In a high-level meeting on August 2, 2025, Pakistan’s Planning Minister Ahsan Iqbal met Chinese Vice Foreign Minister Sun Weidong in Beijing. Both sides reaffirmed their commitment to advancing the next stage of the China–Pakistan Economic Corridor (CPEC), signaling renewed momentum in bilateral economic collaboration and strategic cooperation.
Pillars of Phase II: Industrialization & Workforce Development
Iqbal emphasized that building a skilled and educated workforce, alongside deepening business-to-business engagement, will be central to Phase II of CPEC. The next stage aims to catalyze industrial expansion, agriculture modernization, digital infrastructure, and institutional development through people-centric reforms and technological cooperation.
Sun Weidong assured that China would continue supporting Pakistan’s efforts in clean energy, education, digitalization, and other people-oriented sectors, indicating a shift from brick-and-mortar infrastructure to long-term economic transformation.
Gwadar SEZs and Port Development: Government’s Priority
In a separate engagement, Ahsan Iqbal assured China’s ambassador that the development of Gwadar Port and its Special Economic Zones (SEZs) remains the government’s top priority. He emphasized that unlocking Gwadar’s trade and logistics potential is key to regional connectivity and job creation.
The minister further proposed using Gwadar as a launchpad for connecting CPEC to Central Asian republics, bolstering Pakistan’s relevance as a trade corridor and energy conduit. The government has also pledged to fast-track mineral exploration and energy infrastructure to attract foreign investment.
CPEC Phase II Vision: From Corridor to Connectivity Hub
The second phase of CPEC is focused on economic inclusivity rather than just connectivity. Ahsan Iqbal outlined five key sectors for future development: industrial cooperation, agriculture, digitalization, social services, and livelihood programs.
He presented these goals as part of a broader effort to reframe CPEC into a comprehensive development framework that supports domestic innovation, productivity, and regional integration.
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Strategic Context & Regional Diplomacy
a. Economic Reinforcement During Tensions
Pakistan is navigating a delicate period of economic uncertainty, inflation, and political volatility. Chinese reaffirmation of support—including the rollover of $2.3 billion in loans and fresh pledges up to $2.8 billion in new assistance—offers critical breathing room.
b. Expansion into Central Asia and Afghanistan
Pakistan and China are considering extending CPEC into Afghanistan and Central Asia, positioning the corridor as a bridge between South and Central Asia. The proposal is part of long-term plans to stabilize border regions, facilitate regional trade, and draw multinational investment into transportation and energy networks.
Economic and Political Implications
Job Creation and Export Growth
SEZs in Gwadar are expected to unlock significant investment in logistics, minerals, manufacturing, and agro-processing. Thousands of jobs are anticipated as infrastructure links with the hinterland and new industrial clusters emerge. Iqbal described these zones as the “backbone of inclusive growth” for underdeveloped regions of Balochistan and Sindh.
Evolution of Pakistan–China Partnership
The relationship between Islamabad and Beijing is clearly evolving from a focus on roads and ports to a shared development mission, grounded in mutual strategic interest and long-term economic interdependence. This reflects growing trust and the recognition that economic resilience is now tied to shared prosperity and regional stability.
Challenges and Risk Mitigation
Security Threats and Community Friction
Militant attacks, particularly in Balochistan, have threatened key projects and targeted Chinese personnel in recent years. The government has ramped up security coordination, but local grievances around land rights and exclusion from benefits remain a challenge. Sustainable success will depend on how benefits from CPEC reach local communities.
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Debt & Governance Pressures
While Chinese financing is essential, concerns remain around debt sustainability and transparency in project execution. Pakistan must balance foreign investment with public sector accountability, ensuring that development outcomes meet both macroeconomic and grassroots expectations.
Outlook and Next Steps
The next Joint Cooperation Committee (JCC) meeting will finalize CPEC Phase II’s roadmap. This includes firming up timelines for SEZ rollouts, approval of digital and energy corridors, and expansion into regional transit hubs.
Iqbal is expected to unveil Pakistan’s five-corridor development strategy, aimed at converting CPEC into a platform for broad-based economic reform, industrial policy, and export diversification.
Conclusion
The recent flurry of engagements between Islamabad and Beijing reflects serious intent to transform CPEC into a holistic engine for economic growth. With an emphasis on industrial zones, skills training, regional linkages, and institutional reform, Phase II could redefine the strategic landscape of Pakistan’s economy.
However, the path forward is not without obstacles. Effective governance, political continuity, community inclusion, and sustained regional security will be critical in converting potential into performance. As CPEC matures, it offers not only a corridor for trade—but a test case for Pakistan’s long-term development model.
