Pakistan's Role in the US-China Trade War — 2026

Official angle: Pakistan's External Affairs — Relations with US/China, 40 Marks

Background

• US-China strategic and trade competition (tariffs, tech export controls, supply-chain "de-risking") has intensified through the 2020s, with renewed tariff escalations in 2025–26 under the Trump administration.
• Pakistan sits structurally between the two: CPEC anchors it firmly in China's economic orbit, while the US remains a key export market (notably textiles) and IMF/multilateral-lending influence channel.

Pakistan's Position (2026)

• Pakistan pursues a policy of "non-alignment" or "all-weather friend to China, cooperative partner to the US" rather than picking sides, reflecting limited leverage to influence the trade war itself.
• Potential upside: some supply-chain diversification away from China ("China+1") could theoretically benefit Pakistan's textile/manufacturing exports if it improves ease-of-doing-business and energy costs — though Pakistan has captured only a modest share of this shift compared to Vietnam, Bangladesh, or India.
• Risk: deeper US-China rivalry increases pressure on Pakistan over Chinese debt/CPEC transparency (a recurring US/IMF talking point) and complicates dual-track diplomacy.

CSS Exam Angle

Use for "great power competition and Pakistan's foreign policy choices" style questions — emphasize strategic hedging rather than alignment as Pakistan's core approach.

Expanded Material for a Full 20-Mark Answer

Introduction (write-up)

As US-China strategic and economic competition has intensified into a full-spectrum contest over tariffs, technology, and supply chains through 2025–26, Pakistan finds itself structurally positioned between the two powers in a way few other states are — bound to China through CPEC's foundational economic architecture, yet dependent on the US-influenced IMF/multilateral system for financial stability and on Western markets for its largest export sector.

Additional Dimensions

• Structural bind, not free choice: unlike states that can meaningfully "choose sides," Pakistan's position is one of structural interdependence — CPEC debt and infrastructure cannot be unwound without severe economic cost, while IMF programs (largely US-influenced through voting-share weight) remain essential to avoiding balance-of-payments crises, as demonstrated repeatedly since 2022.
• Trade-war-specific dynamics: escalating US tariffs on Chinese goods and expanding technology export controls (semiconductors, AI chips) through 2025–26 have accelerated global supply-chain "de-risking" — companies diversifying manufacturing away from China toward alternative low-cost manufacturing bases (the "China+1" strategy).
• Pakistan's limited capture of the "China+1" opportunity: despite theoretical upside, Pakistan has captured a much smaller share of relocating manufacturing/textile investment than regional competitors like Vietnam, Bangladesh, and India — attributable to persistent energy-cost unpredictability, security concerns, ease-of-doing-business rankings, and political instability, all of which are legitimate self-critical points for a strong CSS answer.
• CPEC transparency pressure: deeper US-China rivalry has increased Western/IMF scrutiny of Chinese-linked debt structures globally, including CPEC — a recurring point of friction in Pakistan's IMF program negotiations regarding debt transparency and restructuring terms.

Statistics & Examples to Cite

• Textile exports remain Pakistan's largest export category (roughly 55–60% of total exports), with the US historically its single largest single-country export destination — directly exposing Pakistan to any US tariff or trade-policy shifts.
• CPEC's Phase I investment commitment (~$62 billion) represents by far Pakistan's largest single external-financing relationship, dwarfing US bilateral economic engagement in absolute infrastructure-investment terms, even as the US remains critical for market access and multilateral-lending influence.

Critical Evaluation (balanced, dual-track argument)

Case for opportunity: even modest gains from "China+1" relocation, semiconductor/tech supply-chain diversification, or increased US market access could meaningfully boost Pakistan's chronically underperforming export base if paired with genuine domestic reform.

Case for risk: Pakistan's dual dependence creates vulnerability to being squeezed from both directions — US/IMF pressure over Chinese debt transparency, or Chinese expectations of political-diplomatic alignment (e.g., not fully endorsing Western positions on Taiwan, Xinjiang, or South China Sea disputes) in exchange for CPEC's continued investment.

Comparative Angle

Contrast with Vietnam's and Bangladesh's substantially more successful capture of "China+1" manufacturing relocation (driven by more stable energy supply, stronger ease-of-doing-business metrics, and more consistent trade policy) to identify concretely what Pakistan would need to reform to compete for similar investment — a strong, specific comparative point.

Way Forward

1. Pursue genuine "non-alignment" as active strategic hedging rather than passive drift — engaging both powers on their own terms without over-committing to either.
2. Improve the specific domestic conditions (energy reliability, security, ease of doing business) that currently limit Pakistan's capture of supply-chain-diversification opportunities.
3. Maintain CPEC debt transparency proactively to reduce friction points in IMF program negotiations, rather than reactively responding to Western pressure.
4. Diversify export markets and products beyond textiles to reduce vulnerability to any single bilateral trade relationship (US or otherwise).

Model Conclusion

Pakistan's position amid US-China trade-war competition is defined less by strategic choice than by structural necessity — a reality that demands careful, deliberate hedging rather than either full alignment or naive neutrality. The theoretical upside of supply-chain diversification remains real but largely uncaptured, meaning Pakistan's most consequential response to this global power competition may ultimately depend more on its own domestic economic reform than on its diplomatic positioning between Washington and Beijing.