This paper explores how the China-Pakistan Economic Corridor (CPEC) has enhanced bilateral relations between China and Pakistan, focusing on Pakistan’s success. CPEC’s economic cooperation has driven infrastructure development and job creation in Pakistan. The study examines political and military aspects, highlighting diplomatic advancements and military cooperation and their implications for South Asian geopolitics. It also considers social and cultural benefits, such as educational diplomacy and public perception. Despite challenges like economic dependency and security concerns, CPEC projects have strengthened Pakistan’s economy, geographic presence and strategic alliances. This analysis confirms the evolving and deepening cooperation between China and Pakistan through CPEC.

Introduction

The end of the twentieth century has been dominated by landmark events that have had an everlasting impact on the world order and the relations among states. Whereas the US is pursuing a Global war on Terror, the Chinese policymakers laid their attention on enhancing their economy, setting new economic goals, and searching for new markets and investment opportunities across the globe.

The diplomatic relations between Pakistan and China date back to the Silk Route, with formal connections established in 1950. Pakistan was the first Muslim state to recognize China, with Pakistan International Airlines being the first to operate a service to China. Pakistan’s then Prime Minister Hussain Shaheed Suhrawardy visited China in 1956, followed by Chinese Premier Zhou Enlai’s visit to Pakistan the same year. The 1960s marked a new era of friendship, with noteworthy events like the 1963 boundary demarcation agreement and the construction of the Karakoram Highway (KKH) from 1959 to 1978. Known as the “Friendship Highway” or the “Eighth Wonder of the World,” KKH significantly boosted trade and tourism. It was upgraded in 2006, extending to the developing port city of Gwadar, facilitating economic activity and heavy vehicle movement. During high-level visits, China and Pakistan agreed to build an economic corridor between Gwadar and Kashgar. These historical milestones underscore the enduring and strong diplomatic and political ties between China and Pakistan.

A grave enterprise that the People’s Republic of China (PRC) has captured to reinforce its reflection as a soft power across the globe is the commencement of the ‘One Belt One Road’(OBOR) initiative. The China-Pakistan Economic Corridor (CPEC) is the lynchpin of OBOR as it connects the project’s maritime routes to the mainland nodes. China-Pakistan Economic Corridor (CPEC) is one of the major programs under BRI which is targeting at providing new ways and frameworks to improve connectivity between the two nations. CPEC has been envisaged as a mega project since 2013 where investment from China worth multi billions of dollars is for infrastructure, energy, and Industries that set up a new social-economic order in the regional political map and economic geography. It stretches by 3,000 kilometres from China’s Xinjiang province to Pakistan’s Gwadar Port, and its key functions are trading and energy connectivity. CPEC has drastically enhanced the political, and economic strain and strategic collaboration between China and Pakistan. In the economic respect, it has become instrumental in stimulating growth, and development and even helping to offset some of the infrastructure shortages that Pakistan experienced in the past through upgrading its transport systems and increasing its energy profile, for instance. These developments have not only promoted economic activity but have also produced several job opportunities which helped to address the instability of the economy of Pakistan.

In that context, CPEC has cemented the bilateral relations between the two countries for decades of friendship. Enhanced cooperation has led to increased diplomatic interactions and strategic military relationships and both states are seen as strategic in the regional power dynamic. This partnership can be considered especially valuable in the context of the politics of the South Asian region, where both countries have rough relations with neighbouring India and other actors. The CPEC has helped in bringing about more intercultural interactions and cooperation in the field of education between China and Pakistan through interaction and cooperation. However, the project has come across some difficulties. Also, the structures used in the present have proven to be complex. The core issues of dependency on the global economy, effects on the environment, and security issues are still valid and hence need attention and proper handling to ensure that the world can progress to another level sustainably.
The purpose of this study is to analyze and understand the effect of CPEC on China-Pakistan relations focusing on the former’s implications due to the success of the latter. In addition to reframing the literature on CPEC from the economic lens only, it pays attention to how the political landscape has changed between the two countries the undergoing or expected social transformations, and the challenges related to CPEC in the new contemporary era.

Research Questions.

• How has CPEC fostered economic collaboration between China and Pakistan since its inception?
• What specific aspects of CPEC have strengthened the strategic partnership between China and Pakistan?
• How might future agreements evolve if Pakistan succeeds in fully implementing CPEC?
• What are the long-term prospects for China-Pakistan relations if CPEC is fully successful in achieving its goals?

