China’s economic slowdown is reshaping its global trade relationships, particularly with Pakistan, as both countries navigate new geopolitical realities. China’s economy is growing at around 5% in 2025 and early 2026, slower than previous rates of above 10%. This decline affects various sectors, including the China-Pakistan Economic Corridor (CPEC).
China’s population is shrinking and aging. This demographic shift leads to fewer workers and falling employment rates. Additionally, household spending in China remains low, which impacts overall economic growth. In 2025, China’s fixed investment turned negative, signaling deeper issues within its economy.
The CPEC initiative has seen significant investment from China. An estimated $25.9 billion has been invested in large transport and energy projects under this initiative. President Asif Zardari’s recent visit to China aimed to attract further Chinese investment and expand trade between the two nations.
As both countries adapt to these changes, the semiconductor industry plays a crucial role. China is focusing on self-reliance in this sector due to US export curbs on advanced chips. Currently, China has captured a roughly 30% share of the global market for legacy chips. However, experts indicate that achieving chip self-sufficiency remains a significant challenge.
Key insights from recent discussions:
- Commentators note a deliberate shift towards sub-national diplomacy, where provinces act as engines of trade and technology transfer.
- Ambassador Mansoor Ahmad Khan highlighted that China is significantly affected by its oil imports originating from Iran or transiting through the Strait of Hormuz.
- Experts like Ryu Yongwook emphasize that while Beijing aims for chip self-sufficiency, it is far from achieving this goal.
The long-term impact of China’s economic slowdown on global trade is unclear. Whether Pakistan’s evolving economic ties with China will lead to a full-scale revival of CPEC also remains uncertain. As both nations navigate these challenges, they will need to reassess their strategies in light of changing geopolitical dynamics.