The CPEC: A Corridor Poised for Internationalization

by Sebastien GOULARD

Today, the China-Pakistan Economic Corridor (CPEC) is the most advanced component within China’s ambitious “Belt and Road” initiative (BRI). The fact that it involves only two nations, China and Pakistan, facilitates the relatively swift implementation of infrastructure projects, while other Silk Road corridors have encountered certain delays. Furthermore, both parties are highly motivated to realize this corridor’s potential. For Pakistan, the CPEC has become a cornerstone of its development strategy, connecting all its provinces, modernizing its infrastructure facilities and structuring its economic policies around a unified project. Similarly, China views the CPEC as the most direct means of unlocking the economic development of its western provinces, and more precisely Xinjiang.

However, the CPEC should not be perceived merely as a project connecting China’s western regions to Pakistan. Beijing’s aspirations, which Islamabad should share, extend to opening connections between China and Pakistan, and the rest of the world, particularly East Africa and the Gulf region, and eventually Europe via the Indian Ocean and the Suez Canal. The ultimate aim is to shorten shipping routes by creating an alternative to the Malacca Strait and establishing new maritime pathways, turning Karachi and Gwadar into new commercial hubs. Thus, the CPEC is not exclusively reserved for Pakistan and China; its internationalization is a significant ambition. Consequently, Beijing has consistently encouraged foreign companies to invest in CPEC projects. It is not in China’s interest to be the sole foreign investor in the CPEC; attracting non-Chinese foreign enterprises is crucial to accelerating the corridor’s development. Furthermore, Pakistan does not wish for China to be its sole foreign partner in the CPEC, as a potential slowdown in the Chinese economy could weaken the whole CPEC. A few states, such as Saudi Arabia and Oman, have responded positively to this invitation by making substantial investments in infrastructure projects, especially in Gwadar. However, these are often politically driven initiatives. The CPEC remains relatively unattractive to other countries and even to medium-sized enterprises, including Chinese businesses.

For the CPEC to succeed in its global outreach, two conditions must be met. The first is security. Unfortunately, Pakistan continues to face elevated terrorist threats, and Chinese interests have been targeted several times through violent actions. To date, terrorism has not prevented Chinese state companies from operating and investing in Pakistan but it has slowed the implementation of the project. This terrorism could deter potential foreign investors, especially in relation to smaller projects that may not receive the same level of security attention as larger infrastructure projects. Similarly, political instability might be an obstacle to the rapid development of CPEC projects. Chinese and international investors need to be aware of the main economic directions adopted by the Pakistani government, and political unrest may divert the attention of Pakistani leaders from the CPEC.

The second condition is closely tied to the first: ensuring the inclusion of local communities in the CPEC. Pakistanis in regions traversed by the CPEC should benefit from new opportunities created by this project, thereby reducing the risk of terrorism. The entire population should have a stake in the CPEC, and the new corridor-related infrastructure should not jeopardize the nation’s economic activities. For example, new port projects in Gwadar should not negatively impact the local, traditional fishing industry. To achieve this, Pakistan can draw inspiration directly from the Chinese example. The success of China’s opening-up policy in the 1980s was not solely based on newly built infrastructure but primarily on supporting entrepreneurship. Chinese coastal cities attracted foreign companies (often initially owned by the Chinese diaspora) and migrants from other provinces. They also enabled local residents, particularly in Guangdong and Fujian, to start new commercial and industrial ventures. Land was not monopolized by officials from other provinces, and all local stakeholders, from ordinary farmers to city leaders, had an interest in the success of these newly established projects. The current context in Pakistan is different; it is not about transitioning to a new economic system, as China did in the 1980s.

Until now, the CPEC has primarily focused on the physical infrastructure required for transportation. These new corridors are essential in connecting North and South Pakistan and soon, Western China, but they are insufficient in ensuring the CPEC’s success and internationalization. Beyond infrastructure, the CPEC must also impact the human capital of Pakistani society. On one hand, the workforce must be upskilled to make the industrial sector more attractive to foreign investors, including the Chinese. Educational programmes are already being reinforced, such as in Baluchistan, the province where Gwadar is located. On the other hand, initiatives must be undertaken to unleash the potential of Pakistani entrepreneurs. Thus, the CPEC will not only connect China to the Indian Ocean but will also enable companies from around the world to find new commercial and industrial partners in Pakistan. While the construction of roads, railways and ports for the CPEC represents a crucial first step, empowering Pakistani entrepreneurs is the second and the more ambitious one. Only then will the CPEC become truly international.