CSS 2018 Solved Current Affairs Past Papers | CPEC and the Upliftment of Pakistan’s Economy
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Question Breakdown
This question requires the details of multi dimensional CPEC project of China. It requires the explanation of different sectors in which China is making investments and which will turn out to be a game changer for Pakistan’s economy and uplift. The question demands examples, statistics, facts and figures.
Outline
1-Introduction
2-China-Pakistan Economic Corridor: A game changer
3-CPEC shaping Pakistan’s Economic future
- ✓ Infrastructure Development
- ✓ Improvement in the Energy Sector
- ✓ Job Creation and Skill Development
- ✓ Special Economic Zones & Industrial Growth
- ✓ Boost to Trade and Exports
- ✓ Agriculture and Technology Transfer
- ✓ Strategic Positioning and Geopolitical Benefits
4-Critical Analysis
5-Conclusion
Answer to the Question
Introduction
CPEC, a project of approximately $62 billion, is a comprehensive initiative that includes road networks, energy sector enhancements, the establishment of Special Economic Zones (SEZs), and railway lines. This project has the potential to modernize Pakistan’s economy, stimulate its industry, and reduce poverty, making it a transformative force for the country. A massive improvement in infrastructure, industrialization, and energy projects potentiality makes CPEC the cause of optimism in Pakistan. However, economic discrepancies raise parameters leading to the defeat of the transformative premise believed to be inherent with this project. Lending from China has triggered many different issues regarding Pakistan’s increasing amount of debt. To this end, the deficiencies that stand in the way of realising these goals need to be addressed with strategic leadership that seeks to support sustainable and inclusive growth and development, and for this to happen, China and Pakistan have to begin the process in good earnest.
China-Pakistan Economic Corridor: A game changer
The China-Pakistan Economic Corridor is one of the first project of the Chinese Belt and Road Initiative. Recorded to be a cross-sector project displacing over multiple billions of dollars, is intended to connect the Gwadar Port of Pakistan to the Xinjian province of China. There are different opinions regarding CPEC positioning in Pakistan; some analysts consider CPEC as a revolutionary factor for the Pakistani economy since the latter relates to a vast number of various energy projects as well as industrial parks in all four Pakistani provinces. It will make a complete transformation in the economical scenario of Pakistan, increase its industrial sector and also will have a potentiality to fight against poverty which is considered as a major curse of Pakistan. CPEC’s most critical investment is for the infrastructure development across Pakistan, i.e., the construction of motorways, railways and highways such as the Multan-Sukkur Motorway, the Karakoram Highway and the Main Line-1 (ML-1) railway upgrade. All these projects will collectively help in improving internal and external connectivity and will significantly reduce transportation costs. World Bank reported that these transport networks will reduce logistics costs by up to 30% which will enhance the competitiveness of Pakistani exports in global markets. Additionally, the multiple energy projects have also been instrumental in overcoming chronic energy shortages in Pakistan. Over thirteen energy projects have been completed under CPEC by 2023, facilitating approximately 7,000 megawatts of electricity to the national grid of Pakistan. Its strategic and geopolitical positioning makes it a trade centre between Asia and the Middle East which enhances Pakistan’s global standing. It also strengthens Pakistan’s ties with China as well as other countries providing political and economic leverage on the international stage.
CPEC shaping Pakistan’s Economic future
- ✓ Infrastructure Development:
Infrastructure is a cornerstone of CPEC which aims to enhance economic growth by improving connectivity, trade facilitation, enhancing transportation, industrial capacity and energy supplies. The most significant infrastructure components are the construction of roads and railways, for example, the Gwadar-Hoshab Road and the development of the Karachi-Lahore Motorway (reduce transportation time and costs) and the upgradation of the Karakoram Highway (to decrease travel time between Pakistan and China). As per the Pakistan Bureau of Statistics, by 2023, these projects had already gained a 1.5% increase in GDP growth. The Gwadar port and its development are the highlights of CPEC in the Baluchistan province of Pakistan, which will enhance its maritime infrastructure. Approximately, $1.6 billion investment is made to expand the port so it can accommodate larger ships and cargo capacity. This will turn Gwadar into one of the most important trade hubs, which will provide Pakistan with new markets and enhance its position in regional trade. It will also create more than 40,000 jobs and significantly contribute to the national economy.
