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

Taliban Seek Recognition, But Offer Few Concessions to International Concerns

Taliban Seek Recognition, But Offer Few Concessions to International Concerns

Tuesday, September 28, 2021

By: Andrew Watkins; Ambassador Richard Olson; Asfandyar Mir, Ph.D.; Kate Bateman

Since taking power in August, the Taliban have repeatedly expressed the expectation that the international community will recognize their authority as the new government of Afghanistan and have taken several procedural steps to pursue recognition. But the group has done very little to demonstrate a willingness to meet the conditions put forward by Western powers and some regional states. USIP’s Andrew Watkins, Richard Olson, Asfandyar Mir and Kate Bateman assess the latest Taliban efforts to win international recognition, the position of Pakistan and other key regional players and options for U.S. policy to shape Taliban behavior and the engagement decisions of other international partners.

Type: Analysis and Commentary

Global Policy; Reconciliation

How the Region is Reacting to the Taliban Takeover

How the Region is Reacting to the Taliban Takeover

Thursday, August 19, 2021

By: Garrett Nada; Donald N. Jensen, Ph.D. ; Gavin Helf, Ph.D.; Andrew Scobell, Ph.D.; Tamanna Salikuddin

While the Taliban’s swift advance into Kabul over the weekend has left much of the West reeling, Afghans themselves will bear the brunt of the militant group’s rule. Beyond Afghanistan’s borders, its neighbors will feel the most immediate impact. Earlier this year, Russia, China and Pakistan affirmed that the future of Afghanistan should be decided through dialogue and political negotiations. How will they engage with the Taliban now?

Type: Analysis and Commentary

Afghanistan-Pakistan Ties and Future Stability in Afghanistan

Afghanistan-Pakistan Ties and Future Stability in Afghanistan

Thursday, August 12, 2021

By: Elizabeth Threlkeld; Grace Easterly

The situation in Afghanistan—and with it the Afghanistan-Pakistan relationship—is likely to worsen in the short term. The prospect of a prolonged civil war or full Taliban takeover now looms large as hopes of a negotiated settlement recede. Whatever the outcome, the countries’ bilateral relationship will continue to be shaped by tensions that have characterized it for more than a century. This report examines these sources of tension and identifies potential openings for engagement that could, over time, become sources of stability and growth.

Type: Peaceworks

Conflict Analysis & Prevention

The Impact of COVID-19 on South Asian Economies

The Impact of COVID-19 on South Asian Economies

Tuesday, August 3, 2021

By: Uzair Younus

The COVID-19 pandemic has caused one of the most serious public health and economic crises faced by India, Bangladesh, and Pakistan in recent years. This report looks at the economic impact on these nations, their prospects for the remainder of 2021, and their relations with the United States. It identifies key areas of focus for ensuring the subcontinent’s recovery is equitable—which, in the context of an erosion of democratic norms, growing authoritarianism, and severe crackdown on dissent, could help avoid economic and social instability.

Type: Special Report

Economics & Environment

View All Publications