Rehmat Ullah
Economics, technology and trade are a vital part of global politics. Due to the increasingly difficult relationship between the U.S and China, economic investment and cooperation is now a key method used to gain economic influence. The CPEC makes up a significant amount of the Belt and Road project by China. The CPEC 2.0 will enable them to turn Pakistan into an industrialised economy with a focus on technology and exports. This will rely on Pakistan being able to utilise its strategic advantage.
Since 2013, the CPEC has mainly focused on energy, transport and Gwadar port projects. This has helped develop infrastructure within Pakistan but there has been little opportunity for industry. Issues with funding and inefficiencies have occurred. The CPEC 2.0 will help overcome this by increasing productivity from greater private industry.
The CPEC 2.0 will bring economic growth due to the 5 development corridors that will be focused on. This will lead to greater innovation, sustainability, quality of life and openness. This will improve industry, technology and agriculture cooperation. In October 2026, the importance of increasing industry and exports was highlighted by the planning minister. How successful the plan is implemented will depend on how well it is executed.
The CPEC will offer some economic benefits to China by improving their relationship with the country in the long term and will help them achieve their goal of increasing regional connectivity. Gwadar is close to major shipping lanes within the Arabian sea however it cannot be viewed as a success. There is no guarantee that China will be able to create an alternate trade route due to their high investment requirements, reliable logistics and competitive transport.
Due to the geopolitical issues, Pakistan have had some issues. Washington are becoming increasingly worried about China’s growing economic influence. Pakistan need to increase cooperation with Beijing but do not want to damage their relationship with western nations. Whilst China are an important strategic partner, they need to have diverse export opportunities, foreign investment and good relations with the U.S and Europe. Having a diverse economic partnership will create a more sustainable strategy.
Security is an issue for the CPEC. There have been attacks on the Chinese and their infrastructure meaning there is little security when investing in Pakistan. Balochistan and Gwadar are key areas of the project. However, simply increasing military and intelligence will not be enough. Social economic issues, poor public services and unfair development must be improved. Without proper cooperation with the local community, there will not be much job creation.
Pakistan continue to have economic issues. A report published by the World Bank showed they managed to increase their economy by 3.7% during the 2026 fiscal year. However, there are underlying issues stopping them from growing. The IMF have stated that they need to improve governance, increase competition and improve private investment. Without changes within the country, foreign investment into infrastructure will not help.
Special Economic Zones can help increase manufacturing investment. This will help integrate Pakistani companies into global supply chains and create competitive exporters. To create a sustainable industry they need affordable energy, stable taxation, skilled workforce and efficient regulations. Memorandum of Understandings and investment should not be seen as factories, normal investment and increased exports. Pakistan should have clear indicators to show real economic growth.
The CPEC 2.0 offers opportunities for regional integration. Increased connectivity will help business with central Asian countries. Pakistan will be in a better position due to the new Eurasian trade routes. However, Afghanistan remains an unstable country. Political tensions and poor border infrastructure will make this difficult. Constant diplomatic efforts, political certainty and good economic relationships are needed to increase regional connectivity.
Overall, Pakistan should focus on making the CPEC 2.0 an economically viable project. Islamabad should focus on creating export industries, increasing accountability, increasing technology transfer and making sure the local communities benefit. Being transparent with how the projects are funded, environmentally impactful and business will create confidence.
Overall, the CPEC 2.0 will be a key test for Pakistan to see if they can overcome great power rivalry and create economic change. It will not be judged on how many deals have been signed but how much productivity has increased, how many jobs have been created, exports increased and regional stability increased. Whilst they have a strategic position with opportunities in our increasingly competitive world, their economic power will determine how influential they are. They must ensure the CPEC 2.0 is used as a tool for national development.
