Already facing multifaceted challenges – low growth, inflation, high poverty, and food insecurity – Pakistan’s ability to respond has been further undermined by the debt and policy traps woven by Bretton Woods’ institutions. The trade war is expected to deepen the crisis and introduce new challenges. For instance, the US may accelerate efforts to pressure Pakistan to weaken its ties with China or curtail the China-Pakistan Economic Corridor (CPEC).
So, what policy choices are available for Pakistan, and what opportunities might help soften the impact of the trade war?
On the policy front, Pakistan must acknowledge that the era of a balanced foreign relations strategy has passed, at least for now. The US has launched a full-spectrum economic and diplomatic war, with China as its primary target.
Policy choices are narrowing, with the US seemingly returning to a post-9/11 stance: you’re either with us or against us. Given this, Pakistan’s best option is a pro-Pakistan policy. It must make clear that it is not neutral but aligned with its national interests and pro-humanity. Pakistan should cooperate with all nations to promote shared values and seek partnerships that address, rather than compound, its internal problems.
Can Pakistan implement such a policy? Fortunately, yes. The recent Pakistan Minerals Forum exemplified this approach, as it engaged with diverse international groups.
CPEC, in particular, offers a robust opportunity for Pakistan to manage and resolve its challenges. It has all the ingredients to support sustainable development. The first phase of CPEC helped address the country’s energy shortages and infrastructure deficits. The second phase is focused on industrialisation, agricultural modernisation, and strengthening the scientific and technological base. Despite persistent negativity and propaganda, CPEC continues to deliver and contribute to national welfare.
However, this is no easy path, as the global trade war is fundamentally about China. The US is implementing its strategy to isolate China and damage its economy. CPEC, being a China-led initiative, will likely draw further scrutiny and opposition from Washington. This will complicate matters for Pakistan, which is already facing attempts to sabotage CPEC.
India, acting on behalf of its Western allies, has been actively conducting and financially supporting terrorist activities in Pakistan with impunity. International institutions like FATF have failed to hold India accountable. These acts of terrorism primarily target the CPEC route and Balochistan. Since the development of Gwadar Port and Airport, terrorist activity has surged.
There is fear among adversaries that this progress will turn Balochistan, especially Gwadar, into a regional connectivity hub and development catalyst. Such transformation is expected to drive industrial growth and modernise agriculture and livestock sectors in Balochistan and beyond. It would also improve education and healthcare in the province.
This development threatens to dismantle the prevailing narrative of Balochistan as a neglected region. The resulting job creation could undermine terrorist recruitment strategies. As a result, CPEC-related projects and Chinese nationals have come under frequent attack. Innocent citizens are also being targeted to damage Pakistan’s global image.
Moreover, adversaries believe the CPEC route offers China a secure alternative to the geopolitically sensitive Strait of Malacca, which spans roughly 12,900 kilometres. The shorter, more reliable CPEC route could render US-led investments and initiatives like QUAD less effective.
In addition to terrorism, fifth-generation warfare tactics are being deployed. Propaganda and disinformation campaigns manipulate public opinion using fake news and distorted data. Some retired Pakistani scholars and so-called journalists have been recruited to spread disinformation under the guise of expertise and patriotism. These individuals distort facts about CPEC, China, and the bilateral relationship, with their narratives amplified by Western outlets and hostile actors.
The West has invested in grooming fake journalists under the labels of citizen journalism and media entrepreneurship. These individuals fabricate stories alleging debt traps and corruption tied to CPEC. Their primary target is the Chinese public. These efforts aim to sow discord between the people of Pakistan and China. For example, narratives like “look what Pakistani scholars or media say about China” are strategically floated on Chinese social media to erode mutual trust.
Another widespread narrative falsely claims that China is reducing investment in CPEC due to security concerns. These stories aim to create doubts among stakeholders and feed anti-Pakistan sentiment in Chinese circles.
Given these circumstances, it is likely that hostile nations will try to pressure Pakistan via the International Monetary Fund (IMF), Financial Action Task Force (FATF), and other Bretton Woods institutions to scale back CPEC or reduce its engagement with China. If Pakistan resists, it may face economic punishment and an uptick in terrorism.
In conclusion, CPEC offers Pakistan a genuine opportunity to mitigate the impact of the trade war and achieve sustainable development. But it’s a path laden with obstacles and fierce resistance from the US and its allies. Pakistan must be prepared to push back.
To do so, the country needs to move away from the impractical notion of a balanced foreign policy and adopt a Pakistan-centric approach – grounded in the principles of humanity and shared prosperity.
THE WRITER IS A POLITICAL ECONOMIST AND A VISITING RESEARCH FELLOW AT HEBEI UNIVERSITY, CHINA