By Ayesha Saba

Pakistan is accelerating the second phase of the China-Pakistan Economic Corridor, shifting its focus from energy and infrastructure to industrialisation, export growth, and climate-resilient development, as policymakers push for deeper business-to-business (B2B) engagement and the relocation of Chinese industries.

The Pakistan–China Industrialisation Dialogue, hosted by the Pak-China Institute, brought together policymakers, diplomats, business leaders, and development experts to shape the next phase of bilateral industrial cooperation, with a strong emphasis on export expansion, investment facilitation, and climate-resilient growth.

Speaking at the event, Qaiser Ahmed Sheikh highlighted the significant progress made under CPEC, noting that substantial Chinese investments have already been realised, particularly in electricity generation and connectivity infrastructure. He emphasised that the next phase must prioritise business-to-business (B2B) engagement and the relocation of Chinese industries to Pakistan.

Highlighting policy incentives, he referred to Special Economic Zones (SEZs) under CPEC, which offer tax exemptions and duty-free import of machinery. “There has never been such a facilitative environment in Pakistan,” he remarked, adding that regulatory reforms and the recently enacted “Asaan Karobar Act” aim to reduce bureaucratic hurdles and improve the ease of doing business.

Addressing the gathering, Dr Shezra Mansab Ali, Minister of State for Climate Change, underscored the urgency of climate action, citing Pakistan’s vulnerability to extreme weather events, including the devastating floods of 2022 that affected over 33 million people.

She emphasised that climate resilience is now central to industrialisation, noting that investors require not only incentives but also energy security, resilient infrastructure, and regulatory predictability.

Pakistan, she noted, is advancing its climate commitments through policies such as the Climate Change Act 2017 and ambitious emissions reduction targets under its Nationally Determined Contributions (NDCs), aiming for a 50% reduction in projected emissions by 2035.

The minister also revealed ongoing collaboration with China, including plans for a joint task force and a forthcoming memorandum of understanding (MoU) to strengthen cooperation on climate policy implementation and green development.

Mahmood Tufail, Director General of the Board of Investment, detailed the government’s regulatory reform agenda aimed at transforming Pakistan into a manufacturing and services hub. He highlighted the establishment of a Cabinet Committee on Regulatory Reforms and the approval of over 200 reform proposals, which have already generated an estimated $1.3 billion in savings for businesses.

Tufail noted that 160 MoUs signed during previous high-level engagements with China are at advanced stages of implementation. Further initiatives include the development of a Pakistan Business Portal and a centralised regulatory registry to provide investors with easy access to all business-related requirements. He also emphasised streamlined visa facilitation for Chinese investors, with approvals being processed within hours.

Speaking at the event, Dr Muzammil Zia, Executive Director, CPEC Secretariat, Ministry of Planning, Development and Special Initiatives, highlighted that the first phase of CPEC delivered rapid and tangible results due to Pakistan’s prior institutional readiness in key sectors.

He noted that over 9,000 megawatts of electricity were added to the national grid within a short span, alongside more than $7 billion in infrastructure investment and the completion of major connectivity projects, including highways and the operationalisation of Gwadar Port. “We successfully completed around 22 projects worth approximately $26 billion during Phase-I,” he said.

Dr Zia revealed that both Pakistan and China have now aligned their development frameworks through a strategic agreement linking Pakistan’s “5Es” initiative with China’s “5Cs” corridors. These include innovation, green development, livelihood, openness, and growth corridors, which will guide the next phase of bilateral cooperation.

He emphasised a shift in strategy, noting that while large government-to-government (G2G) projects such as ML-1 railway and energy initiatives will continue, there is now a growing focus on smaller, business-to-business (B2B) investments. “We are prioritising small- and medium-scale projects to accelerate industrial activity and deepen supply chain integration,” he said.

To support this transition, the CPEC Secretariat has established a specialised institutional framework, including sector-specific experts in agriculture, industry, mining, Gwadar development, and socio-economic projects. These teams are tasked with coordinating both G2G and B2B initiatives and facilitating investor engagement across Pakistan.

Highlighting early signs of progress, he said a Chinese company is set to break ground on a new project in Lahore this month, marking a transition from a small manufacturing unit to a larger industrial facility within an SEZ. He credited provincial leadership, particularly in Punjab, for facilitating land, utilities, and regulatory approvals.

Despite progress, he acknowledged that Pakistan has yet to fully capitalise on SEZ potential, particularly in attracting large-scale foreign industrial investment. However, interest from Chinese firms is increasing, with new proposals under consideration in zones such as Faisalabad.

Looking ahead, Dr Zia expressed optimism that enhanced coordination between federal ministries, provincial governments, and Chinese stakeholders, combined with political stability, will accelerate the implementation of Phase-II projects.

Credit: INP-WealthPk