Pakistan Institute of Development Economics

THE PAKISTAN DEVELOPMENT REVIEW 

China’s Journey in Renewable Energy and Its Potential Spillover Effects through the CPEC in Pakistan

The China-Pakistan Economic Corridor (CPEC) has provided Pakistan an opportunity to tap into its huge potential as a developing economy and progress towards the path of Newly Industrialised Economies (NIEs). It aims to open new trading routes, industrial zones and energy corridors to meet the country’s ever-growing needs and stimulate economic activity. Although the CPEC is not restricted to renewable energy, with coal power plants a major part of the plan, there are significant opportunities to promote the renewable energy market through various complementary policy measures. The research draws lessons from China’s journey in the renewable energy (RE) sector and the potential spillover-effects Pakistan may experience through CPEC. The fundamentals of China’s renewable energy sector are relevant to Pakistan in light of the current global discourse on Sustainable and Low Carbon Development. Foreign Direct Investment (FDI) from China has the potential to be a catalyst for growth in the renewable energy sector. The transfer of knowledge and know-how can be achieved from this cooperation with China in the RE domain, provided the state has adequate policies facilitating the flow of knowledge to the local industry. For this purpose, direct training programmes must be setup with China’s cooperation. Win-win scenarios can be created, where low-cost local workforce can be equipped with the necessary skills and knowledge to work in the Chinese managed projects in Pakistan. Moreover, local production of renewable energy products and equipment needs to be promoted, through correcting market failures and incentivising local manufactures.

Syed Twangar Hussain Kazmi

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