toward renewable and coal-based energy, aiming to reduce dependency on expensive fuel imports. Initiatives like the Quaid-e-Azam Solar Park and wind projects promote cleaner and more sustainable energy solutions.

Equity and Empowerment:

CPEC plays a pivotal role in reducing regional disparities. One of its key promises is to uplift underprivileged regions such as Khyber Pakhtunkhwa, Gilgit-Baltistan, and Balochistan. It also contributes indirectly to women’s empowerment through vocational training, gender-inclusive policies in energy and transport, and increasing employment opportunities in Special Economic Zones (SEZs).

Approximately 14,000 women have been employed in CPEC-related initiatives. Special training programs have been introduced for women in STEM fields, and women-led businesses in Gwadar have increased by 25% over the past five years. For instance, in Tharparkar, Sindh, the Thar Coal Project has marked a significant shift in gender roles by employing hundreds of local women.

“No country can ever truly flourish if it stifles the potential of its women and deprives itself of the contributions of half of its citizens.” — Michelle Obama

CPEC has also promoted financial inclusion and digital empowerment, ensuring access to banking and digital services for marginalized communities. E-commerce has grown by 78% over the past five years. The Karakoram Highway Upgradation has enabled artisans to reach broader markets. CPEC-funded schools and hospitals have benefited over 500,000 people in rural regions.

Political Economy of CPEC:

“Economic corridors cannot flourish without political stability.” — Joseph Nye

Recent developments indicate enhanced cooperation between China and Pakistan in infrastructure and mining. Military ties have also strengthened, including joint naval drills in the Indian Ocean. The U.S.–China rivalry further complicates matters, as the U.S. views CPEC as part of China’s geopolitical ambition.

The IMF and World Bank have expressed concerns over Pakistan’s growing debt dependency, with China owning over 30% of Pakistan’s external debt, much of which stems from CPEC-related loans. Comparisons are drawn to Sri Lanka’s Hambantota Port, which was leased to China for 99 years due to debt default—raising fears of a similar scenario for Pakistan.

Security threats persist. In 2021, a suicide attack on Chinese engineers working on the Dasu Hydropower Project resulted in the death of nine Chinese nationals. Pakistan has since deployed 15,000 security personnel under the Special Security Division (SSD) to protect CPEC assets.

According to PIDE, after completing Phase I, Pakistan is preparing for Phase II, which includes 27 projects focusing on industrial cooperation, trade promotion, agricultural development, and tourism expansion.

Environment and Climate Change:

Although CPEC is often seen as a beacon of economic progress, it casts a complex shadow over Pakistan’s environmental landscape. It acts as a double-edged sword, balancing economic growth with environmental strain.

Projects like the Thar Coal Power Plant address energy needs but at a significant environmental cost—emitting an estimated 51 million tons of greenhouse gases annually, leading to ozone depletion. Large-scale construction has accelerated deforestation, increased pollution, and caused notable biodiversity loss. These impacts not only harm natural habitats but also increase climate vulnerability.

Critical Review:

“CPEC is an economic Big Bang which turned Pakistan’s profile from a most dangerous country to a safe haven for billion dollars of Chinese investment.” — Ahsan Iqbal

Despite various risks and criticisms, CPEC holds transformative potential. It promises to uplift the economy through infrastructure development, energy sector expansion, industrialization, trade connectivity, and job creation—overall presenting a net positive outlook.

To fully harness its benefits, Pakistan must implement prudent financial management and ensure community inclusion. As highlighted by PIDE, robust regulatory frameworks and strategic planning are crucial for translating this initiative into a sustainable and inclusive economic revolution.

“The road to prosperity is never without obstacles, but those who embrace opportunities amidst challenges carve the path to a brighter future.”