A recent policy consultation in Islamabad underscored growing concern among experts that Pakistan lacks a clear industrialization strategy and must stabilize its policies to attract increasing levels of Chinese green investment. The discussion, held on 04 May 2026 and organized by the Sustainable Development Policy Institute, focused on how Pakistan can position itself to secure Chinese investment in renewable energy, electric vehicles (EVs), and green manufacturing supply chains.
During the consultation, specialists emphasized that Pakistan will struggle to compete for Chinese private sector investment unless it undertakes meaningful structural reforms, improves long-term policy consistency, and offers competitive incentives. They noted that several emerging sectors—especially solar energy, battery storage, and EV manufacturing—provide opportunities for collaboration, but Pakistan must address critical market gaps and make its investment environment more predictable.
Mustafa Hyder Sayed, Executive Director of the Pakistan-China Institute, explained that the first phase of the China-Pakistan Economic Corridor was largely driven by Chinese state-owned enterprises. However, he said the next stage of economic cooperation depends on attracting Chinese private firms that are now relocating manufacturing operations to various countries.
According to him, rooftop solarization could serve as an accessible starting point for new investments, but Pakistan needs to compete with ASEAN economies such as Vietnam and Malaysia, which have better infrastructure and more streamlined procedures. He recommended joint planning with Chinese investors, subsidized industrial land, tax holidays, duty-free access to imported machinery, and a more effective one-window facilitation mechanism.
Xiaokang Xue, a researcher at the Net Zero Industrial Policy Lab at Johns Hopkins University, discussed the rapid expansion of Chinese overseas investments in clean technology manufacturing. Most of these investments, he said, are flowing into ASEAN and Central Asian economies where market access, raw materials, and policy stability are more assured.
He noted that Pakistan has promising potential in the solar and EV industries but must offer fiscal incentives comparable to countries such as Indonesia, Thailand, and Malaysia to attract similar levels of investment.Professor Stella Hong Zhang from the Hamilton Lugar School of Global and International Studies at Indiana University Bloomington drew comparisons between ASEAN and MENA approaches to industrial development.
She explained that ASEAN countries have been successful in integrating into global manufacturing networks due to strong industrial policies, well-developed special economic zones (SEZs), and export-driven strategies. She highlighted that Indonesia, for instance, has used its nickel resources to attract Chinese investment in EV and battery manufacturing. In contrast, Pakistan has yet to develop a consistent industrialization roadmap and remains dependent on imports of Chinese solar technologies rather than building domestic production capabilities.
From the host institute, Engr. Ubaid ur Rehman Zia, Head of the Energy Unit at SDPI, observed that Pakistan’s energy cooperation with China is undergoing an important shift. Initially, CPEC projects were dominated by large-scale investments supported by sovereign guarantees. Now, he said, partnerships are moving toward more commercially driven models involving equity participation, joint ventures, and broader private sector engagement.
He noted that Pakistan’s industrial sector is increasingly exploring decentralized and lower-cost energy solutions, which is reshaping the direction of bilateral energy cooperation. According to him, understanding these new investment structures and risk-sharing arrangements is essential for planning future collaboration.Dr. Hassan Daud Butt, Senior Advisor at China Energy Engineering Group, described how global investment strategies are shifting toward “friend-shoring” and “near-shoring,” where stability and trust are prioritized over purely low costs.
He stressed that Pakistan must build a dependable and affordable green energy ecosystem if it intends to remain competitive. He also noted that future investments will concentrate on technologies that improve energy efficiency, smart grid systems, and low-carbon manufacturing, especially in sectors experiencing rising demand such as AI-driven data centers.
To achieve this, he said, the state must play a stronger role in supporting industrial upgrading, innovation, diversification, and targeted sectoral incentives.Professor MA Jinlong from Tianjin University’s APEC Sustainable Energy Center emphasized that energy security has become a decisive factor in investment decisions, particularly in a period of global uncertainty.
He called for Pakistan to reinforce its national power grid, ensure reliable electricity supply to special economic zones, and promote low-carbon energy to meet global market expectations. He also underlined the importance of efficient regulation, investor-friendly policies, and building the necessary infrastructure for AI development and circular economy practices.
Overall, experts agreed that Pakistan stands at a critical juncture. To capture the next wave of Chinese green investment, the country will need to prioritize long-term planning, streamline procedures, strengthen infrastructure, and create a stable policy environment capable of supporting modern, competitive, and sustainable industrial growth.
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