Pakistan-China economic and CPEC cooperation

Pakistan and China are deepening economic and strategic ties through expanded trade negotiations and the evolution of the China-Pakistan Economic Corridor (CPEC) into its second phase, known as CPEC 2.0. Initial discussions focused on the third phase of the China-Pakistan Free Trade Agreement (CPFTA), with Pakistan seeking tariff concessions for sectors such as textiles, minerals, and meat products. This new phase of CPEC aims to move beyond energy and infrastructure to prioritize agriculture, technology, innovation, digital connectivity, and education.

Building on this framework, efforts have expanded to include regional connectivity and maritime cooperation. Pakistan has proposed upgrading Central Asia Regional Economic Cooperation (CAREC) transport corridors to link Central Asia to Arabian Sea ports through modernized border facilities and rail upgrades. Additionally, under the CPEC 2.0 framework, maritime cooperation has been emphasized through initiatives focused on the blue economy, marine science, and sustainable development, leveraging Pakistan’s coastline and the strategic position of Gwadar Port.

As CPEC 2.0 advances, the focus has increasingly shifted toward industrialization and regional connectivity. Xinjiang has emerged as a critical logistics platform for this expansion, supported by an increased railway and highway network. A significant development in land-based trade is the Khunjerab Pass, which began year-round operations in December 2024 to facilitate continuous movement. Prime Minister Shehbaz Sharif has reaffirmed the bilateral relationship, noting that the project is advancing rapidly with the goal of developing Gwadar as a regional trade hub and strengthening Pakistan’s economic base through deeper cooperation in science, technology, and information sectors.