The China-Pakistan Economic Corridor(CPEC): A Roadmap to Prosperity or a Debt Trap?

“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 not just about roads and bridges; it is a vision for connectivity, economic transformation, and development. It is a massive bilateral undertaking that aims to improve infrastructure within Pakistan by enhancing trade with China and other South Asian countries.

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

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

Chinese President Xi Jinping described CPEC as the “project of the century,” highlighting its potential to promote prosperity and mutual growth for both countries. Beyond its economic significance, CPEC has attracted both praise and criticism from global observers. While proponents view it as a boon, skeptics caution against potential downsides, such as debt dependency and geopolitical vulnerabilities. The central question thus 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 drastically boost Pakistan’s economy, with projections estimating the creation of approximately 700,000 jobs over the next 15 years and a 5% increase in social welfare—especially in underdeveloped regions.

In addition to economic growth, CPEC is transforming Pakistan into a critical trade corridor linking South Asia, the Middle East, Central Asia, and China. Gwadar Port is envisioned as a major transshipment hub and is projected to handle around 400 million tons of cargo annually by 2030, making Pakistan a principal player in global trade. Moreover, the expansion of rail and road networks further underscores CPEC’s strategic significance. Projects like the $6.8 billion Karachi–Peshawar Railway Line aim to modernize Pakistan’s outdated rail infrastructure. Meanwhile, highways such as the Hakla–Dera Ismail Khan Motorway are enhancing connectivity, reducing travel times, and 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

As a result, CPEC is enabling Pakistan to become a hub of regional commerce by integrating domestic markets with international supply chains. This boost in connectivity encourages exports, reduces operational costs, and attracts both local and foreign investment. However, the success of this transformation hinges on critical institutional reforms—namely, enforcement of the rule of law, strengthening governance, and ensuring political stability. Additionally, Pakistan must diversify its sources of Foreign Direct Investment (FDI) beyond China to mitigate financial risks and enhance economic resilience. Security threats—especially in Balochistan—are also a concern. Although Gwadar is often described as “Pakistan’s Dubai,” it has faced considerable challenges. The influx of Chinese investment has resulted in heightened security measures and restrictions on local activities, particularly those affecting fishermen. These changes have led to local resentment and increased tensions, including attacks by the Balochistan Liberation Army, as reported by 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

In this broader context, CPEC also pledges to promote sustainable development—defined as meeting present needs without compromising the ability of future generations to meet theirs. As highlighted in PIDE’s research, CPEC offers equitable development opportunities, especially for marginalized regions. It emphasizes the need for region-specific strategies to ensure that all areas can benefit from the project. Yet, despite its potential as a catalyst for economic growth, challenges such as increasing external debt, low national savings, limited tax revenue, and declining exports remain significant hurdles. Relying solely on CPEC without broader economic reforms may ultimately undermine its effectiveness.

Furthermore, CPEC has stimulated an increase in Foreign Direct Investment (FDI). For instance, data from the Pakistan Ministry of Commerce (PMC) reveals a 56% surge in FDI since CPEC’s inception. The initiative aims to establish a 3,000-kilometer network of highways, railways, and pipelines connecting Gwadar to China’s Xinjiang region. Enhanced connectivity is expected to increase productivity in domestic sectors—particularly agriculture. Crops like rice, fruits, and beverages are projected to grow by 2.13%, 1.20%, and 1.04% respectively, while improved logistics reduce distances and delivery times, boosting trade competitiveness.

Given Pakistan’s chronic energy shortfall, addressing the energy crisis has remained a top priority. Projects like the Port Qasim coal-fired power plant generate over 3.2 billion kWh of electricity annually, supplying energy to nearly five million people and creating approximately 45,000 jobs each year.

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

These energy projects are instrumental in addressing power shortages, but they also represent a pivot towards renewable energy. Initiatives like the Quaid-e-Azam Solar Park and wind energy projects aim to promote clean, sustainable solutions while reducing reliance on expensive fuel imports.

More importantly, CPEC plays a critical role in promoting equity and empowerment. One of its key promises is to bridge regional disparities by uplifting underprivileged areas like Khyber Pakhtunkhwa, Gilgit-Baltistan, and Balochistan. CPEC indirectly supports women’s empowerment by providing vocational training, encouraging gender-inclusive policies in transport and energy sectors, and increasing female employment in Special Economic Zones (SEZs). Approximately 14,000 women have been employed in CPEC-related projects, and special training programs in STEM fields have been launched. In Tharparkar, Sindh, the Thar Coal Project has marked a historic shift by hiring hundreds of women in a traditionally male-dominated labor sector.

“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

Moreover, CPEC has enhanced financial inclusion and digital empowerment, ensuring marginalized communities have access to digital banking and e-commerce. Over the past five years, e-commerce has grown by 78% in Pakistan. Upgrades to the Karakoram Highway have enabled artisans in remote regions to market their products nationwide. CPEC-funded schools and hospitals have already benefited more than 500,000 people in rural areas, marking a significant leap toward inclusive development.

From a political-economic standpoint, CPEC’s progress remains contingent on internal and external stability.

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

Recent developments have shown a renewed commitment by China and Pakistan to enhance cooperation in infrastructure and mining. Military collaborations, including joint naval drills in the Indian Ocean, have further solidified ties. However, CPEC is also enmeshed in global power politics, particularly in light of the U.S.-China rivalry. The United States views CPEC as part of China’s broader geopolitical strategy to challenge Western dominance. Additionally, institutions like the IMF and World Bank have expressed concerns over Pakistan’s rising debt dependency on China. With China holding over 30% of Pakistan’s external debt, comparisons have been drawn to Sri Lanka, which was forced to lease its Hambantota Port to China for 99 years due to loan defaults. Security threats also persist; in 2021, a suicide attack killed nine Chinese engineers working on the Dasu Hydropower Project. Pakistan has since deployed 15,000 personnel under the Special Security Division (SSD) to safeguard CPEC assets.

According to PIDE, Phase I of CPEC has concluded, and Phase II is underway, involving 27 new projects focusing on industrial cooperation, trade, agriculture, and tourism. While promising, these projects must be executed within transparent and sustainable frameworks.

On the environmental front, CPEC has been hailed as a beacon of economic transformation but also criticized for its ecological toll. It acts as a double-edged sword: driving growth while increasing environmental strain. Coal-based power projects like the Thar Coal Plant are expected to emit up to 51 million tons of greenhouse gases annually, contributing to ozone depletion and climate vulnerability. Large-scale construction has led to deforestation, pollution, and biodiversity loss—posing risks to both ecosystems and human health.

“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 challenges, CPEC remains a transformative initiative with vast potential for Pakistan’s economic future. It encompasses infrastructure development, energy generation, industrialization, trade, and employment—all contributing to a positive outlook. While risks persist, the long-term benefits of regional integration and growth outweigh these threats. To maximize its potential, Pakistan must embrace financial discipline and ensure equitable distribution of benefits among all communities. As PIDE suggests, CPEC offers immense economic opportunities, but capitalizing on them requires sound governance, strategic planning, and effective regulation.

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