Executive Summary
This report examines the evolution of bilateral relations between the People’s Republic of China (PRC) and the Islamic Republic of Pakistan, contextualising them within Beijing’s broader strategic interests in South Asia and the Arabian Sea.
China’s initiatives, including the Belt and Road Initiative (BRI) and the 21st Century Maritime Silk Road, account for its focus on Pakistan.
The report focuses on the economic and strategic dimensions of Sino-Pakistani cooperation, highlighting the mechanisms through which China has expanded its influence over Pakistan’s domestic and foreign policy spheres.
In particular, the establishment of the China-Pakistan Economic Corridor (CPEC) has marked a turning point, positioning Islamabad as a key node in China’s regional strategy and significantly increasing its political and economic reliance on Beijing’s support.
Key Takeaways
- Pakistan’s location benefits China, being near vital oil shipping lanes.
- CPEC offers China an alternative to the Malacca Strait and addresses Xinjiang’s Uyghur threat.
- Islamabad sees the CPEC as an opportunity to increase its strategic weight in South Asia and counter India’s growing presence.
Background Information
Pakistan occupies a position of considerable strategic value, located at the intersection of South Asia, Central Asia, and the Middle East. It shares borders with Afghanistan, Iran, China’s Xinjiang region, and India—the latter being its longest frontier, spanning approximately 2,912 kilometres. This includes the Line of Control, which demarcates the contested territories of Indian- and Pakistani-administered Kashmir.
Islamabad and Beijing formally established diplomatic relations in 1950, with Islamabad becoming the first Muslim-majority country and the third non-communist state to recognize Beijing’s sovereignty. This early diplomatic engagement was driven by Islamabad’s strategic interest in fostering industrial development and securing Chinese support in counterbalancing India, particularly over competing territorial claims in Kashmir.
A significant milestone in bilateral relations occurred in 1963, when both countries signed a boundary agreement that delineated the border between China’s Xinjiang region and Pakistan-administered Gilgit-Baltistan. As part of the agreement, Pakistan ceded a portion of the Karakoram region to China, in return for Chinese recognition of Pakistan’s sovereignty over other border areas. This accord laid a stable geopolitical foundation for their partnership, which was further solidified during the Indo-Pakistani wars of 1965 and 1971 (also known as the Second Kashmir War and the Bangladesh Liberation War).
During the 1965 war, China provided Pakistan with military equipment valued at approximately $250 million. In the 1971 war, which led to the secession of East Pakistan and the creation of Bangladesh, Beijing adopted a dual-track approach: while continuing to supply Islamabad with military support, it also actively defended Pakistan’s position in the United Nations Security Council.
The strategic partnership expanded into the nuclear domain in 1986, when China and Pakistan signed a nuclear cooperation agreement. This gave Islamabad the technical know-how needed for its first nuclear test in 1998, twelve years later. Alongside military collaboration, China significantly increased its economic ties with Pakistan, undertaking large-scale infrastructure projects, most notably the Karakoram Highway connecting Xinjiang and northern Pakistan.
From the 1990s through the early 2000s, Beijing maintained consistent political and strategic support for Islamabad. However, bilateral relations entered a new phase of intensification with the launch of the China-Pakistan Economic Corridor (CPEC), a flagship component of Beijing’s Belt and Road Initiative. Since then, diplomatic, economic, and security cooperation between the two countries has deepened considerably.
Geopolitical scenario
Since the beginning of Xi Jinping’s presidency in 2013, Sino-Pakistani relations have entered a phase of intensified strategic and economic integration, marked by the launch of the China-Pakistan Economic Corridor (CPEC). Framed within the broader Belt and Road Initiative (BRI), the CPEC envisions a foreign direct investment (FDI) plan initially valued at $62 billion, aimed at advancing two primary objectives.
The first is to deepen Pakistan’s financial reliance on Beijing. The steady increase in Islamabad’s external debt, reaching $124 billion in 2024, with approximately $30 billion owed to China, evidences this trend.
