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CWA # 1970, 31 December 2025
Pakistan in 2025
Pakistan & China

  Aparna A Nair

2025 marked the tenth year of the official launch of the China-Pakistan Economic Corridor (CPEC). Celebrated as the symbol of an enduring China-Pakistan strategic partnership, it stands at a critical juncture with uneven outcomes, security challenges, and political economic constraints. 

In May 2025, Afghanistan's Acting Foreign Minister Amir Khan Muttaqi announced Afghanistan's plan to integrate the country into CPEC.

In September 2025, the 14th Joint Cooperation Committee meeting was held in Beijing. In this meeting, Pakistan and China launched the CPEC Phase II. The plan signalled a shift of focus on infrastructure towards diversified economic, technological and social cooperation and a renewed agenda for the next decade. 

What is the background?
First, a brief note on the CPEC and what it means for China and Pakistan. The China-Pakistan Economic Corridor is a flagship project under the Belt and Road Initiative. The corridor spans 3000 kilometres and connects Pakistan’s Gwadar Port with China’s Kashgar, located in the Xinjiang region. The corridor integrates highways, railways, energy projects, industrial zones and digital connectivity. In this plan, Pakistan stands as a key node in China’s westward economic outreach. It will improve Beijing’s accessibility of Middle East energy imports by shortening the route by around 12,000 kilometres. These projects are funded by policy banks and funds from the Asian Development Bank and employ China’s exports and expertise in implementation. The project was initially valued at USD 46 billion, and it now stands at USD 62 billion.

For China, CPEC opens avenues for economic rebalancing, energy security and plays a crucial role in its geopolitical influence. It primarily aims to fulfil the BRI ambition of connectivity. The projects fit its strategy to export infrastructure know-how, capacity and secure alternative routes for energy and technology. The CPEC projects help channel China’s excess industrial capacity in steel, cement, technology and construction and secure alternative routes for energy and trade. The Gwadar port not only improves and widens China’s reach to the Middle East but also reduces its dependence on the Malacca Strait. Moreover, this connectivity project expands China’s footprint in the Indian Ocean and South Asia at large. 

For Pakistan, the project aids with infrastructure development, economic growth and regional connectivity. The CPEC projects address its decades-long deficits in energy, transport and logistics. It also stimulates economic growth with large-scale implementation of industrialisation, transport and logistics. Furthermore, once the ports and highways are operationalised, it will make Pakistan a regional transit hub that links South Asia, Central Asia and the Middle East.

Second, the story so far. Phase I of the CPEC spanned from 2015-2020. The “early harvest projects” prioritised addressing Pakistan’s acute energy shortages and logistical bottlenecks. Over the past decade, the CPEC resulted in over 10,000 MW of power generation, which eased Pakistan’s electricity shortfall. Road projects like the Karakoram Highways and ML-1 railways improved connectivity. The Gwadar Port is operational but underutilised. The establishment of Special Economic Zones is progressing slowly owing to regulatory and macroeconomic challenges.

Third, the transition to phase II of the project. The 14th Joint Cooperation Committee meeting marked the transition to Phase II of CPEC. It is structured around five interconnected Corridors. They are the growth corridor, Livelihood Corridor, Innovation Corridor, Green Corridor and Opening up Corridor. These corridors along with Pakistan’s 5E framework, which includes export, equity, E-Pak, Environment and Energy. The plans suggest a shift from construction-heavy projects to diversified cooperation.

3. What are the major issues?
First, the Pakistan’s political climate. Pakistan’s domestic conditions, like frequent government changes, civil-military tensions and policy reversals, disrupted its continuity. They were protests against China’s presence, triggering anti-China protests. It undermined long-term planning and investor confidence.

Second, local resistance and security challenges. In Pakistan, Balochistan and Gilgit-Baltistan have witnessed strong protests and resistance to CPEC. It is often tied to land, resource allocation and limited local benefits from the mega projects. These, along with attacks on Chinese workers, signify the cost of inadequate local buy-in. In China, Xinjiang-linked sensitivities such as militancy and cross-border security concerns existed.

Third, economic and governance constraints. Pakistan’s structural constraints such as low exports, a narrow tax base and IMF reliance, pose a fragile macroeconomic base to CPEC. Pakistan’s Balance of payments pressures and rising debt have raised concerns over the fiscal burden of CPEC projects. These issues are further exacerbated with governance gaps in the form of opaque contracts, weak parliamentary oversight and poor coordination between federal and provincial authorities.

Fourth, continued trust and development. Both sides reaffirmed their long-term commitment despite economic turbulence and regional instability. The renewed agenda and new action plans include measures to ensure momentum. For Pakistan, the CPEC initiatives present an opportunity to move towards sustainable growth and accomplish its goal of a USD 1 trillion economy by 2035. The past decade’s experience highlights the need for deep domestic reforms, export competitiveness and inclusive development. For China, the projects consolidate the model of “high-quality BRI.” It tests the country's ability to adapt to BRI projects to local needs and political realities. For the region, the CPEC offers connectivity and trade ease in South Asia and Central Asia. However, it also poses the risk of geopolitical contestation as the corridor passes through Pakistan-occupied Kashmir (PoK), and India has consistently objected to it.

What next?
First, implementation of Phase II of the project. The phase II’s success depends on the execution of flagship transport corridors, development of SEZs and export-driven industrial clusters. 

Secondly, efforts to resolve socio-political tensions. The past decades' experience calls for political stability and inclusive local engagement. It is essential to reduce resistance and ensure shared benefits from development.

References
“A Decade of CPEC: An Analysis,” Teshu Singh, 24 November 2023

“Ten Years of CPEC Implementation: Promise, Pitfalls, and Potential,” Natasha Matloob, Yummna Hina Khan, August 2025

“Ten Years Of CPEC: A Decade Of Opportunities,” Eurasia Review

“China-Pakistan Economic Corridor Power Projects: Insights into Environmental and Debt Sustainability,” E. Hillman, Columbia Centre on Global Energy Policy, 10 April 2025

About the author
Aparna A Nair is an undergraduate student at Madras Christian College, Chennai.

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