The China-Pakistan Economic Corridor (CPEC),
which has been successfully implemented for ten years, is being celebrated by Pakistan and China. There is no disagreement among Pakistanis on the fact that CPEC has greatly benefited the nation.
Challenges including a lack of energy, the renovation and creation of transportation infrastructure, the need for alternative seaports, etc. have been overcome thanks to CPEC.
Opponents, however, reject reality and cast doubt on CPEC’s significance. By neglecting the potential cost of having no CPEC, they attempt to associate it with issues like debt traps.
The Asian Institute of Eco-civilization Research and Development has conducted a fast analysis that shows the opportunity cost of no-CPEC would be quite large.
Start with the energy industry. Analyzing the facts in-depth paints a dreadful picture in the absence of CPEC projects. According to the report, Pakistan had a severe electrical shortage prior to the start of CPEC. As business possibilities decreased, the industry had begun to leave the nation.
For the expanding young population, there were few employment options. According to government figures, the country was losing $4–$5 billion a year as a result of these severe economic costs.
As a result of extended electricity load-shedding, people were experiencing sleepiness, hence health expenditures were not included. The difficulty of power interruptions was managed, if not entirely eliminated, thanks to CPEC energy projects. The amount of electricity consumed per person increased from 431 kilowatt-hours (kWh) in 2014 to 644 kWh in 2022 as a result of new power projects.
What would the cost of electrical load-shedding have been if the CPEC energy projects had not been rendered operational? According to a basic calculation, there would have been an annual loss of $15–20 billion as a result of power interruptions. How?
The argument is supported by two main elements. First, Pakistan had 188 million people overall in 2014, an increase over the previous eight years.
The new population census estimates that there will be 241 million people living worldwide in 2022. It indicates that the demand for energy significantly increased as a result of the population growth.
Second, throughout the same time period, the amount of electricity consumed per person grew. Both possibilities show that the demand increased within the specified time period.
Therefore, Pakistan might have seen the worst load shedding in 2023, which would have caused deindustrialization, unemployment, mental health problems, and business closures. In essence, the price would have gone up to $15–20 billion.
Let’s try to analyze the effects while keeping the current economic crisis in mind. Pakistan is having trouble coming up with ways to stop debt dangers and rekindle economy. In this case, the country was compelled to agree to all IMF requirements in order to receive a $3 billion loan.
Along with addressing the energy shortage, CPEC has made three other sorts of interventions to combat poverty. It first produced jobs and respectable chances for employment. Data show that during the first stage, 192,000 jobs were produced.
Second, the CPEC projects benefited more than 100 small and medium-sized businesses (SMEs), which supported several families and created indirect jobs. Third, CPEC improved the transportation infrastructure and gave enterprises access to electricity. Without CPEC, there is no doubt that poverty levels would have risen.
highways and roads
Pakistan needed $1.2 billion in 2014 to repair its crumbling national road system, which was brought on by the transit facility made available to the NATO supply chain.
However, Pakistan’s allies did not express any interest in investing in the infrastructure’s rehabilitation. China stepped up at that time and assisted with both the construction of new infrastructure projects as well as the rehabilitation of existing facilities.
Statistics show that 851 km of new roadways were built as part of CPEC, improving connectivity and luring new investment to the nation.
youth education
In addition, it is a well-known truth that Pakistan is endowed with an abundance of young people. It must give them the right abilities so they can take advantage of the chance.
Sadly, there aren’t enough resources to give young people access to chances for skill development. The Chinese government also contributed millions of dollars in this instance to CPEC’s talent development program. Additionally, Chinese businesses trained young people. The Sahiwal coal-based power plant’s builder, Huaneng Shandong Rui Group, invested in enhancing the capabilities and talents of its 622 employees, according to the information that is currently accessible.
245 engineers were trained in accordance with the requirements of the plant, according to a further data breakdown. Additionally, the Huaneng Shandong Rui Group plant administration created a 377-person capacity.
Additionally, Port Qasim helped develop the skills of the employees and engineers. According to data, the Port Qasim plant’s possibilities for skill development and capacity growth helped 2,600 employees.
It trained 2,000 general staff workers and 600 engineers, a significant amount, particularly in the engineering field.
important investment
Pakistan had the biggest terrorist attack in 2014–15 as it paid a price for being a frontline ally. It experienced terrorism-related incidents that cost it more than $100 billion in economic losses and about 50,000 fatalities. The allies deemed Pakistan a dangerous place for investment at the time.
Pakistan has a difficult time finding investment prospects. Sadly, nobody wanted to make an investment in the nation—even the Pakistani business community was wary. China and Pakistan launched the CPEC at that crucial moment, opening the door for investment from other sources. Currently, a large number of nations, including Asean members and the Central Asian States, are expressing interest in joining CPEC.
It is clear from the reasoning above that there is a significant opportunity cost associated with not having CPEC. Without it, Pakistan’s social and economic conditions would have been in horrible shape because the West may be pressuring Pakistan to toe its line.
Therefore, there is a widespread belief among Pakistanis that CPEC has assisted the nation in avoiding such a crisis.
The author is a visiting research fellow at Hebei University in China and a political economist.
