New World Order

As China’s economy matured, its government embraced slower, higher-quality growth, coined as the “New Normal.” The emphasis has shifted from exports and infrastructure to domestic consumption, innovation, and high-tech industries.

Pakistan’s strategic geography, youthful workforce, and deep ties with both Washington and Beijing place it in a unique position to act as a bridge, not merely a beneficiary, of this new world order.

Rising outbound FDI reflects China’s ambition to move up the global value chain, gain access to advanced technologies, and establish globally competitive brands. This is particularly evident in Beijing’s efforts to transform state-owned enterprises (SOEs) into internationally viable firms.
With rising wages and diminishing cost advantages, China is increasingly offshoring lower-end manufacturing, thus offering a unique opportunity for countries like Pakistan to position themselves as attractive alternatives. The China-Pakistan Economic Corridor (CPEC), launched in 2013, could become a key beneficiary of this transition.

Belt and Road Initiative (BRI) and CPEC
Launched in 2013, the Belt and Road Initiative (BRI), formerly known as One Belt, One Road (OBOR), is Beijing’s flagship strategy to deepen global trade integration through infrastructure development, economic corridors, and policy alignment across Eurasia, Africa, and beyond. Nadege Rolland, a senior fellow at the National Bureau of Asian Research, describes BRI as China’s “grand strategy” to respond to internal economic shifts and external geopolitical competition. It is rooted in China’s long-term aspiration to reassert regional influence and build economic interdependence.

U.S. policymakers remain sceptical, warning that BRI may serve Beijing’s strategic interests by indebting partner countries, exporting its governance model, and securing access to critical infrastructure. Its relevance in 2025 is not just about infrastructure. It is now a crucial lever in China’s strategic competition with the West. The IMF and G7 have even launched alternative frameworks such as the “Partnership for Global Infrastructure and Investment (PGII)” to compete with BRI, further evidence of how central BRI is to today’s multipolar contest.

CPEC represents a cornerstone of BRI. Through it, China gains an alternative trade route to the energy-rich Middle East via Gwadar Port, circumventing the U.S.-patrolled Malacca Strait, which is critical if U.S.-China tensions escalate further. With further expansion via the Iran-China Strategic Partnership Agreement, China could solidify its influence from Central Asia to the Indian Ocean.

The Iran-China Strategic Partnership Agreement (ratified in 2021) gives China footholds in ports like Jask and potentially oil-rich zones, consolidating its presence in the Indian Ocean.

Importantly, this strategy increasingly blurs the line between economic and military expansion. Gwadar, Jask, and Djibouti (where China already has a military base) create a chain of potential dual-use facilities, prompting concern among the U.S. Indo-Pacific Command and India’s naval planners.
Chabahar Port, backed by India but now partially aligned with BRI ambitions, adds another layer of rivalry, transforming South Asia’s coastline into a geopolitical chessboard.

Global Trade Imbalances and WTO
Much of the global trade imbalance stems from bilateral U.S.-China dynamics and deeper structural issues rooted in the World Trade Organization (WTO). Established in 1995, the WTO was envisioned to stabilize global trade, encourage fair competition, and facilitate market access.

Theoretically, the WTO was meant to promote a predictable global trading system based on comparative advantage—each country exporting goods it can produce cheaply due to local resources (e.g., labour or feedstocks). However, in practice, the WTO’s policies have often favoured developed nations, offering them better terms of trade and greater protection, sometimes to satisfy other non-trade interests, while exposing developing countries to asymmetrical pressures. This has created a culture of mistrust, inefficiency, and systemic favouritism.

The principle of global free trade has, paradoxically, been undermined by a differentiated tariff regime and an institutional structure that protects industrialised economies. This, in turn, has catalysed protectionist responses globally, most notably from the United States.

Trump’s Tariff Policy and U.S. Strategic Uncertainty

President Donald Trump has doubled down on tariffs aimed primarily at Chinese goods in response to these imbalances. While designed to correct long-standing trade deficits, these tariffs, combined with broader “decoupling” rhetoric, have led to economic uncertainty.

The principle of global free trade has, paradoxically, been undermined by a differentiated tariff regime and an institutional structure that protects industrialised economies.

Referencing Henry Kissinger, “America’s China policy has no strategy.” Trump’s tariff-centred approach, though politically expedient, seemingly lacks a coherent long-term strategy. The endgame is unclear, and the result remains fraught with unpredictability.

While correcting trade imbalances is essential, the costs of abrupt protectionism may be borne globally. In the short run, both the U.S. and the world face, e.g., supply disruptions and diplomatic fallout. The question remains: Is this the necessary cost of correction?

Differentiating Strategic Philosophies

The U.S. increasingly views China as both an economic and military challenger. In 2020, then-Joint Chiefs Chairman Gen. Joseph Dunford warned, “China likely poses the greatest threat to U.S. national security by 2025.” This perception underpins a bipartisan consensus framing China as a “strategic competitor.”

Henry Kissinger once compared Chinese strategy to the game of WEIQI (Go), where long-term positioning and patience are central, unlike Western chess, which is focused on decisive confrontation. This reflects China’s gradual, incremental approach to power projection.

In his book Has China Won?, Kishore Mahbubani outlines U.S. strategic strengths:

• World-leading scientific research
• A dynamic free-market economy
• Top-ranked universities
• An inclusive, immigrant-friendly society
• Strong institutional foundations—notably its central bank and legal system, which uphold global confidence in the U.S. dollar.

However, Mahbubani also highlights America’s strategic missteps: underestimating China’s rise and allowing economic engagement to outpace strategic foresight. China, too, has miscalculated, alienating U.S. corporations and political elites, fuelling bipartisan support for tariffs and decoupling.
While China asserts it does not seek to export its model, the U.S. has long promoted its liberal democratic values. As Hillary Clinton once suggested, “America is the indispensable nation.” While aspirational, this worldview often translates as arrogance abroad, especially in regions with different governance traditions.

Conclusion
“A major geopolitical contest between America and China is both inevitable and avoidable.” -Kishore Mahbubani.

The rivalry is fuelled by America’s domestic challenges and China’s assertive diplomacy. Beijing prioritizes societal harmony and governance stability, while Washington champions individual liberties and democratic norms.

Whether this results in open conflict or peaceful coexistence depends on leadership, mutual understanding, and strategic compromise. While China may not seek to replace the U.S. as a global hegemon, its economic gravity is undeniable.

“A major geopolitical contest between America and China is both inevitable and avoidable.”
-Kishore Mahbubani.

For countries like Pakistan, understanding this evolving contest is critical. Pakistan’s strategic geography, youthful workforce, and deep ties with both Washington and Beijing place it in a unique position to act as a bridge, not merely a beneficiary, of this new world order. To succeed, Pakistan’s leadership must prioritize national interest over personal gain, investing in human capital, institutional reform, and sustainable growth.

Pakistan, with a deep understanding of both U.S. and Chinese strategies and a commitment to multilateralism, must remain agile. A clear-eyed national interest - leveraging its youthful population, strategic geography, and diplomatic credibility - can help it mediate and benefit from the reordering of the global system.

The world is not bifurcating into the U.S. or China. Rather, it is demanding new rules of engagement and new voices to shape them.