The China-Pakistan Economic Corridor (CPEC), a cornerstone of China’s Belt and Road Initiative (BRI), was formally launched in 2015 following agreements signed during Chinese President Xi Jinping’s visit to Pakistan. This initiative, valued initially at $46 billion and later estimated at $62 billion, aims to enhance connectivity and economic cooperation through a network of infrastructure projects spanning approximately 3,000 kilometers from Kashgar in China’s Xinjiang province to Gwadar Port in Pakistan’s Balochistan province. This survey note provides a detailed examination of CPEC’s objectives, key projects, investment details, economic impacts, challenges, and future prospects, drawing on a wide range of data and analyses available as of April 5, 2025.



Introduction and Objectives

CPEC is designed to serve multiple objectives, including improving Pakistan’s transportation networks, addressing energy shortages, fostering industrial cooperation, and enhancing social development through people-to-people contacts. Key projects under CPEC include the development of Gwadar Port, expansion of the Karakoram Highway, upgrades to the Main Line-1 (ML-1) railway, and the construction of various energy projects such as coal, hydro, wind, and solar power plants. These initiatives aim to transform Pakistan’s economy from agriculture-based to industrial, while also providing China with a shorter trade route to the Arabian Sea.

Investment and Funding

The financial commitment to CPEC has been substantial, with initial estimates of $46 billion in 2015 growing to around $62 billion by recent reports. Funding primarily comes from Chinese sources, including loans from the China Development Bank and investments by Chinese state-owned enterprises. A report from the CPEC official website highlights that approximately half of the original $45 billion commitment, or $23-25 billion, has been utilized for projects, with the remainder at various stages of planning or negotiation [2].

Economic Impacts

The economic impact of CPEC on Pakistan is multifaceted, with both positive outcomes and significant challenges.

Positive Impacts

Infrastructure Development: CPEC has led to significant improvements in Pakistan’s infrastructure. The construction and upgrading of highways, such as the Karakoram Highway, have reduced travel times and improved access to remote areas. The development of Gwadar Port is expected to position Pakistan as a key trade hub in the region.

Energy Generation: Energy projects under CPEC have added thousands of megawatts to Pakistan’s grid, addressing chronic power shortages. For instance, completed projects have contributed to stabilizing the energy sector, which is crucial for industrial growth.

Employment Generation: CPEC has created numerous job opportunities, both directly and indirectly. A meta-analysis published on ResearchGate estimates that CPEC has generated over 75,000 direct jobs and potentially over 200,000 indirect jobs, particularly in sectors like energy, infrastructure, and Gwadar development [3]. An article from Pakistan Observer in 2021 noted that ongoing projects have already provided livelihoods for many Pakistanis, with potential for further job creation as projects progress [4].

Trade Facilitation: While the direct impact on trade volumes is mixed, CPEC aims to enhance Pakistan’s trade capabilities by improving port facilities and transportation networks. Data from tradingeconomics.com shows China’s exports to Pakistan increased from $14.6 billion in 2015 to $17.3 billion in 2023, suggesting some facilitation of trade [5]. However, Pakistan’s exports to China, at $2.74 billion in 2023, have not shown a consistent upward trend, indicating limited impact on export growth [6].

Challenges and Negative Impacts

Despite these benefits, CPEC faces several challenges that have impacted its economic outcomes:

Delays and Cost Overruns: Many projects have experienced delays due to security concerns, bureaucratic hurdles, and contractual disputes. The Stimson Center’s 2023 report highlighted that after a decade, many development projects have stalled, attributing this to governance issues and security challenges [7].

Debt Sustainability: The financing model, heavily reliant on Chinese loans, raises concerns about Pakistan’s debt sustainability. The lack of transparency in loan terms, as noted in a Brookings article, prevents proper accountability and could burden Pakistan’s balance of payments [8]. A report from csstimes.pk mentioned that Pakistan’s liability is currently limited to $23-25 billion, but future financing burdens remain uncertain [9].

Regional Disparities: The distribution of CPEC projects has been uneven, with regions like Balochistan feeling marginalized despite hosting critical projects. This has led to tensions and perceptions of inequitable benefit distribution, as discussed in a Taylor & Francis article analyzing CPEC’s federal politics [10].

Environmental Concerns: Large-scale infrastructure projects have raised environmental issues, including deforestation, water scarcity, and increased pollution. A Wikipedia entry on CPEC noted that by 2030, carbon dioxide emissions from CPEC projects could total 371 metric tonnes, with significant contributions from the energy sector [11].

Future Prospects

The second phase of CPEC, focusing on industrial cooperation, agriculture modernization, and social development, holds promise for further economic growth. The establishment of special economic zones (SEZs) is anticipated to attract foreign direct investment and promote export-oriented industries. 

However, realizing this potential will require addressing governance issues, enhancing security, and ensuring equitable distribution of benefits. A Georgetown Journal of International Affairs article from 2024 emphasized the need for inclusive approaches and reassessment of development plans to foster trust and long-term success [16].

Conclusion

In conclusion, CPEC has had a significant but complex impact on Pakistan’s economy. It has driven infrastructure development, energy generation, and job creation, yet faces challenges such as delays, debt concerns, and regional disparities. The future of CPEC depends on effective implementation and addressing current shortcomings, potentially transforming Pakistan’s economic landscape if managed well.