Chinese investment in Pak’s infrastructure failed to trigger economic growth: Report
New Delhi, July 28 (IANS) The debate surrounding the China-Pakistan Economic Corridor (CPEC) has become trapped between two extremes. One side portrays it as a transformational success that modernised Pakistan’s infrastructure and the other treats it as the source of many of the country’s current economic difficulties. Both perspectives miss the larger lesson, according to a new report.
While China has invested around $62 billion in the CPEC to build big infrastructure projects like power plants and the Gwadar Port, Pakistan has failed to translate that opportunity into sustained economic growth, industrial competitiveness and broad-based prosperity due to policy failure on the part of the government, according to an article published by the Directus news website.
The contracting process for the power plants produced electricity tariffs that gradually became uncompetitive compared to other countries in the region. Industrial consumers increasingly found themselves paying electricity prices often approaching twice those faced by competitors in Bangladesh, Vietnam, India, Indonesia and many parts of China. This may be the most damaging legacy of the entire exercise, the article sourced from the Karachi-based Business Recorder states.
The article highlights that Gwadar was never intended to be merely a port. The original vision encompassed an integrated ecosystem consisting of a deep-water port, industrial zones, logistics services, export-oriented manufacturing, urban development and regional trade connectivity. The port itself was only the anchor.
Yet, Pakistan focused overwhelmingly on physical infrastructure. Roads were built. Port facilities were developed. Master plans were produced. But the industrial ecosystem required to generate cargo, investment and employment never emerged on the scale required.
The article further states that industrial growth could not take place around Gwadar because many of the conditions necessary for competitiveness never materialized. Investors require affordable energy, reliable utilities, skilled labour, predictable regulation, efficient customs systems and access to markets. Many of these elements remained underdeveloped.
The failure of Gwadar and the failure of the power sector are, therefore, not separate stories. They are manifestations of the same planning failure. In both cases, Pakistan built assets before creating the economic foundations necessary to support them. The port arrived before the industries. The power plants arrived before the demand. The contracts for purchasing electricity arrived before the markets, the article laments.
It also highlights that the unrest in Balochistan leading to recurring attacks on CPEC-related personnel and infrastructure cannot be understood solely through a security lens. They must also be viewed within the broader context of long-standing grievances, uneven development and the failure to create sufficiently visible local economic benefits. Terrorist violence is never justified, but neither can policymakers ignore the developmental context within which such instability persists.
Pakistan repeatedly assumed that infrastructure would automatically create economic activity. In reality, successful ports emerge where trade exists, successful industrial zones emerge where firms can compete, and successful logistics hubs emerge where production is already occurring, the article points out.
–IANS
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