- ✓ Improvement in the Energy Sector:
Many projects have been designed under CPEC to address the country’s energy needs, power infrastructure loopholes, and maintenance of sustainable growth, like the Sahiwal Coal Power Plant, one of the most significant energy projects that became operational in 2017. It is a $2 billion project with a capacity of 1,320 megawatts. It has substantially contributed to the alleviation of Pakistan’s power shortages. Pakistan Energy Department reported that this plant has already reduced load-shedding by 30% in the Punjab. Similarly, The Thar Coal Project in Tharparkar, with investments of $1.5 billion, includes both the construction of a coal-fired power plant and open-pit mining. The first phase, completed in 2022, has added 1200 megawatts to the grid. Additionally, the Karot Hydropower Project is a $1.8 billion project that involves the construction of a 720-megawatt hydropower plant on River Jhelum. It is expected to be completed by 2024. Once operational, it has the capacity to reduce the country’s reliance on fossil fuels and cut greenhouse gas emissions. There are a number of other energy projects under development that will give a rapid boost to Pakistan’s fluctuating economy upon their completion.
- ✓ Job Creation and Skill Development:
The massive infrastructure projects of CPEC will generate significant employment opportunities across the country. For example, the Gwadar Port, its development and expansion alone, is capable of creating over 40,000 jobs, which will benefit local communities and help stimulate economic growth in Balochistan and, eventually, Pakistan. Similarly, the energy projects mentioned above will not only secure the country’s energy supply and demand ratio but will create thousands of direct and indirect employment opportunities. Apart from job creation, China has focused greatly on skill development in its people as well as in its external projects, so one of the strong emphases of CPEC is on skill development, which will help in the long-term sustainability of the country’s economy. Pak-China collaboration has established various training programs and multiple technical institutes to focus on enhancing the skills of the local workforce. These are aligned with CPEC’s requirements, which will ensure that Pakistani workers are learned and well-equipped to handle the demands of modern infrastructure projects. For instance, specialized training in logistics, engineering and port management is already provided to Gwadar Port workers, which is helping them to acquire related skills. Recent studies conducted by the World Bank estimated that CPEC could boost Pakistan’s GDP by up to 1.5% annually only through job creation and skill development, especially in deprived areas of Pakistan.
- ✓ Special Economic Zones & Industrial Growth:
The industrial development and establishment of SEZs across the provinces are some of the most important facets of the CPEC that would bring economic transformation to Pakistan. As a matter of fact, it is believed that these SEZs would definitely increase industrialization, establish a good business environment, facilitate export capability, and result in the economic uplift of Pakistan. These SEZs are being developed in strategic locations to attract foreign as well as domestic investments through the provision of attractive incentives like tax exemptions, better infrastructure, and streamlined regulations that make them the hub of industrial growth. The two most prominent SEZs in Pakistan under CPEC are Allama Iqbal Industrial City in Faisalabad and Rashakai SEZ in Khyber Pakhtunkhwa. While the old SEZs were focused on textile, engineering, and pharmaceuticals, the new ones would be primarily aligned with steel and manufacturing industries. As per BOI Pakistan, these SEZs are likely to create around 500,000 direct jobs and unlimited indirect jobs, thus considerably increasing the number of employments while bringing in investments worth $1 billion. Moreover, it may also serve as a regional hub for trade, which will connect Pakistan to both regional markets and world markets through an increase in port capacity. According to the citation of the Pakistan Institute of Development Economics, the development of Gwadar Port and other SEZs in Pakistan is likely to increase the country’s total volume of trade within the range of 64%, through which the revenue of Pakistan from exports is expected to increase.
