Maroc - EURASIAREVIEW.COM - A la une - 30/12/2024 17:13

CPEC: Addressing Deficits And Diversifying Sources – OpEd

The CPEC, a flagship project of China’s BRI, has been signifying a very significant development towards the integration of regional economy. Commonly initiated as an energy project with Chinese investment in Pakistan’s infrastructure, CPEC has much expanded to an economic cooperation project of diverse infrastructure, energy production, industrial development and, most recently, digital integration. This article offers a critical analysis of the changes CPEC has brought into Pakistan and how it affects the region and comes as a driver of developmental connectivity. CPEC is an important factor in the BRI, an international project promoting integrated cooperation and exchange in Asia, Africa, Europe. CPEC forms part of Pakistan’s strategic plan of reversing infrastructure deprivations, energy scarcities and seeking to position the country as a regional economic powerhouse. With regard to investment worth $62 billion, CPEC is an integrative model of bilateral cooperation that contains FDI, low-interest financing, and grant. Housing one of the world’s largest infrastructure development projects, one would not be wrong to say that CPEC has transformed the scenery of Pakistan. More than 3,000 kilometres of highways and motorways have been built linking Gwadar with northern Pakistan and going further to China. These marginal improvements have cut transportation time on goods by half hence has freed $1 billion a year on transport costs. Also, the improved infrastructure of roads has helped increase imports and exports between the two nations and Afghanistan improved by 72% from the year 2018 to 2024. Chinese financed energy projects under CPEC have largely helped Pakistan in managing existing perennial power crises. In CPEC projects by 2024, Pakistan has added more than eight thousand mega watts to the generating capacity of the country and all around the year 2015, Pakistan was generating twenty four thousand mega watts but in the year 2023 the generating capacity has touched thirty one thousand mega watts. These improvements have lowered power outages in the least served provinces including Balochistan and Khyber Pakhtunkhwa’s by a third. Separately, solar and wind projects among others are contributing new types of energy into the energy capacity of Pakistan and subscribing to global climate change solutions. Nevertheless public finance issues remain a potential problem. Increasing cost implications of imported fuels for thermal power plants has brought to the fore, the need for diversification towards domestic and sustainable energy sources. This paper has argued that achieving transparency in tariff setting and correcting operational cost note can improve sustainability of these energy projects. Also, connectivity of SEZs with global value chain can enhance the role of SEZs on diversification of economy of Pakistan. CPEC and digital silk road and became an IT services and digital trade country of Pakistan. Internet usage increased from 11% in 2015 to 54% in 2024 for the e-commerce business for cross border digital trade of which tripled in 300% between 2020 and 2024. Digital transformation under CPEC has also facilitated the growth of Pakistan’s startup ecosystem. With over $500 million invested in tech startups by 2024, Pakistan’s digital economy is projected to contribute 10% of the GDP by 2030. Expanding digital literacy programs and enhancing broadband accessibility will further accelerate this growth. CPEC’s economic benefits extend beyond Pakistan. By integrating South Asia, Central Asia, and the Middle East, CPEC has increased regional trade by 50%, with Gwadar Port emerging as a hub for international shipping. This enhanced connectivity underscores Pakistan’s strategic relevance in regional trade dynamics. However, geopolitical tensions and competing interests among neighboring countries pose risks to CPEC’s long-term success. Pakistan has also benefited from an increase in startup culture under the CPEC digital transformation process. Investment in technology startups also has touched a cumulative of $500 million by 2024, the digital economy of Pakistan is expected to amount to 10% of the Gross Domestic Product by 2030. Additional steps to increase the availability of digital literacy initiatives or increase the access to broadband services should thus promote a faster growth. Besides Pakistan, CPEC has the potential to boost economic activities in many countries. Connecting southern Asia, central Asia and the Middle Eastern Countries, CPEC has boosted the trade by 50 % and turned Gwadar port into an international shipping terminal. These improved connections have underlined the Operational significance of Pakistan in the ongoing patterns of the trading bloc. However, threats hindering the sustainability of CPEC include current political instabilities within the region and continuing rivalry between neighboring countries. There will be the need to strengthen cooperation with neighbourly countries on policies and measures to dismantle non-tariff barriers as a way of realizing the envisaged benefits from CPEC.