Beijing’s second objective, enhancing its strategic footprint in Pakistan’s economy, centres on infrastructure and energy development. This specifically targets linking Xinjiang’s industrial base to the Arabian Sea via Gwadar port. This corridor provides China with a critical alternative to the Strait of Malacca, through which nearly 80% of its Middle Eastern crude oil imports transit.
On the infrastructure front, China has committed $2 billion toward the development of the Gwadar Special Economic Zone (GSEZ), envisioned as a hub for approximately 300 industrial plants and logistical facilities. Major transport connectivity investments enhance this port-centric development. These include the expansion of the Karakoram Highway and the modernisation of Pakistan’s Main Line 1 railway corridor, involving track doubling and speed enhancements up to 160 km/h. The estimated cost of the rail project is $6.8 billion, predominantly financed through Chinese loans, with Islamabad expected to contribute approximately 15%.
Energy cooperation forms another cornerstone of this strategic alignment. Beijing has pledged around $28 billion for the development of Pakistan’s energy infrastructure, focusing on hydroelectric and nuclear generation. In the hydroelectric sector, key projects include the Karot Dam (financed through a $1.74 billion loan from the Export-Import Bank of China) and the Suki Kinari plant, built by SK Hydro Ltd with an investment of $1.7 billion.
In the nuclear domain, the 2013 bilateral agreement facilitated the construction of two third-generation power reactors near Karachi, known as K-2 and K-3. Each plant has a capacity of 1,100 MW, and the China National Nuclear Corporation, which provided $6.5 billion largely funded the overall project (valued at $9.59 billion). K-2 became operational in 2021, followed by K-3 in 2022.
Beyond civil energy cooperation, Beijing’s engagement with Islamabad encompasses a significant military dimension. This includes the transfer of advanced weapon systems such as eight Yuan-class diesel-electric submarines, four Type 054A frigates, and HQ-16A surface-to-air missile systems. The partnership extends to joint weapons development programs, most notably the co-production of the JF-17 fighter jet and collaboration on nuclear-capable missile platforms.
The second axis of Sino-Pakistani military cooperation centres on counterterrorism, particularly efforts to combat jihadist groups operating in South Asia. A key focus is the East Turkestan Islamic Movement (ETIM), which has been active in China’s Xinjiang region and adjacent border areas. In response, Beijing and Islamabad have intensified bilateral coordination through joint military exercises, intelligence sharing, and enhanced security cooperation aimed at neutralising transnational extremist threats that could destabilise both countries, especially China’s western frontier.
The third and most strategically sensitive dimension of this cooperation concerns the potential use of Pakistan’s Gwadar port by the Chinese People’s Liberation Army Navy (PLAN). If granted, this access would provide Beijing with two significant strategic advantages.
First, it would enable China to project naval power near the Strait of Hormuz, a vital maritime chokepoint through which approximately 20% of the world’s oil supply transits. As of 2023, the Strait of Malacca has surpassed the Strait of Hormuz only in strategic significance, with the latter handling around 23.7 million barrels per day (bpd) of oil.
Second, a Chinese naval presence in Gwadar would facilitate an expansion of PLAN operations in the western Indian Ocean, particularly near the Horn of Africa. While Beijing already maintains a military base in Djibouti, strategically located between the Gulf of Aden and the Red Sea, the addition of Gwadar would significantly enhance China’s maritime reach and sustainment capability across key sea lines of communication.
Conclusion
Pakistan’s integration into the CPEC has deepened its strategic alignment with China, which Islamabad views as a vital counterbalance to Indian influence, particularly regarding Kashmir. However, this orientation has significantly increased Islamabad’s economic dependence on Beijing, especially in the industrial-military sector. In 2024, bilateral trade reached $23.1 billion, with a trade deficit exceeding $17 billion in China’s favour.
Looking ahead, Beijing might further merge its leverage over Pakistan’s economy, aiming to turn the country into a strategic satellite. This would serve two key objectives: limiting India’s regional influence and transforming Gwadar into a major commercial and military outpost for Chinese access to the Middle East and European markets, reducing reliance on the vulnerable Malacca Strait, currently contested by the India-U.S. axis.
