As Pakistan prepares for the second phase of the China-Pakistan Economic Corridor (CPEC), anticipation is high for the economic dividends that this strategic initiative promises to deliver. The CPEC, part of China’s broader Belt and Road Initiative (BRI), has already transformed Pakistan’s infrastructure and energy landscape, but the upcoming second phase is seen as pivotal in driving industrial growth, creating jobs, and deepening economic integration between the two nations. During the upcoming visit of Chinese Prime Minister to Pakistan, the Pakistani government is expected to present a detailed wish list aimed at maximizing the benefits from CPEC’s second phase.
Table of Contents
This phase focuses on industrial cooperation, agricultural modernization, socio-economic development, and technology transfer—areas crucial for Pakistan’s long-term economic stability. As such, Pakistan’s wishlist will reflect priorities designed to ensure a sustainable partnership with China, while addressing domestic needs and the challenges faced by the country.
Recap of the First Phase of CPEC
The first phase of CPEC, launched in 2013, largely revolved around infrastructure development and energy projects. Massive investments from China helped Pakistan address its chronic energy shortages, build new highways and roads, and improve port facilities—especially the development of the strategic Gwadar port. These projects contributed to Pakistan’s GDP growth and significantly enhanced connectivity across the country.
However, while the first phase focused heavily on infrastructure, it did not fully address Pakistan’s industrial and agricultural potential, nor did it create as many long-term jobs as was initially expected. The second phase is designed to address these gaps, with a stronger focus on sustainable economic growth and boosting local industries.
Priority Areas in the Second Phase of CPEC
As Pakistan crafts its wish list for the second phase of CPEC, the focus will be on areas that can drive long-term economic growth, reduce poverty, and improve the quality of life for its citizens. Below are some of the priority areas expected to feature prominently in Pakistan’s wish list.
1. Special Economic Zones (SEZs) and Industrial Development
At the heart of the second phase of CPEC is the establishment of Special Economic Zones (SEZs). These zones are intended to attract Chinese and international investors by offering tax incentives, improved infrastructure, and access to a large labor force. Pakistan hopes that the SEZs will act as engines of industrialization, creating thousands of jobs, boosting exports, and enhancing domestic manufacturing capabilities.
One of the major SEZs under construction is the Rashakai Special Economic Zone in Khyber Pakhtunkhwa, which has already garnered significant Chinese investment. Pakistan is expected to urge China to expedite the development of additional SEZs, including those in Faisalabad (Allama Iqbal Industrial City), Dhabeji, and Gwadar.
By fast-tracking these projects, Pakistan aims to expand its industrial base, reduce its reliance on imports, and increase exports, particularly in textiles, agriculture, and pharmaceuticals. The SEZs are crucial for addressing Pakistan’s unemployment challenges and providing a platform for technology transfer, where local industries can learn from Chinese expertise.
2. Agricultural Modernization
Agriculture remains the backbone of Pakistan’s economy, employing nearly 40% of the workforce and contributing around 20% of GDP. However, the sector has been plagued by low productivity, outdated farming techniques, and poor water management. Under the second phase of CPEC, Pakistan aims to modernize its agricultural sector, and this is expected to be a key item on the wish list for the Chinese Prime Minister’s visit.
Pakistan will likely seek Chinese assistance in introducing advanced farming technologies, including precision agriculture, hybrid seeds, and modern irrigation techniques. This will help to increase crop yields, reduce post-harvest losses, and improve food security. Additionally, Pakistan is expected to propose joint ventures with Chinese agribusiness firms in areas such as dairy farming, horticulture, and fisheries.
By partnering with China, Pakistan hopes to enhance its agricultural exports, particularly to Chinese markets, where there is growing demand for high-quality food products. Collaboration in this sector could also create rural employment opportunities and contribute to poverty reduction in Pakistan’s agricultural heartlands.
3. Technology Transfer and IT Cooperation
Technology transfer is a key element of Pakistan’s vision for the second phase of CPEC. As Pakistan seeks to transition from an agriculture-based economy to a knowledge-based economy, collaboration in the IT and tech sectors will be critical. The Pakistani government is expected to request China’s support in building IT parks, improving digital infrastructure, and investing in education and training for its burgeoning youth population.
China, with its vast experience in tech innovation and digital economies, can help Pakistan leapfrog into the digital age. The promotion of e-commerce, digital payment systems, and IT startups could create new economic opportunities for Pakistani youth and support entrepreneurship.
Moreover, Pakistan may also request Chinese investments in areas such as 5G infrastructure and the development of smart cities. This would not only improve connectivity but also make Pakistan an attractive destination for global tech companies and investors.
4. Socio-Economic Development Initiatives
A key component of the second phase of CPEC is socio-economic development, particularly in less developed regions of Pakistan. The government is expected to seek Chinese support for initiatives aimed at improving education, healthcare, and vocational training across the country.
One of the critical areas where Pakistan will require assistance is in upgrading its healthcare infrastructure, particularly in rural areas. The COVID-19 pandemic highlighted the shortcomings of Pakistan’s healthcare system, and the government is eager to improve access to medical services for all citizens. Pakistan may propose collaboration with China in building hospitals, improving medical training, and facilitating technology transfers in the medical field.
Similarly, vocational training programs will be essential in equipping the Pakistani workforce with the skills needed to thrive in the new industries and sectors that will emerge from the SEZs and other CPEC projects.
5. Energy Cooperation: Expanding Clean Energy Projects
While much of the first phase of CPEC focused on addressing Pakistan’s energy shortages through coal and gas power plants, the second phase will likely emphasize cleaner and more sustainable energy sources. Pakistan is keen to expand its renewable energy capacity, particularly in solar and wind energy.
Pakistan’s wish list is expected to include requests for further Chinese investment in renewable energy projects, particularly in regions such as Balochistan and Sindh, where there is significant potential for solar and wind power generation. Additionally, Pakistan is expected to explore opportunities for hydropower projects in the northern areas.
Given China’s leadership in renewable energy technologies, this collaboration could significantly reduce Pakistan’s dependence on fossil fuels and help the country meet its climate commitments.
Security Cooperation
As CPEC continues to evolve, ensuring the security of the projects and personnel involved is paramount. Pakistan may seek further assistance from China in enhancing the security of CPEC infrastructure and personnel, particularly in regions where security challenges persist, such as Balochistan and Khyber Pakhtunkhwa.
There is also the potential for deeper cooperation between the two countries in counterterrorism efforts to protect CPEC projects from external and internal threats. Pakistan may request additional support in building its counterterrorism capabilities, especially in intelligence sharing, border security, and technological surveillance.
Conclusion: Building a Stronger Future Together
As Pakistan prepares to present its wish list to the Chinese Prime Minister during the upcoming visit, the second phase of CPEC offers both countries an opportunity to deepen their strategic and economic partnership. While the first phase of CPEC laid the foundation with critical infrastructure projects, the second phase promises to be transformative for Pakistan, with a focus on industrialization, job creation, technology transfer, and sustainable development.
Pakistan’s wish list reflects its desire to not only strengthen its economy but also improve the lives of its citizens through better infrastructure, healthcare, education, and job opportunities. For China, continued investment in CPEC offers the chance to further solidify its influence in South Asia and enhance its strategic interests in the region.
The successful execution of the second phase of CPEC will require strong political will, effective governance, and continuous cooperation between the two nations. If done right, the second phase could propel Pakistan into a new era of economic prosperity and development, while further cementing the China-Pakistan relationship as a cornerstone of the Belt and Road Initiative.
