Pakistan: The Socio-Economic Impact of CPEC

Pakistan: The socio-economic impact of CPEC

Long read

The China-Pakistan Economic Corridor (CPEC) is one of the dynamic projects of the Belt and Road Initiative (BRI). This project was launched in 2015 after the Chinese President, Xi Jinping signed some agreements with the Pakistani Prime Minister, Nawaz Sharif. A total of 51 Agreements and Memorandums of Understanding valued at an estimated $46 billion were signed by the duo. The entire project which is a framework of regional connectivity will not only benefit China and Pakistan but will also bring about positive impacts in countries such as Afghanistan, India, Iran as well as the entire central Asia. The vision of CPEC is to improve lives by building an economic corridor that promotes bilateral connectivity and equally explores potential bilateral investment, economic and trade. It is evident that the CPEC project has brought about major progress since it was launched some seven years ago. According to the Chinese Foreign Ministry, this project has brought about $25 billion of investment from China alone. That said, the major overwhelming impact of the CPEC includes the following:

1. Power and water supply
2. One of the major results of the CPEC is the fact that it has enhanced power supply in Pakistan.  Many dams have actually been constructed to enhance the country’s water storage capacity which is currently at just 11 million acre-feet (MAF). It is worthy to note that at the moment, Pakistan’s storage capacity is lower than what is required and can only meet demands of 30 days during emergency situations. Moreover, there are shreds of evidence that suggest that between the years 1980 and 2010, Pakistan lost about 1,049 MAF of water as a result of lack of the right storage capacity. This loss was estimated to be an equivalent of 10 years of water withdrawal in the country.
3. Nevertheless, it is apparent that the construction of dams in Pakistan also has multiplier effects. This assertion can be explained by the fact that with the availability of these dams, there is also likely to be cheaper electricity which can generated via a sustainable flow of water throughout the year. With more electrical power, it can be used for food production as well as by households and by industries.

2. Infrastructural development
3. According to Wang Wenbin, Spokesperson of the Chinese Foreign Ministry, some of the projects completed under CPEC has resulted in infrastructural advancement in Pakistan. For instance, its thanks to CPEC that the Orange Line Metro Train (OLMT) in Lahore, Pakistan was completed. It is worthy to note that this Metro Line is the first electric-powered public transport project to be completed in Pakistan. The Orange Line actually went operational last month, thereby marking the beginning of the subway era for Pakistan.

3. Employment
4. There are also indications that the CPEC project has reduced unemployment, especially in Pakistan. This assertion can be backed by the fact that by enhancing infrastructure and electricity supply, CPEC has created an estimated 70,000 direct positions, thereby also contributing about two percent of Pakistan’s Growth Domestic Product (GDP). More so, the Gwadar Port also fostered regional connectivity, thereby creating up to 1,000 jobs. It is evident that the CPEC project has not only reduced unemployment in Pakistan, but it has also created jobs in China. According to the Xinhua News Agency, the Orange Line involves Chinese designs, construction, equipment operation and maintenance. Therefore, this goes without saying that this project has increased employment in China, both directly and indirectly.

4. Regional connectivity
5. Another major benefit of the CPEC is the fact that it has brought about regional connectivity. Thanks to CPEC, a lot of work is ongoing at the Special Economic Zones (SEZs), Gwadar Port and many social development programs. It’s a matter of fact that transit trade through Gwadar is a major step towards regional connectivity. Until recently, Afghanistan are now importing food such as wheat, sugar, and other important items through the Gwadar Port. As far back as early 2020, the Gwadar port had started shipping cargo weighing as much as 20,000 tones to Afghanistan.
6. As for the SEZs, they are simply the key to achieving industrialization. The CPEC project has not only led to the inauguration of many SEZs, but it has also led to the acceleration of work at different SEZs that are still under creation.

5. Social development
6. The CPEC project has also brought about significant social development in Pakistan. So far, China has invested an estimated $300 million on major projects in 2020 alone. Out of this sum, $100 million has been diverted to improve the agricultural sector. A further $100 million has been invested in sectors such as housing and healthcare in a bid to meet the basic needs of the entire population.
7. Despite all the progress and advancements brought about by the CPEC project, it is still imperative for the governments of both China and Pakistan to stay focused to achieve all their ambitious objectives. There is already criticism from environmental activists with dams and such matters that will definitely be raised for public debates in the future. Besides the government, it is also in the interest that all political parties in Pakistan and China to co-operate to see that all the projects under CPEC come into fruition without negativity.

Nevertheless, there have been recommendations put forward to help the governments of Pakistan and China realize all the objectives of CPEC. First and foremost, these governments are considering forming CPEC planning and execution groups comprising of representatives of the different political parties in the country. Such a group will definitely be efficient in steering decision making and the implementation process. In Pakistan, there is already the CPEC Authority overseeing some major projects.  Secondly, it is imperative for the two governments to devise an effective engagement strategy to counter all negative perceptions about the CPEC project. Above all, these governments should invest in gathering real-time and verifiable data that should be shared among stakeholders. By so doing, these stakeholders will easily make recommendations based not only on facts but also on the developmental needs of the country and its people.