Written by: Hussain Al-Qemzi
The ambitious Chinese Belt and Road Initiative has had an impact on the Pakistani economy that cannot be overstated. This project, aimed at creating massive global infrastructure to serve the Chinese economy, is the largest ever undertaken by a single country. It has generated both admiration and concern. In this article, I will discuss how Pakistan has benefited from this major initiative and what obstacles and issues are associated with it.
Pakistan holds economic significance in the Gulf and Middle East region, boasting one of the largest economies in South Asia. Being a sizable market, it represents a significant opportunity for trade and investment by Gulf and Middle Eastern countries.
There is a long history of economic cooperation between Pakistan and the Gulf and Middle Eastern countries, encompassing trade and investment in a diverse range of sectors such as oil, gas, infrastructure, and various other industries.
Pakistan is also a significant energy importer from Gulf and Middle Eastern countries and serves as an important source of labor export to these nations.
Pakistan’s strategic location along the Arabian Sea and the Gulf of Oman positions it as a vital maritime transit route for shipping and trade between Gulf nations, the Middle East, South Asian countries, and East Asia. This enhances Pakistan’s role as a hub for trade and logistics.
Pakistan has benefited from the Belt and Road Initiative, particularly through the China-Pakistan Economic Corridor (CPEC), a flagship project within the initiative. CPEC has promised to transform Pakistan’s infrastructure, economy, and trade. The significant Chinese investment of $62 billion has led to the development of power plants, highways, and modern communication networks, alleviating energy shortages and creating job opportunities.
However, Pakistan’s grand vision of becoming a global manufacturing hub has fallen short of expectations. Chinese private companies have hesitated to invest in the Special Economic Zones due to security, bureaucratic, and local population-related issues, creating an impression of instability and hindering the transformation of infrastructure into sustainable economic growth. This has left many of these areas underdeveloped, and the industrial share of Pakistan’s GDP has remained at around 13 percent.
Furthermore, the CPEC project has encountered security challenges due to attacks on Chinese engineers and concerns about extremist groups disrupting land trade routes.
Pakistan’s external debt has significantly increased since 2015, with Chinese lenders being the largest creditors, consuming a significant portion of the country’s revenue to service this debt.
The Belt and Road Initiative has generally faced criticism due to concerns about unsustainable debt levels in recipient countries and allegations of corruption. While China’s ability to implement large-scale infrastructure projects is not in doubt, there are concerns about cost-effectiveness and the sustainability of the Belt and Road Initiative.
Despite these challenges, China remains committed to the Belt and Road Initiative. President Xi Jinping has announced additional funding for Belt and Road projects, and the initiative is expected to evolve, with a focus on green development, public health, and the digital economy in the future.
China aims to support the three global initiatives proposed by President Xi, focusing on poverty reduction and the construction of an alternative global system.
In the case of Pakistan, despite its challenges, the CPEC project remains a vital source of investment in the country. Even with its recent financial difficulties, it continues to be Pakistan’s largest investment.
Finally, we can say that the Chinese Belt and Road Initiative has had a significant impact on Pakistan’s economy, a mix of successes and challenges. While it brought developmental infrastructure, questions remain about the sustainability and long-term benefits of these investments.