The China-Pakistan Economic Corridor (CPEC)—which connects China’s western province of Xinjiang to the Pakistan’s Arabian Sea coastline in Balochistan province—is the first large-scale attempt to bolster economic ties between Beijing and Islamabad, after decades of robust diplomatic and military relations. Based on interviews with federal and provincial government officials in Pakistan, subject-matter experts, a diverse spectrum of civil society activists, politicians, and business community leaders, the report puts CPEC in historical and economic context, identifies challenges to it, and assesses its implications.

Summary 

  • Support for the China-Pakistan Economic Corridor (CPEC) and Chinese investment in the country is almost unanimous in Pakistan. The country’s political parties and regions, however, have been deeply divided on the subject of equitable distribution of and control over CPEC projects. 
  • CPEC is a fifteen-year program scheduled for completion in 2030 that will begin to address Pakistan’s energy and infrastructure needs in the near term. 
  • CPEC could prove an opportunity to decisively overcome the Balochistan insurgency in Pakistan. Doing so, however, means protecting the political rights of the locals and granting economic privileges over migrant labor. 
  • A broader CPEC authority is necessary to ensure that the project moves forward on a consensus basis. Neither the Pakistani military nor the civilian bureaucracy have the economic and political aptitude to steward the project to success. Such a task is the reserve of the political leadership in Islamabad. 
  •  Policymaking communities in New Delhi and Washington exaggerate the strategic component of CPEC. This may, however, end up being a self-fulfilling prophecy. Pakistan’s primary goal should be to put itself on a trajectory of rapid, equitable, and sustained macroeconomic growth. 
  • The ultimate benchmarks for the success of CPEC will be whether it boosts industrial productivity, exports, and job creation in Pakistan, putting the country on a path toward sustained, high levels of equitable economic growth.

About the Report

This report clarifies what the China-Pakistan Economic Corridor actually is, identifies potential barriers to its implementation, and assesses its likely economic, sociopolitical, and strategic implications. Based on interviews with federal and provincial government officials in Pakistan, subject-matter experts, a diverse spectrum of civil society activists, politicians, and business community leaders, the report is supported by the Asia Center at the United States Institute of Peace (USIP).

About the Author

Arif Rafiq is president of Vizier Consulting, LLC, a political risk analysis company specializing in the Middle East and South Asia. He is also a nonresident fellow at the Middle East Institute and a fellow at the Center for Global Policy. The author is grateful to Moeed Yusuf, Colin Cookman, and the Asia Center at USIP for their generous support for this research project, and would like to thank the anonymous peer reviewers for their constructive feedback.

Related Publications

The Promise and Peril of Pakistan’s Economic Recovery Effort

The Promise and Peril of Pakistan’s Economic Recovery Effort

Wednesday, September 6, 2023

By: Shahbaz Rana

In the first half of 2023, Pakistan appeared to be moving toward a catastrophic economic default. An IMF loan program Pakistan entered into in 2019 had gone off track after the Fund found Islamabad’s commitment to reform lacking, leading to a suspension of loan disbursements. The derailment of the IMF program resulted in a significant drop in the country’s foreign exchange reserves — at one point this year, reserves could only cover about two weeks' worth of imports due to concurrent debt repayment pressure. To avoid defaulting, the government imposed stringent import restrictions in an attempt to control dollar outflows. That caused a major economic shutdown of import-dependent industries, a shortage of essential commodities and surge in inflation.

Type: Analysis and Commentary

Economics

Pakistan’s Parliamentary Period Ends as Election Uncertainty Looms

Pakistan’s Parliamentary Period Ends as Election Uncertainty Looms

Thursday, August 10, 2023

By: Asfandyar Mir, Ph.D.

A five-year parliamentary term just concluded in Pakistan, marking the third such term since the country's 2008 transition from military rule. These past five years were marred by domestic political tumult and an outsized — at times decisive — military role in politics. During this period, Pakistan witnessed two ruling coalitions with different prime ministers: the Imran Khan-led Pakistan Tehreek-e-Insaf (PTI) and allied parties from August 2018 to April 2022, followed by the Shehbaz Sharif-led Pakistan Muslim League Nawaz (PML-N) and allies from April 2022 until this week. Top political leaders also faced legal issues — most recently, Khan was convicted for illegally selling state gifts and disqualified from contesting the election.

Type: Analysis and Commentary

Civilian-Military RelationsDemocracy & Governance

Displaced to Cities: Conflict, Climate Change, and Rural-to-Urban Migration

Displaced to Cities: Conflict, Climate Change, and Rural-to-Urban Migration

Thursday, June 15, 2023

By: Gabriela Nagle Alverio;  Jeannie Sowers;  Erika Weinthal

Countries as geographically diverse as Honduras, Jordan, and Pakistan are experiencing a common challenge—rapid growth in urban populations as conflict and climate-induced disasters push people from rural areas into cities. This report examines the effects of this increased urban migration on both the migrants and the urban environment, as well as the challenges policymakers face. It offers recommendations to help meet the needs of growing urban populations and develop adaptive, resilient systems to better withstand the impacts of climate change and conflict.

Type: Peaceworks

Conflict Analysis & PreventionEnvironment

The Latest @ USIP: Pakistani Police’s Gender Initiatives Expand Access to Justice

The Latest @ USIP: Pakistani Police’s Gender Initiatives Expand Access to Justice

Tuesday, May 23, 2023

By: Amna Baig

The Pakistani police’s gender protection units ensure that from start to finish, a victim’s case is handled by a staff of female and transgender officers — helping women and transgender victims overcome the cultural and gender barriers that often hamper their access to the justice system. Amna Baig, a Pakistani police superintendent and founder of Pakistan’s first gender protection unit, discusses how these programs work to prevent and counter gender-based violence, what’s needed to help replicate and expand them elsewhere, and how police can better integrate gender initiatives in their work more broadly.

Type: Blog

GenderJustice, Security & Rule of Law

View All Publications