By Moaaz Manzoor

China’s 2026-30 industrial strategy offers Pakistan a useful policy reference for transforming its special economic zones (SEZs) into export-oriented manufacturing hubs through better infrastructure, targeted industrial planning, trade facilitation and stronger linkages between industry, technology and investment.

The policy direction was outlined during China’s annual legislative session, where the National Development and Reform Commission submitted its report on the implementation of the 2025 plan and the draft plan for 2026 to the 14th National People’s Congress.

The official documents state that 2026 marks the first year of the 15th Five-Year Plan period and emphasize the application of the new development philosophy, promotion of high-quality development, expansion of domestic demand, improvement in supply capacity and the development of new quality productive forces.

The planning report also highlights the continued development of a modern industrial system and stronger support for foreign trade. It calls for accelerating the integrated development of domestic and international trade, improving logistics efficiency and strengthening the role of the domestic market in sustaining industrial growth.

China’s progress in logistics and distribution is already visible. According to the report, total logistics costs declined to 13.9% of GDP in 2025 as more national logistics hubs and intermodal freight facilities were developed across the country. This indicates that China is advancing industrial upgrading alongside trade facilitation, efficient distribution networks and stronger market connectivity.

For Pakistan, this integrated approach carries important lessons. SEZs cannot become effective export hubs merely through land allocation and tax incentives. Their success depends on reliable energy supply, efficient customs procedures, transport connectivity, skilled labour and a coherent export-oriented industrial strategy.

Speaking with WealthPakistan, Dr Hassan Daud Butt, former Project Director of the China-Pakistan Economic Corridor and Senior Advisor at the China Energy Engineering Corporation, said China’s 2026-30 industrial strategy demonstrates how targeted planning, sector-specific incentives and coordinated state support can help build strong export-oriented industries.

He noted that China is gradually shifting from its role as the “factory of the world” toward advanced engineering, high-value manufacturing and quality-driven growth. According to him, the experience shows that industrial upgrading, reliable infrastructure and long-term planning are critical for building globally competitive manufacturing hubs.

He suggested that Pakistan should reshape its SEZs into sector-focused clusters that promote technology adoption, value addition and export diversification rather than simple assembly operations. Economic zones, he said, cannot succeed if they remain generic industrial estates with weak logistics, unreliable utilities and limited integration with national export strategy.

Engr. Ahad Nazir, Program Manager at the Sustainable Development Policy Institute, told WealthPakistan that China’s latest industrial plan highlights the importance of linking technological development with industrial production. He said China has placed science, frontier technologies, artificial intelligence and talent development at the core of its industrial policy while ensuring that research outcomes are connected directly with manufacturing activity.

According to him, Pakistan needs stronger mechanisms to translate research into industrial applications. He suggested that public R&D funding should support clearly defined national missions where domestic demand and existing production capacity already exist, particularly in areas such as agricultural technology, health technologies, energy equipment, industrial automation, mining and digital systems.

Research Fellow Asad Ullah Khan at the China Pakistan Study Center at the Institute of Strategic Studies Islamabad also emphasized the importance of policy reforms while speaking with WealthPakistan. He said that with China’s development plan focusing on industrial upgrading and trade-oriented manufacturing, Pakistan needs targeted measures to make its SEZs more attractive for investors.

He noted that consistent policies, improved infrastructure, reliable energy supply, one-window facilitation and competitive tax and regulatory frameworks are essential for encouraging investment in economic zones. Strengthening supply chains, facilitating technology transfer through partnerships with Chinese and other foreign firms, and improving skills development and customs procedures would also help SEZs generate higher value addition and support export growth.

The broader lesson from China’s experience is that industrial zones succeed only when backed by coordinated execution across infrastructure, policy and trade systems. Pakistan’s SEZs have long faced challenges including delayed infrastructure development, weak investor facilitation and limited integration with national export strategy.

Shifting toward sector-focused zones in areas such as engineering goods, electronics, pharmaceuticals, agro-processing and renewable energy components could align economic zones more closely with Pakistan’s export objectives.

As China’s 2026-30 plan combines industrial upgrading with trade competitiveness and investment facilitation, Pakistan has an opportunity to rethink the structure of its own SEZ policy. With targeted planning, stronger implementation and a clear export-oriented approach, economic zones could become engines of value addition and sustainable export growth. Without such reforms, they risk remaining underperforming industrial enclaves that fall short of their intended economic potential.

Credit: INP-WealthPk