Articles Asia Trade & Economics

Resuscitating the Silk Route

Image Credits: Claude Arpi
Economy, BRI, CPEC

The Belt and Road Initiative (BRI) proposed by the Chinese President Xi Jinping in 2013, embodies China’s modern strategy of resuscitating the silk route and exporting China’s development model across borders; realizing the Chinese dream of becoming the center of the global economic setting. The BRI, with a plan of investment ranging from $1 trillion to $8 trillion is expected bring economic development in unstable regions like Southwest Asia. In sum, through the BRI, China has introduced a new model of economic development of cross‐continental connectivity. With all its promising prospects, the initiative now raises a question how such grand designs are going to impact the developments in South and West Asia. To this end, CPEC, one of the pilot projects of BRI, worth more than $60 billion of investment plans, will be pivotal. Accordingly, $35 billion is earmarked for energy projects, and $15 billion is to be invested in infrastructure, Gwadar Port, and Special Economic Zones (SEZs) which is crucial in facilitating trade relations between China, Pakistan and Southwest Asia.

Accordingly, $35 billion is earmarked for energy projects, and $15 billion is to be invested in infrastructure, Gwadar Port, and Special Economic Zones (SEZs) which is crucial in facilitating trade relations between China, Pakistan and Southwest Asia.

SEZs have always been a fruitful strategy for promoting trade, employment and economic growth in a country. A SEZ is a specifically delineated duty-free enclave for the purposes of trade operations, duties and tariffs. From past several years, SEZs have been established in several countries with the goal to increase foreign investment. In line with changing global economic structure, Pakistan has prioritized the establishment of SEZs. So far 41 sites have been identified for SEZs and the Board of Investment (BoI) has prioritized nine exclusive Industrial Zones to be built under the umbrella of CPEC, one each in Punjab, Khyber Pakhtunkhwa (KP), Balochistan, Islamabad, FATA, Azad Kashmir, Gilgit-Baltistan and two in Sindh. Accompanied with principles of inclusive and sustainable development, work on three prioritized SEZs has been initiated under Long Term Plan of (LTP) of CPEC. The three prioritized SEZs of first phase of LTP are M3 Industrial City in Faisalabad-Punjab, Chinese SEZ Dhabeji-Sindh and Hattar SEZ in KP province. The establishment of SEZs  promises to bring a massive socio-economic development in the country specifically in the areas of energy, trade, agricultural development, infrastructural development, connectivity, industries, poverty alleviation and tourism cooperation between financial institutions and markets, financial cooperation between Free Trade Zones (FTZs).

So far 41 sites have been identified for SEZs and the Board of Investment (BoI) has prioritized nine exclusive Industrial Zones to be built under the umbrella of CPEC, one each in Punjab, Khyber Pakhtunkhwa (KP), Balochistan, Islamabad, FATA, Azad Kashmir, Gilgit-Baltistan and two in Sindh.

Subsequently, SEZ and CPEC promises to integrate global economy, with Pakistan at its center, whilst investing in energy and infrastructure development and softening the international trade. The cross-border infrastructure investment will bring a positive trend in the regional economies while strengthening regional connectivity and integration. It would narrow the development gap at national and sub-regional levels, thus promoting inclusive and sustainable growth. Economic development and industrial modernization would also support market conditions that are conducive to growth by improving competitiveness, productivity and would therefore support social and economic progress.

Moreover, the SEZ’s under CPEC draw their logic from increasing Pakistan’s demands for energy resources and consumer markets to sustain its export-based manufacturing economy. Not only, will they enable Pakistan to secure its energy supplies but allow China, to access the huge consumer markets of South Asia and west Asia/Middle East. SEZ’s would mainly act as a trade bridge between China, Pakistan and the Middle East. Concurrently, investments in infrastructure development­ projects of CPEC, under the broader frame of the BRI will be crucial to the domestic economic development of the countries of South Asia, Central Asia, Middle East, Europe and Africa. Thus, the CPEC and BRI offer an unprecedented opportunity of regional connectivity and economic development to the countries of Asia, Europe, and Africa in general and the Middle East and South Asia in particular.

For Pakistan CPEC is a win-win situation. For instance, CPEC in many ways is a boon for Pakistan’s economy that has been suffering from law and order crisis, export stagnation, under‐investment, chronic energy shortages and weak state institutions. By providing a solid foundation to the country’s faltering economy and a catalyst to industrial development, CPEC will pave the way for nation building. Moreover, it will also play the role of a conduit for China’s access to the Arabian Sea. The northwestern Chinese city of Kashgar in Xinjiang’s autonomous region will be connected with Gwadar port in western Pakistan through a 3,000 km network of roads and railways. This will bring development in the underprivileged region of Xingjiang which has been ignored before due to untoward circumstances.

Qurat Hafeez

Qurat Hafeez

Qurat ul Ain Hafeez is the Research Coordinator at the Centre for Strategic and Contemporary Research. She has done her M.Phil in International Relations from the Quaid-i-Azam University, Islamabad.

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