Pakistan Today

Experts hope positive impact of CPEC on community development

The development of the China-Pakistan Economic Corridor (CPEC) has spurred debate among Chinese and Pakistani experts, who analyse its overall impact on the society and living condition of an ordinary person in different angles.

Some see the CPEC as an unprecedented for economic revival and community development, with potential for positive spillover effects including stronger local institutions.

The CPEC is a package of infrastructure projects worth US $46 billion. About two thirds of this funding, US $33 billion is committed towards establishing energy and power projects in Pakistan.

Ahmed Zulfiqar Siddiqui, a senior executive at China Power, says these projects will help alleviate the country’s chronic energy crisis that cost the nation 7 percent of its annual GDP last year. “T

The Chinese have invested in power generation from coal and LNG as well as hydro, wind, and solar power. A new transmission line funded by them will carry electricity from new power generation units in Sindh to load centres in Punjab.

Shanghai Electric, a sister company of China Power, has also expressed interest in acquiring a major stake in K-Electric, which is the main provider of electric power to over 20 million people in Karachi. The Chinese are therefore covering the entire power sector value chain, from fuel extraction (mining) to end-user distribution.”

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.

A Deloitte study predicts that if everything goes according to the plan, the combined value of the CPEC’s infrastructure projects would be equivalent to 17 percent of Pakistan’s GDP in THE coming years.

Moreover, the project is expected to create at least 700,000 direct jobs and serve as a springboard for the development of industries such as retail, tourism, hospitality, health, and education.

The expansion of these industries could potentially lead to synergies among various downstream sectors, with benefits accruing to the larger population. But Siddiqui stresses the need for policies to ensure involvement of local unskilled labour and small contractors since the mega-construction projects will predominantly be executed by Chinese labour. He also highlights the need to protect established local industries against price competition from China because local firms may be unable to compete with cheaper Chinese industries.

The CPEC project may also benefit the real-estate industry along the trade route. In Gawadar, property prices have more than doubled in recent months due to demand for housing. Atif Alam, owner of RB Associates, a real estate agency that deals in property across the country, believes that demand for quality housing and recreation facilities will sky-rocket as more Chinese expats move to Pakistan and infrastructure development enables access to previously isolated areas of natural beauty or historic significance.

CPEC could catalyse Pakistan’s gradual shift from an agrarian economy to a logistics hub for the transport of goods from China to emerging markets in the Middle East and Africa and vice versa. With the development of emerging market economies, demand and supply have started to shift to the South. China has already surpassed the United States as Dubai’s largest trading partner and imports more oil than any other nation in the world. Singapore is another major bilateral trade partner for China.

Dubai and Singapore have both evolved into major transport hubs for both passengers and cargo, due largely to their strategic geographic locations, robust infrastructure, and strong leadership, serving as gateways to emerging markets in Asia, the Middle East, Africa, and Western Europe.

Today, these cities connect cultures and commodities, deriving most of their earnings from external trade, tourism, aviation, real estate, and financial services. Pakistan is strategically positioned to follow this model. However, in order to ensure long-term sustainability, it must avoid some of the common pitfalls of foreign development.

Sabrin Aziz Beg, Assistant Professor at the University of Delaware, focusing on Development Economics and Political Economy, views the CPEC as a “promising” arrangement that could mutually benefit both countries. But she emphasises the need for more rigorous research and documentation in order to evaluate whether the economic benefits of large-scale infrastructure projects outweigh the social and environmental costs in the long term.

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