Leading Issues in the Economy of Pakistan: Agenda for Reforms 17.8 Loss of Momentum of CPEC The process of contracting of loans and credits with China under the framework of CPEC has broken down since 2019-20, as shown in Table 17.6. The total investment proposed under CPEC by China in Pakistan was$60 billion. It stands at $20.6 billion currently in terms of the value of loans and credits contracted with China for projects. In 2021-22, there was no commitment by China. Table 17.6: Contracting of Loans and Credits with China (As of October 2022)(cents/kwh) Years Annual Cumulative 2012-13 448 448 2013-14 6493 6941 2014-15 37 6978 2015-16 9422 16400 2016-17 729 17129 2017-18 500 17629 2018-19 2000 19629 2019-20 0 19629 2020-21 1000 20629 2021-22 0 20629 Absolutely the highest priority must be attached to CPEC. In particular, the focus must be on establishment of Industrial Zones at different locations to attract Chinese investment in labor-intensive projects, given the relatively low wage rate in Pakistan. Also, agricultural exports should be promoted by application of latest technology and funding from China. This will facilitate greater participation in the global value chain. Adequate fiscal incentives, including at least a five-year tax holiday and duty-free import of machinery should be offered to Chinese investors. The above set of recommendations in eight areas should be given the highest priority and implemented rapidly. The target must be to take the economy to an annual growth rate of close to 6 percent in the next few years along with measure to ensure sustainability of this growth path. 182