May 21 marked the 75th anniversary of diplomatic relations between China and Pakistan. A proud moment indeed for the cordial, and the ever-strengthening relations between the two countries, not just on the diplomatic side but in a number of aspects, including economy, where the ongoing development with regard to China-Pakistan Economic Corridor (CPEC), as part of China’s overall Belt and Road Initiative (BRI) stands out as an important endeavour in this regard.
“There is a huge learning opportunity for Pakistan regarding the economic pathway taken by China toward overall economic development—not only in terms of high growth rates, but also the immense success achieved by the country in lowering poverty, greening the economy, and adopting artificial intelligence (AI)-related technology.
As per a May 26 published article ‘Xi urges faster building of closer China-Pakistan community with shared future in new era’ by The State Council Information Office of the People’s Republic of China indicated: ‘China and Pakistan should accelerate the building of a closer China-Pakistan community with a shared future in the new era, and achieve more results in all-weather cooperation between the two countries, Chinese President Xi Jinping said on Monday.
Xi made the remarks when meeting with Pakistani Prime Minister Shehbaz Sharif in Beijing. He also urged the two sides to bring more benefits to the people of both countries, contribute to promoting regional peace and stability, and set an example for building a community with a shared future with neighbouring countries.
Since the establishment of diplomatic relations 75 years ago, China and Pakistan have forged an unbreakable traditional friendship, Xi said, noting that the strategic mutual trust and practical cooperation between the two sides have effectively promoted the development of each country’.
Moreover, the same article pointed out with regard to Pakistan PM Shehbaz Sharif’s comments on the occasion ‘Pakistan stands ready to learn from China’s experience in governance, deepen cooperation under the Belt and Road Initiative, promote the construction of the China-Pakistan Economic Corridor, and continuously advance Pakistan-China relations to bring benefits to the two peoples, he [PM Shehbaz Sharif] added.’
Here, lessons mostly remain untapped by Pakistan from China over the decades, especially in terms of understanding China’s economic philosophical underpinnings, and policy formulations.
Among fundamentals in this regard includes learning from China’s employment of gradualism, instead of following shock therapy policies, and ‘dual-track’ pricing mechanism to achieve more sustainable economic growth, reach better price discovery in terms of predictability of consumption, and investment, and also as support mechanism for enhancing resilience and growth.
Moreover, among other main learning opportunities lies in learning from China’s non-adoption of shock therapy/neoliberal/austerity policies, the extensive role of public sector, and the underlying importance given to the role of economists, and of overall holding meaningful policy discussion/discourse. The comments above by the PM should serve as a strong basis for a renewed sense of effort to both enhance the scope and deepen the learning from tremendous success by China over the decades, both overall, and in the realm of economy.
Additionally, Pakistan should look to learn from the mission-oriented approach adopted for reaching broader economic development goals, including drastically reducing poverty, shifting rapidly towards green energy, for not only reducing carbon footprint but also enhancing energy generation, especially in actively supporting adoption of artificial intelligence.
Other learning curves include the approach of presence of innovative policy to lower the burden on government’s fiscal space for infrastructure investment, for example, along with how the financial sector is broadly managed to overall finance the underlying development needs.
Moreover, like Pakistan, Denmark is also celebrating its 75th anniversary of diplomatic relations with China, and there are indeed lessons for Pakistan in terms of forging even more purpose-driven economic and environment-related relationship with China, especially in terms of transition to green economy.
The economic philosophical underpinnings of China have taken a very different pathway as against the one adopted by scores of programme countries, including Pakistan – which, in addition, has been mostly a prolonged user of International Monetary Fund (IMF) resources since the 1990s.
Instead of adopting a neoliberal and austerity approach, China did not liberalize, privatize, or deregulate in a shock-therapy style which, otherwise, remained a bread-and-butter approach advocated by IMF and ‘Chicago boys’-styled policymakers in countries in general over the last four decades or so, including Pakistan. Instead, China adopted a non-shock therapy approach taken by the country, especially since the 1980s.
Moreover, not only did China not reduce the role of government, and instead kept a meaningful level of public purpose, may that be in keeping the state-owned enterprises (SOEs) for highly strategic economic aspects, yet it allowed for participation of private sector in an efficient way, whereby instead of privatizing in still important sector for overall consumption, production, and exports, it went for mixed-ownership enterprises (MOEs) while total privatization was kept for nominally important sectors for the economy.
