For at least a decade, developing countries across Asia and Africa have worried about growing dependent on China. They are concerned about debt traps, coercive policies and hidden costs that might push their economies toward crisis.
Crisis has come, and that logic has been turned on its head. After six weeks of the US and Israel’s war on Iran and its ensuing counterattacks, it is the countries that bet on Chinese supply chains that are faring better than the ones that trusted Pax Americana.
Consider Pakistan. By now, it should have been in the middle of yet another economic and social implosion. It has always been vulnerable to energy price shocks, given that it imports almost all of its energy, much of it through the Strait of Hormuz. The country has US$130 billion in external debt and a persistent current account deficit, and so the slightest nudge should have tipped it over into a familiar spiral: emergency requests to the IMF, 18-hour power blackouts and unrest on the streets.
None of that is visible. There are signs of stress, certainly: Islamabad has hiked fuel prices and is planning to shut off electricity for two to three hours each day. A sustained shortage of liquefied natural gas would make it hard to keep power plants running. However, compared with the situation just a few years ago — when, after the Russian invasion of Ukraine, the economy had a full-scale meltdown — it is showing remarkable resilience.
What is the difference? Chinese-made solar panels. Pakistanis have gleefully transitioned to solar power, importing about 17 gigawatts a year of photovoltaics since 2024. One-quarter of households have installed solar panels for their own use.
Islamabad did not even have to spend too much money subsidizing the renewables rollout. They just had to ride Chinese overcapacity instead of fighting it, and make it work for their own citizens by keeping tariffs low. The price of imported solar panels dropped by almost 60 percent in 2024 to last year; Beijing’s subsidies kept their factories humming, but also financed the electrification of millions of households across Pakistan.
Many other countries made the opposite choice, to insulate domestic production or minimize political risk. Those that tried to keep cheap photovoltaic cells out have seen much slower rates of uptake — and are, in consequence, far more exposed to the chaos in the Gulf.
Nor are solar panels the only way in which cheap Chinese goods are turning out to be sources of resilience rather than disruption. Nepal has a higher proportion of electric vehicles (EVs) than any other country in the world, barring Norway. Its huge imported fleet of cheap EVs mean that it is far less worried about gasoline prices than most of its Asian neighbors. And they run on clean electricity, emerging from a hydropower infrastructure that is financed in part by Beijing.
It is not hard to imagine policymakers from across the developing world looking at examples such as these and concluding that betting on Beijing is not actually the riskier option. Some might already have taken that chance; imports of Chinese solar panels have shot up in the past couple of years across sub-Saharan Africa in particular. If the only options are dependence on predictably mercantilist Beijing and on an erratic, self-centered and disruptive US, the choice is obvious.
That might turn out to be the wrong call. It is not wise to imagine that relying upon Beijing’s goodwill is any safer. In just the past year, China has shown the willingness to weaponize control over supply chains, such as the production of magnets and rare earths.
However, right now, the contrast is glaring. Countries that believed that the open trading order, underpinned by US hegemony, would protect them from shocks are struggling; those who chose to run the risk of dependence upon Chinese imports and infrastructure are showing unexpected resilience.
That would only get worse if US President Donald Trump withdraws from the Gulf without making an effort to reopen the Strait of Hormuz. Then, the lesson the world learns is even harsher: The US would make decisions about your energy supply, take no responsibility for the consequences and then leave. China would sell you the technology that allows you to stop caring about what the US does.
This is a far greater geopolitical setback to the US than any loss of face in the Iran war might be. Trump might have thought that he would be remembered as the president who restored US greatness by solving long-running problems — Venezuela, Iran, perhaps Cuba. Instead, it looks like he would be remembered as the president who lost Asia to China.
Mihir Sharma is a Bloomberg Opinion columnist. A senior fellow at the Observer Research Foundation in New Delhi, he is author of Restart: The Last Chance for the Indian Economy. This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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