Aligning the Global Value Chains of China and Pakistan in the Context of the Belt and Road Initiative, and China Pakistan Economic Corridor

Abstract

The traditional approaches to the integration of low-income countries have been the assembly of intermediate goods, which are generally produced in high-income countries, for re-export to the final consumers. This strategy should be re-evaluated, especially for a low-income country such as Pakistan, to integrate more value-added activities and services. The main objective of this research is to identify the possible value chain for integration and ranking of a suitable value chain based on the criteria of potential volumes. For instance, a country like Pakistan has been following the traditional integration cycle, but the Belt and Road Initiative and China Pakistan Economic Corridor (CPEC) projects provide an ample opportunity to strategically align itself with the Chinese exporting industrialization regime, which will create a baseline for the much-needed industrial revolution in Pakistan. Therefore, the governments of both China and Pakistan have rightly incorporated special economic zones (SEZs) as a kick-starter for the Industrial revolution in Pakistan under the banner of CPEC, keeping the success of Chinese SEZs in consideration. This chapter will explicitly show the rationale and decisional process for how Pakistan can efficiently utilize CPEC projects to integrate its industry and trade with the global value chains of China, coupled with its geostrategic economic advantages, and create a ‘win–win’ for both.

Appendices

Appendix 1: CPEC’s Special Economic Zones, Endowments and Potential Industry

No.	Special economic zones	Location	Endowments and potential industries
1	Rashakai Economic Zone on M-1	Khyber Pakhtunkhwa	Gem and soap stones, metal ores, marble/granite, magnesium, phosphate, sugarcane, tobacco, wheat, maize, rice, mustard, water melon, musk melon, apricot, guava, pear, peach, plum, citrus and mulberry
2	Special Economic Zone Dhabeji	Sindh	Manufacturing and automobile industries
3	Bostan Industrial Zone	Balochistan	Mines, minerals, agriculture and livestock (reserves: copper, gold, coal, iron and silver)
4	M-3, Faisalabad	Punjab	Suitable for major fruits and vegetables (rice, wheat, berseam, sugarcane, etc.), textiles and livestock
5	ICT Model Industrial Zone, Islamabad	Islamabad	Information technology and innovation driven
6	Industrial Park on Pakistan Steel Mills Land	Port Qasim, Karachi	Manufacturing and automobile industries
7	Mir Pur Industrial Zone	Azad Jammu and Kashmir	Maize, wheat and rice, vegetables, grams, pulses (red lobia) and oil seeds, apple, pear, apricot and walnut
8	Mohmand Marble City	Federally Administered Tribal Areas	Minerals, agriculture, marble (reserves: uranium, dimensional stones, granite, coal, manganese ore and limestone)
9	Moqpondass Special Economic Zone	Gilgit Baltistan	Precious stones, fruits, marble/granite, iron

1. Source: Author’s findings

Appendix 2

List of Belt and Road Initiative countries
Serial Number	Name	Serial Number	Name
1	China	36	Malaysia
2	Afghanistan	37	Maldives
3	Albania	38	Moldova
4	Armenia	39	Magnolia
5	Azerbaijan	40	Montenegro
6	Bahrain	41	Myanmar
7	Bangladesh	42	Nepal
8	Belarus	43	New Zealand
9	Bhutan	44	Oman
10	Bosnia and Herzegovina	45	Pakistan
11	Brunei	46	Palestine
12	Bulgari	47	Philippines
13	Cambodia	48	Poland
14	Croatia	49	Qatar
15	Czech Republic	50	Romania
16	Egypt	51	Russia
17	Estonia	52	Saudi Arabia
18	Ethiopia	53	Serbia
19	Georgia	54	Singapore
20	Hungry	55	Slovakia
21	India	56	Slovenia
22	Indonesia	57	South Africa
23	Iran	58	Sri Lanka
24	Iraq	59	Syrian Arab Republic
25	Israel	60	Tajikistan
26	Jordan	61	Thailand
27	Kazakhstan	62	Timor-Leste
28	Korea	63	Turkey
29	Kuwait	64	Turkmenistan
30	Kyrgyzstan	65	Ukraine
31	Laos	66	United Arab Emirates
32	Latvia	67	Uzbekistan
33	Lebanon	68	Vietnam
34	Lithuania	69	Yemen
35	Macedonia

1. Source: Author’s findings