The idea of a young Pakistani engineer commuting to a modern energy-efficient industrial zone or farmers using smart agriculture tools to improve yields captures the promise often associated with the China-Pakistan Economic Corridor (CPEC) 2.0. It is an appealing vision: a shift from roads and power plants to a more diversified, innovation-driven economy.

Yet the real question is not whether this vision is attractive but whether Pakistan has the institutional capacity, policy consistency and economic stability required to translate ambition into outcomes.

CPEC’s first phase focused largely on infrastructure, highways, energy projects and transport links. It helped address critical energy shortages and improved connectivity. However, it also left behind important questions about debt sustainability, uneven regional benefits and delayed industrial spillovers.

CPEC 2.0, in contrast, is being framed as a shift toward industrial cooperation, agriculture modernization, renewable energy and digital technologies. In theory, this second phase is meant to move Pakistan closer to export-led growth and value-added production. But transitions of this scale are never automatic.

The central promise of CPEC 2.0 is the development of Special Economic Zones (SEZs) and industrial clusters that can attract investment and generate employment. The underlying assumption is straightforward: better infrastructure leads to industrial growth, which in turn drives exports.

However, Pakistan’s industrial history suggests that infrastructure alone is not enough. Weak governance in SEZ implementation, regulatory uncertainty........

© Pakistan Observer