China’s ambitious trade and infrastructure plan the Belt and Road Initiative (BRI) has already delivered benefits well beyond its borders. The roadmap is to augment international supply chains predominantly via debt-financed infrastructure projects, across more than 60 countries.
China predicts annual trade with these countries to be worth US$2.5 trillion within a decade.
More than 100 countries and international companies have given positive responses to the initiative, with the signing of about 50 inter-governmental agreements of cooperation. Chinese companies have invested more than US$50 billion and built 56 economic and trade cooperation zones in 20 countries along the BRI routes, generating nearly $1.1 billion in tax revenue, creating 180,000 local jobs and spurring the economic development of these countries.
The China-Pakistan Economic Corridor (CPEC), a flagship project of the BRI, has already started to produce economic gains for Pakistan. Recently, the World Bank revised its growth forecasts for Pakistan’s gross domestic product. It had previously estimated 5% growth for fiscal year 2016-17 (FY17 ends on Sept. 30) and 5.4% for FY18, but now predicts 5.2% and 5.8% respectively. Thus it is clear that CPEC has revitalized Pakistan’s stagnant economic growth and promoted investment opportunities in the country.
IMF has praise for Pakistan’s economic growth
An International Monetary Fund report on Pakistan released on July 13 praised the country’s economic growth and described it as favorable, with real GDP growth estimated at 5.3% in fiscal year 2016-17. According to the report, with the Extended Fund Facility completed during the last three years, microeconomic elasticity was also strengthened.
A strong economy is an indicator of a strong country. Economic development not only brings prosperity but also promotes the country’s international image.
The CPEC has been termed a game-changing infrastructural project for Pakistan as well as the whole region. It is the key project of the BRI as its completion will help establish linkages with other corridors, which would bring huge economic gains for the region.
China and Pakistan have created a framework to enhance and strengthen their economic relations. The two countries have had robust economic and military relations that have constantly gained strength with the passage of time.
CPEC’s impact seen in four key economic areas
The CPEC is a systematic, long-term mega-project to promote the “1+4” pattern of economic cooperation in the four key areas of energy, transportation, infrastructure and industrial cooperation, including Gwadar Port on the Arabian Sea in the Pakistani province of Balochistan. It has already started to enhance the economic outlook of Pakistan.
The CPEC has revived Pakistan’s economy even before its completion. It has significantly improved the business environment in the country and has also helped improve diplomatic relations.
This is the biggest investment among all the BRI corridors currently and accounts for about 20% of Pakistan’s GDP. The CPEC project has gained momentum, with investment pushed to US$62 billion with additional infrastructure projects and industrial zones.
The CPEC is an economic corridor encompassing a set of projects that will not only open doors to enormous economic opportunities for Pakistan but will also connect with other regional and extra-regional markets.
Easy movement of goods and people is the goal
Under the BRI, the CPEC will link many economic agents on the regional landscape, hence realizing the potential of regional connectivity and improving linkages with the Middle East, Central Asia and Africa. The main objective is to develop an effective system that facilitates the movement of goods and people around the region without unnecessary barriers, delays, and costs. The process of upgrading connectivity linkages catalyzes economic growth and regional development.
The BRI has huge prospects to redesign the economic positions of states in and outside the CPEC region. It is anticipated that millions of people in the region will benefit from this corridor as the project has the potential to enhance economic activities, amplify trade connections, improve technical cooperation, produce fresh financial prospects, and strengthen socio-cultural linkages if implemented with transparency.
The BRI has a bigger economic significance as it has the potential to create a unified and integrated region. But even though there are many advantages for strengthened economic collaboration and creating regional interconnection, the goals of the BRI still face some challenges. The global economy has continued to be sluggish for quite a while now. Income inequality and uneven development weigh heavily on global social stability.
The BRI envisages win-win cooperation and a policy of common development, and proposes to the world a Chinese-style response to the challenges of today.