Moaaz Manzoor

China’s 15th five-year roadmap for 2026–2030, focused on industrial modernization and innovation, offers Pakistan a chance to reposition its Special Economic Zones (SEZs) for advanced, technology-driven production, reports Wealth Pakistan. Beijing’s “modern industrial system” plan targets upgrading traditional industries and developing emerging sectors, including new energy, aerospace, quantum technology, biomanufacturing, hydrogen and fusion energy, brain-computer interfaces, and 6G.

For Pakistan, aligning its industrial policy with these shifts could move the country beyond infrastructure-led development toward innovation-oriented industrialization. Under the China-Pakistan Economic Corridor (CPEC), Pakistan focused on roads, energy plants, and logistics networks, but progress in upgrading production capacity was limited. China’s next industrial phase emphasizes high-quality development of the services sector and advanced manufacturing clusters, signaling the need for Pakistan to integrate technology, research, and skills into its SEZ strategy.

China’s latest guidelines highlight revitalizing traditional sectors and nurturing new industries, including the low-altitude economy, new materials, and future-focused technologies. Pakistan’s nine priority SEZs — including Rashakai, Allama Iqbal Industrial City, Dhabeji, Bostan, and M-3 Faisalabad —could benefit if they evolve from labor-intensive to technology-intensive operations. Dr. Nasir Iqbal, Associate Professor and Registrar at Pakistan Institute of Development Economics (PIDE), emphasized linking the existing industrial clusters in Sialkot, Lahore, and Karachi to the evolving regional value chains.

“Special Economic Zones are made for specific activities, but we already have several functioning industrial hubs. To benefit from China’s diversification, Pakistan needs to clear bottlenecks in financial payments, border clearances, and the ease of doing business,” he said. Dr. Iqbal also stressed the importance of innovation-driven, targeted policymaking to capture CPEC’s industrial potential. “We need to replicate what other countries, like China, are doing in AI and robotics.

If we bring innovation to existing clusters and provide specific, target-based incentives, such as for AI-related exports, we can create additional export surplus. Blanket subsidies won’t help; we need quick and focused regulatory reforms.” China’s plan prioritizes integrating technology with production, making innovation the main driver of growth. Pakistan can emulate this by developing technology parks, testing centers, and research facilities near SEZs to encourage partnerships in robotics, electric vehicles, and digital logistics.

Such initiatives could generate skilled jobs and facilitate technology transfer to the local industries. Nabila Jaffer, Head of China Program at the Institute of Regional Studies (IRS), told Wealth Pakistan that Pakistan must strengthen its foundations to benefit from China’s modernization. “Pakistan needs to work on prerequisites, including structural reforms and better governance. E-governance and digital platforms can enhance transparency and efficiency,” she said.

She added that collaboration in electronics, mining, EV components, and renewable energy could meet domestic demand and expand exports. “If China relocates IT and high-tech industries to Pakistan, knowledge creation and transfer can be achieved through joint ventures and talent exchange,” Nabila noted. China’s commitment to carbon neutrality will shape its overseas investments.

Pakistan can capitalize by offering “green industrial zones” powered by renewable energy and resource-recycling systems, attracting Chinese firms facing strict carbon-reduction goals. Industrial supply chain integration is another opportunity. China aims to promote high-standard opening up and mutually beneficial cooperation via “the initiative to open China wider”.  With its proximity to China and access to Middle Eastern markets via Gwadar, Pakistan can serve as a complementary manufacturing and logistics base, provided that customs procedures are efficient, transport links are upgraded, and trade systems are harmonized.

Financing and technology support will be decisive. As China refines its financial system for industrial innovation, Pakistan can explore joint financing platforms for technology-intensive projects. Public–private partnerships, supported by development funds or Chinese institutions, could advance local manufacturing of solar, EV, and telecom components within SEZs.

To attract investors, SEZ authorities must streamline approvals, simplify taxation, and ensure reliable utilities. At the same time, vocational and technical training should align with China’s evolving industrial priorities so Pakistan’s workforce is prepared for automation, electronics, and green-manufacturing roles. China’s modernization drive is not just domestic — it reflects a global shift toward innovation and sustainability. For Pakistan, this presents both challenges and opportunities.

If Islamabad adapts its SEZ policy to align with China’s industrial agenda, it could transform its manufacturing base, expand exports, and generate skilled employment. As China’s 2026–2030 industrial plan unfolds, Pakistan’s next CPEC chapter will hinge on effectively redefining its SEZs — from infrastructure projects to engines of technological progress — anchoring the country’s long-sought industrial renaissance.

Credit: INP-WealthPk