The CPEC Phase 2.0 has been dubbed as crucial for Pakistan’s qualitative development, massive industrialization, green transformation, social development, and last but not least, digitalization. However, indicators of its pace, progress and productivity are not up to the mark because of many internal policy flaws, regional geopolitics and global geostrategic shifts.
As per the Theory of Strategic Culture (TSC), it seems that socio-economic and political dimensions of our values, beliefs, traditions, conducts and means of governance towards development, security, positivity and community development are creating confusions and hurdles in the expansion of the CPEC Phase 2.0, unfortunately. Key figures like Jack Snyder introduced the concept, highlighting cultural inputs—identity, values, historical memory—as crucial for understanding strategic choices. There is an urgent need to change our strategic culture of public conduct, ways of governance, bureaucratic models, economic priorities and geopolitical preferences and jointly work for the national cause. We must start thinking beyond short-term gains through good governance by promoting economic consistency, political stability, social harmony and avoiding any personalized international engagement.
The menace of political marginalization, social and ethnic discrimination and the short-term economic development model have already ruined the prospects of a progressive society and a prosperous nation, which have direct correlation with the development of CPEC Phase 2.0. It is a bitter reality that Pakistan’s appeasement-oriented strategic culture has remained a common norm in government and bureaucracy, spoiling the fates of common people and their dreams of a qualitative life for so many years. The euphoria of absolute power has created impassable impediments for smooth economic growth, justice systems, policing and regulatory mechanisms in the country. As a result, Pakistan has been declared the graveyard of development projects.
For a long period, central policies have been hostage to professional incompetence, redundant methods of approval, execution, implementation and completion. The rent-out mentality of many vital organs of the state has only achieved ghosts of darkness instead of real elements of development. The IMF’s latest report has already dubbed Pakistan’s economic model as “unfit” for people’s welfare because of the elite’s surrender on resources, slots and tax exemptions. Their constantly increasing privileges have slowed the pace and prosperity of common people and even the progress of CPEC Phase 2.0 in the country.
It seems that the economic model is tilted toward cartelization, unequal corporate profits and imbalanced development policies due to institutionalized corruption, denial of justice, absence of merit, lack of fair play, missing accountability and financial transparency, creating havoc for common people. Land grabbing has become a national character and personal glorification and gratification pull society in the opposite direction. Unemployment has immensely increased, reaching a 21-year high of 7.1%, while the World Bank has calculated the poverty rate at 44.7%. Additionally, according to the Asian Development Bank, Pakistan’s investment into the social sector is the lowest in Asia, increasing wealth concentration only among specific segments of society. Its division is alarming and on the rise and brain drain has become a bitter reality.
The nation’s wealth and resources have been controlled by corporate elites, influential politicians, less productive bureaucrats and non-professional policymakers, negatively affecting widows, pensioners and common people’s bank investments due to declining interest rates that favour industrialists and businessmen. The shift in the strategic culture of appeasement from public governance to individual interests has hindered true professionalism, industriousness, innovation, productivity, honesty and commitment to the national cause. It has weakened higher education and qualifications, transparent promotion and privilege systems, while advancement through awards and rewards, often linked to political connections, has become more prominent, affecting many corporations in the country.
Thus, ongoing so-called economic stabilization policies cannot achieve socio-economic prosperity and qualitative industrialization in the country, as indicated by the IMF and the World Bank. Economic growth has been on a steadily declining trend, slipping from an average of 3.9% over the last 30 years to 3.5% over the last 20 years and further to 3.4% over the last five years, vividly reflecting that business cycles are shortening. Therefore, the current growth model simply cannot sustain a country of over 250 million people.
Many international organizations have already declared Pakistan’s current economic model as unsustainable, consumption-led, import-heavy and debt-driven, urgently needing a paradigm shift toward a factor-driven model emphasizing innovation through further export diversity (Pakistan has the lowest investment-to-GDP ratio in Asia), investment-focused, IT/AI-driven approaches with greater participation of the private sector, meaningful structural reforms in education, further broadening of taxation and inclusive growth. The country must move away from reliance on friendly deposits and import restrictions for so-called stability.
There is an urgent need to prepare a new economic model supported by all sectors, creating a unified, holistic and comprehensive plan supporting steady and inclusive growth for all. Revenue must rise to run the country sustainably because low tax collection cannot support essential reforms or future development. Even custom policies have been termed corrupted by the IMF. Additionally, policymakers must strengthen local manufacturing, produce key inputs domestically and build domestic investment before relying on foreign capital.
In summary, it seems that the prolonged phase of economic stabilization has overburdened people and businesses through heavy taxation, high energy costs to offset inefficiencies and no control over growing expenses. Real financial discipline and transparency are widely missing and much needed from top to bottom to gear the CPEC Phase 2.0 through a strategic culture of productivity and progress. Strategic partnerships with Uzbekistan, Kazakhstan, Tajikistan, Turkmenistan, Kyrgyzstan, Azerbaijan and Russia must be pursued and the reactivation of CPEC Phase 2.0, instead of meaningless and directionless projection of the URAAN Pakistan, development of the SME sector, promotion of youth entrepreneurship, green economy and financing, women empowerment and socio-economic democratic norms, respect for merit, domestic talent and equal opportunity culture would rescue Pakistan’s economy, communities and enterprises from the diminishing returns phenomenon.
Pakistan and China have finalized nine SEZs to be developed in the first phase under the auspices of CPEC. Four SEZs—Dhabeji SEZ in Sindh, Bostan SEZ in Balochistan, Rashakai SEZ in KP and Allama Iqbal Industrial City in Punjab—are at an advanced stage of development. Moqpondass SEZ in Gilgit Baltistan, Mirpur SEZ in AJK, Mohmand Marble City in FATA and two federal SEZs—Industrial Park on Pakistan Steel Mill land and ICT Model Industrial Zone—are at the feasibility stage.
It is strongly suggested that the success of CPEC’s SEZs hinges on moving beyond infrastructure to industrial transformation, attracting private investment, ensuring policy continuity and aligning incentives for stakeholders. Despite initial challenges like financing gaps and potential geopolitical shifts, this approach can realize benefits such as job creation and regional integration, shifting CPEC towards its Phase 2.0 goals.
