Why China-Pakistan Economic Corridor Has Turned Out To Be A Flop

(MENAFN- IANS) New Delhi, May 31 (IANS) The China-Pakistan Economic Corridor which was projected for close to a decade as being a game changer for the Pakistani economy has instead turned out to be“a heavily securitised network of incomplete infrastructure, mounting debt obligations, stalled industrial zones, and growing frustration on both sides,” a report has said.

The branding of“CPEC 2.0” today is less an indication of renewal and more an attempt to politically salvage a project that has failed to meet its own strategic and economic promises, according to a report in European Times.

The original framework of CPEC, valued at around $62 billion, included highways, power plants, rail infrastructure, port development, and special economic zones spread across Pakistan. Beijing's flagship of the Belt and Road Initiative promised industrial transformation, regional connectivity, energy security, and the rise of Gwadar as a major commercial hub linking western China to the Arabian Sea.

However, the model was flawed from the beginning because it prioritised visible infrastructure over long-term economic sustainability, the report points out.

Pakistan imported large-scale Chinese financing and construction capacity without building the industrial ecosystem necessary to generate durable economic returns. Roads and ports alone do not create growth unless they are connected to productive industries, stable exports, and functioning governance structures, the report observes.

Several Chinese-backed coal and power projects were implemented through agreements that guaranteed high returns to Chinese firms in dollars. These agreements became increasingly expensive as Pakistan's currency weakened and the country's broader economic crisis deepened.

By 2025, Pakistan's circular debt crisis had reportedly left billions in unpaid dues owed to Chinese power producers. Estimates linked to Chinese independent power producers alone crossed $7 billion. Instead of solving structural problems in Pakistan's power sector, CPEC added another layer of financial liability onto an already fragile system, the report points out.

Pakistan's balance of payments crisis, repeated IMF negotiations, and foreign exchange shortages exposed how vulnerable the corridor model actually was. Chinese loans and investments did create infrastructure, but they did not generate the export competitiveness required to sustain repayment obligations. This gap between construction and economic productivity sits at the heart of the CPEC problem, the report observes.

It highlights the failure of Gwadar to take off as a commercial port as the original plans envisaged as another Dubai or Singapore which would be the hub of global trade.

At the same time, the security situation surrounding CPEC has deteriorated sharply. Chinese engineers and workers have increasingly become targets of militant attacks, particularly in Baluchistan where insurgent groups view the corridor as a form of external extraction imposed on local populations without meaningful economic inclusion, the report states.

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