New Delhi, May 31: A recent report highlights the failures of the China-Pakistan Economic Corridor (CPEC), once touted as a game-changer for Pakistan’s economy. After nearly a decade, it has devolved into a project marked by “incomplete infrastructure, rising debt, stagnant industrial sectors, and increasing frustration between the two nations.”
According to the European Times, the branding of “CPEC 2.0” signals less of a new beginning and more of an attempt to politically salvage a project that has not met its strategic and economic objectives.
Valued at approximately $62 billion, the core infrastructure of CPEC includes highways, power plants, rail networks, port development, and special economic zones across Pakistan. This flagship project of China’s Belt and Road Initiative aimed to drive industrial transformation, enhance regional connectivity, ensure energy security, and develop Gwadar as a major trade hub linking western China to the Arabian Sea.
However, the report indicates that the model has been flawed from the outset, prioritizing visible infrastructure over long-term economic stability.
While Pakistan has secured substantial Chinese financing and construction capabilities, it has failed to establish an industrial framework that could yield long-term economic benefits. Merely building roads and ports is insufficient without a connection to productive industries, stable exports, and effective administrative systems.
Numerous coal and power projects supported by China were implemented under agreements that guaranteed high returns for Chinese companies in dollars. As Pakistan’s currency weakened and its economic crisis deepened, these agreements became increasingly costly.
By 2025, Pakistan’s circular debt crisis left billions of dollars owed to Chinese power producers, with the debt to independent Chinese power producers exceeding $7 billion. Instead of addressing the structural issues in Pakistan’s power sector, CPEC has compounded the financial burden on an already fragile system.
The report also notes that Pakistan’s balance of payments crisis, repeated negotiations with the International Monetary Fund (IMF), and foreign currency shortages have exposed the inherent weaknesses of this corridor model.
While infrastructure was built through Chinese loans and investments, it did not lead to a significant increase in exports capable of generating the revenue needed to repay the debt. This gap between construction and economic productivity has become CPEC’s most significant issue.
Additionally, the failure of Gwadar port is cited as a major reason for the project’s shortcomings. Originally intended to become a global trade hub like Dubai or Singapore, this goal remains unachieved.
Moreover, the security situation surrounding CPEC has rapidly deteriorated. The report states that Chinese engineers and workers, particularly in Balochistan, are increasingly targeted by militant attacks.
Baloch insurgent groups view this corridor as a project that exploits local resources without providing real economic benefits to the local population. This perception has led to escalating protests and security challenges in the region.
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