- ✓ Boost to Trade and Exports:
The projects under CPEC are already forthcoming with economic uplifting and increased exports. According to the Pakistan Business Council-PBC, the infrastructure project under CPEC—the Gwadar Port—is capable of accommodating as many as 13 million tons of cargo per year, adding to $6 billion in trade revenues annually. The World Bank estimated that infrastructure improvements, which include the Karachi-Peshawar Motorway and the Karakoram Highway, cut shipping times by as much as 50% and logistics costs by up to 30%, thus making Pakistani exports more competitive in the international market. Further, BOI estimated that the same SEZs under CPEC could increase Pakistan’s exports to $10 billion per year by 2025. It has also opened the way for acting as a transit and trade corridor that connects the whole region to the rest of the world markets. Besides infrastructure, developed ties with China provided a gateway to the transfer of technology, which is considered essential for the modernization of the industrial base of Pakistan.
- ✓ Agriculture and Technology Transfer:
It is set to revolutionize the agricultural sector, driving economic boost through an increase in productivity and improved food security. Agriculture always remained the backbone of China as well as Pakistan’s economy, which contributes about 20% of the GDP and employs about 42% of human resources (Pakistan Bureau of Statistics). Apart from SEZs China has also developed high-tech agricultural zones to improve quality, enhance crop yields and reduce costs. These agricultural advancements include remote sensing, precision farming and modern irrigation systems; for instance, China has introduced sprinkler systems and drip irrigation, which has shown efficient water use and reduced its use to 50%, if compared to traditional methods. Pakistan Agriculture Research Council (PARC) 2023 report says that hybrid seeds (from China) for crops like wheat, maize and rice have increased yields by 20-30% in pilot projects, which eventually increased rice exports from Pakistan to international markets. Additionally, the introduction of smart farming techniques like the use of drones for crop monitoring and multiple soil analysis enhanced the agricultural efficiency already seen in Punjab and Sindh, where drone technology is used to assess crop health, monitor irrigation, optimize pesticide use, increase yields and reduce labour costs.
- ✓ Strategic Positioning and Geopolitical Benefits:
CPEC and its intellectual alignments with Pakistan’s strategic location strengthen its geopolitical significance. It is a gateway for China and other countries to access the Arabian Sea through one of the world’s deepest ports, the Gwadar Port. Gwadar, the crown jewel of CPEC, becomes a major trans-shipment and logistics hub, it will facilitate trade for Central Asia, Afghanistan and China. Based on the Gwadar Port Authority statistics, the performance efficiency of the developed port for handling is projected to reach one hundred Million tons of the cargo in 2030 annually as compared to the traditional Malaccan Strait by cutting down the overall ship operating cost and time. According to the statistics, CPEC has clarified that the projects, especially Gwadar port, are already under $500 million investment. On the basis of SBP data, the largest foreign investment in Pakistan comes from China for about $25 billion in energy, infrastructure and industrial sectors. This monetary flow from China not only help the economic booms but also stabilize the foreign exchange reserves and hence protect Pakistan’s economy from external shocks. Also, Afghanistan and Iran both have shown the desire to be a part of CPEC, has turned Pakistan into and important trading partner as well as transit point for land locked countries like Central Asian Republics. Besides this, the fiber optic networks would enhance digital interoperability, ripening Pakistan’s IT industry by allowing the entry to global e-commerce and software export platforms.
Critical Analysis
CPEC is portrayed as a saviour for the much beleaguered economy of Pakistan. On the one hand, it entails a great deal of infrastructural development, industrialization, energy projects while on the other hand it has so many challenges that might actually hinder the overall transformation. Hence, there is a positive effect of this connectivity on economic activities but borrowing form China has emerged as a key issue as Pakistan total foreign debt exceeded to $130 billion in the year 2023. For actual improvement of the economy, both China and Pakistan have to address these challenges systematically while aiming at more effective and efficient economy that will increase inclusiveness of mass populations.
Conclusion
CPEC has a chance to significantly transform the Pakistan’s economy as it practically contributes to all sectors of common interest such as energy, trade, employment, infrastructure development, industrialization and geopolitics. Over-all development promoted by FDI in many fields will contribute to improve connection within the region to achieve long-sustained economic growth and raise living standards of millions of Pakistani population. Another important aspect of the CPEC projects being undertaken is they collectively hold a potential to redefine Pakistan’s future, making it a strategic stakeholder on the global platforms as infrastructure projects pace continues. In order to get the most from the deal and to avoid economic disaster, Pakistan has to address issues regarding debts and should have the best interest of the people in the areas where CPEC will be implemented especially Baluchistan province.
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