Methodology

This study utilizes a comprehensive review of secondary data sourced from academic articles, government reports, policy papers, and reputable news outlets. Data was collected from a range of publications focusing on the economic, political, social, and strategic impacts of the China-Pakistan Economic Corridor (CPEC). Sources included peer-reviewed journals, official documents from the governments of China and Pakistan, and analyses by international organizations and think tanks.

Literature Review

Sino-Pak relations have immensely gained from cooperation in infrastructure development, provision of employment opportunities, and strategic partnerships through the CPEC. Diplomatic relations were formalized in 1950, there are succeeding events such as the demarcation of the boundary in 1963 and the construction of the Karakoram highway. CPEC, an extension of the Belt and Road Initiative, will integrate Xinjiang with Gwadar port forging the trade and energy corridors ( Jia & Sha, 2018; Malik, 2022). CPEC’s improvement on the infrastructural base of transportation includes; the aim to react on the Karakoram Highway and develop Gwadar Port. The energy-related projects such as the Sahiwal Coal Power Project have helped to fill the energy deficits hence fostering industrial development (Ali, 2021; Ahmed & Latif, 2019). SEZs help bring in investment and boost industrialization and hence employment generation (Siddiqui & Rizvi, 2021).

Despite these achievements, the CPEC project has issues; the debt burden of Pakistan, and social and environmental effects. Political and security issues also affect the project completion as stated by Malik and Shaheen (2021). However, if optimally exploited, CPEC also has the potential to revolutionize the Pakistani Economy and provide a boost to regional trading activities (Nasir & Khan, 2022).

Historical Background

CPEC has gained global attention primarily due to its acknowledgement of the main problems as well as its proposal of China-Pakistan Economic Corridor stands for the China-Pakistan Economic Corridor which is a multi-billion-dollar project aimed at increasing the connectivity of China and upgradation in Pakistan more particularly in terms of infrastructure facilities, energy projects, and special economic zones. CPEC is one of the major components of BRI necessary to build new roads, railways, and pipelines connecting China’s western province to the Pakistani port of Gwadar. In the context of Pakistan with the help of CPEC the country saw an opportunity to transform the ageing infrastructure, address its long-standing problem of energy deficit, and trigger its economic activity. From the perspectives of the economic benefits of CPEC and strategic implications, it can make China and Pakistan’s bilateral relationship even closer and more powerful in the region.

Economic Impact of CPEC

• Infrastructure Development

It is therefore clear that since the commencement of CPEC, tangible enhancements have been realized in Pakistan’s infrastructure. These are the improvement of KKH, the construction of LKM, and the undertaking of the ML-1 railway project. These infrastructural improvements have boosted the transportation links both internally in Pakistan and between the two countries and hence promoted efficiency in transport. CPEC is finely based on the development of Gwadar Port which is strategically important for Pakistan. The access and control of the Strait of Hormuz make Gwadar Port a potentially prominent centre of the commerce and trade of the Persian Gulf region. The facilities found at the port consist of a deep seaport, an international airport, and a free trade zone which are meant to ease the export and import of goods and services in the port.

• Energy Sector Investments

The energy sector has been one of the most favoured sectors in investment by CPE through the sector Pakistan’s energy crunch has now been well dealt with. Such ventures consist of coal-based thermal power plants, hydel stations, and clean power generation schemes. These projects have contributed immensely to the enhancement of the national grid capacity of Pakistan which helped avoid acute energy crises and offer support for sustaining industrial growth. Some of the mega energy projects which include the Sahiwal Coal Power Project, Quaid-e-Azam Solar Park, and Karot Hydropower Project among others are under CPEC. Aside from addressing energy shortages, these measures also help increase the spread of sources of energy, ensuring Pakistan’s longevity in the future in many ways.

• Industrial Growth and Employment

SEZ plays a key role in industrial development, particularly when set up under the framework of CPEC. These zones help to attract investments in manufacturing, technology and agriculture industries, and as a result, employment opportunities increase and hence the economic growth of the country. Some of the renowned SEZs under development including the Rashakai SEZ, and the Dhabeji SEZ, are among the distinguished. These planned SEZs will be planned as centres of industrial growth to attract investors both domestic and Foreign Direct Investors. They shall also promote technology transfer, increase efficiency, and draw Pakistan in a better way into the value chains.

• Favourable to Trade and Economic Activities

The China-Pakistan Economic Corridor has increased cross-country trade between the two countries tremendously. Improved transport facilities and communication have freed the trade channels by cutting costs involved in the transportation of goods. The trade exchange has enhanced its volumes for both countries with more preference of Pakistan exporters towards China. Other than stimulating import-export business in Pakistan, CPEC has helped set up better business conditions in the country to lure more investments for various economic activities. It also enhances the infrastructure and energy supply that propels industrial and commerce business hence enhancing the economy.