Similarly, instead of keeping weakly regulated markets, it adopted a ‘dual-track’ pricing mechanism.
Hence, rather than adopting austerity policies, China propelled domestic production by bringing price stability while giving a strong positive signal for businesses, and consumer – that is enhancing both supply, and demand – in terms of enhancing capacity to investment and increase purchasing power, putting in place a two-way causation between production and consumption. No wonder, poverty fell drastically while China also started to be called the ‘factory of the world’ or the manufacturing hub.
Internationally renowned economist, Isabella M. Weber in her seminal 2021 Routledge published book ‘How China escaped shock therapy: the market reform debate’ pointed towards the gradual reform approach taken by China while adopting a novel ‘dual-track’ pricing mechanism, which they employed for industry, but can also be applied for any number of important economic sectors in terms of domestic production, and exports, like agriculture. She indicated in this regard: ‘Instead of destroying the existing price and planning system in the hope that a market economy would somehow emerge “from the ruins,” China pursued an experimentalist approach that used the given the institutional realities to construct a new economic system. The state gradually re-created markets on the margins of the old system. Unleashing a dynamic of growth and reindustrialization, gradual marketization eventually transformed the political economy while the state kept control over the commanding heights.’
Pakistan also needs to very much build a non-shock therapy, non-neoliberal economic system with a mission-oriented and purpose-driven goal of public sector, leading the effort on major economic missions, or goals, collaborating in turn with the private sector in a symbiotic relationship in a whole-of-government approach.
Highlighting the quick-paced and deep, inclusive economic progress made by China, the 2016 published book ‘How China escaped the poverty trap’ pointed out: ‘In 1980 China’s GDP per capita was US$193, lower than that of Bangladesh, Chad, and Malawi, present day “bottom-billion” countries.
In practical terms, an income per capita of US$193 means that average food consumption fell below basic nutritional standards. …Now, fast-forward thirty-five years. China has become the world’s largest exporter… By 2012 China’s GDP per capital had jumped thirty-fold from US$193 to US$6,091, leaving other bottom-billion countries far in the dust (in Malawi, GDP per capita nudged up by only $50 in thirty-two years, a typical case of being stuck). Underlying these impressive growth statistics is a radical restructuring of the economy. China today boasts legions of private firms, Fortune 500 companies, multinational investors, a booming middle class, and capitalist institutions like securities, e-commerce, and corporate governance standards.’ Since, then the country has not only strengthened its economy further, but has also seen astronomical shift towards green economy, and enhanced immensely its prowess in high-tech sector, especially AI. This, indeed, owes a lot to not adopting shock-therapy natured policies, it also strongly appears, especially given the overall sour experience in terms of reaching sustainability, and resilience for a number of countries globally, including Pakistan.
In that spirit, China is insulating its economy from shocks and building resilience without causing economic disruption. For example, it is building up huge oil reserves and deploying large-scale alternative energy sources like solar in a mission-oriented way. This saves the economy from a virtual free-float, shielding it from domestic and external demand, supply, and price shocks that disrupt planning, while securing more predictable expenditure needs and fiscal space.
The ‘dual-track’ pricing, for instance, provided a meaningful level of price stability and, in turn, significantly contributed to predictability in the economy.
She pointed out in this regard in the same book that ‘The most important manifestation of China’s reform approach is the dual-track price system, which is the opposite of shock therapy. Instead of liberalizing all prices in one big bang, the state initially continued to plan the industrial core of the economy and set the prices of essential goods while the prices of surplus output and nonessential goods were successively liberalized. …The gradualist reform that set China on a path of catching up, re-industrialization, and re-integrating into global capitalism also implied that the institutional convergence between China and the neoliberal variety of capitalism remained incomplete.’ Conversely, policymakers in Pakistan—and the broader thought processes of the IMF and the World Bank, for instance—continue to prescribe neoliberal policies.
Reflections on this historic 75th anniversary should include the realization that neoliberal and related austerity policies do not work in any meaningful way. Instead, they weaken both public sector capacity and the link between public opinion and public policy.
Both need to be strengthened and directed in a mission-oriented way to tackle a world of ‘polycrisis,’ including existential threats like the climate change crisis and the related ‘Pandemicene’ phenomenon.
Copyright Business Recorder, 2026
The writer holds a PhD in Economics degree from the University of Barcelona, and has previously worked at the International Monetary Fund. His contact on ‘X’ (formerly ‘Twitter’) is @omerjaved7