China Pakistan Economic Corridor (CPEC) remains hailed as a game-changer. Meanwhile, the boardrooms of Hanoi and Bangkok aren't talking about corridors; they're building an ecosystem. China’s trade with ASEAN reached $1.05 trillion last year, accounting for 16.6% of its global trade. In contrast, trade with South Asia was only $202 billion, with Pakistan accounting for just $23 billion and growing 1.9%. These figures highlight the significant gap in regional trade integration.
Market access does not automatically translate into effective market entry, and Pakistan has yet to capitalize on the opportunities created by existing trade agreements fully. Regional Comprehensive Economic Partnership (RCEP) provided ASEAN cumulation rules, while the China–Pakistan Free Trade Agreement CPFTA provided tariff lines. A Vietnamese corporation imports cooked material from China, buys knobs from Thailand and zippers from Malaysia, assembles them in Hanoi, and brings the finished merchandise into China without paying a levy. Ten countries became a single shop floor, backed by that one rule. However, Pakistan lacks a comparable institutional architecture as it faces stringent rules of origin, cumbersome customs procedures, and complex standards requirements. Transaction costs wipe out the margin for exporters. Trade does not follow signatures but production networks. ASEAN did not sign to become a trillion-dollar organization. It harmonized, standardized, and developed its supply chain there.
Ostensibly, Pakistan has developed physical infrastructure through economic corridors, ports, and special economic zones. However, mechanisms required to make these investments productive remain underdeveloped. Chinese stockholders import their own materials into Rashakai, including steel, machinery, and packaging material because Pakistani SMEs may lack the capacity to meet the required quality standards and certification requirements. However, Vietnam has implemented supplier development programs. They provided engineering support to local companies working with Chinese buyers, financed testing facilities, and sent engineers to factories. Thailand and Malaysia followed suit. Conversely, Pakistan has developed the zones without adequately developing local suppliers and has overlooked the vendors. The initial phase of CPEC has removed the blockage; nonetheless, it has not generated any export capacity. The industrial phase remains aspirational, as special economic zone development has focused more on physical infrastructure and real estate than on building productive, export-oriented industrial capabilities. The same warning holds for Sri Lanka, which shows that infrastructure alone cannot generate industrial and export capacity without a coherent industrial policy. Pakistan needs three coordinated acts, with political backing, not notifications.
First, make the border disappear, implement a genuine single-window customs system rather than a portal linking multiple agencies, and align technical standards product by product with China’s GACC requirements. Singapore’s $119 billion trade with China validates that trade performance depends less on geographic size than on efficient procedures and institutions. Singapore also provides a practical model that Pakistan can adapt.
The evidence is clear: the necessary institutional architecture, market demand, and capital are already in place. So the question is whether Pakistan can move beyond celebration to ecosystem development. The gate is open. The only way is to take it on foot and have something to offer.
Second, transform SEZs into supplier-development hubs rather than land banks. Chinese investors in CPEC zones should adopt five-year localization roadmaps to increase local sourcing, supported by a Supplier Development Fund that trains and certifies Pakistani SMEs. Vietnam’s Supporting Industry Program demonstrates how supplier development can strengthen local industrial linkages. Pakistan, however, has yet to establish a comparable program.
Third, industrialize to meet existing demand rather than relying on uncertain export prospects. India’s $155 billion trade with China is partly driven by its manufacturing demand for Chinese inputs such as chips and chemicals. Pakistan cannot generate that with its narrow base. Pakistan should focus on producing intermediate goods, such as surgical instruments, machinery components, and processed mineral and textile inputs, while developing downstream industries that use Chinese raw materials. An economy that exports raw cotton but imports finished machinery is likely to face persistent trade deficits.
This is not merely a technocratic issue; it is a policy choice. Customs performance should be measured by clearance time and trade facilitation, rather than revenue collection alone. The Ministry of Commerce should evaluate officers based on SME certifications rather than the number of trade delegations. Similarly, SEZ performance should be measured by local content ratios and industrial output rather than ground-breaking ceremonies. ASEAN governments coordinated across ministries and sustained policy implementation to embed trade reforms institutionally. In Pakistan, trade policy often remains, confined to bureaucratic processes rather than being pursued as a coordinated, cross-ministerial priority.
China’s supply chains are undergoing significant transformation, with the “China-plus-one” strategy encouraging firms to expand production in countries such as Vietnam, Malaysia, India, and Bangladesh. Pakistan is so far debating the next phase of CPFTA. The evidence is clear: the necessary institutional architecture, market demand, and capital are already in place. So, the question is whether Pakistan can move beyond celebration to ecosystem development. The gate is open. The only way is to take it on foot and have something to offer. Pakistan should now focus on productive industries under CPEC 2.0 to enhance its local sourcing, exports, employment rather than land development. They should create a supplier development program for Pakistani SMEs. They should make it easier for Pakistani community to enter Chinese markets by integrating single-window trade system.
Pakistan should develop its own products and not focus only on exporting raw material or agricultural commodities. Pakistan should develop technical centres where Chinese and Pakistani engineers work with SMEs to improve productive process, quality control and for this, they should learn from Vietnam supplier development approach. Pakistan should now make SEZs as a supplier development hubs but not as a real-estate projects. The policymakers from the ministry of commerce, SEZs management, Ministry of Planning, Board of investment and Ministry of industries should work together for Pakistan’s broader trade and industrial policy.