When Pakistan’s first shipment of rare earth minerals quietly departed for the US in October, it drew immediate attention across Asian commentary circles. Some in China saw betrayal, others in Washington viewed it as an opportunity.
However, in reality, Pakistan’s decision to export rare earths and receive its first crude oil shipment from Houston around the same time signals something more pragmatic than ideological: a bid to regain economic relevance through strategic balance.
Rare earth minerals sit at the heart of today’s technology race. They power everything from electric vehicles to precision-guided missiles, making them a symbol of strategic dependence. For years, China has dominated this supply chain, controlling nearly 70 per cent of global production. Against that backdrop, any new entrant supplying the US naturally raises geopolitical eyebrows. But Pakistan’s export should not be read as a pivot away from China. Instead, it reflects Islamabad’s growing recognition that surviving in the current world order requires diversification.
China remains Pakistan’s largest investor and infrastructure partner through the China-Pakistan Economic Corridor (CPEC). Yet the economic stagnation of recent years, combined with the IMF’s tight fiscal conditions, has forced Islamabad to broaden its options. Selling minerals to the US and importing energy from Houston are acts of necessity.
For decades, Pakistan’s economic narrative has been shaped by dependency, first on US military and economic aid, then on Chinese loans and projects. Both relationships brought short-term relief but long-term vulnerability. The rare earth shipment, though small in volume, reflects an emerging understanding in Islamabad: that sustainability requires trading with everyone and depending on no one. Pakistan sits atop untapped reserves of copper, lithium and other critical minerals in Balochistan and Khyber Pakhtunkhwa. These assets, however, remain trapped under poor infrastructure and limited investment. Unlike China, Pakistan lacks the capital, refining technology, and logistics network to process these resources domestically. Partnering with US companies allows the country to monetise what would otherwise stay underground while avoiding over-reliance on a single partner. In this sense, Pakistan’s rare earth exports are less a geopolitical signal than a developmental strategy.
By opening trade lanes westward, Pakistan aims to attract the type of high-value investment it has historically lacked, investment that generates jobs, builds infrastructure and earns foreign exchange rather than merely incurring debt.
That same pragmatism explains why a crude oil shipment from Houston docked in Karachi almost simultaneously. This is an experiment in energy diversification driven by affordability. The fact that the US has now entered Pakistan’s energy matrix underscores how Islamabad is learning to manoeuvre in a multipolar world where ideology matters less than supply security. It also aligns with Washington’s broader strategic considerations.
The US is actively seeking to ‘de-risk’ its critical mineral supply chain from Chinese dominance. Engaging with smaller partners like Pakistan serves both strategic and symbolic purposes: it signals that resource security is no longer confined to alliances but open to pragmatic partnerships. For the US, importing from Pakistan offers limited volume but valuable diversification. For Pakistan, it provides recognition and leverage.
Beijing’s discomfort with Pakistan’s move is understandable but perhaps overstated. China has long viewed Pakistan as its strategic partner and buffer in South Asia, not its exclusive economic client. In fact, a more economically stable Pakistan benefits China’s regional ambitions, particularly the viability of CPEC. If US engagement helps stabilise Pakistan’s currency, infrastructure and security, Beijing indirectly gains from it. Moreover, Pakistan’s rare earth exports to the US are unlikely to threaten China’s global dominance in this sector. The volumes are small, the refining capacity is minimal and the technology gap is wide. What Islamabad offers instead is optionality, a signal to both great powers that it can cooperate with each without being consumed by either.
Pakistan’s history is littered with moments where it leaned too far towards one power and paid the price. In the cold war, US aid flowed when Pakistan was useful and dried up when it wasn’t. In the post-9/11 era, counter-terrorism partnerships brought dollars but also dependency. More recently, reliance on Chinese loans exposed fiscal vulnerabilities when projects stalled and debt repayments mounted.
This latest round of trade with the US reflects a course correction. Islamabad appears to be rediscovering a fundamental principle of foreign policy: balance is power. By trading across geopolitical divides, Pakistan can reassert agency over its economic future. The move also speaks to a broader trend in global politics. As the US and China compete for strategic dominance, middle economies like Pakistan, Vietnam and Indonesia are finding room to manoeuvre. They can extract value from both sides.
Pakistan’s rare earth shipment to the US will not upend global power dynamics, but it does mark a subtle shift in Islamabad’s approach: from ideological alignment to strategic maturity. Rather than choosing between Washington and Beijing, Pakistan is learning to pick itself, leveraging its geography, resources and partnerships for its own development.
The next step should be to transform these one-off transactions into a coherent national resource policy, one that encourages transparent investment, ensures environmental safeguards and fosters local refining capacity rather than merely exporting raw materials. That is how Pakistan can convert this moment from symbolism into substance, and from survival into strength.
The writer is a non-resident fellow at the CISS. He posts/tweets @umarwrites
