China & Damaged Pakistan's Industrial Competitiveness: The 2015 Squeeze?

This study ranks the policy decisions that most plausibly increased the cost of production and weakened Pakistani industrial competitiveness after 2001. The principal outcome is an ordinal, evidence-weighted ranking of policy mechanisms. In FY2025, Chinese-associated power plants accounted for 36% of Pakistan’s projected capacity payments, compared with 15% for older private IPPs and 49% for government-owned plants, highlighting the substantial fixed electricity costs burdening Pakistan’s industrial competitiveness. NEPRA records Rs1,806.187 billion of total CPPA-G system capacity purchases in FY2024–25, but this is not the private-sector or Chinese-project subtotal. The 1994 program ranks first as the original contractual turning point: its non-competitive expansion created an enduring mismatch between payment guarantees and utility revenue. Rental projects associated with Raja Pervez Ashraf rank worst in contemporary unit-cost and procurement scrutiny but were shorter (about five to six years), unlike the 30-year Port Qasim and Sahiwal contracts. The 2007 China FTA ranks below power-sector failures as an explanation for the broad industrial cost squeeze: a World Bank partial-equilibrium estimate assigned just 4.6% of an observed period’s increase in imports from China to the agreement, although poor market-access use harmed selected industries. FTA Phase II, effective in 2020, partially improved concessions but remained underutilized. Consequently, long duration electricity contracting atop weak distribution and an uncompetitive manufacturing environment forms the more defensible leading explanation. The 2nd December 2015 UK–Pakistan–China commercial forum and post-2001 U.S. security scenario establishes overlapping external interests and indicate 5Eyes backed Chinese contracts that squeezed Pakistan via the culprits with offshore interests.