Opinion | How tech innovation can bolster Pakistan’s relationship with China

Pakistan’s start-up ecosystem is set to flourish and collaboration with China in areas such as agritech and fintech can boost growth and prosperity

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A woman takes a selfie with her friends after offering prayers at the Badshahi Mosque in Lahore, Pakistan. About two-thirds of the population are under 30, and many are eager to adopt new technology. Photo: AFP

Published: 4:30pm, 1 Apr 2025

Pakistan has the potential to become a land of opportunity for start-ups, powered by its young, tech-savvy population of 240 million. But its founders are facing a series of challenges, including political instability and a funding downturn, which has hit Pakistan hard. One way to overcome those obstacles is by deepening its connection with China. And encouraging Pakistan’s innovation can benefit both countries.

China and Pakistan’s diplomatic partnership dates back nearly 75 years. The China-Pakistan Economic Corridor (CPEC) is a critical part of Beijing’s Belt and Road Initiative, and, under the CPEC, China has invested billions of dollars into Pakistan’s physical infrastructure.

This partnership is expanding to digital infrastructure, too, with the CPEC covering initiatives such as joint research and technology transfer centres. When President Xi Jinping and Pakistan President Asif Ali Zardari met in Beijing in February, science and technology were among the areas on which they signed bilateral cooperation documents.

The collaboration also extends to the provincial level. In January, Punjab Chief Minister Maryam Nawaz told Chinese investors that the province, which is Pakistan’s largest by population, aspires to build the biggest AI centre in the country with China’s cooperation.

The groundwork is already there for building a truly powerful start-up ecosystem. The driving force is the country’s size – Pakistan is the world’s fifth-most populous country – and its youthful population. About two-thirds of people are under the age of 30, and many are eager to adopt new technology. Pakistan’s start-up ecosystem experienced rapid growth in 2018 and 2019, followed by a funding boost during the Covid-19 pandemic.

But Pakistan faces serious challenges. A lack of capital has become one of the ecosystem’s biggest constraints. During the first 11 months of 2024, Pakistan start-ups raised just US$37 million, a nearly 90 per cent drop from the US$355 million in 2022, according to the Pakistan Startup Ecosystem Report. Political instability is another friction point, making it harder to plan new policies that would benefit founders and their businesses, while economic woes such as inflation hurt investment.