By Ayesha Saba

Pakistan-China economic cooperation under the China-Pakistan Economic Corridor (CPEC) 2.0 is expanding into artificial intelligence (AI), cloud computing, data centres and digital connectivity, creating new opportunities for technology investment, industrial innovation and the development of domestic computing capacity.

The emerging digital agenda marks a shift beyond traditional transport and energy infrastructure towards technology-driven economic cooperation, with proposed joint AI research laboratories, cross-border fibre connectivity and cloud infrastructure expected to strengthen Pakistan's ability to develop and commercialise digital solutions.

The shift gained further attention at the 93rd CPEC Progress Review Meeting on October 7, where the government identified joint research laboratories in artificial intelligence and applied sciences as priority initiatives under CPEC 2.0. According to the Planning Ministry, the laboratories would promote knowledge exchange and technology transfer between Pakistani and Chinese institutions.

An official investment pitchbook issued in May also identifies the acceleration of CPEC cross-border optical fibre Phase II, expansion of rural broadband, 5G-oriented fibre deployment, internet exchange points and AI innovation hubs as priority areas for Pakistan-China cooperation.

Dr Hassan Daud Butt, former CPEC Project Director and an expert on regional economic cooperation, told Wealth Pakistan that the significance of the emerging digital corridor lay in developing the infrastructure required to support knowledge-intensive industries.

“The real shift is from carrying data to creating computing capacity inside Pakistan. Joint AI laboratories, local data centres and stronger cross-border fibre connectivity would allow research institutions and companies to process, store and develop digital products domestically rather than relying heavily on overseas infrastructure,” he said.

Butt explained that the economic value of the proposed digital infrastructure would depend on Pakistan's ability to use it for developing local AI applications, cloud services and industrial technologies rather than treating digital connectivity as an end in itself.

The expansion of Pakistan-China cooperation into digital technologies comes amid growing demand for computing infrastructure and cloud-based services in Pakistan.

According to the official investment pitchbook, Pakistan's AI and cloud computing market is estimated at around $180 million, with annual growth of 17.8%, indicating opportunities for investment in computing facilities, digital services and related infrastructure.

The document also notes that only 17.9% of telecom towers are currently connected by fibre, highlighting the need for stronger digital connectivity to support advanced telecommunications and emerging technologies.

It projects a data-centre capacity gap exceeding 45 megawatts by 2030 and identifies hyperscale and colocation facilities as priority investment opportunities.

Among the proposed investments is a 6 MW Tier III colocation data centre requiring an estimated investment of $38 million to $39 million.

These opportunities could help Pakistan strengthen its domestic digital infrastructure while supporting greater participation in AI development, cloud computing and technology-based services.

Sarmad Khan, former Executive Director at CIS Technology Park Islamabad, said the economic benefits of the emerging infrastructure would depend on how effectively Pakistan linked computing capacity with practical applications across different sectors.

“AI has to be embedded in sectors where Pakistan faces persistent productivity gaps, particularly agriculture, healthcare, education, manufacturing and logistics. The important issue is not simply access to AI tools, but whether local institutions and firms develop applications around Pakistan’s own economic and social needs,” he told Wealth Pakistan.

Khan said Pakistan's startup ecosystem could play an important role in translating new computing infrastructure and research capabilities into commercially useful solutions.

“Local startups are well placed to develop applications in areas such as smart irrigation, diagnostic systems, supply-chain management and industrial optimisation. But that requires access to reliable datasets, interoperable systems and skilled technical talent. Without those foundations, individual AI initiatives will remain fragmented and difficult to scale.”

He emphasised that CPEC-linked investment in cloud infrastructure, data centres and AI research would generate stronger economic returns if accompanied by clear data-sharing frameworks, common technical standards and closer cooperation between universities, startups and industry.

According to Khan, the emerging CPEC digital agenda is becoming more specific than the earlier concept of a Digital Silk Road, with greater emphasis on the infrastructure and institutional capabilities needed to support technology development.

For Pakistan, the expansion of cooperation into AI and cloud computing offers opportunities to strengthen digital entrepreneurship, improve industrial productivity and develop locally relevant technological solutions.

However, the proposed laboratories, connectivity upgrades and data-centre investments will require effective implementation, adequate financing and skilled human resources to translate their potential into measurable economic benefits.

The growing digital dimension of CPEC 2.0 could therefore provide Pakistan with an opportunity to move beyond physical connectivity towards building the domestic computing capacity and innovation ecosystem needed to participate more actively in China's expanding AI and technology landscape.

Credit: INP-WealthPk