Chinese industrial cooperation with Pakistan under the second phase of the China-Pakistan Economic Corridor (CPEC) is increasingly focused on modernising Pakistan’s textile sector by gradually shifting from reliance on imported machinery to localised production based on advanced and energy-efficient technologies.
PAK-CHINA COOPERATION
Chinese industrial cooperation with Pakistan under the second phase of the China-Pakistan Economic Corridor (CPEC) is increasingly focused on modernising Pakistan’s textile sector by gradually shifting from reliance on imported machinery to localised production based on advanced and energy-efficient technologies.
This collaboration envisages the establishment of textile machinery manufacturing units within the Special Economic Zones (SEZs) being developed across the country. These SEZ -- such as Allama Iqbal Industrial City in Punjab, Rashakai Special Economic Zone in Khyber Pakhtunkhwa, and Dhabeji Special Economic Zone in Sindh -- are designed to attract Chinese investment in advanced machinery manufacturing and to serve as platforms for meaningful technology transfer.
Reports indicate that Chinese companies are investing in the indigenisation of high-performance textile materials and advanced machinery, facilitating a transition from low-value, manual processes to automated and high-efficiency production systems. Several Pakistani and Chinese firms have recently signed agreements to strengthen the textile sector, including initiatives for the indigenisation of textile machinery and components. These developments include a $40 million partnership for textile products and machinery parts between Hunan Dongxin Textiles, leading Chinese producers and Keywin Trading Ltd, a Pakistani trading-house based in Hongkong, alongside plans by the RUYI Shandong Group of China to establish specialized textile parks in Punjab and Sindh. Also, Sino Pak Tech Industry (Pvt) Ltd, the Chinese investors, plan to establish new industrial parks, such as a 300-acre project in Punjab valued at $1.5 billion, focused on textiles and other sectors.
On August 14, 2025, Prime Minister Shehbaz Sharif inaugurated a 100-acre Special Economic Zone, known as Textile Park, near Lahore. The project, with an estimated $150 million in investment from the Challenge Group of China, is expected to become one of the country’s largest and most advanced integrated textile manufacturing facilities. Under CPEC, China aims to move beyond simply exporting machinery to Pakistan and instead establish manufacturing, assembly, and service centres within the country, thereby reducing production costs and encouraging the local production of parts and components rather than the continued import of finished equipment.
Textiles remain Pakistan’s single largest industry, yet the sector is almost entirely dependent on imported machinery, equipment, accessories and spares. Local facilities for manufacturing textile machinery are virtually non-existent, despite the fact that globally the textile machinery sector has historically served as a catalyst for the development of a robust capital goods industry. The Pakistani textile and apparel industry annually imports machinery and spares worth hundreds of millions of dollars. Imports peaked at $792 million in 2021, declined in subsequent years due to adverse domestic and global economic conditions, and during 2025 stood at $241 million. Textile machinery is imported from various countries, including China, Germany, Italy, Switzerland, Japan, South Korea and Turkiye. China remained a leading supplier, with exports to Pakistan in 2024 totalling textile processing machines valued at $18.5 million and auxiliary machinery for use with textile machines valued at $32.8 million.
Historically, the localisation of textile machinery manufacturing remained on the agenda of successive governments. Efforts were made, particularly through the public-sector engineering industry, to diversify product lines to include textile machinery. Unfortunately, these initiatives failed. The textile industry itself showed limited interest in nurturing the domestic engineering base, while the engineering sector lacked the technological depth and competitiveness required to offer modern machinery. Government policies, too, remained inconsistent and unsupportive of sustained indigenisation.
The foundation for an engineering base was laid as early as in 1973 with the establishment of the Textile Machinery Corporation of Pakistan in the public sector. Subsequently, Textile Machinery Company (TMC) was established in 1975 at Korangi, Karachi, to produce manual and automatic cone winding machines, with an installed capacity of 50 units per year. Gilbos of Belgium provided technical know-how under a licensing agreement. Although production commenced in 1978, the company remained grossly underutilised from the outset. The Corporation was later liquidated, and its both manufacturing units were transferred to the State Engineering Corporation.
By 1988, TMC had produced and sold cone winders, high-drafting systems, ring-spindle frames, and spares worth only Rs50 million, earning marginal profits. In the early 1990s, production ceased following privatisation, and the company remained closed thereafter. Similarly, the other unit, Spinning Machinery Company (SMC), established in 1977 at Kot Lakhpat, Lahore, produced ring spinning frames (machines) under licence from Schubert & Salzer of Germany. Although commercial production began in 1982, SMC never achieved its full annual capacity of 250 frames. Capacity utilisation remained around 20 per cent, and by June 1989 total sales amounted to only 231 frames valued at Rs155 million. Lacking economies of scale and burdened by high production costs, the company eventually discontinued production.
Another company of the State Engineering Corporation, Pakistan Engineering Company Limited (PECO), manufactured and marketed power looms in Lahore. In collaboration with Iwama Looms of Japan, PECO produced automatic shuttle looms and gradually increased annual output from 250 to 600 units. Negotiations were also underway with global leaders, including Chinese firms, to assemble and manufacture modern shuttle-less looms. However, these plans did not materialise due to the company's privatisation, and the power loom division was shut down in the early 1990s.
Efforts were also made at Pakistan Machine Tool Factory (PMTF) to produce ring spinning frames under licensing arrangements with Chinese and Japanese manufacturers. Although significant technical know-how was transferred and production of Jingwei (China) ring spinning frames was launched in December 1998, the project failed to sustain momentum. Plans to manufacture knitting machines at PMTF, and blow-room, carding, dyeing, and finishing equipment at Heavy Mechanical Complex, were eventually abandoned.
In recent years, the private sector has made modest contributions by producing parts, accessories and selected machinery items. However, these small and medium enterprises -- largely operating in the informal sector -- have been unable to achieve meaningful scale and assimilate the latest technology. Locally produced items include power looms, warping and twisting machines, winders, washing and calendaring machines, sizing and scouring equipment, spindles, rings, fluted rollers, metallic card clothing, inspection machines and air-conditioning and humidification systems for textile units.
Today, Pakistan’s textile industry, which contributes about 60 per cent of total exports, faces formidable challenges, including high energy costs, import restrictions, sharp currency depreciation and fluctuating global demand, besides lacking modernisation. Textile and apparel exports have remained inconsistent in recent years, and several industrial units have closed under financial strain. Nevertheless, the export-oriented textile sector retains strong potential for revival, given rising global and domestic demand for textiles and made-ups. Modernisation and technological upgrading are therefore inevitable if Pakistan is to remain competitive.
The second phase of CPEC thus presents a rare and timely opportunity. By leveraging Chinese cooperation for genuine technology transfer, local manufacturing, and skill development, Pakistan can finally build a viable textile machinery industry -- an objective that has eluded policymakers for decades. If pursued with consistency, policy support and active private-sector participation, this collaboration could transform the textile sector from a heavy importer of machinery into a technologically capable and self-reliant industry, strengthening the country’s broader industrial base and enhancing its long-term export competitiveness.
The writer is a retired
chairman of the State
Engineering Corporation.
Today, Pakistan’s textile industry, which contributes about 60 per cent of total exports, faces formidable challenges, including high energy costs, import restrictions, sharp currency depreciation and fluctuating global demand, besides lacking modernisation