Strengthening Bilateral Relations

CPEC has enhanced political as well as strategic interaction between China and Pakistan. The two countries have enjoyed close relations for centuries, and what is referred to as an “all-weather friendship”. CPEC has strengthened this bond to a greater extent due to the synchronization of economic as well as strategic aims of both states. The improvement of relations with CPEC projects has contributed to the enhancement of relations between the two countries. More visits at the higher level, new bilateral accords, and collaborations have rendered the response stronger in recent years. CPEC has therefore appeared as one of the vital frameworks that amplify China-Pakistan relations and understanding.

• Geopolitical Significance

The CPEC has great geopolitical value both for the People’s Republic of China and for the Islamic Republic of Pakistan. For China it opens the door to the Arabian Sea, thus giving China a route independent of the strategically sensitive Strait of Malacca. This route improves the energy security of China and offers a shorter and more convenient way of the transit of trading with the Middle East, Africa, and Europe. For Pakistan CPEC also increases its strategic importance in the region. The construction of Gwadar Port along with the attached projects make Pakistan a strategic transit point of the Belt and Road Initiative. This helps provide Pakistan the upper hand in the GEO-POLITICAL aspect and combines its position at the regional and global levels.

• Defence and Security Cooperation

The strategic aspect of CPEC is focused on expanding cooperation between two countries in the sphere of defence and security. The security of CPEC projects and people is of vital importance to both countries. Pakistan has formed security forces exclusively to protect the CPEC projects and the Chinese people engaged in numerous projects. This cooperation pertains to military partnership, particularly in manoeuvres, punts and calls, and the sharing of military technologies. Not only the security of the investments in CPEC is secured, but this cooperation also plays a part in increasing the strategic stability in the entire region.

Challenges and Criticisms

• Financial and Economic Concerns

Despite that, there has been criticism of the realization of CPEC particularly in the aspect of financial obligations on Pakistan. Regarding the financial structure of CPEC, it is important to understand that it consists of various projects which involve substantial amounts of loans from Chinese financial institutions, so the matter of concern is how sustainable is this Pakistani debt. Some analysts opine that this is resulting in a debt overhang that increases the risk of economic instability and reduces available policy options in Pakistan. However, there are also what can be termed as economic-related issues concerning some of the CPEC projects. Thus, social infrastructure and energy projects are important for economic development proceedings, but the rates of their stock and profitability in the long-term perspective require further examination. One critical factor vital for CPEC’s success is making sure that the benefits derived from these projects should be greater than the costs.

• Social and Environmental Impacts

Criticisms have also been raised towards the social and environmental effects of CPEC projects. Large-scale infrastructural development projects need to involve large acreages of land to be approved hence they displace locals’ people and destroy their sources of income. Other factors within the social domain include pollution of the environment through excessive felling of trees and the generation of pollution. The concerns of making certain that the local communities in the region stand to gain from CPEC projects and the efforts to avoid aggravating the negative impacts of the project in the social setup.

• Political and Security Challenges

The political and security situation in Pakistan plays a role when it comes to the application of CPEC. Unpredictable changes in political structures sponsoring infrastructure projects, conflict in the region, and activities of insurgents will affect the time needed for the completion of the projects and increase security risks to maintain the security of the CPEC chain and its people, it is paramount that calls for regular guarding and practice of adequate security precautionary measures. Furthermore, due to the strategic alignment of the CPEC project, different countries and worldwide researchers have shown keen interest and have criticized this project. Global powers, India for instance have expressively deplored projects that make up CPEC given the fact that they pass through disputed territories. Subsequently, Kriesi explains the European Union’s approach towards these territories, regarding it as an infringement on its territory. Considering the successes and challenges of the countries in the context of geopolitical processes responding to the matters constituting the communications concern us from the other stakeholders is essential in sustaining the dynamism and desirability of the cause.

Implications of Pakistan’s Success

• Economic Growth and Development

If CPEC has been successfully implemented, then, there are certain impacts on the economic growth of Pakistan, a better transport system, better and more efficient sources of energy, and higher industrialization. Studies show that these activities lead to increased rates of economic growth. Construction along with the improvement of Gwadar Port and related facilities can play the role of a transit centre of South Asian countries and turn Pakistan into a trade and logistics centre. Increase of inoculations as well as economic activities and investment. The development of job opportunities and human resources through projects of CPEC have been given positive socio-economic implications. Better employment chances, especially in underdeveloped countries, contribute to poverty eradication and the enhancement of standards of living for the people. On the same note, the creation of SEZs might help to encourage growth and development powered by industrialization and technological advancement; thus, boosting Pakistan’s economic competitiveness.

