Pakistan Showcases Achievements in Belt and Road Cooperation
Former Pakistani Prime Minister Shaukat Aziz repteatedly indicated that the Belt and Road Initiative has brought huge development opportunities to Pakistan.
China and Pakistan stand to benefit considerably from the economic corridor that now links them.
ChinaThe China-Pakistan Economic Corridor has empowered Xinjiang Uygur Autonomous Region to become a hub in Central Asia, promoting local development and reducing the travel time from Gwadar Port, Pakistan to China from seven days to two. The economic corridor’s shortened energy transmission distance also guarantees the country’s energy security.
Pakistan
China-Pakistan energy cooperation ensures that Pakistan’s energy supply meets the demands of its industrial development. Bilateral cooperation in infrastructure has enabled the country to form a highway network that will make it a future key developmental node in Eurasia. Bilateral cooperation in the construction of industrial parks has fueled the country’s economic development and created more jobs for local residents.
The formal start of operations at Gwadar Port signaled its fi rst large scale loading of export containers. DESPITE sluggish global economic development, Pakistan achieved outstanding growth in 2016. During its fi scal year July 2015 to June 2016, the country’s GDP increased by 4.7 percent over the previous year, the largest increase in the last eight years. Its industrial growth reached 6.8 percent, also the highest in eight years, exceeding its target growth of 6.4 percent. This fi scal year (July 2016 to June 2017), Pakistan’s economic growth is expected to top 5 percent, and hit 5.4 percent in 2018.
In addition, Pakistan’s KSE100 Index increased by more than 45 percent in 2016, rebalancing the historical record and representing the best performance in the Asian market. Morgan Stanley Capital International (MSCI) re-listed the Pakistani stock market as MSCI’s emerging market benchmark stock index.
It is clear that the rise of Pakistan’s stock market is related to its steady economic growth, which, to a large degree, can be ascribed to the implementation of the Belt and Road Initiative. Former Pakistani Prime Minister Shaukat Aziz repeatedly indicated that the Belt and Road Initiative has brought huge development opportunities to Pakistan, and has become a driving force behind regional development. The IMF also named the investment projects along the China-Pakistan Economic Corridor as one of the three major catalysts for Pakistan’s economic development.
Poor Infrastructure Constrains Economic Development
Agriculture constitutes Pakistan’s economic foundation; rural residents account for 48 percent of the country’s total population. Due to the limited scale of industry and insuffi cient industrial structure, the country’s industrial output is only 24 percent of its total economic output.
Over the past 20 years, Pakistan’s economy has maintained overall momentum for growth, but has been constrained by inadequate energy supply and backward infrastructure. The country has been eager to improve the situation.
Take the power system, for example: during the summer, the peak season for electricity consumption, Pakistan used to have a deficit of over 6,000 megawatts. Low electricity capacity meant that nationwide blackouts were frequent. On July 10, 2012, Islamabad suffered an 8-hour power cut. On June 25, 2013, the electricity supply was down for 12-15 hours in major cities, and for 16-18 hours in rural areas. On April 29, 2014, major cities suffered power outages for 10-12 hours, while rural areas were cut off for more than 12 hours.
Poor transportation infrastructure is another bottleneck in Pakistan’s economic development. Its railway system has not seen any improvements for a long time. Its highway system is also underdeveloped with poor road conditions and a low road density. Many remote areas remain unconnected to the outside world.
The construction of Gwadar Port, energy, transportation infrastructure, and industry are key areas to be developed in the economic corridor.
China-Pakistan Economic Corridor
The construction of the China-Pakistan Economic Corridor started in 2013. An important part of the Belt and Road Initiative, it strengthened exchanges and cooperation between China and Pakistan in areas like transportation, energy, and maritime activities, and improved connectivity between the two countries.
The corridor is actually a passageway for trade, involving roads, railways, oil and gas pipelines. There is also an optical cable route, from Kashgar in Xinjiang, China, to Gwadar Port in south Pakistan, which runs to more than 3,000 km and is expected to connect hundreds of millions of people. China and Pakistan have agreed that the construction of Gwadar Port, energy, transportation infrastructure, and industry are key areas to be developed in the economic corridor, promoting connectivity and economic development in Pakistan.
After the principle behind the economic corridor’s construction was agreed on, a range of major projects, including industrial parks and free trade zones, were started in succession, and cooperation was established in multiple areas including infrastructure, energy resources, water conservation in agriculture, and information technology. In 2015, the two countries made over 50 cooperation agreements with a total value of US $46 billion. Problems with transportation, energy, and infrastructure, which have been impeding Pakistan’s economic development, have become a particular focus of the Belt and Road Initiative. China is lending its vast experience in these areas to help pave the way forward.