From Game Changer to Fate Changer: Opportunities and Challenges of Pakistan–China Trade Integration under CPEC
Written By: Ms. Malaika Zainab, a Participant of ICSF-UoS Fellowship Program 2025-26 at University of Sargodha
CPEC is a bilateral multi-billions dollar development project which start in 2013 and emerge as the comprehensive framework of Regional Connecter directly with China (Kashgar) Pakistan (Gwadar) and indirectly with Central Asian “Land Lock Countries” (Kazakhstan, Uzbekistan, Kyrgyzstan, Turkmenistan and Tajikistan, Middle East and South Asia which aims economic corporation and development. This BRI flagship project brings huge investment for infrastructure development, agriculture and industrial zone, energy sustainability projects, Cross border internet connectivity, Special Economic Zones and promote people to people exchange in Pakistan. China and Pakistan relations based on “All Weather Friendship Partners”. Both Countries support each other to achieve goals and evaluate better SWOT analysis outcomes. Chinese investment in Pakistan enhance ability to produce in more efficient manner and open Chinese market by China Pakistan Free Trade Agreement (CPFTA) signed on 24 November 2006. Under the Umbrella of intellectual the trade effect increases and shows in 2007. Because trade work as a fuel of economic growth, strong defense systems and poverty alleviation.
Weakness and threats in term of Trade integration:
The challenges faced domestically and internationally which effect the results of investment such as Baluchistan’s people against CPEC because they thought all benefits will go to Punjab and at that point they said; CPEC is the China Punjab Economic Corridor while the more growth of economy leads to the better living standard of whole nation. The internationally western narrative and their quench of power move nations towards the conflicts. The terrorism in Pakistan cause trust issues, decrease foreign investment and trade. China and all countries across the world also admire the Pakistan efforts against terrorism and wars. China provides military assistance and joint trainings to ensure the nation security. The relationship solidified and confronting challenges of terrorism, extremism and separatism.
The political instability in Pakistan act as a major reason of creating a challenging environment for sustained economic progress. This may cause to decrease the investor confidence about their future output because of security concerns. As frequent changes political disagreement become the reason of delaying various CPEC projects like roads, power plant and special economic zone. Greater the instability greater uncertainty concerning future of lower economic growth.
Pakistan face trade deficit due to China high exports of machinery, vehicles, yarn, fertilizers, chemicals and telephones & electronics. The trade deficit is due to lack of awareness and strategic planning for increasing exports. On the other hand, Pakistan exports copper and yarn. The overall trade volume steady but Pakistan faced large trade deficit. In Oct 2025 Pakistan export increases 0.37% and China exports 5.82% than previous year. The trade balance is in favor of China.
According to China Customs data the bilateral trade of goods between China and Pakistan reached to US$23.1 billion dollar in 2024 which is 11.1% increase from the previous year. In Oct 2025.
During the establishment of largest infrastructure project, the voice arise that it mainly caused environmental damage, displacement of local communities and their concerns over equity. The Socio-Environmental concern cause of making hurdles which effect trade and use of opportunities provided under this project. Trade through CPEC is the game changer for security and stability of nation.
Strength and Opportunities in term of Trade:
Trade is a way to decrease conflicts and tension among countries. Trade with China increase potential to produce better quality goods and services. Through Chinese support Pakistan moved towards the progress in various aspects: industrialization, agriculture, defense and education sector. Mainly the enhancement of trade via CPEC project is seemed world largest connector through road. Special Economic Zone (Rashakai, Allama Iqbal, Dhabeji) designed the area for attractive Foreign Direct Investment (FDI), exports promotions and skilled economic growth. Gwadar port transforms Pakistan into a crucial trade hub for China and central Asia.
With the guidance and the idea of clean and green environment implemented and installed
solar power plant and electrical vehicles, the purpose of initiative is uninterrupted access of electricity and efficiency in production.
They foster people to people ties and gave students opportunities to get scholarship for better future research and experimental works. They also use soft power (cultural exchange, education and innovation) for the better understanding of business and providing favorable surroundings for more trade enhancement. These types of opportunities promote tourism and trust of foreigners and engaged them for longer period because Pakistan is the country which have four different seasons and natural spectacular sight, religion respect factor and prefer prosperity in every situation. The collaboration also backing up in digital and technological corporation (fiber optics, 5G internet), E-commerce (Alibaba-style platform) and digital payments.
Under the stages of Free Trade Agreement (FTA) phase 1 and phase 2 support to expand the trade market. This leads to improve financial and economic stability of Pakistan and give China opportunity to establish a strategic connection with Arabian Sea, central Asian countries and middle east at low cost. By using that route the Chinese supply chain became more productive. Both countries always stand by with each other when the need arise, the reason behind is mutual benefits, geo-strategic location and diplomatic support and stronger supply chain. The trade enhancement and economic empowerment direct the sustainable development through trademarks.
Game Changer to Fate Changer of Nation:
Pakistan has an opportunity to convert their weaknesses into strength by comprehensive planning about decreasing imports and diverting focus on making final goods instead of exporting raw material. China gave agricultural seeds machineries drones for creating efficient check on production of food items to see better growth in reality. In current year 2025 the major initiative taken by Government for progress of agriculture sector, they planned to send 1000 agriculture professionals/students to China Agri-Research institutes. The Confucius institutes give the clear message of China corporation and mind set of win-win situation, through which we can understand partner country point of view, way of living, and in future providing them goods according to their demand. The advancement in production according to world’s perspective rise foreign exchange in country and trigger growth. Through Chines’ project of $46 billion investment under BRI, Pakistan could take the benefit by establishing; shops, promoting their culture of Punjabi, Sindhi, Baluchi, and Pashtuns which attract tourism and expansion of market along CPEC the result should be positive by decreasing un-employments, inflation, poverty and trust issues. Gwadar-Port is the Point of boosting economies of nations because of it’s characteristic of geo-strategic location.
In my opinion if we fully operationalize the Gwadar port and make road links with Land Lock Countries than open market for them with Transit Trade Policy. By keeping top preference to Balance of Payments so that Pakistan don’t face trade deficit problem and work on zero sum game with the mindset of mutual progress. It can enhance export incentives for Gwadar based firms if we adopt policy of more dollar inflow and less dollar outflow. We should enrich the Special Economic Zone (SEZ) so that it uplifted the only Gwadar port to trade-exchange industrial ecosystem.
The export of Gwadar port services (ship repair and bunkering center, oil storage hub, technical support system) earning directly increase the revenue. China can also get benefit by strengthen their Supply Chain. The strategic policies become the pillar of Pak-China trade and it has capacity to move nations toward continuous growth and development.