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For much of the last decade, Pakistan’s economic geography seemed to have settled into a familiar pattern: China was the investor, builder and strategic partner in the East; the US and Europe were Pakistan’s main export markets in the West.
Islamabad could lean politically towards Beijing while remaining commercially dependent on Western consumers. It was an arrangement with its contradictions, but at least the lines were reasonably clear. Today, those lines are becoming blurred and Pakistan increasingly looks less like a passive participant in the global economy and more like a potential battleground in the competition between two economic worlds.
The numbers already tell part of the story. During July–March of FY2025-26, the US accounted for 19.9 per cent of Pakistan’s exports, making it the country’s largest export destination. China accounted for 8.4 per cent, followed by the UAE at 7.0 per cent. At the same time, China remained overwhelmingly important on the import side. Pakistan’s trade relationship with Beijing has historically been marked by a large imbalance: in calendar year 2024, Pakistan exported around $2.83 billion to China while importing more than $20.2 billion, according to data compiled by the FPCCI. China therefore represents both a critical market and a formidable source of manufactured imports.
Then there is CPEC. According to the CPEC Secretariat, China invested about $25 billion during the first phase, adding nearly 8,000MW of power-generation capacity and building major infrastructure, including the Thar coal project and a fibre-optic network. The second phase is now being pushed toward industry, agriculture, minerals, technology and business-to-business partnerships.
Yet CPEC’s trajectory has also exposed the limits of grand geopolitical promises when confronted by Pakistan’s domestic realities. This is where questions arise: why is Islamabad simultaneously working so aggressively to attract American companies, Western FIs and international capital? Why is the government seeking a return to international capital markets? Why is the prime minister sitting with the leadership of J P Morgan etc? And why, at precisely the same time, is Pakistan presenting itself to China as a willing partner for the next generation of CPEC?
Consider the minerals question. In September 2025, a high-level American delegation, including USSM and Mota-Engil, met Prime Minister Sharif to explore Pakistan’s copper, gold and rare-earth potential. The resulting framework between the FWO and US Strategic Metals envisaged cooperation in critical minerals and a first phase of approximately $500 million in investment, including the possibility of developing processing capacity inside Pakistan.
The stated ambition was not simply to extract minerals, but to add value, build processing capacity and develop infrastructure linked to the critical-minerals supply chain. That distinction matters. Pakistan is not merely sitting on commodities; it sits on resources that have gained strategic importance in a world increasingly concerned with supply-chain security, technological competition, and the concentration of critical minerals.
The West’s renewed interest is also visible in finance. In April, Finance Minister Muhammad Aurangzeb said Pakistan was preparing to re-enter international capital markets after a four-year absence, with Eurobonds, a Panda bond and other instruments under consideration. Rothschild & Co offered advisory support on sovereign bond issuance, liability management, blended finance and sovereign-rating strategy.
Pakistan subsequently completed a privately placed $500 million, three-year Eurobond, which the finance ministry described as a vote of confidence in the country’s economic direction.
By September, the PM was in London, meeting senior executives from major companies and discussing capital markets, trade finance, investment banking and expanding financial-sector engagement with Pakistan. This is where the current foreign policy deserves a more serious reading than it often gets at home. Pakistan’s diplomatic activism over the Iran-US confrontation has not necessarily produced an immediate cheque for the treasury. Diplomacy rarely works that way. But it has placed Pakistan in rooms where its strategic geography suddenly matters.
That is an important shift in Pakistan’s external posture. For years, Islamabad’s geopolitical relevance was often reduced to its relationship with India, Afghanistan, terrorism, nuclear weapons or its strategic partnership with China. Today, Pakistan is trying to position itself more broadly: a country capable of engaging with competing blocs, facilitating communication between adversaries and turning geography into diplomatic relevance.
Geopolitics and trade are increasingly inseparable. The old assumption was that countries became strategically important after they became economically successful. The emerging global order is producing the opposite possibility: countries with strategically important geography, minerals, markets, diplomatic access, or supply chains can gain economic relevance before they solve all their domestic problems.
Pakistan is an unusually clear example of this contradiction.
Taken individually, none of these developments proves that Pakistan is becoming a new economic prize. Taken together, however, they reveal a country increasingly being courted across multiple strategic domains.
And that is where the apparent contradiction in Islamabad’s diplomacy begins to make sense. Pakistan does not necessarily need to choose between Beijing and Washington. It needs to avoid becoming economically dependent on either. The strategic objective should be to extract maximum economic value from both relationships while preserving room for independent decision-making.
If Pakistan becomes merely the terrain upon which larger powers compete for minerals, markets, influence and strategic access, it will have changed very little. A battleground is still a battleground, even if foreign investment flows through it.
That means copper should not leave Pakistan as copper if Pakistan can process it. Agricultural cooperation should not end with another export of raw commodities. Projects should ultimately be judged not by the number of kilometres of road constructed but by factories established, exports generated, technology transferred and Pakistani firms integrated into global supply chains. Western financial engagement should not become another cycle of borrowing; it should deepen capital markets, mobilise private investment and finance productive assets.
This will require considerably more diplomatic sophistication than choosing a camp. This will also require domestic reforms that match the foreign policy’s ambition. No amount of geopolitical relevance can permanently compensate for weak institutions, unpredictable regulation or poor execution.
But for perhaps the first time in years, Pakistan’s problem is not that nobody is looking at it. Everyone may be looking at it for different reasons. For decades, Pakistan has often approached the world asking what its partners can give it. The emerging opportunity is to ask a different question: what does Pakistan possess that competing powers are willing to pay for, invest in and negotiate for?
That is the beginning of economic leverage. Perhaps, therefore, Pakistan is not becoming easier to invest in. Perhaps it is becoming harder to ignore.
The writer is a trade, policy and climate expert, and managing director of Carbo-X.
