Bridging economies: benefits of Islamic finance for CPEC

The China-Pakistan Economic Corridor (CPEC) stands as a testament to the evolving landscape of international trade and economic cooperation. Spanning infrastructure projects, energy ventures, and economic zones, CPEC aims to bolster connectivity and development between China and Pakistan, while also potentially benefiting neighbouring regions. It is predicted that CPEC will result in the creation of upwards of 2 million direct and indirect jobs by 2030, and could add up to 2.5 percentage points to the country’s annual economic growth. At present, the estimated interest-based loan component of CPEC payable to Chinese commercial banks is around $10 billion, while bilateral Chinese loans on conventional terms are close to $13 billion. Amidst this ambitious endeavour, Islamic finance can play a pivotal role in reshaping the financial architecture of CPEC projects and fostering sustainable growth grounded in ethical principles that are in line with the belief system of the local population.