CPEC 2.0 and Special Economic Zones: Analyzing the Existing Regulatory Framework for Chinese Investors in Pakistan

China-Pakistan Economic Corridor entered its second phase in the middle of 2024, where it suggestively aligned with establishing Special Economic Zones (SEZs) and bilateral memorandums of the union. Launching SEZs under the CPEC is an engine for Pakistan's economic growth, industrial development and provides opportunities to Chinese investors. Pakistan has set up nine zones across the country to materialize this aim and bolster equal and fair industrialization. However, to invest money fearlessly in these zones and work conveniently, investors need to find a comprehensive legal framework that gives at least the minimum international standard of protection by the host state. This paper has analyzed the standard of protection in the existing legal frameworks, particularly the Fair and Equitable Treatment (FET) standard under the 2007 China-Pakistan Free Trade Agreement (FTA). According to this research, Chinese investors enjoy the vast interpretation of FET under the FTA, its incentives and privileges provided domestically under the 2012 SEZ Act of the government of Pakistan. This study has further included the viewpoint of economic experts from Pakistan who have assisted in connecting the current concept of sustainable SEZs under CPEC relative to the present regulatory framework. Also, this suggestive paper has probed the existing flaws in the current investment system and has given policy recommendations paving the path for Chinese and other foreign investors. Finally, the analytical method has excavated the prospects and challenges in the existing domestic and international investment principles, highlighting the privileges and loopholes under the SEZ Act of 2012. Hence, the research has examined that for greater certainty, Pakistan's government must consider enlisting the FET standards in further international investment agreements for the smooth progress of CPEC SEZs.