China-Pakistan Economic Corridor (CPEC) is the biggest ever economic activity in the country’s history involving billions of dollars direct foreign investment in infrastructure development and establishment of some economic zones.  It would definitely put the country’s otherwise slow economy on fast track.

Economic experts are pinning great hopes on the generation of gigantic economic activities related to CPEC to bring a real turnaround of the county ’s economy and could rightly be dubbed as the real game changer not only for Pakistan but for the whole region.

The CPEC projects costs has risen to more than $54 billion after number of new projects with regard to energy, infrastructure, tourism, agriculture and socio-economic development have been included. The overall launching time of CPEC spreads from 2014 to 2030. There are three phases for implementation of the projects under CPEC. The short-term, midterm-term and long-term projects are estimated to complete by 2017, 2025 and 2030 respectively.

The Corridor would lead the changes in the pattern of industrial and commercial developments in Pakistan by means of the new growth centres and urbanization drive in the country. The cities adjacent to the corridor and proposed economic zones will gain the values. The new industrialized cities and commercial centres will generate the additional capacities for the employment creating opportunities.

The CPEC would spur the economic activities in the country. The government and economic experts believe that CPEC is likely to increase Pakistan’s economic growth by 2 percent by the end of 2020. The CPEC would also generate up to 2 million employment opportunities in the country every year. Similarly, it would also boost exports and generate economic prosperity. The CPEC projects would also help in overcoming power shortages from the country, as 14 electricity projects out of 21 including gas, coal and solar energy would generate around 11,000 megawatt electricity by 2018. Improved energy supply could enable Pakistan to boost its flagging indigenous industries such as textiles, agriculture and manufacturing, increase exports and ultimately lead to sustained economic growth in the long term.

CPEC would link remote areas of Sindh, Khyber Pakhtunkhwa (KP), Balochistan, Bilgit-Baltistan and Punjab. The economic potential of these areas is under-exploited and projects like Optical Fibre line, digitalization and infrastructure will open window of opportunity in these areas. This digitalization will add half a percent to GDP growth and enable the country to fully reap the benefits of 3G and 4G. The infrastructure projects will enhance connectivity and enhanced mobility will create economic value. The underemployment and unemployment in these areas will be cured as a result of these projects in poorest areas.

The 6th Joint Cooperation Committee of the China Pakistan Economic Corridor (CPEC) held last month in Beijing included the introduction of new projects into the CPEC framework. Pakistan and China had recently approved the establishment of industrial zones in different parts of the country including one each in all provinces and one each in Fata, AJK, Gilgit-Baltistan and Islamabad Capital Territory (ICT). The industrial zones will be established in the areas including Rashakai, KP, Bostan Balochistan, Pakistan china economic zone Sheikhupura Punjab, Bhimber Kashmir, Mackpondas Gilgat-Bultistan, Mohmand Marble city FATA, Dhabajy Sindh. The establishment of Special Economic Zones (SEZs) offering exemptions and ease of business would provide job opportunities to thousands of people throughout the country.

Jobs are expected with the establishment of special economic zones under the CPEC that will also integrate the nation into global production chains. There exists an immense potential and prospects for Chinese investors in the country with 180 million people, which has a growing middle class (75 million) with increasing needs in different products.

According to the reports, Pakistan has lagged behind even its South Asian peers in exploring the option of SEZs to attract direct foreign investment, promotion of industrialization and economic growth. SEZs, once implemented, could enhance the country's productive capacity; expand its exports base; and provide a major impetus for economic and social development through their backward and forward linkages with the rest of the domestic economy. In the past, the economic zones in Pakistan remained largely ineffective in boosting industrial growth, investments, and exports. In this backdrop, the renewed emphasis on this strategy under CPEC is a welcome development, as this would allow Pakistan to learn from the successful experience of China.

Chinese companies under CPEC projects will establish their businesses in industrial zone, which would provide a golden opportunity to enable Pakistan to accelerate the aforementioned process of high level industrialization.

The industrial zones could be a manufacturing hub producing a large amount of goods that directly caters to the ever-accelerating urbanization process and rapidly burgeoning middle class. Having local production replace imports can help bring down price and increase affordability in areas where tariff or transport cost is high. Injection of more advanced technology will also help improve quality and reduce environmental impact in areas where Pakistan already has a reasonably developed capacity. A case in point is the alternate energy sector like solar panels and wind turbine production, where domestic demand is high due to Pakistan’s acute electricity shortage. China is a leading country both in terms of production capacity and in terms of quality to price ratio in these areas. And in truck and construction machinery sector, China has a dozen of world class factories producing very reliable and affordable machines that have long been the backbone of China’s infrastructure construction, largely replacing their expensive imported counterparts.

Industrial zones would help Pakistan to produce more internationally competitive products and to tilt the trade balance more in its favour. Pakistan has been running a significant trade deficit due to the lower exports and even increase in imports. Lack of competitive manufactured goods has left Pakistan with no other choice but to import more than it can export, and hampered its ability to fully enjoy the economic vitality from regional economic integration.

By making industrial zones production the centre of high quality manufactured goods, Pakistan will be more favourably positioned in the international trade market. A larger percentage of manufactured goods in export portfolio will not only make it more resilient to changes in market demand and price fluctuation, but also more profitable due to a bigger added value. Chinese investment in Pakistan has always kept an eye on enabling Pakistan to generate its own economic blood, and whenever Pakistan successfully makes its way into international market with products jointly designed and manufactured by our two countries.

Special Economic Zones and Investment would allow economic corridors along major transport and communication networks to fully harness the physical and human resources of the country, contribute to the value chain of finished products in the region, enable relocation of industry to utilise the abundant labour at lower costs and utilise the abundant savings in the region for higher return investment in a saving deficient developing country.

Trade Facilitation will clear the impediments in the free movement of transport, goods and people for reducing the costs of logistics. Establishment of Havelian Dry port as a multi modal transportation of goods to facilitate the trade and investment in the country will feed in to prospective economic zones in the corridor. The World Banks report noted that Pakistan’s economic activity is projected to gradually accelerate over the medium term reaching 5.0 per cent in 2017 and 5.4 per cent in 2018, building upon 4.7 per cent GDP growth at factor cost in 2016. This growth is the result of infrastructure projects under the China Pakistan Economic Corridor (CPEC) and related public investment. CPEC can also help accelerate growth in the domestic construction industry, as well as increase electricity generation.