Special Economic Zones under the CPEC and the Belt and Road Initiative: Parameters, Challenges and Prospects

Abstract

The use of special economic zones (SEZs) has played a vital role in the rapid industrialization of China. Shenzhen is largely regarded as a success story regarding implementation of SEZ idea, where a small fishing village has been converted into a thriving economic hub. However, China, owing to its rapidly increasing competitiveness and advance towards high-tech industries, has decided to relocate some of the industries outside its boundaries. Thus, the mega-agenda of the Belt and Road Initiative (BRI) was launched by Chinese President, Xi Jinping in 2015. The BRI comprises six economic corridors connecting China with diverse countries worldwide. The China Pakistan Economic Corridor (CPEC) is considered to be a flagship under the umbrella of the BRI. Under the CPEC, a window of opportunity has opened for Pakistan where the country can draw lessons from the Chinese experiences of rapid industrialization in the form of SEZs. In this regard, the SEZ mechanism remains an effective and significant tool for Pakistan to transform its national industrial outlook. However, the pragmatic practice of developing SEZs under the CPEC is not visible as yet, largely because of the internal and external challenges faced by Pakistan. This chapter tries to understand the general concept of the SEZs, their significance under the CPEC and the BRI, and the parameters of the SEZ mechanism with a Pakistani perspective. Apart from this, the study also explores multiple challenges, which are the major impediments to the successful establishment of the SEZ mechanism in Pakistan, by using the qualitative method and interview technique.