China Pakistan Economic Corridor: from stocktaking to New Structural Economics driven strategy

This paper assesses whether the China–Pakistan Economic Corridor (CPEC) makes economic sense for Pakistan, the extent of its progress, and how its developmental benefits can be maximized. Using a mixed-methods approach–including primary document analysis, 30 field visits in China and Pakistan, 144 interviews, and a survey of 209 respondents–it examines the structural reasons behind the slow industrial take-off of CPEC’s Special Economic Zones. Applying the Growth Identification and Facilitation Framework of New Structural Economics, the study finds that while CPEC has delivered significant gains in energy and infrastructure connectivity, Pakistan has yet to fully leverage its comparative advantages. China emerges as an effective lead country whose experience can support Pakistan’s industrial upgrading. The paper argues that Pakistan must reorient CPEC toward sectoral prioritization, targeted industrial collaboration, and better alignment with its factor endowments to achieve sustained structural transformation.