ISLAMABAD - Experts at a policy consultation said that Pakistan must undertake structural reforms, ensure policy consistency and offer competitive incentives to attract Chinese private sector investment, particularly in emerging sectors such as renewable energy, electric vehicles (EVs), and green manufacturing.
The consultation on ôHow Pakistan Can Compete for China’s Green Manufacturing FDIö, was organized by Sustainable Development Policy Institute (SDPI) here Monday. Speaking on the occasion, Mustafa Hyder Sayed, Executive Director, Pakistan-China Institute, said that while China-Pakistan Economic Corridor (CPEC) had made significant progress through Chinese state-owned enterprises (SOEs), future growth depended on attracting Chinese private sector firms relocating abroad.
Rooftop solarization offers a viable entry point for such engagement, he said and suggested that Pakistan must compete with ASEAN economies like Vietnam and Malaysia, which provided better infrastructure, streamlined procedures and investor-friendly policies. He called for joint planning with Chinese investors, provision of subsidized land, tax holidays and duty exemptions on imported machinery, along with an effective one-window facilitation system. Xiaokang Xue, Researcher at the Net Zero Industrial Policy Lab, Johns Hopkins University, highlighted a surge in Chinese overseas investments in clean technology manufacturing, particularly in ASEAN and Central Asia. He said host countries must ensure market access, raw material availability and long-term policy clarity to attract such investments. He added that Pakistan has potential in solar and EV sectors but must offer fiscal incentives comparable to countries like Indonesia, Thailand and Malaysia. Prof Stella Hong Zhang, Assistant Professor, International Studies, Hamilton Lugar School of Global and International Studies, Indiana University Bloomington, compared ASEAN and Middle East and North Africa (MENA) models, stating that ASEAN countries have successfully integrated into global manufacturing through strong industrial policies, SEZs, and export-oriented strategies.
Engr Ubaid ur Rehman Zia, Head of Energy Unit at SDPI, highlighted that Pakistan’s energy partnership with China was entering a new phase, moving beyond the traditional sovereign guarantee-based model established under the CPEC. While earlier engagement was driven by large-scale, state-led investments financed through sovereign-backed debt, there is now a visible shift towards more commercially oriented and diversified models, he said. Increasingly, he maintained, Chinese energy engagement is being shaped by equity participation, joint ventures, and private sector actors alongside growing demand for decentralized and cost-effective energy solutions in Pakistan’s industrial sector.
This evolving landscape, he said, underscores the need to better understand how investment structures, risk-sharing mechanisms, and emerging business models are transforming bilateral energy cooperation.
Dr Hassan Daud Butt, Senior Advisor, China Energy Engineering Group, said global investment patterns are shifting toward ôfriend-shoringö and ônear-shoring,ö where stability and trust outweigh cost advantages. He stressed that Pakistan must develop reliable, cost-efficient, and green energy ecosystems to remain competitive. He noted that future foreign investment would focus on energy-efficient technologies, smart grids and low-carbon manufacturing, driven by demand from advanced sectors such as AI data centers. Dr Butt emphasized the need for a facilitating state to support industrial upgrading, innovation, and diversification, adding that targeted industrial policy, sector prioritization, and performance-based incentives are critical for sustainable growth.
Prof M A Jinlong, School of Architecture, APEC Sustainable Energy Center, Tianjin University, highlighted that energy security was now central to investment decisions, particularly amid global geopolitical uncertainties. He stressed the need for strengthening Pakistan’s power grid, ensure reliable electricity supply to special economic zones (SEZs), and promote low-carbon energy to meet international market standards. He also underscored the importance of efficient regulatory procedures, investor-friendly policies, and development of AI and circular economy infrastructure.
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