By Maham Tahir
Prime Minister Shehbaz Sharif has wrapped up a six-day visit to China that both sides billed as a reset for economic cooperation, with 21 MoUs and joint ventures worth about $8.5 billion signed in Beijing across agriculture, renewables, EVs, health, steel and other sectors.
Officials told this correspondent that the agreements mark the formal launch of “CPEC 2.0”, shifting focus from roads and power to industry, technology and export
At talks with Premier Li Qiang, the two governments reaffirmed work on the second phase of CPEC, with an emphasis on special economic zones (SEZs), IT, agriculture, mining and industry. Mr Sharif described his meeting as “warm and most productive”, and invited Chinese firms to expand their investment footprint in Pakistan.
He also pressed for early implementation of the ML-1 rail upgrade, Karakoram Highway realignment and Gwadar’s operationalisation.
According to official readouts and wire reports, the Beijing business conference produced $7 billion in MoUs and $1.5 billion in joint ventures, part of a broader effort to accelerate industrialisation and revive bilateral trade.
The government also highlighted business-to-business engagement, noting “more than 300 Pakistani and 500 Chinese companies” attended the conference.
Key sectors poised to benefit
Industrial zones & manufacturing: The emphasis on SEZs (notably Rashakai and Dhabeji) aligns with CPEC Phase II’s factory-led model, with Pakistani officials courting textiles, electronics and agro-processing investors to deepen supply chains and expand exports.
Agriculture & food processing: Joint work on seed technology, irrigation and SPS cooperation aims to lift farm productivity and open market access in China for higher-value Pakistani produce.
Technology & green economy: MoUs covering IT and renewables support Pakistan’s push to raise the share of clean energy and build digital services exports as part of the “CPEC 2.0” pillars.
The ML-1 Test and Domestic Hurdles
The Karachi–Peshawar ML-1 railway remains the flagship test of CPEC’s next phase. While Pakistani officials in Beijing reiterated calls for early execution, Chinese financing has yet to be publicly finalised. Recent reports suggest Beijing has pulled back from directly funding ML-1, prompting Islamabad to explore an alternative ~$2 billion ADB package for the Karachi–Rohri segment.
This shift from the original CPEC financing model highlights the growing need to diversify funding sources for major infrastructure.
Yet even with new agreements worth $8.5 billion, analysts warn that policy clarity, energy costs, and security for Chinese personnel will be decisive in translating MoUs into operational projects. Prime Minister Shehbaz Sharif called the security of Chinese businesses “paramount”, addressing longstanding investor concerns after recent attacks on Chinese workers in Pakistan.
Structural constraints also weigh heavily. The power sector’s circular debt reached Rs 2.396 trillion as of March 2025, undermining competitiveness and deterring industrial investment. The government has arranged bank facilities to stabilise payables and is pursuing broader reforms to reduce the debt stock.
On the trade front, Pakistan’s exports to China remain modest compared with its imports, leaving a persistent deficit that policymakers hope to narrow through value-added agriculture, manufacturing, and services.
Officials argue that the B2B deals, SEZ investments, and market-access initiatives agreed in Beijing could help integrate Pakistani firms into Chinese value chains.
However this is dependent on if domestic bottlenecks in energy, regulation, and logistics are addressed swiftly.
The Beijing trip resets the conversation around CPEC’s second phase, with a tangible $8.5 billion pipeline and political commitment at the top.
The near-term test is project conversion: land acquisition, utilities, tax clarity and security protocols to move MoUs to groundbreaking. The medium-term prize is a more balanced economic relationship driven by industrial production and exports, rather than debt-funded infrastructure alone.
If Pakistan can execute at pace, especially on SEZs and priority logistics like ML-1, it could leverage “CPEC 2.0” to raise export capacity and improve its China market footprint over the next three to five years.
