CPEC for growth

As war clouds begin to lift, the ceasefire with India has enabled Pakistan to assess the evolving geopolitical scenario with a different perspective and a sense of cautious optimism.

We are witnessing the Middle East's longstanding rivalry experiencing a significant transformation; Turkey is altering its regional dynamics, and preliminary moves towards reconciliation between Russia and Ukraine indicate the potential emergence of a new security framework in Eurasia, alongside strengthening the Central Asian States.

The new normal is marked by decisions driven primarily by national economic interests, with an emerging sense of strategic autonomy that places national development and transformation above traditional political alignments. Still, numerous other challenges persist, including unresolved territorial disputes, proxy conflicts, and the potential for major-power competition between the US and China to reignite flashpoints despite global efforts to foster prosperity through diversification of trade patterns.

In recent months, China has negotiated a reduction in US tariffs from 125 per cent to 10 per cent for 90 days, easing decoupling risks amid global uncertainty. President Xi’s recent ASEAN tour focused on strengthening regional ties, including an $8 billion railway linking southern China to Vietnam’s Haiphong port. China is also evolving its Belt and Road Initiative (BRI), moving beyond mega-projects to more flexible bilateral frameworks and financial instruments. In the short to mid-term, Beijing may restructure co-financing models. Exim Bank and China Development Bank share risks with commercial lenders, multilateral institutions and host-country partners in joint ventures.

Green BRI projects remain a priority, supported by new green-finance windows with major development banks, targeting green SEZs, solar parks, agriculture zones, and battery-storage schemes. By 2030, China aims to produce 70 per cent of its own chips and lead in deep-sea port infrastructure. Domestically, stimulus measures -- such as easing foreign investment restrictions and subsidising green tech -- have bolstered China’s role as a key producer of AI hardware, EVs (notably BYD), 5.5G equipment (led by Huawei) and solar panels.

Though China has scaled back large-scale global lending, it may still offer such financing in neighbouring regions. The shift towards ‘small is beautiful’ is not universal and will vary by geopolitical context and business case -- something BRI partner countries must prepare for.

The above factors and China’s unwavering support align with Pakistan’s urgent investment needs. China recognises Pakistan’s vast natural and strategic endowments and in light of renewed India-Pakistan tensions, fast-tracking the development of Gwadar and accelerating the rollout of CPEC Phase 2 have become strategic imperatives for both countries.

As CPEC approaches its first decade, its post-2025 trajectory will be shaped by several intertwined factors: the new tariffs imposed by the US administration, the recalibration of US-China trade and technology competition, the diversification of Belt and Road financing models, shifting regional geopolitics -- particularly the recent India–Pakistan tensions and China’s role therein -- and, last but not least, Pakistan’s own efforts to integrate more deeply into global markets.

Our pitch decks must move beyond outdated templates as we transition from a series of energy and infrastructure projects into a true multimodal hub for manufacturing, transport connectivity and sustainable growth. We should embrace a genuine win-win philosophy and follow the principle that ‘to attract the phoenix, one must first build the nest’ by demonstrating how joint investments in cluster-based Special Economic Zones, high-capacity transmission corridors, agricultural zones, a dedicated CPEC Phase 2 ‘Digital Corridor’ and green-energy initiatives can deliver shared security, resilience and prosperity for both Pakistan and China.

This means exploring new avenues for Pakistan to attract downstream manufacturing, electric vehicle components, solar modules, digital infrastructure and agricultural hardware under CPEC’s preferential tariff framework. It also involves establishing research and development centres and training institutes to enhance local technological capabilities.

All of this must take place in well-developed SEZs and tech zones, supported by broader incentives, a robust and efficient system, integrated security structures, and stronger relationships with local banks. A balanced approach to transparency, disclosure and ESG management should complement these efforts. At the same time, Pakistan must strengthen its regional economic ties through platforms like the Shanghai Cooperation Organization to attract broader investment and deepen regional integration.

While there are significant opportunities, Pakistan also faces serious challenges. India's recent move to alter the Indus Waters Treaty highlights the urgent need for Pakistan to speed up key hydropower projects such as Diamer-Basha and Azad Pattan etc (in AJK), along with the long-delayed ML-1 railway upgrade.

Once completed, ML-1 will link Central Asia via Afghanistan to the Indian Ocean’s deep-water ports, transforming the region into a major transport hub with parallel advances in the Trans-Afghan Railway that will strengthen a sustainable north–south trade axis. By expediting the development of hydropower with integrated water-management systems and by embedding itself more swiftly into this regional economic framework, Pakistan can significantly mitigate its strategic risks and secure a more prosperous future

As CPEC 2.0 gathers urgency, backed by national harmony, Pakistan must immediately mobilise its human capital: upskilling engineers, planners, negotiators and public-sector managers through rigorous training programmes so that strategic vision is matched by execution capability.

The planning ministry along with the SIFC must transition CPEC governance from a purely state-driven model to one that actively incorporates private-sector enterprises and key stakeholders through transparent governance, strategic coordination and rigorous disclosure standards, an approach that aligns seamlessly with the URAAN Pakistan initiative's vision of fostering inclusive, innovation-led national development. Similarly, the National Development and Reform Commission established a new Bureau for Private Sector Development to strengthen policy support and institutional engagement with private enterprises.

CPEC’s future depends on Pakistan’s ability to leverage its strengthened strategic partnership with China, harness technological cooperation, adopt innovative financing and regulatory models and ensure disciplined risk management.

The writer is a project management specialist and is a faculty member at various institutes/universities, while also having served as a diplomat in China and Vietnam. He can be reached at: hdb4049@gmail.com