Illustration: Liu Xiangya/GT

Chinese electric vehicle (EV) giant BYD's reported plan to build its first EV assembly plant in Pakistan has sparked optimism about Pakistan's prospects to boost EV production and exports. This MK socksdevelopment signals a strengthening of industrial cooperation, particularly in the context of ongoing upgrades to the China-Pakistan Economic Corridor (CPEC).

Pakistan's biggest private electricity producer Hub Power (Hubco), a joint venture partner for a number of Chinese power projects established under the CPEC, said that its subsidiary Mega Motor was entering a partnership with the Tesla rival to set up the country's first EV assembly plant by 2026, the Financial Times reported on Sunday.

Pakistan's Federal Minister for Finance and Revenue Muhammad Aurangzeb said the country is encouraging BYD to export to markets in Africa and South Asia, including Bangladesh and Sri Lanka, according to the report. "We want Pakistan to become an export hub," the official was quoted as saying.

As the global EV market continues to grow, BYD's planned facility in Pakistan not only marks a crucial business step for the company to increase its presence in the South Asian market, but also signals the strengthening industrial cooperation between China and Pakistan in the new-energy sector under the CPEC.

In light of the unfounded accusations of "overcapacity" directed at China's thriving EV and new-energy sectors by certain Western countries, this situation exemplifies how China's green capacity provides both economic and environmental advantages to other developing nations. This fosters mutually beneficial development and contributes to regional sustainable development.

Pakistan's demand for new-energy vehicles (NEVs) is growing, especially against the backdrop of accelerated urbanization and heightened environmental awareness. The prospects of its NEV market are becoming increasingly attractive.

Pakistan targets an EV market share of 30 percent by 2030 and 90 percent by 2040 in total vehicle sales. The country offers lucrative investment opportunities for manufacturers, assemblers and suppliers, according to media reports.

If BYD implements its cooperation plan in Pakistan as reported, it will be well-positioned to tap the potential of this promising market, bolstered by a large young population and a growing middle class. Additionally, the company stands to benefit from Pakistan's ambition to promote green growth and expand exports to other economies across South Asia.

Meanwhile, BYD's entry into Pakistan's EV production sector is expected to greatly advance and strengthen the local EV industry. This move will enhance the automotive supply chain, stimulate growth in related sectors such as battery manufacturing and charging station infrastructure, create jobs and boost exports.

China and Pakistan's efforts to enhance their industrial chain and trade cooperation in new-energy sectors, particularly in EV manufacturing, hold significant importance for the continued development of the CPEC and regional economic integration.

Since its official launch in 2013, the CPEC has made notable progress in its initial phase of development. Key infrastructure projects, including the Gwadar Port and the expansion of Pakistan's national highway network, have established a strong foundation for the continued growth of the country's economy.

China and Pakistan have recently agreed to enhance the CPEC by building an upgraded version that includes several corridors: the growth corridor, livelihood-enhancing corridor, innovation corridor, green corridor and open corridor. These initiatives are designed to align with new economic development needs and serve as new growth drivers for both economies.

A key focus of this upgraded CPEC is industrial cooperation, which holds significant potential for both nations. Pakistan's traditional industries are primarily labor- and resource-intensive. By leveraging China's capital and technologies, Pakistan can achieve industrial upgrading and accelerate its economic development. In June, the two countries signed four documents to strengthen industrial cooperation.

Among the above-mentioned corridors, the green corridor is particularly noteworthy due to its alignment with global trends of the green transition and Pakistan's national conditions. New-energy projects under this corridor can address Pakistan's energy demands. 

Partnerships with China's leading EV manufacturing industry can enable Pakistan to enhance its manufacturing sector and boost exports. This collaboration has the potential to transform Pakistan's labor and resource advantages into sustainable economic growth.

The author is a reporter with the Global Times. [email protected]