• Building up the Partnership between Countries and China

Due to the success being recorded in CPEC the bond between China and Pakistan has been enhanced through the recognition of economic cooperation and strategic partnership. The strengthened economic linkage lays a firm ground for long-term cooperation in all sectors ranging from trade cooperation, investments, and technology cooperation. Smart power also creates better relations for more comprehensive strategic and defence partnerships. Thus, military cooperation and exchange of intelligence is a positive factor in the provision of stability and security in the region. The China-Pakistan relationship is very important and cordial this relationship acts as a shield and fosters growth in the region.

• Regional and Global Implications

Thus, Pakistan’s success in implementing CPEC has far-reaching significance in the regional as well as the global context. It places Pakistan in the strategic framework of China’s Belt and Road Initiative, thus increasing its significance in the region. The development of Gwadar Port and better connectivity could help trade liberalization in the South Asian region, Central Asian Region, and Middle East region. In this case, the completion of CPEC is viewed as a positive reference to other countries in the Belt and Road Initiative. It also tries to explain the opportunities for infrastructure construction and economic integration within the BRI framework. Over time CPEC’s positive results for both Chinese and Pakistan’s economy can aid other countries to encourage similar cooperation projects for the benefit of worldwide economic enhancement and interlinkage.

Major Findings

• Infrastructure and Energy Development: because of the CPEC, many lacunae in the physical infrastructure in Pakistan and in the energy, sector have been filled which was imperative for the support of various economic exercises.
• Economic Growth and Employment: The projects under CPEC have helped in development in the shape of augmented business, employment opportunities as well as better standards of living in the backward areas.
• Strategic and Geopolitical Significance: CPEC brings about the rationale and geographic significance of both China and Pakistan and boosts the relationship between the two countries to a positive profile in the region.
• Challenges and Criticisms: But like any other project, CPEC is not without technical, financial, social, and environmental considerations and political and security volatility. To these challenges, these points must be corrected for the lasting success of the initiative.
• Broader Implications: Since CPEC is progressing well for regional and global integration, connectivity, and trade it is a positive sign for other countries that are part of the Belt and Road initiative.

Conclusion

The outcome of the CPEC could bring a revolutionary change in economic and strategic structuralism in Pakistan because the corridor will benefit virtually every segment of the country’s economy. The planned project is to improve the communication between the newly built Gwadar Port in Pakistan and China’s Xinjiang province, making Pakistan as the centre of regional trade and commerce. It is believed that through CPEC, Pakistan is expected to attract large amounts of FDI that would help develop infrastructure in the country. Some of these major improvements include the Karakoram Highway, the Lahore-Karachi Motorway and the Main Line 1 Railway Project improving internal connectivity as well as with China. These enhancements make it easy and fast to transport goods and people hence enhancing trade and economic activities. Gwadar port situated at the entrance of the Persian Gulf is now under construction and aimed at being a prominent trade center; shorter and more economical trade routes will be obtained.

For 15 years from 2015 to 2030, the above-stated CPEC initiative expects at least 3 million job creation which will lead to a decrease in unemployment and poverty ratios in the country. SEZs under CPEC tenets will unlock manufacturing, technology, and agricultural investment, hence generating more employment. Likewise, coupled with the energy sector, the energy projects included in CPEC are likely to contribute up to 17000 MW in the total energy production of Pakistan. This reliable source of energy is essential for the development of the industrial sector, increasing productivity, and increasing Pakistani products’ chances of penetrating the global market. Geopolitically, CPEC is helpful to China as it offers China the access to Arabian Sea thus avoiding the Malacca Strait which China considers vulnerable. For Pakistan, the Belt and Road Initiative development of Gwadar Port has put it strategically in the geostrategic bargain of the BRI, adding its advantage. Notwithstanding, financial issues, social and environmental effects, and political and security factors still prevail in Pakistan. Thus, from the Indian point of view, the success of CPEC for Pakistan raises strategic issues connecting with enhanced economic & military interconnectivity between China and Pakistan.

Title image courtesy: Ensemble

Disclaimer: The views and opinions expressed by the author do not necessarily reflect the views of the Government of India and Defence Research and Studies

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