Aliza Pervaiz 
Aliza Pervaiz 
CPEC, a flagship project between China and Pakistan, is all set to enter its second phase. The second phase of CPEC, popularly known as CPEC 2.0, presents a transition from infrastructure development to industrialization, sustainable development, and innovation. This transition is anchored in a strategic vision shared by both China and Pakistan, which depicts the importance of industrialization, sustainable development, agricultural advancement, and innovation in ensuring the long-term prosperity of the project. Overall, it reflects Pakistan’s economic goals to advance its economy by means of massive industrialization, and exports. However, these dreams and hopes of transforming Pakistan’s industrial landscape under CPEC 2.0 are accompanied by certain sustainability concerns. Social, economic, and environmental sustainability of CPEC 2.0, which highly prioritizes industrialization by means of SEZs, demands special consideration.
Industrialization under CPEC 2.0 is pioneered by the establishment of Special Economic Zones in each province of Pakistan. Allama Iqbal Industrial City (AIIC), is functional in Faisalabad, Punjab, from early 2020. Reshakai is the second largest SEZ set up in KPK. Dhebaji has been set up in Sindh, and lastly, Bostan SEZ is established in Balochistan. All of these SEZs are attracting the attention of foreign investors and companies. According to the official website of CPEC, Dutch multinational Akzo Nobel N.V., which is a globally known producer of paints, is willing to set up a plant at AIIC. The project entails an investment of US$ 24 million and will provide employment to 183 workers. Moreover, a British company, Strong Stitch Ltd, is investing US$ 8.5 million to set up a textile plant in Allama Iqbal Industrial City. Reshakai is attracting investors from Century Steel, which, once operational, will provide employment to 1000 workers. SEZs constitute an important place in the second phase of CPEC. It is being assumed that the fully operational SEZs have the potential to transform the industrial as well as economic landscape of Pakistan in the future. This article aims to predict the sustainability of phase 2.0 of CPEC, which heavily relies on industrialization.
Industrialization is not inherently sustainable. Although industrialization reduces poverty and ensures employment, it also opens doors for environmental degradation, resource depletion, and social inequalities if not managed properly. United Nations Brundtland Report (1987), formally known as Our Common Future, defines sustainable development as a “development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs”. The concept of sustainable development is anchored on three pillars, namely, economic development, social inclusion and environmental protection.
Talking about the economic perspective, CPEC 2.0 holds a significant position. It offers immense employment opportunities, industrial production, and economic growth. As evident in initial developments, CPEC phase 2.0 is attracting foreign companies and foreign investors to set up their firms and plants in all operational SEZs, specifically in AIIC. These investments can strengthen Pakistan’s industrial outlook by generating revenues and exports. If effectively managed, Pakistan will become more economically resilient and can reduce dependence on external borrowing.
From an economic perspective, industrialization under CPEC 2.0 offers immense opportunities for Pakistan. The country has long struggled with low industrial productivity, unemployment, and a narrow export base. The development of SEZs can help diversify industrial production, attract foreign direct investment, increase exports, and generate government revenues. Industrial clustering can also create linkages between local and international firms, encouraging knowledge transfer and technological upgrading. Furthermore, industrialization can contribute to regional economic integration by connecting Pakistan more closely with Chinese and global markets. If effectively managed, these developments can strengthen Pakistan’s economic resilience and reduce dependence on external borrowing. However, to ensure economic sustainability, it is imperative to improve the quality of economic governance. Relying too much on foreign investment and capital will harm Pakistan’s local industry. It is necessary to integrate local industries, local business groups, and SMEs in CPEC’s supply chain. Without meaningful local participation, industrialization may create economic enclaves that generate limited spillover benefits for the wider economy.
The social dimension of sustainability incorporates the generation of local capacity through certain projects. It is done by providing employment opportunities and initiating skill development among local communities. New industries under CPEC 2.0 can create thousands of direct and indirect jobs for local populations. It can reduce poverty and improve living standards. However, social sustainability also includes the inclusion of local communities in decision-making. Local communities must feel that they are stakeholders in the development projects. Inadequate consultations with local communities, followed by unequal opportunities and benefits among various stakeholders, have already raised concerns in the first phase of CPEC. If these concerns remain unaddressed, they may generate resentment and reduce public support for CPEC projects. To ensure social sustainability, community engagement and local ownership should be treated as a priority. Local labour should be given preference and local businesses should be included in procurement and supply chains. Such initiatives can strengthen trust between local communities and governance authorities, which is an utmost requirement of the industrial phase of CPEC.
Environmental sustainability is therefore the most challenged pillar of sustainability when it comes to industrialization. Resource depletion, carbon emissions, and waste generation are some of the major effects of Industrial activities. Pakistan is already among the countries most vulnerable to climate change, facing challenges such as water scarcity, extreme weather events, and environmental degradation. Large-scale industrialization without proper environmental safeguards could exacerbate these vulnerabilities.
It is not a choice, but a necessity to incorporate environmental considerations into planning and the operation of special economic zones. A transparent and rigorous Environmental Impact Assessment (EIA) should be conducted before approval of further industrial projects. The success of CPEC 2.0 will largely depend on whether industrial expansion can be balanced with environmental protection.
In conclusion, industrialization under CPEC 2.0 presents a historic opportunity for Pakistan to transform its economic landscape and achieve sustainable development. The establishment of SEZs can stimulate investment, generate employment, and enhance industrial competitiveness. However, sustainability cannot be achieved through economic growth alone. Social inclusion, environmental protection, local ownership, and strong institutions must form the foundation of industrial development. The future success of CPEC 2.0 will depend on Pakistan’s ability to balance economic ambitions with the broader principles of sustainable development. If managed wisely, CPEC 2.0 can become not only a driver of industrial growth but also a model of sustainable and inclusive development for the region.
