DefinePK

Abstract

The never-ending competition between the United States and China has placed Pakistan on the border of economic statecraft and strategic rivalry. Concurrently facing U.S. sanctions and IMF conditionality in the wake of the 2025 Indo-Pak conflict, Islamabad should have a chance presented to it by the China-Belt and Road Initiative (BRI) and the China-Pakistan Economic Corridor (CPEC). According to this article, the Pakistani reaction is not that of passive dependence but of economic hedging: taking advantage of IMF programs to appease Beijing even as Chinese financing is being used to mollify Western conditionalities. The paper uses theories of economic statecraft and hedging to explain why Pakistan can use structural weaknesses as bargaining assets. The results demonstrate how Islamabad avoids being dependent or completely falling into the grip of dependence but rather cleaves out some space of agency by pitting Washington and Beijing against each other. The paper broadens hedging theory to the economic realm by identifying a hybrid strategy used by Pakistan and provides fresh insights into the way middle powers can cope with a great-power rivalry situation.